How local economies can reel in more commercial fishing revenue

Nov 20, 2019

The study examines what kind of multiplier effect originates from commercial fisheries into their local economies.
Credit Redoubt Reporter

It’s no secret that a good amount of commercial fishing revenue generated in Alaska doesn’t stay here. A new study from UAA took a look at how much commercial fishing does contribute to local economies, and where that income goes when it doesn’t create jobs at home.

Commercial fishing in Alaska is worth about $4.5 billion a year. And a lot of that value leaves the state, mostly in the form of wages to out of state workers and sales to out of state processors. 

“About a third of ex-vessel revenue, for example, is owned by folks that are out of state," says Brett Watson, a Post-Doctoral Researcher at UAA. He and a team of three other researchers spent two years looking at how commercial fisheries contribute, or to a degree, don’t contribute to local economies.

“Only about a fifth of processor value is actually owned by folks that reside in the state of Alaska. So given these two big facts; that commercial fisheries are a big deal, but the second is that a lot of that money leaves right away, it kind of motivates this question, how much do locals in Alaska actually benefit from these activities.”

The answer, at least from an economics standpoint, is not as much as they could be. Harvesting a natural resource is the basis of practically all local economies in Alaska, and that can be a big advantage.

“Unlike manufacturing activity, which has some geographic flexibility where you can kind of plop down a factory, you can’t really move a fishery; you can’t really move an oil field. So there’s this opportunity that local economies have to try to capture that economic activity.”

Watson says the key is looking up and down the chain at things like expanding local permit ownership.

“So in fisheries, the important upstream links in the supply chain are things like labor. Are there local crews in the community that skippers can hire, so that when the value of the fishery increases, you see more hiring of local crew."

Some of the main numbers out of the study show that when a community's fishery earnings go up 10 percent, it ripples through to local incomes at a rate of $1.54 in total income for every $1 of fisheries earnings.

"Another important link up the supply chain are other types of inputs like bait and ice, fuel for the ships, repair services for vessels.”

And on the other side, more local processing is a key, but really what that means, for commercial fisheries specifically, is creating more value locally. And that’s where Watson hopes policy makers will find the study useful for economic development, especially in rural areas.

“Right now a lot of that value added activity is happening in places like Seattle or even China. So you can imagine communities looking up the supply chain or down the supply chain and trying to take a step in either direction.”

Watson notes some limitations in the study, namely that it’s focused purely on commercial fisheries and not sport or subsistence activity, and those economic links. It’s also meant to be looked at over the long term, and doesn’t really apply for the boom and bust swings that can happen in commercial fisheries.

“Our study probably doesn’t speak to what would happen if the Bristol Bay fishery were to collapse; what would happen to Dillingham? We don’t really have lots of good test cases for those fishery collapses in Alaska because they’re fairly well managed. But if you’re interested in...cycles of activity, I think we’re providing pretty good evidence of what’s going on there.”

He says based on this study, they next want to look at communities that have made an effort to keep more fishing revenues in the local economy, and what works and doesn’t.