Towards Investment in Sustainable Fisheries: A framework for financing the transition

Last modified: 
December 14, 2019 - 11:15am
Type: Report
Year of publication: 2014
Authors: Kate Bonzon, Klaas de Vos, Lucy Holmes, Kent Strauss
Publishing institution: Environmental Defense Fund and The Prince of Wales’s International Sustainability Unit
Pages: 86

Research suggest three key enablers of sustainable and profitable fisheries that, together, provide the basis for increased value: 

  • Secure tenure aligns the incentives and empowers the fishing industry to pursue sustainable use of the resource and is a vital first step in the transition
  • Sustainable harvests determine how much fish can be caught sustainably and enable the creation of both management and investment frameworks
  • Monitoring and enforcement provide assurance that fishers will comply with sustainable management and reduce the chance of illegal activity that could undermine the transition

These conditions, particularly establishing secure tenure, provide the platform for unlocking greater social, economic and environmental value in fisheries and are vital to investment activities. With the conditions described above in place, investment can be channelled towards the three key drivers of increased fisheries value:

  • Improving stock health leads to higher long-term yields and makes fish less costly to find and catch
  • Increasing operational efficiency reduces fishing and delivery-related costs, improving profit margins and thus improving the returns from fishing as a whole
  • Increasing market value through improved market access, certification, branding and long-term partnerships returns more value to fishers 
  • A clear business case for the transition that includes a contextual analysis of the project as well as a bioeconomic and financial model of the investment proposition
  • Investable entities to act as counterparty to the investment; these can be existing, modified, or newly created entities
  • Mechanisms for capturing return from the beneficiaries of the transition to share the upside of a transitioned fishery with the investor, such as dividends, taxes, or fees
  • Risk management through appropriate identification and articulation of risks, as well as efforts to mitigate or manage risk

Structuring the investment to align and coordinate sources of capital can create a financially sustainable transition and match investors to the financial, environmental and social returns that fisheries provide. Project developers can consider two key points:

  • Sources of capital, or investors, fall along a spectrum based on, among other things, target returns, type of investment and target terms. Traditionally, fishery transitions have been funded by ‘impact-only’ investors who expect no return or little financial return
  • Combining capital to sequence, blend or layer investment structures can effectively reduce and spread risk, while leveraging larger pools of capital. Including different types of investors will ultimately unlock the resources needed to start to address the scale of the challenge that lies ahead
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