Priorities for Sustainably Managing Sri Lanka’s Marine Fisheries, Coastal Aquaculture, and the Ecosystems That Support Them September 2021 Disclaimer © 2021 International Bank for Reconstruction and Development / The World Bank 1818 H Street, NW Washington, DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundar- ies, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorse- ment or acceptance of such boundaries. 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Photo credits clockwise from left to right: Measuring length of blue swimming crabs, © Steve Creech Coastal fishing boats in Jaffna. © Lucy Emerton A 40 kg yellowfin tuna caught using longline, © Sri Lanka Longline FIP Eco-labeled Sri Lankan blue swimming crab sold in U.S. supermarkets, © Sachiko Kondo Priorities for Sustainably Managing Sri Lanka’s Marine Fisheries, Coastal Aquaculture, and the Ecosystems That Support Them September 2021 Contents Acknowledgments................................................................................................................................................................ v Acronyms and Abbreviations......................................................................................................................................... vii Executive Summary............................................................................................................................................................. ix Chapter 1. Introduction.......................................................................................................................1 Chapter 2. Role of Fisheries in Achieving National Objectives, Opportunities, and Challenges.......................................................................................... 5 2.1. Government’s Macroeconomic and Fisheries Sector Objectives.................................................. 5 2.2. Present Contribution of Fisheries to National Objectives..................................................................7 2.3. Key Characteristics of the Marine Fisheries and Coastal Aquaculture Subsectors...................................................................................................................................12 2.3.1. Coastal Fisheries.......................................................................................................................................12 2.3.2. Multiday Fisheries.....................................................................................................................................15 2.3.3. Coastal Aquaculture................................................................................................................................17 2.4. Impact of the COVID-19 Pandemic on the Fisheries Sector...........................................................21 2.5. Opportunities and Challenges for Increasing Fisheries’ Contribution to National Objectives.........................................................................................................24 2.5.1. Sectorwide Opportunities and Challenges............................................................................................ 25 2.5.2. Coastal Fisheries................................................................................................................................................. 27 2.5.3. Multiday Fisheries..............................................................................................................................................38 2.5.4. Coastal Aquaculture.........................................................................................................................................47 Chapter 3. Vision and Program of Priority Investments for Coastal and Marine Fisheries...............................................................................................................53 3.1. Vision....................................................................................................................................................................... 53 3.2. Priority Investments, Policy Actions, and Institutional Capacity Development...............................55 3.2.1. Capture Fisheries.....................................................................................................................................56 3.2.2. Coastal Aquaculture..............................................................................................................................64 3.2.3. Enhancing Livelihoods and Resilience in Coastal Fishing Communities............................ 68 Chapter 4. Conclusion ...................................................................................................................... 71 Bibliography......................................................................................................................77 Appendix A. Locations of Coastal and Multiday Fisheries.............................................................................88 Appendix B. Fisheries Development–Related Activities Specified in the National Policy Framework....89 Appendix C. The Ministry of Fisheries and Its Subsidiary Organizations............................................... 90 Appendix D. Coastal Ecosystem Degradation.....................................................................................................92 Appendix E. Sri Lankan Longline Fishery Improvement Project.................................................................96 Appendix F. Compliance with IOTC Resolutions..............................................................................................98 Appendix G. The Bio-LEWIE Methodology and Past Applications to Fisheries................................ 100 Tables Table 1.1. ASA Studies and Their Status as of June 2021..............................................................................3 Table 2.1. Employment and Livelihoods, Production in Sri Lanka’s Fisheries..................................... 8 Table 2.2. Coastal and Multiday Fish Catch by Major Commercial Group, 2019.............................. 9 Table 2.3. Export Quantities and Value of Fish and Fish Products, 2019–2020............................... 9 Table 2.4. Import Quantities of Fish and Fish Products, 2019–2020................................................... 10 Table 2.5. Characteristics of Fisheries by Coastal Region, 2019..............................................................12 Table 2.6. Status of Coastal Aquaculture in Sri Lanka, 2019......................................................................18 Table 2.7. Lost Income from COVID-19 in Sri Lanka Fishing Communities..................................... 23 Table 2.8. Biomass of Coastal Pelagic and Demersal Species Estimated by the R/V Dr. Fridtjof Nansen Stock Surveys, 1978–1980 and 2018 (MT, thousands)......... 30 Table B2.4.1 Results of MSC 2018 Pre-assessment of Sri Lanka’s Longline Fisheries....................... 40 Table 2.9. YFT Nominal Catch in Sri Lanka, by Year and Fleet (MT)....................................................43 Table 2.10. Fleet Development Plan for Tropical Tuna, 2021–2025.........................................................46 Table 2.11. Fleet Development Plan for Swordfish, 2021–2025................................................................46 Figures Figure 2.1. Sri Lanka’s 4 Coastal Fisheries Regions and 15 Administrative Fisheries Districts..... 13 Figure 2.2. Average Catches (MT) of Yellowfin Tuna in Indian Ocean 2015–2019 by Gear Group and CPC, Ordered by Importance of Catches..................................................16 Figure 2.3. Monthly Production by Fishery Type, 2018–mid-2021 (MT)................................................21 Figure 2.4. Monthly Fish Exports and Imports by Quantity and Value, 2019–Early 2021.............24 Figure 2.5. Coastal Fish Production, Fishing Vessels, and Fishers, 1995–2019.................................... 31 Figure 2.6. Declining Catch per Unit Effort in Hambantota, 1990–2017 (MT).................................. 33 Figure 2.7. Annual Export Value and Unit Price Received for Tuna by Target Region, 2010–2019................................................................................................................................................................. 39 Figure 2.8. Targeted Coastal Aquaculture Production, Jobs, and Export Earnings..........................48 Figure B2.5.1. Transitioning from a Conventional Approach to an Ecosystem Approach to Aquaculture...................................................................................................................49 Figure 3.1. Potential Steps in the Spatial Planning and Management Process for Aquaculture......66 Figure 4.1. Coastal Aquaculture Development Theory of Change.........................................................74 Figure 4.2. Coastal Fisheries Development Theory of Change............................................................... 75 Figure 4.3. Multiday Fisheries Development Theory of Change..............................................................76 Figure A.1 Areas Relevant to the Definition of Coastal and Multiday Fisheries..............................88 Figure D.1 Trends of Economic Activity in the Coastal Zone, 2000–2018...........................................91 Figure D.2. Change of Coral Cover, 1998–2007 (%).......................................................................................94 Boxes Box 2.1. Sri Lanka’s Experience with Shrimp Farming........................................................................................ 23 Box 2.2. Sri Lanka Blue Swimming Crab Fishery Improvement Project.....................................................28 Box 2.3. Complementarity Between the Stock Assessment-Related Activities Supported Under the Sri Lanka–Norway Bilateral Project and This ASA............34 Box 2.4. Sri Lankan Longline Fishery Improvement Project............................................................................ 40 Box 2.5. The Ecosystem Approach to Aquaculture..............................................................................................49 Box 3.1. Successful Co-management of the Mexican Pacific Lobster Fishery....................................... 60 Acknowledgments This report was prepared under the guidance of Faris Hadad-Zervos and Idah Z. Pswarayi-Riddihough (respectively, the current and former Country Director), Chiyo Kanda (Country Manager), and Christo- phe Crepin (Practice Manager). The team preparing the report was led by Tijen Arin (Senior Environmental Economist), Nadeera Ra- japakse (Environmental Specialist), and Sachiko Kondo (Environmental Specialist), and comprised Ran- dall Brummett (Senior Fisheries Specialist), Julien Million (Senior Fisheries Specialist), and Miguel Angel Jorge (Senior Fisheries Consultant). Stephen Akester (Senior Fisheries Management Consultant), Oscar Amarasinghe (Senior Fisheries Management Consultant), Priyanie Amerasinghe (Ecosystem Manage- ment Consultant), Steve Creech (Fisheries Management Consultant), Lucy Emerton (Environmental Economics Consultant), Max Goulden (Financial Analysis Consultant), J. M. P. K. Jayasinghe (Aquacul- ture Development Consultant), Justin Kagin (Economics Consultant), Dilanthi Koralagama (Fisheries Economics Research Consultant), Dale Manning (Fisheries Economics Consultant), Thomas Muenzel (Economist, FAO), Rishi Sharma (Fishery Stock Assessment Specialist, FAO), J. Ed Taylor (Senior Eco- nomics Consultant), Elmo M. Weerakoon (Aquaculture Development Consultant), Ed Willsteed (Con- sultant Fish stock Specialist ); and Heng Zhu (Economics Consultant) contributed specific analyses and reviews. Poonam Rohatgi (Senior Program Assistant), Kasun Jayasuriya (Team Assistant), Sankha Gamage (Team Assistant), and Shayami Dilrukshi Hindle (Team Assistant) provided logistical and ad- ministrative support. Elie Amkraut (Intern), Gangadari Ranawaka (Environmental Specialist), Srinivas Varadan (Senior Social Protection Specialist), Thomas Walker (Senior Economist), Mokshana Wijeyer- atne (Senior Environmental Specialist), and Andre Zollinger (Intern) provided helpful inputs. The team is grateful for the support and overall guidance of R. M. I. Rathnayake, Secretary of the Min- istry of Fisheries (MOF); Jayantha Chandrasoma, State Secretary of the State Ministry of Ornamental Fish, Inland Fish & Prawn Farming, Fishery Harbour Development, Multiday Fishing Activities and Fish Exports; Dhammika Ranatunga, Director General (technical) of the MOF; H. M. Palitha Kithsiri, Director General, National Aquatic Resources Research and Development Agency (NARA); Nimal Chandra- ratne, Director General of National Aquatic Resources Development Agency (NAQDA); and Anurad- ha Kumarasiri, Director General of the National Planning Department (NPD). This report also greatly benefited from the technical cooperation and consultations with Asoka Jayasinghe Mudalige, Director, Coastal Aquaculture Development, NAQDA; Mallikage Marcus, Director, Fishery Management Division of the Department of Fisheries and Aquatic Resources (DFAR); Rohan Wickramawardhana, Acting Di- rector, Plantations and Fisheries, NPD; Nihal Palitha, Director, DFAR; Sisira Haputhantri, Head, Marine Biological Research Division, NARA; Sujeewa Ariyawansa, Principal Scientist, NARA; Upul Liyanage, Senior Scientist, NARA; Aruna Maheepala, Senior Scientist, NARA; Janaka Mudalige, General Manager, Ceylon Fishery Harbours Corporation; and Maj. Gen. S. W. L. Daulagala, Chairman, Ceylon Fisheries Corporation. Sisira Hapuhantri and Upul Liyanage led the assessments of the western small pelagic and Hambantota spiny lobster stocks, respectively. From the World Bank, the team would like to thank Idah Z. Pswarayi-Riddihough and Faris Hadad-Zer- vos (respectively, the former and current Country Director), Karin Kemper (Global Director for Environ- ment, Natural Resources, and Blue Economy), Christophe Crepin, Chiyo Kanda, and Andrew Goodland and Stephen Danyo (respectively, the former and current Program Leader) for their encouragement and support. The team is also thankful to peer reviewers Sita Ramakrishna Addepalli (Senior Environmental Specialist), Andre Aquino (Senior Environmental Specialist), Robert Beyer (Senior Economist), Darshani De Silva (Se- nior Environmental Specialist), Gunilla Greig (Senior Fisheries Specialist), Harrison Charo Karisa (Fisheries Management Specialist), and Yeon Soo Kim (Senior Economist) for their helpful comments, and to Milen Dyoulgerov (Senior Environmental Specialist) and Adriana Jordanova Damianova (Consultant Operations Adviser) for their advice. We are also thankful to colleagues at development partner agencies and the organizations working with them for sharing information about their engagements and sector insights, specifically Catherine Lecouffe of the French Development Agency, Sanath Ranawana of the Asian Development Bank, and Gunnstein Bakke from the Norway–Sri Lanka bilateral project “Improved management of the marine resources in Sri Lanka Phase II.” Several of the studies carried out under this ASA were supported by the PROBLUE and PARCC multidonor trust funds, administered by the World Bank. The team is grateful for this support. Besides the financial support, the team wishes to express heartfelt gratitude to Miguel Angel Jorge and Gunilla Greig, former and current PROBLUE window managers, respectively, who provided enlightening technical guidance and advice on how to approach sustainable fisheries in an integrated manner. Finally, we would like to thank Jane Sunderland for editorial work and Spandan Design Communication for the design and layout work on this report. Acronyms and Abbreviations ASA advisory services and analytics Bank World Bank Bio-LEWIE bioeconomic modeling and local economy-wide impact evaluation BSC blue swimming crab CFHC Ceylon Fishery Harbours Corporation COVID-19 Coronavirus disease 2019 CPC IOTC Contracting Parties and Cooperating Non-contracting Parties CPF Country Partnership Framework CPUE catch per unit of effort DFAR Department of Fisheries and Aquatic Resources EAA ecosystem approach to aquaculture EEZ exclusive economic zone FEDECOOP Regional Federation of Cooperative Societies of Baja California FAO Food and Agriculture Organization (of the United Nations) FARA Fisheries and Aquatic Resources Act FIP fishery improvement project FMP fishery management plan GDP gross domestic product GIS geographic information systems GRID green, resilient, and inclusive development IOTC Indian Ocean Tuna Commission IUU illegal, unreported, and unregulated km kilometer LBSPR length-based approach to spawning potential ratio LEWIE local economy-wide impact evaluation LO local observer m meter MDF multiday fisheries MCS monitoring, control, and surveillance MOF Ministry of Fisheries (formerly Ministry of Fisheries and Aquatic Resources, MFAR) MSC Marine Stewardship Council MSY maximum sustainable yield MT metric ton MTMFS Medium-Term Macro-Fiscal Strategy NARA National Aquatic Resources, Research and Development Agency NAQDA National Aquaculture Development Authority NPD National Planning Department NTS nontarget species R&D research and development SAM special area management SDG Sustainable Development Goal SG scoring guidepost SMEs small and medium enterprises SPR spawning-stock-biomass-per-recruit ULT ultra-low temperature VMS vessel monitoring system YFT yellowfin tuna Executive Summary Context Fisheries contribute significantly to livelihoods and food security in Sri Lanka, but they were impacted negatively by the COVID-19 pandemic. Sri Lankans derive about 50 percent of their animal protein from fish, which is about three times the global average. Coastal and marine fisheries provide full- or part-time direct or indirect employment to some 0.9 million people and thus support the livelihoods of some 3.6 million Sri Lankans. At the same time, the sector’s contribution to gross domestic product (GDP) (direct, indirect, and induced) and export revenues is modest: in 2019, these were about 1.9 percent and 1.5 percent, respectively. The COVID-19 pandemic caused fish harvest and exports to decline as much as 20 percent and 26 percent, respectively, for marine capture fisheries in 2020, negatively impacting the livelihoods of already vulnerable coastal fishing communities, which have been experiencing decreasing catch per unit effort in recent decades and the impacts of extreme weather events. A green, resilient, and inclusive development (GRID) approach to recovery would enhance not only the sustainability of fisheries but also their contribution to GDP and exports. The World Bank’s GRID framework emphasizes that recovery investments and policies must diverge from a business-as-usual focus on singular challenges. GRID policies need to recognize the complex links between environmental, socioeconomic, and financial sustainability (green), risks and uncertainties related to climate change, recessions, financial shocks, natural hazards, among others (resilient), in- equality and exclusion (inclusive), and economic development and poverty reduction. A multifaced approach that focuses on increased international competitiveness, mobilizing private sector capital, in- novation, and entrepreneurship, together with enhanced governance and management of the under- lying resources while systematically taking care of the vulnerable in the process of shifting livelihoods and climate risks will be key to a sustainable recovery. In this way, the fisheries sector can contribute to enhancing Sri Lanka’s export revenues, employment, and food security in a sustainable manner, as envisaged in the National Policy Framework: Vistas of Prosperity and Splendor. This advisory services and analytics (ASA) work has focused on marine (coastal, offshore, and high seas) capture fisheries and coastal aquaculture and analyzed the challenges and opportunities that Sri Lanka faces in the pursuit of this objective. Based on that analysis, we offer a vision for the sector in 2032 and recommend a program of priority public investments, policy actions, and institutional development that would help Sri Lanka realize that vision. The recommended public investments are consistent with the Ministry of Finance’s Medium-Term Macro-Fiscal Strategy: they would (a) develop infrastructure and human capital (skills), enhancing the productivity of small and medium enterprises and mobilizing more private capital, while making the coastal communities X Executive Summary and their natural resources more resilient; and (b) strengthen the government’s policy, regulatory, and institutional frameworks to ensure environmental and social sustainability. Opportunities and Challenges by Subsector Coastal fisheries make up 57 percent of all marine capture landings and are critical to food security and meeting the high domestic demand for fish. In fact, national catches fall short of the domestic demand and must be complemented by imports. Importantly, most of these stocks are being harvested at or just above the maximum sustainable yield level, as indicated by decreasing catch per unit effort and associated earnings by fishers. The decline in the coastal fish stocks seen today is largely explained by several decades of increased harvests, a fishing effort that had seen a 411 percent sector expansion over the last 58 years. In addition, many coastal ecosystems show signs of stress and degradation from habitat destruction and pollution, which could be contributing to the decline of some stocks in some areas. The precarious state of the coastal fisheries precludes any harvest increase for import substitution in the short run. Exportable coastal species hold promise for higher export revenues and more secure jobs through access to higher-value market segments enabled by sustainable management and eco-labeling. This applies in particular to lobster, cuttlefish, wild-caught shrimp, mud crab, and sea cucumber. Lobster, crab, sea cucumber, and mollusks already made up about 19 percent of fishery sector export revenues in 2019. However, these stocks are likely degraded. For example, the lobster stock assessment for the Hambantota fishery indicates that it is significantly overfished and in need of rebuilding. Stock rebuilding could occur within just a few years with stronger enforcement of existing size limits complemented by additional measures such as closed seasons or zones. To ensure continued provision of these species and revenues to fishers, sustainable fishery management plans (FMPs)—and in several cases, stock rebuilding plans—must be developed and implemented in close cooperation with fishers and other stakeholders, such as women, who are often engaged in fish processing and decision-making. While the world-class Fisheries and Aquatic Resources Act supports such measures, the lack of scientific data on stock status and in- stitutional capacity limitations constrain the development and implementation of such plans. Efforts to build capacity for data collection and analysis and FMP implementation are under way under a bilat- eral cooperation project with Norway. This ASA and its follow-up activities are complementing these efforts by supporting the National Aquatic Resources, Research and Development Agency (NARA) in carrying out stock assessments and the Department of Fisheries and Aquatic Resources (DFAR) in developing FMPs with a strong stakeholder consultation component in two fisheries (lobster in Ham- bantota and small pelagics along the west coast). It will be important to mainstream this experience to all coastal species and strengthen implementation capacity. Sri Lanka’s recent experience with the blue swimming crab is a good example of how active community engagement in management planning and implementation can result in demon- strable improvements in fishing practices, stock status, and market recognition. This has en- abled Sri Lanka’s blue swimming crab fishery to access a high-value segment of the North American market during the early days of the COVID-19 pandemic despite the trade restrictions and reductions in Priorities for Sustainably Managing Sri Lanka’s Marine Fisheries, Coastal Aquaculture, and the Ecosystems That Support Them XI overall demand for seafood in North America. One lesson learned from this experience and the analysis of the lobster fishery is that the use of data-poor length-based stock assessment methods can provide a reliable science-based estimation of stock status swiftly and at relatively little cost, enabling govern- ment and fishers to modify management measures in a timely manner. Erosion of customary tenure rights to the beach and adjoining lands has emerged as a threat to small-scale fishers’ ability to access fishing grounds and thus secure their livelihoods. This trend has resulted from growing interest by tourism and industrial enterprises with higher political and economic power in investing on coastal lands. While the Coast Conservation Department, which has the mandate to manage the coastal zone, has been providing “beach access roads,” sometimes tour- ism-related construction and fencing by hoteliers bar entry to the beaches. Inability to access fishing grounds has put many a fisher’s livelihood at jeopardy, exacerbating the impact of reduced beach area available for craft anchorage due to beach erosion and climate change. Stakeholder platforms with- in the framework of integrated coastal zone management are crucial in facilitating integrated deci- sion-making where conflicts over fishers’ tenure rights can be negotiated and settled. Multiday fisheries (MDF) take place offshore in Sri Lanka’s exclusive economic zone and in the high seas, targeting tuna and billfish—and while only 16 percent of tuna landings meet export-quality standards, they contributed 45 percent of the fishery sector export revenue in 2019. The Sri Lankan MDF fleet is ill-equipped to prevent postharvest quality losses during what are now multiweek trips. While the unexportable fish is consumed domestically and provides livelihoods to mostly female fish dryers and other processers, who ensure that no part of it goes to waste, the lower market prices that these fish fetch represent a loss for the economy. A key constraint to increasing export revenues is the overfished status of the yellowfin tuna (YFT) stock in the Indian Ocean, which precludes an increase in the harvest by Sri Lanka or any other country. In fact, the Indian Ocean Tuna Commission (IOTC) has called for further reductions in allowable catch. This is an opportunity for Sri Lanka to rekindle its leadership role among the Indian Ocean G-16 countries and become more active in the design of IOTC resolutions on tuna governance. The multiday fleet also faces a growing market risk because Western retailers are shifting their preferences to tuna with better environmental, social, and quality attributes, resulting in actions such as cutting back purchases of YFT from the Indian Ocean. As such, the long-term financial and economic viability of the Sri Lankan MDF is directly linked to the success of the IOTC in adopting and the contracting parties in effectively implementing a regional ro- bust stock rebuilding plan. Sri Lanka can increase export revenues and jobs from the MDF while staying within IOTC boundaries by applying a combination of mutually reinforcing strategies. Sri Lanka has an opportunity to retain and increase its market share in lucrative Western markets by (a) building on its progress to date in complying with IOTC resolutions on YFT governance, including by better addressing illegal, unreported, and unregulated fishing; (b) modernizing and restructuring the MDF fleet; and (c) investing in the landing infrastructure. Together, these interventions offer a potential to reduce post- harvest loss and thus enhance export revenues and jobs without increasing catch or, potentially, while decreasing catch. One opportunity is to refit existing vessels with refrigeration capacity when it makes financial sense. Initial financial analyses, carried out under this ASA, based on a survey of 378 MDF ves- sels of all five size categories, indicate that investments in retrofitting onboard refrigeration systems combined with potential price markups from certified traceability and sustainability could be profitable XII Executive Summary for the largest (category 5) vessels.1 Measures that reduce trip duration, improving onboard handling practices by continuing training initiatives already initiated, and improving the quality of ice used on board would also greatly improve fish quality and price. Further analysis and piloting of technology and techniques is necessary to validate these initial findings. Another challenge that requires scientific study is fish loss experienced by long-liners because of predator fish. Nonetheless, high-end tuna markets increasingly require tuna frozen on vessels at ultra-low temperatures (ULT), a technology that would not be feasible for most, if any, of Sri Lanka’s current MDF fleet. In the long run, transitioning the fleet to larger vessels with ULT capacity would likely not create more fishing jobs because of their higher efficiency, but the construction, mainte- nance, and servicing of the vessels would likely lead to new and better jobs. Research and development (R&D) to support shifting fishing effort to healthy stocks, such as swordfish and skipjack, using sus- tainable methods, and introducing value-added products from lower-value tuna species also carry the potential for increased export revenues and processing jobs. Growing global and domestic demand for seafood offers an important opportunity for Sri Lanka to sustainably expand aquaculture production, employment, revenues for the private sector, and tax income for the state. To capture this potential, the government has elaborated an ambitious program to broaden coastal aquaculture into sea bass, seaweed, sea cucumber, mud crab, marine ornamental fish, and bait fish for the multiday fishery. Currently, the subsector mainly focuses on shrimp in the northwest, generating about 7 percent of fishery sector export earnings. It has seen a rebound since the early 2000s after a boom-and-bust cycle in the 1990s because of uncontrolled development that left behind degraded coastal ecosystems and abandoned shrimp farms. Modern technology and an “ecosystem approach to aquaculture” (EAA) can sustainably intensify aquaculture to increase output and revenues while reducing environmental impacts. Adoption of best aquaculture practices will reduce financial and environmental risks while increasing efficiency to improve total cash flow and product quality to access more lucrative markets. Sustainable and resilient growth of Sri Lanka’s aquaculture sector depends on smart zoning with clear and consistent regulatory parameters, new knowledge, and supports to de-risk private investment. Existing infrastructure, institutions, human capital, and available space and de- mand for economic opportunities in the Northern and Eastern Provinces provide a good basis for aqua- culture expansion in an environmentally and socially sustainable manner. Nevertheless, the identifica- tion and delineation of aquaculture zones will be necessary to minimize conflicts with other sectors, protect sensitive ecosystems taking into account existing environmental stresses, and incorporate local stakeholder preferences. Comprehensive spatial mapping will be imperative to understand on-the- ground realities, including environmental risks, proximity to input and output markets, availability or plans for the establishment of support services, and access to infrastructure. The sustainable produc- tion levels of target species in each aquaculture zone that could be supported by local ecosystems must be ascertained and understood by private investors. In addition, there is a need for market information to identify product type, form, and prices related to the high-value species that the National Aqua- culture Development Authority (NAQDA) intends to diversity into. Limited access to finance and ex- perience with EAA technologies constrain their adoption by Sri Lankan enterprises. Equally important constraints for global competitiveness include limited hatchery capacity for commercial seed supply of the proposed high-value species, limited R&D, and extension. 1 Investment decisions would need to rely on vessel-specific financial analyses of concrete refitting plans. Priorities for Sustainably Managing Sri Lanka’s Marine Fisheries, Coastal Aquaculture, and the Ecosystems That Support Them XIII Vision Recognizing that as an island nation Sri Lanka must continue to depend on a healthy and productive ocean for its long-term growth and prosperity, the following 10-year vision for 2032 is offered, drawing from the analyses conducted under this ASA and in response to the direction provided by the Sri Lankan government counterparts: • By 2032, Sri Lanka’s fisheries sector is made up of financially, environmentally, and so- cially sustainable small and medium enterprises (SMEs)2 that generate high-quality jobs and provide high-quality and healthy seafood to domestic and international mar- kets. Fishing SMEs avail themselves of efficient and climate-resilient infrastructure for harvest, landing, access, and value addition, and have access to inputs, services, and a labor force skilled in modern, sustainable technologies. The profitability and sustainability of their businesses allow them fair access to commercial finance. An internationally accepted set of biosafety, environmen- tal, and social standards are in place and enforced effectively and fairly by the state. They provide for a globally respected Sri Lanka brand, allowing access to premium markets. • Investments in basic infrastructure along with careful zoning have stimulated private investment in aquaculture, expanding this subsector significantly and sustainably, providing thousands of jobs and producing a diverse set of high-value products to meet growing global demand in both Western and Asian markets. • Financing and training programs for alternative livelihoods have helped former fishers and their family members develop means to work in aquaculture, coastal tourism, or along the value chain. More livelihood options and social protection/supports for women and fishing families have helped manage access and effort in coastal and multiday fisheries to rebuild stocks. • Key coastal ecosystems have been restored around the island, helping improve the pro- ductivity of both capture fisheries and aquaculture, and coastal fishing communities and fishing infrastructure are more resilient to extreme weather events and climate change. Program of Priority Investments, Policy Actions, and Institutional Capacity Development While the vision for 2032 is ambitious given macroeconomic and fiscal constraints in partic- ular, the resource management outcomes embedded in it are technically feasible and high- ly desirable from an environmental sustainability and climate change adaptation point of view. The vision can be achieved with a government program of strategic investments and policy and institutional capacity development actions, and the active engagement of fishers and the broader private sector. We present our recommendations sequenced into short-, medium-, and where appro- priate, long-term actions and investments, starting with those that are most urgent or highest priority. We begin with overarching recommendations for capture fisheries, followed by specific guidance for the coastal and MDF subsectors, coastal aquaculture, and finally livelihoods and resilience of coastal fishing communities. These recommendations are mainly for the government and designed to incen- 2 Here, the term SMEs is used to denote, in capture fisheries, fishers from traditional fishing communities who own one or more small-scale coastal vessels and have developed sufficient business skills and knowledge of fishery resource management to make decisions in their long-term financial interest, employ their neighbors, and potentially expand their role up the value chain. In aquaculture (which includes mariculture), farmers may include members of traditional fishing communities and other entre- preneurs. XIV Executive Summary tivize and enable fishers’ and private sector engagement, including investments, entrepreneurial cre- ativity, and compliance with the regulatory framework. These recommendations fully align with the GRID framework established by the World Bank to guide its support to client countries, to recover from the COVID-19 crisis. Notably, in terms of the green element, the emphasis on sustainable management of the fisheries and their related ecosystems recognizes the dependence of long-term economic returns on the health of these natural resources. There is also a strong emphasis on the financial and social sustainability to guide the use of the natural resources to generate economic growth. Regarding resilience, the ASA strongly emphasizes climate-resilient infrastructure for fisheries and communities alike, as well as livelihoods diversification to reduce dependence on fisheries, which are subject to shocks such as those induced by pollution, dis- eases, or demand fluctuations. The livelihoods diversification focus is also consistent with the inclusion element of the GRID framework, as it ensures that those who have to reduce their catch or leave the sector as part of the shift to sustainable practices find ways to adapt within the evolving labor markets, and it considers the differentiated roles that women and men play in the fisheries sector. (i) Capture Fisheries: Overarching Capture fisheries overall require careful but strong investments to ensure a wide set of public goods are present to enable sustainable growth in the sector. This includes both natural (plenty of fish in the water), human, and built capital. In the short term, the focus should be on building these key public goods, while in the medium term, the government could invest in more targeted support of sustainable enterprises. Recommendations specific to coastal fisheries and multiday fisheries are presented after these general recommendations that apply to both subsectors. Short Term (1–5 years) • Direct a significantly greater proportion of existing institutional capacity toward sup- porting the development and implementation of sustainable fishery management plans in accordance with the Fisheries and Aquaculture Resources Act (FARA) and MOF objec- tives presented in the National Fisheries and Aquaculture Policy it published in 2018. • Invest in boosting monitoring, control, and surveillance; strengthen judicial procedures against illegal fishing; and promote transparency. • Invest in state-of-the-art technology and human capacity to ensure timely and stream- lined collection and analysis of catch data along with timely reporting of stock status to enable the rapid adoption of previously agreed management measures. This can be done with innovative technologies that allow fishers to share data, improve safety at sea, access markets more directly, and deliver a better product. This would include expanding various types of vessel monitoring systems to vessels of most sizes, but it could also extend to electronic observer systems. • Invest in basic climate-resilient and green infrastructure and public services in and around key harbors used by the MDF fleet as well as landing sites for coastal fisheries to improve the quality and value of all landed seafood, and to meet domestic and inter- national food safety standards. Of paramount importance is the provision of clean water for washing and ice making; reliable electricity; boxes, pallets, and trollies for handling of fish; and improved rural roads by DFAR in coordination with other relevant government agencies and local Priorities for Sustainably Managing Sri Lanka’s Marine Fisheries, Coastal Aquaculture, and the Ecosystems That Support Them XV governments. This should be complemented with appropriate waste disposal and recycling in ports to minimize the pollution generated by fishing activities, and it should also include manual and mechanical fish unloading systems, sanitary facilities, as well as improved unloading and sorting areas (including cold storage facilities for temporary storage of fish and facilities for grad- ing fish using organoleptic and rapid tests), all of which in combination would greatly improve food safety, improve enhance value, and minimize product losses. • To address the socioeconomic impact of initiatives for sustainable fisheries manage- ment, support livelihood diversification for those who need to reduce effort or exit the sector. Various financial and social supports should be explored in addition to training programs to allow affected individuals and their family members to seek employment opportunities in other parts of the fishing sector or value chain as well as other “blue” sectors. Differential impact across gender should be taken into account to ensure the inclusion of women, who fill often important roles in household financial decisions, fish processing, and gleaning, as well as attend fisheries meetings while men are away. Medium Term (3–7 years) • Create a sustainable fisheries investment fund to complement the public infrastruc- ture with private investments in such things as ice-making, refrigeration, processing, and value addition. Various design and operational structures could be considered, but the fund would essentially be an additional mechanism to help increase the economic potential of the private sector while further incentivizing sustainable practices. It could offer loans or matching grants to SMEs and include a capacity-building component to build the business skills of fishers who wish to operate more like SMEs. To ensure these investments do not stimulate more fishing effort, they could be conditioned on a history of good reporting and compliance with manage- ment plans and focus on helping fishers add value to their catch rather than increase their catch. Where relevant, investments could also be made in businesses further up the value chain, but again be linked to active engagement in the management process, including data sharing. Coastal Capture Fisheries: Specific To ensure that coastal fisheries continue to contribute to Sri Lankans’ food security and ex- ports, their sustainable management must be treated as a priority. In the short term, institu- tionalization of science-based management with the active participation of stakeholders is required. In the medium term, attention should turn to restoring degraded essential fish habitats, building climate resilience while ensuring the gains made in stock rebuilding are secured through stronger oversight for compliance, and fine-tuning of management plans in light of changes in stock status. Short Term (1–5 years) • Invest in an accelerated program designed to conduct timely stock assessments and roll out multiple fishery management plans for key coastal species important for meet- ing the growing demand in both export and domestic market. Strengthen institutional capacity for stock assessments and implementing FMPs. This would include technical training and practical capacity building of government staff, fishers, and other actors, including women working in the sector, to engage in the development and implementation of management plans XVI Executive Summary (co-management). Management planning should be “bottom-up,” build on traditional methods used by communities to limit fishing effort, and take into account diverse intergroup dynamics and the presence of migratory fishers in the community. • Complete the process of remodeling the 2018 National Fisheries and Aquaculture Pol- icy, taking into account the 2019 Small-Scale Fisheries Policy and 2021 Inland Fisheries Policy, paving the way for adoption by Parliament and thus strengthening the policy framework for sustainable and inclusive fishery management. • Strengthen fisheries cooperative societies to provide better economic outcomes for their members (including helping some transition to other livelihoods as necessary) and secure their engagement in data gathering, management planning, implementa- tion, and compliance. • Safeguard the tenure rights of traditional coastal fishing communities to coastal lands, to enable their direct access to fishing grounds and to continue their livelihoods. This should be done within a strengthened framework of integrated coastal management. Medium Term (3–7 years) • Invest in the conservation and restoration of essential fish habitats to increase produc- tivity and build climate resilience in the fishing sector and coastal communities. NARA and DFAR should work with fishers to identify and demarcate coastal and marine ecosystems such as coral reefs, seagrass beds, and mangroves and integrate their protection into manage- ment plans. • Institutionalize the fishery management process with budgeting and staffing dedicat- ed to stock assessments, periodic updates of FMPs, and continuous monitoring, con- trol, and surveillance. To ensure sustainability, conduct a review of NARA’s and DFAR’s insti- tutional structures, budgets, and human resources and consider supporting a restructuring to ensure continuity. Multiday Capture Fisheries: Specific To ensure a bright future for Sri Lanka’s MDF, the priority should be to contribute effectively to the rebuilding of the YFT stock and to improve the value of the landed catch. This should be initiated in the short term with the activities and investments listed below, and they will need to continue over time. In the medium term, the focus should be on actions to ensure the MDF continue to supply high-value markets as their requirements continue to shift. Attention must also be paid to those impacted by possible downsizing and modernization of the subsector. In the long run, with a stable fleet and well-managed fishery, attention can turn to investments that will generate additional marginal gains through R&D for further product diversification and infrastructure enhancements. Short Term (1–5 years) • Design and implement a YFT catch reduction plan in line with the IOTC YFT rebuilding plan by (a) exercising more robust oversight of the MDF, including applying vessel monitoring systems and all the associated requirements to the entire MDF fleet; (b) improving catch data Priorities for Sustainably Managing Sri Lanka’s Marine Fisheries, Coastal Aquaculture, and the Ecosystems That Support Them XVII collection and reporting by vessels, including bycatch and secondary species such as sharks; (c) phasing out, or minimizing, the use of gillnets on vessels targeting high-value tuna (the use of gillnets may become a barrier to expanding access to Western markets), in parallel with activities to enhance livelihoods and resilience in coastal communities; and (d) ensuring that the ongoing fish forecasting service provided to vessels to enhance catch efficiency is in concert with the abovementioned management measures. • Strengthen government capacity to play a stronger role in the IOTC and as an influen- tial voice among coastal states. Additional analysis is needed to create an effective strategy for the country’s role in regional policies. DFAR and other relevant government agencies should therefore acquire the expertise not only to react effectively to what emerges in the IOTC meet- ings but to proactively lay out a regional strategy for an effective rebuilding plan that is in the national interest and the interest of a sustainable resource and fishery. • Conduct a detailed technical, financial, and social analysis of how different onboard re- frigeration technologies, combined with improved fishing and handling practices, and shorter fishing trips could impact the fish quality of the landed product, the profitabil- ity of different-sized vessels, and the incomes of crew members. A wide array of estab- lished and new technologies (for example, solar- and exhaust heat–driven refrigeration) should be carefully considered with regard to applicability and cost. The analysis should produce approx- imations of the best combination of trip length, handling techniques, and technology to maximize vessel profitability of different-sized vessels. • With support from IOTC scientists, and in close collaboration with vessel owners, carry out applied research to identify mitigation measures to reduce predation of hooked tuna by cetaceans. This could build on NARA’s ongoing project to test a variety of deterrents to minimize predation and include acoustic optical signals and longline setting practices, among others. • In partnership with the industry, pilot the most promising combination of modifica- tions for a representative set of vessels for each category and disseminate lessons to facilitate adoption. The government could invest in testing different combinations technologies and fishing practices in perhaps as many as 40 vessels representative of the wider fleet. Lessons gathered from this pilot would feed into the design of a successful fleet improvement program. • Roll out a fleet improvement program for existing vessels based on audits that deter- mine the suitability to adopt the piloted combination of effective measures. It may make sense to manage financial supports as part of a fisheries investment fund. Vessels of various sizes that meet certain financial and technical viability criteria would receive financing to invest in improved refrigeration and training on best practices in handling tuna to improve quality (see sustainable fisheries investment fund above). XVIII Executive Summary Medium Term (3–7 years) • Consider replacing the existing MDF fleet with a newly designed and built fleet of mod- ern “multiweek” long-liners equipped with ULT technology. For Sri Lanka to maintain a competitive domestic fleet, the government may wish to aid the private sector to invest in a gradual and organized transition over the next few years, shifting to a smaller number of larger vessels, owned and operated by Sri Lankans, based on a feasibility study. • Implement an R&D program to identify fishing gear and techniques that would enable vessels that exit the longline/yellowfin fishery to transition toward targeting healthy fish stocks such as swordfish, skipjack, or other pelagic species closer to shore. Once viable options are identified, the sustainable fisheries investment fund could provide financing to help owners adapt their vessel and gear and train their crew to target the new species. This would help reduce yellowfin catches and provide a viable economic alternative to certain vessels. • Explore the potential role for at-sea transshipment through the use of refrigerated car- rier vessels (mother ships) to help improve the quality of landed catch. This would require an analysis of the financial feasibility of various operating models and cost structures and include the costs of human observers to ensure data collection, legality, and traceability. • Establish a multipronged marketing initiative to access higher-value markets on the basis of increased quality and contribution to the YFT rebuilding plan by Sri Lanka’s MDF. This would include funding to promote (a) Sri Lankan tuna purchases in the Middle East and markets where ULT freezing requirements are not yet in place; (b) swordfish and other pe- lagic species in Europe and other high-value markets; and (c) the identification and access of MDF seafood to the domestic tourism sector and other high-value domestic markets. This effort would be greatly strengthened by the investments described above in traceability and improved governance. Long Term (5–10 years) • Once improvements in the quality of MDF landings are made and management over- sight of the fleet is strengthened, explore the potential for broadening revenues across the MDF value chain through more diverse and value-added product offerings. The gov- ernment could provide finance for technical assistance and pilot projects for the private sector to analyze and test the potential of product lines targeting both domestic and international markets. • To the extent this becomes necessary, expand a green ports initiative to include deep- ening key fishing harbors and enhancing the related services in them to accommodate larger vessels. Once identified, the ports best suited to accommodate longline vessels will need to be dredged and ancillary services expanded to provide fuel, provisions, repairs, and mainte- nance. (ii) Coastal Aquaculture To realize the promise of sustainable coastal aquaculture development, a number of inter- ventions are needed. While all of these recommended interventions are of more or less equal im- portance, some take longer to mature than others. Within the context of NAQDA’s 6-year plan, it is Priorities for Sustainably Managing Sri Lanka’s Marine Fisheries, Coastal Aquaculture, and the Ecosystems That Support Them XIX advisable to undertake spatial planning and capacity building immediately so these can be in place to support and guide the private sector as they build on a sound management framework, to ensure that the industry does not again surpass the environmental carrying capacity of the local ecosystems. Short Term (1–5 years) • Develop and maintain institutional capacity to adequately handle the environmental sus- tainability aspects of the coastal aquaculture development plan. Carry out strategic environ- mental assessments of aquaculture development in priority provinces. • Carry out zonal planning in priority coastal provinces. • Establish a sound regulatory framework, including comprehensive and binding user rights and policies that protect and enable small companies as well as clear rules and legal provi- sions that can assure investors of due process in the event of conflict. • Invest in basic infrastructure in the designated aquaculture zones, which may include power lines, pond water supply, access roads, and waste and wastewater management facilities. • Invest in capacity development for extension, R&D, and vocational training in efficient, climate-smart hatchery and production system technology for targeted food and/or ornamental finfish, shellfish, and seaweed, as these are a necessary condition for global competitiveness and dialogue. Medium Term (3–7 years) • Support SMEs to establish aquaculture farms and processing business using sustain- able technologies in the identified aquaculture zones: (a) Provide training and knowledge transfer to SMEs and current and potential aquaculture workers through a financially sustain- able coastal aquaculture development and demonstration center; (b) support SMEs in devel- oping business plans, considering site-specific conditions to determine product type and form, and involving profitability analysis of different product and technology options; and (c) facilitate access to finance through a matching grant/loan scheme, a credit line, fiscal incentives, innovative public-private partnerships, a payment for ecosystem services scheme, or risk reduction schemes such as insurance or loan guarantees. • Support the private sector to invest in hatcheries and feed production systems for high-value aquaculture products and the supporting services, notably transport and cold storage. Attract private sector investors with tax and other incentives and provide helpful technical advice for overcoming the inevitable problems confronting new operations, whether feed and seed, or other enterprises such as processing, production, and input supply. • Invest in restoration and management of ecosystems in catchment areas of aquacul- ture sites/zones and in coastal fishery habitats enhancement to maximize ecosystem services needed for both sustainable aquaculture intensification as well as inshore cap- ture fisheries, including water quality enhancement, waste assimilation, protection from climate impacts, nutrient recycling, and piloting stock enhancement of selected species. XX Executive Summary (iii) Livelihoods and Resilience in Coastal Communities Transitioning to sustainable fisheries management harbors opportunities for new and bet- ter jobs, especially in the medium to long term, but also the potential loss of livelihoods in the short term, which needs to be mitigated. The mitigation of such losses must be a short-term priority for social reasons and to reach short-term catch reductions needed for stock rebuilding (where applicable). Short Term (1–5 years) • Design a set of supports for coastal fishing communities to reduce dependence on fish- eries and address the potential negative livelihood impacts of the transition to sustain- able fisheries management. Ensure that the set of supports is holistic and flexible to meet the diverse socioeconomic and cultural circumstances of fishing communities. The supports may include job matching, training or retraining of fishers and their offspring, grant or loan cofinanc- ing for micro and small businesses, financing of climate-resilient local infrastructure and service enhancements prioritized by the community, and cash transfers. • Design and launch a revised and financially self-sufficient fisheries pension scheme. Medium Term (3–7 years) • Continue implementing the set of supports to coastal fishing communities. Priorities for Sustainably Managing Sri Lanka’s Marine Fisheries, Coastal Aquaculture, and the Ecosystems That Support Them 1 Chapter 1 Introduction The World Bank has engaged with the government of Sri Lanka in an advisory services and analytics (ASA) work entitled Priorities for Sustainably Managing Sri Lanka’s Marine Fisheries,1 Coastal Aquaculture and the Ecosystems That Support Them. The development objective of this ASA is to support the government in prioritizing investment and policy actions to enhance the welfare and resilience of coastal fishing communities and fisheries’ contribution to the national economy, includ- ing in light of the COVID-19 pandemic and climate risks. As such, the ASA is consistent with and aims to support the government’s National Policy Framework: Vistas of Prosperity and Splendor (GoSL 2019). This ASA forms part of the Bank’s support to the government in its effort to respond to, re- cover from, and build back better after the COVID-19 pandemic, given the important role that the fisheries sector plays in the livelihoods of the coastal communities and food security of the nation as a whole. The government took swift measures to provide immediate relief and restore domestic fisheries production and the associated value chain in the first phase of the pandemic. For the recovery and build-back-better phases, the government is prioritizing sustainability and resilience, as well as infrastructure enhancement, adoption of innovative technology, institutional strengthening, and skill development to enhance productivity and global competitiveness as a means to generate employment and local value added and contribute to the balance of payments. The ASA will inform the Bank’s Sri Lanka Systematic Country Diagnostic (SCD) update and the Country Partnership Framework (CPF) for 2022–2025. The World Bank is in the process of updating Sri Lanka: Ending Poverty and Promoting Shared Prosperity. A Systematic Country Diagnostic (World Bank 2015) to reflect recent developments, including notably the COVID-19 pandemic and its impact on the Sri Lankan society and economy. The findings of this ASA will be incorporated into the update, along with other ongoing analytical work in other sectors. A joint product of the government of Sri Lanka and the World Bank Group to be completed by March 2022, the CPF will lay out the areas of cooperation between Sri Lanka and the World Bank Group during the period 2022–2025. The CPF will focus on building back better and more resilient and be consistent with “From COVID-19 Crisis Response to Resilient Recovery: Saving Lives and Livelihoods while Supporting Green, Resilient, and Inclusive Development” (World Bank 2021b). 1 Marine fisheries comprise coastal (capture) fisheries and multiday (capture) fisheries. Coastal fisheries take place within the contiguous zone in the exclusive economic zone (EEZ). Multiday fisheries take place offshore (that is, beyond the contiguous zone in the EEZ) and in the high seas (outside the EEZ) (for more details, see Appendix A). 2 Introduction The ASA’s comprehensive approach is consistent with the green, resilient, and inclusive development (GRID) approach to recovery from the COVID-19 crisis. The World Bank’s GRID framework emphasizes that recovery investments and policies must diverge from a business-as-usual focus on singular challenges. GRID policies need to recognize the complex links between environ- mental, socioeconomic, and financial sustainability (green), risks and uncertainties related to climate change, recessions, financial shocks, natural hazards, among others (resilient), inequality and exclusion (inclusive), and economic development and poverty reduction. The scoping and implementation of this ASA has been a collaborative effort with the Min- istry of Fisheries (MOF) and its subsidiary organizations, informed through consultations with the National Planning Department (NPD). Formal discussions with the NPD and MOF on the ASA’s scope and focus began in May 2020; they were followed by a series of technical consultations from July to October 2020 with members of the government-appointed Technical Working Group (TWG). The group comprised senior representatives of the NPD, MOF, and the organizations that fall under the ministry’s purview, notably the National Aquatic Resources, Research and Development Agency (NARA), the Department of Fisheries and Aquatic Resources (DFAR), the National Aquaculture Development Authority (NAQDA), the Ceylon Fishery Harbours Corporation (CFHC), as well as the Coast Conservation Department (CCD). The NPD no-objection for the ASA was issued on December 13, 2020. A high-level consultation meeting with the NPD was held on March 4, 2021, to share the interim findings, emerging recommendations, and planned outputs of the ASA. The NPD considered that the findings and recommendations of the ASA would inform the annual national budget planning process. The ASA comprises four pillars: coastal fisheries, multiday fisheries (MDF), coastal aquacul- ture, and a cross-cutting bioeconomic modeling and local economy-wide impact evalua- tion (Bio-LEWIE) (Table 1.1). The coastal fisheries pillar is piloting data-based and participatory fishery management plan (FMP) development for lobster in the Hambantota District2 and small pelagics in the Western Province. This hands-on process will provide insights into the regulatory, institutional, and infrastructure gaps that affect those fisheries, leading to recommendations for improvements. Where possible, these insights will also be generalized to subsector-wide recommendations. This pillar also en- visages piloting a habitat assessment, exploring the need and feasibility of habitat restoration, and mak- ing recommendations on integrating habitat management into an FMP. The pillar on MDF focuses on key issues that impact their sustainability, financial viability, and economic contribution, with a particular focus on the yellowfin tuna stock. While each subsector has its own distinct issues, which we address in depth, there are links, dependencies, and similarities between them, which we also duly highlight. The coastal aquaculture pillar examines the environmental and social sustainability and commercial viability of coastal aquaculture species that the government intends to develop in the Northern Province, in light of existing ecosystem sensitivities and stresses, stakeholder preferences, carrying capacity, and market demand. This pillar also reviews institutional and infrastructural gaps that need to be closed to support a coastal aquaculture subsector that meets these conditions. The Bio-LEWIE pillar will enable an examination of the impact on local economies of continued stock degradation and alternative measures to arrest it. Local economy models will be construct- ed for the Hambantota District, the Western Province, and the entire coastal belt. These models will be combined with bioeconomic models of the key fishery stocks, including those for which alternative man- agement/rebuilding measures are considered for inclusion in FMPs. Since fishers in coastal communities 2 Hambantota is the name of the administrative district, while the name of the fisheries district is Tangalle. Priorities for Sustainably Managing Sri Lanka’s Marine Fisheries, Coastal Aquaculture, and the Ecosystems That Support Them 3 are involved in both coastal capture fisheries and MDF, both types of stocks will be modeled and included in the evaluation. Model simulations will provide quantitative estimates of monetary impacts on fishers as well as on those who participate in the value chain (indirect impact) and on the rest of the community (induced impact), as well as the poor and nonpoor. By extension, the models will also estimate the neces- sary compensation for fishers who would have to exit the sector if restrictive FMP measures are applied. As such, these estimates can play an important role in helping stakeholders assess the benefits and costs of alternative measures (see Appendix G). The findings and recommendations of this ASA will be delivered in two phases; this report con- stitutes the first-phase delivery. Table 1.1 lists the studies that form the basis of this report as well as those for the second phase of deliveries, which will consist of several technical reports that will complement this report by adding granularity to the analysis and recommendations, including notably through economic and financial analyses. As much as possible, the costs of refined investment recommendations will also be estimated. Some of the second-phase studies have already commenced, such as the survey work for the Bio-LEWIE models, and where applicable, preliminary findings of those studies are incorporated in this re- port. Delivery of the second-phase technical reports is expected to be completed by June 30, 2022. Table 1.1: ASA Studies and Their Status as of June 2021 Pillar Study Delivery June 2021 By June 2022 a) Stock assessments of the western small pelagics fishery and the Hambantota lobster fishery (carried out by NARA with  technical support from the Bank team) Coastal b) Participatory development fishery management plans (by fisheries DFAR with technical assistance from the Bank team) and  institutional and infrastructure gap analyses for the same fisheries as in (a) c) Habitat assessment  Financial and biological analysis of MDF, including an infrastructural analysis of the fleet and support facilities, Multiday social considerations, status of the MDF resources, marketing  fisheries assessment, governance, stock status and catch scenarios for yellowfin tuna, financial analysis of the MDF fleet a) Desk review of technical and institutional aspects of Sri Lanka’s coastal aquaculture and the government’s sector  development plan 2020–2025 (NAQDA 2021) b) Initial environmental and social review, including stakeholder Coastal consultations, carrying capacity assessment, and financial aquaculture analyses of potential areas and target species in the Northern  Province identified in the government’s aquaculture sector development plan (NAQDA 2021) c) Strategic environmental assessment of aquaculture  development in the Northern Province Modeling of the impact on the local economy, livelihoods, and poverty of stock degradation and management options for the Bio-LEWIE  western small pelagics fishery, the Hambantota lobster fishery, and the coastal and multiday fisheries in general Note: Bio-LEWIE = bioeconomic modeling and local economy-wide impact evaluation, DFAR = Department of Fisheries and Aquatic Resources, MDF = multiday fisheries, NARA = National Aquatic Resources, Research and Development Agency. 4 Introduction This report is organized in four chapters, including this introductory chapter. Chapter 2 focuses on the government’s key national objectives and the opportunities and challenges for the coastal and marine fisheries subsectors to contribute to them. It reviews the sector’s present contributions to the economy, just before the onset of the COVID-19 pandemic and during the pandemic. A presentation of the key characteristics of coastal capture fisheries, multiday (capture) fisheries, and coastal aquaculture forms a background for the subsequent discussion, which is an analysis of the opportunities and chal- lenges for each of these subsectors to contribute to the achievement of the national objectives. Chapter 3 presents a vision and a program of priority investments and institutional capacity development and policy actions to realize the opportunities and address the challenges identified earlier. In addition to the three subsectors, a separate section discusses recommendations regarding the cross-cutting issues of diversifying livelihoods and enhancing resilience in coastal fishing communities. Chapter 4 concludes by presenting the recommended actions in the form of a theory of change by subsector. One of the study areas under the ASA is within the identified impact area of the maritime di- saster that took place in the Sri Lankan coastal waters in May 2021, and the ASA will address this impact in complementarity with the government’s ongoing and planned efforts. On May 20, 2021, about 9.5 nautical miles from Colombo Harbour, the Singapore-based cargo ship MV X-Press Pearl, carrying hazardous chemicals, caught fire, leaving in its wake one of the worst marine environ- mental disasters Sri Lanka has experienced. Large quantities of plastic nurdles (a raw material used in the plastics manufacture industry), part of the ship’s cargo, along with the carcasses of dead fish, turtles, and marine mammals washed up on local beaches in the aftermath of the accident. In mid-August 2021, the vessel was lying half submerged off the western coast, and the presence of hazardous chemicals in its cargo containers and tons of engine oil in the hull continued to present a risk of spillage. A fishing ban was imposed and continues to be in effect in the Negombo and Colombo fisheries districts and two fisheries inspector divisions of the Kaluthara fisheries district, affecting an estimated 16,000 direct and connected livelihoods in the fisheries sector. The government has been implementing a program of compensation payments to the affected fisher families using the initial proceeds from its insurance claim related to the vessel disaster. This area is part of the focus of the small pelagics stock assessment and FMP development and the Bio-LEWIE modeling exercises supported by the ASA and follow-up work. Follow-up Bio-LEWIE work will evaluate losses to the entire local economy, and the FMP development work will aim to incorporate impact on fisheries pending a scientific damage assessment on the fish stocks and associated marine ecosystems. The stock assessment was carried out using historical data, and as such it presents a baseline of stock condition before it was impacted by the accident. As of mid-August 2021, a scientific committee led by a cohort of relevant government agencies was engaged in an assessment of the damage on the stock and the ecosystems that support them. This task is made challenging by, among others, the lack of a baseline on the eco- systems. The findings of this damage assessment will be incorporated in the FMP of small pelagics. Im- portantly, this assessment would also inform future habitat restoration initiatives that the government may support. Similarly, the household and business surveys for the Bio-LEWIE model of the Western Region were completed just before the accident, thus allowing an estimation of the economic costs of the accident not only to the fishers and the associated value chain but to the entire economy, as the model accounts for indirect and induced economic impacts of shocks. To be presented in a separate technical paper, these results would inform the FMP process by evaluating the economic impact of the proposed stock management measures on different parts of the fishing community.3 3 This activity is in line with the originally envisaged function of the Bio-LEWIE studies in complementing the FMP development. Chapter 2 Role of Fisheries in Achieving National Objectives, Opportunities, and Challenges This chapter examines the present and potential role fisheries play in helping Sri Lanka achieve its national objectives. To this end, the first section reviews the government’s macroeco- nomic and fisheries sector objectives as presented in key policy documents. The subsequent two sec- tions discuss the sector’s current contributions and the key characteristics of each subsector, namely coastal fisheries, multiday fisheries, and coastal aquaculture. Then, study findings on the impact of the COVID-19 pandemic on the sector through June 2021 is presented. Against this background, the final section provides a comprehensive evaluation of the opportunities and challenges that the sector over- all and each subsector face in achieving the objectives presented in the first section. 2.1 Government’s Macroeconomic and Fisheries Sector Objectives After a period of high growth in the early 2010s, Sri Lanka in recent years has faced several macroeconomic challenges, including declining gross domestic product (GDP) growth, limit- ed export income, a large fiscal deficit, and high public debt, which all were exacerbated by the COVID-19 pandemic. The economy grew at an average of 6.8 percent between 2010 and 2014, partly because of a peace dividend and a determined policy thrust toward reconstruction, but it aver- aged only 3.7 percent between 2015 and 2019. During the latter period, structural reforms to shift the growth model toward wider private sector participation, export orientation, and integration into global value chains progressed slowly, and frequent macroeconomic shocks also disrupted economic activity. The COVID-19-induced crisis led the economy to contract by 3.6 percent in 2020, notably through the impacts of the containment measures on tourism, construction, and transport, and the collapsing global demand for textiles, one of Sri Lanka’s key export items. The shrinking of the economy further reduced an already low tax collection performance, while expenditures rose because of increases in public health costs and cash transfers as well as interest payments on public debt, widening the fiscal deficit to 14.0 percent of GDP in 2020 (from 6.8 percent of GDP in 2019). This significantly limits the government’s ability to engage in discretionary spending on health, education, and social protection. Finally, the high primary deficit and the slow growth drove the public and publicly guaranteed debt- to-GDP ratio 15 percentage points higher in 2020, to 109.7 percent (up from 94.3 percent in 2019), constraining the government’s ability to borrow for development projects (World Bank 2021a; World Bank 2021c). Role of Fisheries in Achieving National Objectives, 6 Opportunities, and Challenges The COVID-19-induced economic contraction undid some of the past gains in poverty reduc- tion. During the previous decade, economic growth was inclusive and poverty reduction strong, with the poverty rate1 declining from 16.2 percent in 2012/13 to 9.2 percent in 2019. Extreme poverty was rare and concentrated in some geographical pockets, although a relatively large share of the population subsisted on slightly more than the poverty line. Poverty is expected to have risen to 11.7 percent since the onset of the pandemic, mostly due to widespread job and earning losses. The poorest experienced the largest proportionate earnings shock, while the richest suffered the smallest proportionate income losses. The latter tend to have formal, secure jobs and better access to digital technology that allows them to conduct wage work or business operations remotely. To mitigate the impact of the economic hardship on the poor and vulnerable, the government implemented several livelihood support pro- grams, which helped soften the labor market shock and the impact on poverty (World Bank 2021a). Increased international competitiveness and mobilizing private sector capital, innovation, and entrepreneurship will be key to economic recovery. Growth is expected to recover to 3.3 percent in 2021 with gradually normalizing economic activities, and already-signed investments will support growth. However, continued macroeconomic challenges, particularly the high debt burden, large gross financing needs and weak external buffers, will adversely affect growth and poverty reduc- tion over the medium-term. Through an enhanced focus on an export-oriented growth model that taps the full potential of private investment, the country could realize its ambitions to increase its com- petitiveness and raise growth in a sustainable manner. Further progress in restoring livelihoods and making them more resilient could help Sri Lanka continue on its path of poverty reduction and shared prosperity. The current social protection system could support the reintegration of those who lost their jobs. In the medium term, social safety nets could be better targeted toward the poor and vulnerable, and adjusted to allow for support to be scaled up quickly and effectively in times of crises (World Bank 2021a; World Bank 2021c). The government’s priority objectives for the economy are increasing export revenues, em- ployment, and food security, to be sustained by increased productivity and value addition by local enterprises and a skilled labor force. These priorities were articulated in the National Policy Framework: Vistas of Prosperity and Splendor (henceforth “National Policy Framework”) (GoSL 2019). The government’s Medium-Term Macro-Fiscal Strategy (MTMFS) (Ministry of Finance 2020), which aims to achieve economic revival and inclusive economic growth, builds on these priorities. Specifically, for the 2021–2025 period, the government targets a GDP growth of 6 percent or higher and maintain- ing unemployment at less than 4 percent. Economic growth will be catalyzed by public investments in infrastructure to complement private sector investments, in particular transportation and piped water supply to agriculture and industries to help increase their productivity. The productivity of state-owned enterprises will also be enhanced to facilitate better value addition and local enterprises are to be strengthened. In line with the National Policy Framework aspiration “towards a knowledge-based economy through human resource development,” the government declared 2021–2030 as the “De- cade of Skill Development” and the MTMFS aims to transform education for better employment and increase employment for females and the youth (Ministry of Finance 2020). The government considers the fisheries sector a significant potential contributor to the achievement of the National Policy Framework objectives of increasing exports, jobs, and food security, and emphasizes sustainability. Specifically, the National Policy Framework’s objec- At $3.20 per day in 2011 purchasing power parity. 1 Priorities for Sustainably Managing Sri Lanka’s Marine Fisheries, Coastal Aquaculture, and the Ecosystems That Support Them 7 tive for fisheries is to “achieve self-sufficiency in fishery products to ensure food security while contrib- uting to the national economy.” The sector is to provide nutrition to people, increase foreign exchange earnings, and provide employment and livelihood opportunities (for more details, see Appendix B). In addition, the framework specifies “Ensure the Sustainable Development Goals (SDGs) are met by 2030” as one of the strategies to achieve an efficient government mechanism (GoSL 2019, ch. 2). Among the goals, SDG 14—Conserve and sustainably use the oceans, seas, and marine resources for sustain- able development2 —is directly applicable to Sri Lanka’s fisheries sector development, including notably target 14.2, protect and restore ecosystems; target 14.4, sustainable fishing; and target 14.b, support small-scale fishers. However, Sri Lanka has yet to set country-specific target values for these and other SDGs. Furthermore, the 2018 National Fisheries and Aquaculture Policy (MOF 2018b) lists nine objectives for the sector: (1) sustainable management of resources using science-based information; (2) compliance with regional and international obligations; (3) increased marine fisheries production; (4) increased aquaculture and inland fisheries production; (5) minimized postharvest losses and increased value addition; (6) increased per capita consumption of fish; (7) increased export earnings; (8) improved opportunities for leisure, employment, and enterprises development; and (9) improved socioeconomic conditions of the fisher community.3 The sections below review the opportunities and challenges re- lated to the achievement of these objectives. 2.2 Present Contribution of Fisheries to National Objectives In this section, we review the pre-COVID-19 contribution of the fisheries sector in general, and of the coastal and marine fisheries and coastal aquaculture subsectors. We focus on jobs and livelihoods, food security, and exports. Section 2.4 reviews the impact of the COVID-19 pandemic on the marine fisheries sector. Fishermen in Mirissa. Photo © Anton Gvozdikov/Shutterstock.com 2 “Sustainable Development: The 17 Goals,” United Nations Department of Economic and Social Affairs, https://sustainabledevelop- ment.un.org. 3 This policy has been pending adoption by Parliament since its publication in 2018. Role of Fisheries in Achieving National Objectives, 8 Opportunities, and Challenges Sri Lanka’s varied fisheries, which consist of marine and inland fisheries and aquaculture,4 contribute significantly to food security and livelihoods, but modestly to GDP. Fish account for around 50 percent of animal protein5 and 11 percent of all protein consumption in Sri Lanka, which is significantly higher than the global averages of 17 percent and 7 percent, respectively (FAO 2020).6 In 2019, the fisheries sector employed nearly 300,000 fishers on a part- or full-time basis, of whom 9.4 percent were women.7 While these figures reflect formal employment rates, it is important to con- sider the way gender dynamics in Sri Lanka tend to direct women to informal roles that are not easily captured by the official data. Women therefore contribute to fisheries livelihoods through a variety of tasks that directly and indirectly sustain fisher households. Assuming a 1:3 ratio for employment in upstream and downstream activities—including ancillary services to the fisheries industry (such as gear and equipment sales, boat, engine and net repair, ice) and trade, transport, and processing of fish (FAO 2005; Teh and Sumaila 2013)—the total direct and indirect part- or full-time jobs in the sector may be about 0.9 million. Given the average household size of four in Sri Lanka, the sector thus supported the livelihoods of about 3.6 million people, or about 17 percent of the population. Marine fisheries ac- counted for 75–80 percent of these (Table 2.1). The sector’s GDP contribution was 1.3 percent (MOF 2020), with indirect and induced impacts possibly representing another 0.6 percent.8 As discussed in later sections of this report, postharvest value loss in the multiday fisheries subsector causes forgone rent and export revenues, the avoidance of which would increase the sector’s contribution to the GDP. Table 2.1: Employment and Livelihoods, Production in Sri Lanka’s Fisheries Household Fishers Production (MT) members 2018 2019 2018 2019 2018 2019 2020 Fisheries sector total 279,720 295,325 1,017,460 1,052,330 527,060 505,830 428,740 Marine capture fisheries 218,130 224,610 795,190 804,760 439,370 415,490 326,930 Coastal 249,020 242,580 182,560 Multiday 190,350 172,910 144,370 Inland fisheries and aquaculture 61,590 70,715 222,270 247,570 87,690 90,340 101,810 Inland/freshwater fisheries 71,020 73,230 84,310 Aquaculture 16,670 17,110 17,500 Source: Monthly fish production data, Statistics, Ministry of Fisheries, https://www.fisheries.gov.lk; MOF 2019 (Tables 1.8 and 4.1). In 2019, Sri Lanka’s total catch in coastal and multiday fisheries was 415,490 metric tons (MT). Table 2.2 presents the harvests of the main commercial groups. 4 Marine fisheries, which dominate the sector (Table 2.1), comprise coastal and multiday fisheries. Coastal fisheries take place within the contiguous zone within the exclusive economic zone (EEZ) (see Appendix A). They include brackish water capture fisheries in estuaries and lagoons. Multiday fisheries take place offshore within the EEZ and in the high seas, that is, beyond the EEZ. Aquaculture is practiced in both coastal and inland areas. 5 53 percent (2014–2015), 50 percent (2016), 45 percent (2017), 44 percent (2018) (MOF 2019). 6 Sri Lanka’s animal protein ratio is equaled or exceeded only by that in Bangladesh, Cambodia, The Gambia, Ghana, Indonesia, Sierra Leone, and several small island developing states (FAO 2020, 5). 7 21.7 percent (2019) freshwater and aquaculture, 6.2 percent (2019) marine, 9.4 percent (2019) combined (MOF 2019). 8 Assuming an income multiplier of 1.5, which is about midpoint of the range estimated by Jacobsen, Lester, and Halpern (2014). Priorities for Sustainably Managing Sri Lanka’s Marine Fisheries, Coastal Aquaculture, and the Ecosystems That Support Them 9 Table 2.2: Coastal and Multiday Fish Catch by Major Commercial Group, 2019 Commercial group Catch (MT) Share in total catch Lobsters 470 0.1% Crabs 13,600 3.3% Seer fish 7,740 1.9% Trevallies 21,070 5.1% Skipjack tuna 47,230 11.4% Yellowfin tuna 44,760 10.8% Tuna-like fishes 44,710 10.8% All billfishes 32,200 7.7% Sharks/skates 14,240 3.4% Rock fish 27,950 6.7% Small fishes 119,500 28.8% Shrimp 16,930 4.1% Other marine 25,090 6.0% TOTAL 415,490 100% Source: MOF 2020. In 2019, only about 29,000 MT, or 5.5 percent, of the national fish production was exported at differing levels of value added, generating $299 million, or 1.5 percent, of Sri Lanka’s total export revenues (Table 2.3). Multiday fisheries, mainly yellowfin tuna, sailfish, bigeye tuna, swordfish, and marlin, constituted 70 percent of export earnings, while high-value coastal species fisheries, in- cluding mollusks (squid and cuttlefish), crab, sea cucumber, chank and shells, lobster, and fish maws, contributed about 15 percent. There is a significant level of processing (loining and filleting) from the Table 2.3: Export Quantities and Value of Fish and Fish Products, 2019–2020 Export quantity Export value Unit price (MT) (US$, millions) (US$/kg) Item Fishery 2019 2020 2019 2020 2020 Lobsters Coastal 229 1% 99 0% 6 2% 2 1% 20.2 Crabs Coastal 1,818 6% 1,361 6% 28 9% 17 8% 12.5 Sea cucumbers Coastal 503 2% 326 2% 13 4% 9 4% 27.6 Mollusks Coastal 2,590 9% 1,477 7% 13 4% 8 4% 5.4 Fish maws Coastal 4 0% 2 0% 0 0% 0 0% n.a. Chank and shells Coastal 275 1% 221 1% 1 0% 1 0% 4.5 Live fish Coastal — — — — 16 5% 13 6% n.a. Shark fins Coastal and multiday 91 0% 55 0% 3 1% 2 1% 36.4 Food fish* Coastal and multiday 19,885 69% 13,858 65% 192 64% 137 64% 9.9 Prawns Aquaculture 2,115 7% 1,781 8% 20 7% 17 8% 9.5 Other 1,261 4% 2,119 10% 8 3% 10 5% 4.7 Total 28,771 100% 21,298 100% 299 100% 215 100% - Source: Monthly fish production reports and monthly export and import reports, Statistics Unit, Ministry of Fisheries, https://www.fisheries.gov.lk; MOF 2020. * Food fish include tuna, shark, billfish, and seer. Note: — = not available; n.a. = not applicable. Live fish is exported in water containers. Hence their quantity not estimated. Role of Fisheries in Achieving National Objectives, 10 Opportunities, and Challenges longline yellowfin fishery for export; some limited processing from the tuna gillnet fishery into cans oc- curs as well. Some 28 seafood processors add value to mollusks by cleaning and cutting.9 Value is added to blue swimming crab products by cleaning and cutting (frozen cut crab) and by boiling, meat picking, and pasteurization (pasteurized crab products). On the other hand, value addition for chank (jewelry making), sea cucumber (secondary processing), and fish maws (medical applications) takes place in importing countries. Mud crabs and lobsters that are exported are sold alive, in line with destination market consumer preferences (Creech 2020). In 2019, some 96,000 MT of fish were imported at $218 million to meet domestic demand (Table 2.4). Most imported fish and fish products were sourced from coastal fish species (dried sprats of sardines, sardinellas, canned fish of mackerels). Most were dried or canned; frozen (“fresh”) fish made up only about a fifth of the imports in quantity and value. Imported mackerels are canned in Sri Lanka. There is no secondary processing of dried fish (usually sailfish or seer fish), dried sprats, or Maldive fish (usually dried chunks of skipjack tuna) (Creech 2020). Upper-income urban consumers are likeliest the main consumers for frozen food fish and canned tuna products. Middle- and lower-income urban and rural consumers are likely to be the main consumers for canned mackerel products (Creech 2020). While members of all income groups consume dried fish, lower-income urban and rural consumers are most likely the main consumers of smaller and lower-value dried fish and dried sprats. All income levels in urban and rural areas consume Maldive fish. Notwithstanding, MOF government officials have ex- pressed significant concern regarding the sanitary and hygienic conditions prevailing in the value chains involving salted, dried, and Maldive fish. This has significant implications for public health. Table 2.4: Import Quantities of Fish and Fish Products, 2019–2020 Quantity (MT) Value (US$, millions) Item Species 2019 2020 2019 2020 Dried fish Shark 10,119 11% 11,643 14% 29 13% 34 18% Dried sprats Sardine, sardinella 24,850 26% 31,102 36% 54 25% 59 31% Maldive fish Skipjack tuna 2,523 3% 2,545 3% 9 4% 10 5% Canned fish Tuna, mackerel 36,806 38% 26,044 30% 76 35% 58 30% Food fish Yellowfin tuna, billfish 18,536 19% 12,801 15% 41 19% 25 13% Live fish 186 0% 99 0% 2 1% 1 1% Other 2,617 3% 1,575 2% 6 3% 4 2% Total 95,637 100% 85,809 100% 218 100% 191 100% Source: Export and import of fish and fishery products, Statistics Unit, Ministry of Fisheries, https://www.fisheries.gov.lk; MOF 2019. Note: Authors converted Sri Lanka rupee values to U.S. dollars using annual average exchanged rates. Sri Lankan fisherfolk, who are often of low socioeconomic status, are experiencing shrinking incomes, high vulnerability to external shocks, and limited alternative livelihood options. Remote fishing communities face greater challenges regarding logistics and access to services, includ- ing the internet. This results in lower rates of education and higher rates of poverty. Fisherfolk are one of coastal Sri Lanka’s most vulnerable groups. Fishing communities rely mainly on increasingly meager incomes from coastal capture fisheries, as declining catch per unit of effort leads to declining incomes. 9 The Department of Fisheries and Aquatic Resources (DFAR) currently lists 81 seafood manufacturing companies engaged in processing seafood products for export (www.fisheriesdept.gov.lk). Around half of these companies list seafood products sourced from coastal fisheries in their inventories of products that they manufacture and export. Thirty-five factories are ap- proved for process fish for export, but only 28 are operational; 24 of them are approved to export to the European Union, while the other four do not yet have European Union approval. Priorities for Sustainably Managing Sri Lanka’s Marine Fisheries, Coastal Aquaculture, and the Ecosystems That Support Them 11 They also encounter external shocks and stressors, including extreme or unpredictable weather, catch variability due to the unpredictable nature of fish behavior, sudden loss or damage to craft and gear, health hazards, fluctuations of input and output prices, and policy changes with little buffer. To ame- liorate the inherent risks in fishing, fisherfolk often engage in supplemental activities, including rope making, mat weaving, net mending (as hired labor) for the multiday fishing industry, working in orna- mental fisheries, gleaning and fish drying (by women), working as crew members in multiday crafts, agriculture, animal husbandry, and running boutiques. Coastal tourism has also provided new income opportunities, with fisherfolk (especially younger fisherfolk) leading boat trips among mangroves, fish- ing trips, coral-watching expeditions, and snorkeling, as well as offering homestays. Still, for a variety of social development issues, youth in fishing communities often drop out of school without reaching the basic educational levels required to take up state or private sector employment, and thus become fishers (Amarasinghe et al. 2015; Amarasinghe 2020a). Women and men play differentiated roles in the fishing sector, although geographical and ethnic variations exist. Fish harvesting is predominantly the responsibility of men, while women will engage in gleaning fish, prawns, crabs, clams, and mussels. On the other hand, postharvest activities, notably drying, are performed mainly by women (Weeratunge et al. 2021). While Sri Lanka–specific in- formation is not available, globally, on average 19 percent of aquaculture farmers are women compared with 58 percent of processors (FAO 2020). It is likely that a similar pattern exists in the Sri Lankan aqua- culture sector. In some cases and areas, it is culturally acceptable for women to trade fish harvested by their husbands; in others, it is not. Women also manage the household affairs while their husbands are away on extended fishing trips or seasonally migrate to other coastal areas (Weeratunge et al. 2021). Woman drying fish in Negombo. Photo © ingehogenbijl/Shutterstock.com Role of Fisheries in Achieving National Objectives, 12 Opportunities, and Challenges 2.3 Key Characteristics of the Marine Fisheries and Coastal Aquaculture Subsectors The fisheries sector is divided into four geographic regions, which exhibit significant differ- ences (Figure 2.1). In 2019, of Sri Lanka’s 224,610 marine fishers, 38 percent operated on the east coast, 25 percent on the north coast, 19 percent on the west coast, and 18 percent on the south coast. Yet marine fisheries production was highest on the south and west coasts (Table 2.5). Marine capture fisheries are well developed on the west and south coasts and less developed on the east and north coasts. For the north coast, it is due to the civil conflict that lasted from 1983 to 2009. The marine production reported from the four northern coastal districts (Mannar, Kilinochchi, Jaffna, and Mullaitivu) is harvested almost exclusively from coastal fisheries. Table 2.5: Characteristics of Fisheries by Coastal Region, 2019 Region Marine production (MT) Number of fishers North coast 86,310 55,780 East coast 59,680 86,000 South coast 133,710 40,010 West coast 135,790 42,820 TOTAL 415,490 224,610 Source: MOF 2019. Fish harvesting, processing, and trade are dominated by the private sector, although a state- owned organization under the Ministry of Fisheries (MOF) has the statutory responsibility to guide and promote fisheries production and trade, namely the Ceylon Fisheries Corporation. The private sector purchased, distributed, and retailed 99 percent of all fish landed in Sri Lanka and produced by aquaculture and 98 percent of coastal fish production in 2017, the most recent year for which data on Ceylon Fisheries Corporation purchases are available. The Ceylon Fisheries Corporation purchased only 3,771 MT (out of a total marine production of 449,440 MT), of which 82 percent was bought either directly from landing centers or through Colombo’s wholesale market (MOF 2020). The absolute amount of trade by the corporation was already on a downward trend, from almost 5,000 MT in 2011 and 2012 and almost 4,000 MT in 2013 and 2014. MOF officials point out a need to enhance the fish-handling practices, including those of the Ceylon Fisheries Corporation. 2.3.1 Coastal Fisheries Despite comprising only 11 percent of Sri Lanka’s EEZ, coastal fisheries provided 57 percent of the marine catch and 47 percent of all production (Table 2.1). Coastal fisheries encompass more than 30 species of bony fish, sharks and rays, prawns, and crabs (crustaceans), squid, cuttlefish and chank (conch/mollusks), and sea cucumber belonging to 26 families. The species are typically subdi- vided into pelagic (surface), demersal (bottom), and brackish water (estuaries and lagoons) species. Many species are seasonally abundant. Coastal fishers switch between harvesting different species, using different gear throughout the year, depending on relative local abundance and the condition of the sea (that is, southwest and northeast monsoons or between monsoon seasons) (Creech 2020). Of the 50,591 fishing boats registered with the Department of Fisheries and Aquatic Resources (DFAR) in Priorities for Sustainably Managing Sri Lanka’s Marine Fisheries, Coastal Aquaculture, and the Ecosystems That Support Them 13 Figure 2.1: Sri Lanka’s 4 Coastal Fisheries Regions and 15 Administrative Fisheries Districts it SRI LANKA S tr a COASTAL FISHERIES DISTRICTS Fishing Region lk Jaffna Pa NORTH NATIONAL CAPITAL Bay of EAST FISHING DISTRICT BOUNDARIES SOUTH Bengal PROVINCE BOUNDARIES WEST Kilinochchi Palk Bay NORTHERN Mullaithivu Mannar Aruvi Ar a u Gulf of Yan y O SRI LANKA Mannar Puttalam Trincomalee Ka la O ya NORTH CENTRAL INDIAN OCEAN Chilaw Batticaloa Madura Oya NORTH De WESTERN du Mahaweli Ganga ru EASTERN Oy a Negombo CENTRAL ha Oya Kalmunai Ma Gal Oya Senanayake Samudra Colombo Kelan a ng a UVA G COLOMBO i WESTERN SAB ARA alu Ganga G AM K UWA Kirin di Oya Kalutara Walawe Ga 0 20 40 60 Kilometers Laccadive ng a Sea Tangalla 0 10 20 30 40 Miles Galle SOUTHERN Matàra IBRD 45407 | SEPTEMBER 2021 This map was produced by the Cartography Unit of the World Bank Group. The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of the World Bank Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries. Role of Fisheries in Achieving National Objectives, 14 Opportunities, and Challenges Traditional fishermen in Palameenmadu Beach, Batticaloa. Photo © Paco Como/Shutterstock.com 2018,10 91 percent were small-scale coastal fishing vessels. Coastal fisheries operate from more than 900 anchorages and landing sites located within estuaries or lagoons or on the exposed coastline.11 A variety of fishing gear is used, including seine nets, hook and line, gillnets, jigs, and traps. Demand for numerous coastal fisheries is very high, creating a reliable market for small-scale fishers around the entire island. Fish is a highly sought-after commodity in Sri Lanka, and the plethora of vendors, subagents, district agents, and agents in Colombo ensures a healthy competition for purchas- ing and prices in all but the country’s most remote anchorages and landing centers. While prices may be somewhat suppressed by purchasing power, the high local demand for both fresh and dry fish ensures that postharvest losses in terms of quantity (that is, discarded fish) from the marine fisheries is virtually zero. Lower-value coastal species unpopular with fresh fish consumers (queenfish, anchovies, sardines, small rays, triggerfish, catfish, mullet, and lagoon prawns) are salted and dried to meet strong demand for “dry fish,” mainly from low-income groups. Even the carcasses and entrails (the head, backbone, tail, guts, and bones) of yellowfin tuna and sailfish, caught by multiday fisheries and processed by seafood exporters, have value. The meat is extracted and salted for dry fish; the heads, guts, bones, and tail are processed for fish meal (Creech 2020). Brackish water fisheries contribute comparatively little to overall coastal fisheries produc- tion. The main species caught are sold for dry fish production—except for prawns and crabs, which are consumed fresh or processed for export. Brackish water fisheries are locally important for creating livelihood opportunities for small-scale fishers and providing nutrition to poor rural consumers (Creech 2020). 10 In 2019, the total number was 48,976. 11 There were 58 anchorages and 890 minor fish landing centers in 2015 and 2016 (MOF 2019). No official data exist for later years. Priorities for Sustainably Managing Sri Lanka’s Marine Fisheries, Coastal Aquaculture, and the Ecosystems That Support Them 15 2.3.2 Multiday Fisheries Sri Lanka’s multiday fisheries target primarily tuna and billfish, the largest contributors to Sri Lanka’s fish exports. In 2019, yellowfin tuna (YFT), bigeye tuna, and skipjack tuna together ac- counted for 50 percent and 45 percent of Sri Lanka’s fish exports in quantity and value, respectively.12 The billfishes, including swordfish, marlins, and sailfish, are the second largest group in the multiday fisheries catch and are also largely exported. Sri Lanka’s YFT catch is about the fifth largest in the Indian Ocean; of note is the dif- ference in gear used. During the period from 2015 to 2019, on average, Sri Lanka’s YFT catches accounted for about 8 percent of total YFT catches in the Indian Ocean. For most catches, Sri Lanka uses longlines as gear, while some other large contributors of YFT catch- es use purse seines (such as the European Union, Seychelles) and gillnets (such as Iran) (Figure 2.2), which have a greater proportion of bycatch, including sensitive and protected species such as marine mammals.13 About 4,800 vessels, or 9 percent of Sri Lanka’s fishing fleet, are used in MDF and most are less than 15 meters in length, with limited capacity to preserve product quality on long trips of multiple weeks. The number of boats participating in MDF has grown from about 1,300 vessels in 2005 to more than 4,800 in 2019 (MOF 2020). The current fleet is specifically designed to operate for several days within the Sri Lankan EEZ; however, much of the fleet today operates for multiple weeks at a time, with some licensed to operate beyond the EEZ (high seas) and others required to operate Multiday vessels at Tangalle Harbor. Photo © Denis Costille/Shutterstock.com Total fish and fish product exports was 28,771 MT / $299 million (see Table 2.3). Total tuna export was 14,252 MT / $136 million. 12 “Fishing Gear Types: Gillnets and Entangling Nets,” Fisheries and Aquaculture Division, Food and Agricultural Organization, http:// 13 www.fao.org/fishery/geartype/107/en. Role of Fisheries in Achieving National Objectives, 16 Opportunities, and Challenges Figure 2.2.: Average Catches (MT) of Yellowfin Tuna in Indian Ocean 2015–2019 by Gear Group and CPC, Ordered by Importance of Catches Purse seine | FS Longline | Fresh Line | Coastal longline Baitboat Other Purse seine | LS Longline | Deep-freezing Line | Handline Gillnet 100 100 % Cumulative nominal catch 79% 90 80 Total catch(x1, 000 MT) 73% 80 67% 62% 70 60 54% 60 46% 50 40 36% 40 24% 30 20 12% 20 10 0 0 Iran Islamic Rep. Maldives EU,Spain Seychelles Sir Lanka EU, France Oman India Indonesia Source: IOTC 2020b. All others Note: The red solid line indicates the cumulative percentage of the total combined catches of the species for the CPCs (IOTC contracting parties and cooperating non-contracting parties) concerned. “Purse seine” includes industrial purse exclusively within national jurisdiction. A vessel monitoring system (VMS) has been mandatory for ves- sels operating on the high seas since 2016. The fleet principally uses longlines and gillnets (Figure 2.2); however, 42 percent of the vessels used a combination of gear. The government is working with own- ers of vessels operating in the high seas fishery to transition these vessels to longline-only operations by introducing mechanized line haulers. As of 2020, Sri Lanka did not operate purse seine boats targeting tropical tuna (IOTC 2020a). The vast majority of the multiday fleet is based out of harbors in the south and west, close to the fish- ing grounds, which are managed by the parastatal Ceylon Fishery Harbours Corporation (CFHC).14 It is worth noting that there are also 50 Sri Lanka–flagged long-liners on the Indian Ocean Tuna Commis- sion approved list with a length greater than 20 meters, of which 23 are greater than 24 meters (IOTC 2020c). These vessels are of Asian origin/ownership, operate under the Sri Lankan flag, and land frozen tuna for export at the harbor in Dikkowita (one of the few harbors deep enough to accommodate vessels of this size). One of the paramount factors creating uncertainty for the future of the multiday fishery is weak regional governance of the tuna fishery. Tuna are highly migratory and in accordance with the United Nations Law of the Sea require management by an intergovernmental body, which for the Indian Ocean is the Indian Ocean Tuna Commission (IOTC). The IOTC is made up of member states with diverse economic interests, making it difficult to reach consensus. As a result, the IOTC has had limited success preventing overfishing of YFT in the Indian Ocean or agreeing on how to re- The CFHC-managed fishery harbors are in Panadura, Beruwala, Hikkaduwa, Ambalangoda, Dodanduwa, Galle, Mirissa, 14 Puranawella, Nilwella, Kudawella, Tangalle, Hambanthota, Kirinda, Valachchanai, Cod-Bay, Kalpitiya, Chilaw, Negombo, and Dikkowita. http://www.cfhc.gov.lk/Harbour_Main.php. Priorities for Sustainably Managing Sri Lanka’s Marine Fisheries, Coastal Aquaculture, and the Ecosystems That Support Them 17 Yellowfin tuna. Photo © Al McGlashan/Shutterstock.com build the YFT stock. Moreover, many members also face challenges complying with binding regional agreements, further weakening prospects for regional governance capable of charting a course to sus- tainability within the next few years. The longer it takes the IOTC to reach agreement, the greater the declines in fish biomass, the harder it becomes for Sri Lankans to catch fish, and the longer it will take to rebuild stocks to healthy levels. At their annual meeting in June 2021, most members of the IOTC, including Sri Lanka, agreed on new measures consistent with scientific recommendations to rebuild the YFT stock. How effective the new measures will be is in question, however, since consensus among IOTC members was not reached and universal compliance is therefore uncertain. In response to this situation and broader consumer awareness, high-value markets are shifting their sourcing of tuna to fisheries with better environmental, social, and quality attributes, creating market risk for the multiday fleet. Specifically, a number of retailers (Hol- land 2020) and food companies (Oirere 2021) have announced they would be reducing the amount of yellowfin tuna that they are sourcing from the Indian Ocean until their concerns about overfishing and the lack of an effective regional rebuilding plan are addressed. 2.3.3 Coastal Aquaculture Sri Lanka’s coastal aquaculture sector, reemerging after a boom-and bust cycle in the 1990s, currently focuses mainly on shrimp. In the 1990s, under the impetus of success in shrimp farming in other Asian economies, Sri Lanka’s northwestern coastal lagoon and estuary areas, which were cov- ered by mangroves, salt marshes, seagrass beds, and mudflats, were transformed into shrimp farms, in a rapid and uncontrolled manner. Production peaked in 1998, but the spread of two viral diseases caused 90 percent of the farms to either collapse or suffer serious impairment within a short period, resulting in scores of abandoned ponds (Box 2.1). Since 2005, however, improved farm management practices Role of Fisheries in Achieving National Objectives, 18 Opportunities, and Challenges and disease control have gradually returned the industry to a sustainable trajectory (Amarasinghe 2013). In 2019, total shrimp production from farms reached 6,400 MT, of which approximately 2,100 MT were exported at a value of $20 million.15 In the same year, total coastal aquaculture production amounted to 7,568 MT, employed 7,350 people, and brought in $24 million in foreign exchange earnings (Table 2.6). In 2018, 700 shrimp farms and 48 shrimp hatcheries were active in Puttalam, accounting for some 95 percent of national production, with the rest in Batticaloa (MOF 2019). Table 2.6: Status of Coastal Aquaculture in Sri Lanka, 2019 Product Production (MT) Export earnings (US$, millions) Employment (Nos.) Shrimp 6,400 19.68 5,000 Seaweed 247 0.01 400 Sea bass 168 0.75 800 Mud crab 60 1.08 220 Sea cucumber 280 2.82 750 Milk fish 83 (0.14) 180 Other 330 Total 7,568 24.34 7,350 Source: NAQDA 2021. The government has been promoting intensification of shrimp production as well as diver- sification into other high-value species. In Puttalam, to intensify shrimp production, the National Aquaculture Development Authority (NAQDA) plans to enhance technological input, such as improved water reticulation and biosecurity in farms, and to introduce Litopeneaus vannamei, which has higher The sustainable intensification of shrimp aquaculture has enabled the recovery of the sector after years of disease problems. Photo © Randall Brummett “Export of Aquaculture Products,” Statistics, National Aquaculture Development Authority of Sri Lanka, 15 https://www.naqda.gov.lk/statistics/Export-of-aquaculture-products/. Priorities for Sustainably Managing Sri Lanka’s Marine Fisheries, Coastal Aquaculture, and the Ecosystems That Support Them 19 growth rates and productivity compared with Peneaus monodon. Currently, the L. vannamei breeding technology is being piloted in Mannar. Investment in nontraditional high-value species such as sea cucumber, seaweed, sea bass, mud crab, and other finfish has been gradually increasing. Various tech- nical models to promote commercial-level coastal culture systems have been trialed, with NAQDA and the National Aquatic Resources, Research and Development Agency (NARA) playing key roles as technical facilitator and service provider. Among others, they have set up hatchery technology through public-private partnerships, provided technical expertise and fingerlings to private hatcheries, and pi- loted pond/cage-base farming for sea bass, sea cucumber, and crab fattening. The private sector is already undertaking small-scale farming of sea bass, sea cucumber, and seaweed. In 2018, around 300 people participated in sea bass farming in ponds and cages in Negombo Lagoon, Mannar, Puttalam, Batticaloa, and Galle (NAQDA 2018). In 2013, the first large commercial marine fish farm for sea bass farming in cages commenced operation in the Trincomalee Sea as a joint venture with the Board of Investment and yielded 255 MT in 2018. Seaweed farming in the coastal zone off of North Western and Northern Provinces with community participation has been carried out at a low scale (total of 60 hectares) (NAQDA 2018) along with private sector marketing and buyback arrangements. NAQDA has commenced piloting hatchery technology for milkfish farming to support a local industry that can provide a steady supply of bait fish to the tuna fishery, substituting for imported bait fish that costs Sri Lanka about 250 million rupees annually. In more recent times, government support for the sector has come by way of providing a suitable environment for potential investors to develop coastal aquaculture through estab- lishing “aquaculture parks” and “crab cities.” NAQDA plans to establish an aquaculture industrial park in Mannar covering 1,728 hectares as well as crab cities in Rekawa and Galmulla, Hambantota, covering 242 acres, and in Marnkerni, Batticaloa, covering 280 acres (NAQDA 2018). These develop- ments are expected to create around 5,500 direct and indirect jobs and a production volume of around 9,075 MT. Quarantine to reduce the risk of introducing diseased broodstock is critical to the success of the modern Sri Lankan shrimp sector. Photo © Randall Brummett Role of Fisheries in Achieving National Objectives, 20 Opportunities, and Challenges Box 2.1. Sri Lanka’s Experience with Shrimp Farming Shrimp farming in Sri Lanka began on the tracts of healthy coastal habitats, such as eastern coast in the 1970s; however, it mangroves, salt marshes, seagrass beds, and was soon abandoned because of the civil mudflats, were converted to shrimp ponds. conflict. The industry was later revived in Around Puttalam Lagoon, for example, the 1980s along the coastal belt between more than a third of mangroves have been Chilaw and Puttalam in the North Western cleared for shrimp ponds since the early Province, where it grew rapidly under 1990s (Bournazel et al. 2015; Gunathilaka the impetus of a rising global demand for 2020). Similar findings emerged from Chilaw shrimp. Aided by the ample availability of Lagoon, where 57 percent of mangroves suitable habitat as well as quick access to have been cleared for shrimp ponds since the infrastructure, the industry saw a rapid 1990s; by 2006, 75 percent of these ponds and uncontrolled growth between 1992 had been abandoned (Katrien et al. 2009). A and 1996. Small-scale farmers developed study on the loss of salt marshes in Puttalam in clusters, encroaching on lagoons, Lagoon notes a loss of 51 percent between mangroves, mudflats, salt marshes, and 1981 and 1992 (Pathirana et al. 2008). The coconut estates. Shrimp production external costs associated with the removal of peaked by 1998, with the number of farms coastal habitats, which provide environmental reaching 1,400 with over 70 hatcheries, services and maintain ecological balance, for and with a total area of 4,500 hectares. shrimp ponds were overlooked in project Some enterprises produced 8,000–9,000 valuation and issuance of industry licenses. kilograms per hectare per year, stocked The other biggest environmental impact at 3–40 shrimp per cubic meter in resulted from locating the water intake and classical earthen ponds. This rapid rise wastewater discharge in the same source was followed by a rapid decline due to near one another. Hence, the spread of the two major outbreaks of viral diseases, the diseases could not be controlled. white spot disease and the yellow head disease, forcing 70–90 percent of the In recent years, gradual recovery of the farms to collapse in a very short time. In industry has been observed, with abandoned some farms along the Puttalam Lagoon, ponds being rehabilitated and new areas shrimp mortality reached 100 percent. of mangroves being cleared (Emerton et al. Losses due to the white spot disease were 2016). However, large tracts of abandoned valued at 1 billion rupees and the two ponds remain, unsuitable for most uses diseases together caused an approximate because of unfavorably altered soil chemistry 70 percent drop in export volumes. The and limited dispersal ability of propagules resulting financial burden was debilitating (Di Nitto et al. 2013). As such, the natural on the farmers. Subsequent problems with recovery of these coastal ecosystems is likely disease led to the abandonment of many to be very slow. shrimp ponds, leaving behind denuded and unproductive landscapes. The shrimp industry’s evolution in Sri Lanka amply demonstrates the importance of Poor site selection and lack of physical planning, environmental regulation, environmental planning and industry and good industry standards for the long- regulation had created ideal conditions for term financial viability and sustainability of the industry’s downfall. It was estimated the aquaculture industry for it to serve as a that 47 percent of all farms, on the cornerstone of rural economic development average smaller than 2 hectares, were and poverty reduction. operating without proper licenses. Large Priorities for Sustainably Managing Sri Lanka’s Marine Fisheries, Coastal Aquaculture, and the Ecosystems That Support Them 21 2.4 Impact of the COVID-19 Pandemic on the Fisheries Sector The COVID-19 pandemic manifested itself in Sri Lanka in two waves between March 2020 and June 2021. The first wave began in March 2020, leading to rapid containment measures by the govern- ment, including suspension of tourist arrivals and imposition of an island-wide curfew from March 20 through June 28, 2020, coupled with rigorous case finding, contact tracing, and quarantine and isolation. By September 30 there were 3,380 cases and 13 deaths reported, including one death in the coastal com- munity in Negombo and some known cases among fishers. The second wave, characterized by a rapid surge in infections, began in October 2020. This time, to minimize the impact on economic activity, the government decided to impose targeted lockdowns rather than an island-wide curfew. This included the temporary closing on October 21, 2020, of the Peliyagoda Fish Market in the Western Province after sev- eral cases among the merchants at the market were confirmed. On October 23, 2020, the government closed the other main fish markets as well as fishing harbors and widened the curfew in many parts of the island after a surge of infections related to the new clusters centered on the Peliyagoda Fish Market16 and other clusters. A continuing rise in cases and deaths led the government to declare an island-wide curfew in late April 2021 while implementing a vaccination program, both of which were ongoing in June 2021. Coastal and multiday capture fish production declined by more than 20 percent in 2020 com- pared with 2019 (Table 2.1), with the declines being felt particularly during the March–June and September–December periods (Figure 2.3). This is likely due to mobility restrictions, social dis- tancing requirements, and lack of buyers and markets. Fishing was never banned during the curfews or localized lockdowns. However, fishing was nevertheless impacted by the limited number of curfew passes issued (restricting fishers’ access to their boats) in the early phases of the curfew in March 2020; limits on group gatherings, which restricted beach seining, which normally requires 30–40 people to participate in pulling in nets’ curfews; travel restrictions, which impacted seasonal migrant fishers; fear among fishers to be near infected colleagues as the news of cases among fishers spread; and, notably, declining fish demand because of the breakdown in the supply chains, in particular during the first wave (Amarasinghe 2020b; Azmy et al. 2021). Figure 2.3: Monthly Production by Fishery Type, 2018–mid-2021 (MT) Source: Original figure using data from the Statistics Unit, Ministry of Fisheries, https://www.fisheries.gov.lk. “Fish Markets and Fishing Harbors in Many Areas Closed due to Peliyagoda COVID-19 Cluster,” Hiru News, October 23, 2020, 16 https://www.hirunews.lk/english/253161/fish-markets-and-fishing-harbors-in-many-areas-closed-due-to-peliyagoda-covid- cluster-video. Role of Fisheries in Achieving National Objectives, 22 Opportunities, and Challenges Disruptions in marketing and distribution were observed in the first curfew. The curfew ini- tially led to a sudden disruption of logistics. Buyers, including the Ceylon Fisheries Corporation, could not access the landing sites. The temporary closure of micro and small fish drying enterprises because of the curfew precluded drying of fish, leading to wastage on landing sites. Demand for fish by domes- tic consumers remained intact, although at times it went unmet when fish markets closed in response to the emergence of COVID-19 cases among traders, and the perishable nature of fish limited the fulfillment of online orders from supermarkets. On the other hand, demand from hotels in Colombo, Negombo, and Hambantota disappeared because of the collapse of tourism. A study carried out by Oceanswell in July–August 2020 of the entire coastline provided in- sights in differential impacts of the mobility restrictions and trade regulations during the first wave on the different segments of small-scale fishing communities: “Out of those sur- veyed, 91 percent (n=95) of sellers/traders and 90 percent (n=186) of fishers reported that COVID-19 and the resulting restrictions had an impact on their work. Comparatively, 66 percent (n=66) of proces- sors surveyed reported that their work was impacted. However, among the processors interviewed in the North, 81 percent (n=17) reported an adverse impact on their work in contrast to only 59-65 percent of the processors on the other coasts” (Azmy et al. 2021, 8). The less pronounced impact on processors was explained by the longer shelf life of their product, which renders more control over their stocks during market shocks (Azmy et al. 2021). The COVID-19 pandemic has likely impacted poor fishers and their families significantly. Most fishers and their families likely did not experience significant food shortages during the first curfew since, once the initial difficulties with curfew passes were resolved, they could fish for subsistence, and district governments distributed rations to families in need. At the same time, most small-scale fishers were poor and vulnerable already,17 or lived on the verge of poverty, with limited if any savings as a cushion before the pandemic began. Therefore, the drop in demand for fresh fish, the inability to access markets, and the overall breakdown of value chains represented the major impact on fishing families. As adaptation strategies, fishing families exhausted limited savings, pawned assets, and borrowed from both formal and informal sources, placing many further in debt. Other adaptation strategies included switching modes of income (farming, net mending, multiday fishing) and preserving their own catch for future use (Amarasinghe 2020b; Azmy et al. 2021). In addition, in tourism areas, fishers themselves or members of their households are known to have held supplementary employment in the tourism service industry, including in some cases, providing ecotourism tours during the down season for fish- ing (Amarasinghe et al. 2015). The collapse of tourism during the pandemic meant that these income sources also disappeared. The government used the social assistance program Samurdhi to transfer relief funds to poor households. However, uneven coverage of poor households under the Samurdhi program had been documented before; so, the extent to which poor fisher households benefited from the cash transfers could be further studied (World Bank 2019; Amarasinghe 2020b). Surveys in selected coastal areas indicate that fisher households in coastal communities expe- rienced higher income losses than non-fisher households during both waves of the pandem- ic. In surveys of fisher and non-fisher households in Hambantota and the Western Region in April– May 2021,18 fisher households reported a higher percentage of lost income than non-fisher households 17 Nanayakkara (2020) estimates that fishery workers along with skilled agriculture and forestry workers constitute the socioeco- nomic group with the second largest share of poor in Sri Lanka and argues that, as such, this group is among the most vulnera- ble to shocks like the COVID-19 pandemic. 18 Surveys carried out as part of the bioeconomic modeling and local economy-wide impact evaluation (Bio-LEWIE) study; ran- dom samples of 529 and 661 households, respectively, in the Hambantota District and the Western Region. Priorities for Sustainably Managing Sri Lanka’s Marine Fisheries, Coastal Aquaculture, and the Ecosystems That Support Them 23 (Table 2.7). A significant majority of both fisher and non-fisher households reported lost income because of COVID-19. In Hambantota, 96 percent of fisher households and 85 percent of non-fisher households reported lost income. The most severe loss in total income occurred during the first lockdown (March– June 2020), for which fisher households reported an average monthly total income loss of 62 percent, versus 51 percent for non-fisher households. While the second lockdown (October 2020–April 2021) was less severe, fisher households still lost an average of 26 percent of their total income per month over these seven months, compared with a 17 percent loss for non-fisher households. In Kalutara and Gampa- ha, 97 percent of fisher households and 83 percent of non-fisher households reported lost income. The most severe income loss occurred during the first lockdown (March–June 2020), when fisher households reported an average monthly loss of 60 percent, compared with 52 percent for non-fisher households. While the second lockdown (October 2020–April 2021) was less severe, fisher households still lost almost a third of their total income, an average of 27 percent per month over these seven months, compared with a 23 percent loss for non-fisher households (Kagin et al. 2021a, 2021b). Table 2.7: Lost Income from COVID-19 in Sri Lanka Fishing Communities Hambantota Kalutara and Gampaha household groups household groups Non-fisher Fisher Non-fisher Fisher Share reporting lost income 0.85 0.96 0.83 0.97 Mean monthly income loss as a % of total monthly 50.56 62.42 52.16 60.00 income – First lockdown (March–June 2020) Standard deviation of income loss (32.36) (25.74) (32.77) (25.47) Mean monthly income loss as a % of total monthly 16.54 26.46 22.96 27.44 income – Second lockdown (October 2020–April 2021) Standard deviation of income loss (19.44) (24.35) (24.79) (27.16) Sample size 406 123 446 215 Source: Kagin et al. 2021a, 2021b. The quantity and value of fish exports declined by 26 percent in 2020 relative to 2019 (Table 2.3), with the impact being felt strongly during the March–May and October–Decem- ber periods (Figure 2.4). The slump continued in January and February 2021, but a rebound occurred in March 2021. This was mainly because of reduced demand in the importing markets, where restaurants, hotels, and office canteens were severely affected by the pandemic. Multiday fisheries continued to dominate exports, but their share in exports declined from 70 percent in 2019 to 65 percent in 2020. High-value coastal species fell to about 15 percent of fish export revenues, reflecting a significant de- crease in value, from $61 million in 2019 to $37 million in 2020. It is noteworthy, however, that while North American markets for pasteurized crab meat products, 60 percent of which is purchased by the food service industry, crashed because of the COVID-19 pandemic and crab meat processors through- out South and Southeast Asia were forced to stop purchasing, processing, and exporting crab meat products, the Sri Lankan processor’s only orders for North America in April and May 2020 were from premier markets for “sustainably sourced seafood.” This is attributable to the two blue swimming crab fisheries having achieved an eco-recommendation from Seafood Watch.19 Authors’ communication with seafood processors. 19 Role of Fisheries in Achieving National Objectives, 24 Opportunities, and Challenges Fish imports declined in 2020, too, but only by about 10 percent, which helped compensate for the reduction of domestic harvest. While the decline in canned fish and higher-value yellowfin tuna and billfish were significant, the quantities of lower-value dried fish and dried sprats increased (Table 2.4), likely contributing to the food security of lower-income urban and rural consumers in the wake of reduced domestic catches. This was made possible through a Department of Imports and Ex- ports Control exemption of canned fish from the import licensing (Import Control Permit) requirement from March 23 to June 22, 2020, as reflected in the higher March–May 2020 import;20 on the other hand, imports continued to decline significantly in the first quarter of 2021, raising questions about food security impacts (Figure 2.4). Figure 2.4: Monthly Fish Exports and Imports by Quantity and Value, 2019–Early 2021 Source: Authors using data from the Statistics Unit, Ministry of Fisheries, https://www.fisheries.gov.lk. 2.5 Opportunities and Challenges for Increasing Fisheries’ Contribution to National Objectives This section reviews the opportunities and challenges for enhancing the fisheries sector’s contributions to the Sri Lankan government’s targets of increased local production and val- ue-added, increased export, and food security. We first highlight the opportunities and challenges that apply to all three subsectors covered in this report, then we focus on individual subsectors. “Sri Lanka: Import Licensing Requirement Relaxed for Canned Fish due to the COVID-19 Pandemic,” Global Trade Alert, March 20 23, 2020, https://www.globaltradealert.org/state-act/43608/sri-lanka-import-licensing-requirement-relaxed-for-canned-fish- due-to-the-covid-19-pandemic. Priorities for Sustainably Managing Sri Lanka’s Marine Fisheries, Coastal Aquaculture, and the Ecosystems That Support Them 25 2.5.1 Sectorwide Opportunities and Challenges Opportunities Sri Lanka has legislation and policies in place that are conducive to sustainable fisheries management. These include notably the 1996 Fisheries and Aquatic Resources Act (FARA), the 2018 National Fisheries and Aquaculture Policy, Fisheries and Aquatic Resources Act No. 54 of 1998, the 2018 Coastal Zone and Coastal Resources Management Plan, the 2012 National Climate Change Policy, the 2016 Nationally Determined Contributions (part of the Paris Climate Agreement), and the National Adaptation Plan for Climate 2018–2025. FARA was amended in 2013 and 2015 to increase fisheries man- agement capacity, including by incorporating international obligations and enhancing sanctions. FARA provides the government with tools to manage Sri Lanka’s fisheries and aquaculture through licensing, regulating gear, and a provision for fisheries management areas to be managed by various relevant stakeholders. Institutionally, a well-established ministry with specialized agencies and a district-level orga- nizational network is in place, with mandates spelled out in legislation. The Ministry of Fisheries, the highest authority for marine fisheries and aquatic resources, encompasses three key organization: DFAR, which is responsible for day-to-day management of fisheries through 15 district fisheries offices; NARA, a research organization with a record of specialized research through staff at central and re- gional centers and a research vessel, mandated to inform fisheries management policies and practices; and NAQDA, mandated to promote and oversee aquaculture development. This organizational structure provides a good base to lead Sri Lanka’s fisheries sector toward science-based sustainable management of fisheries and aquaculture in a horizontally and vertically coordinated manner. More details on the MOF and its subsidiary organizations may be found in Appendix C. Natural ecosystems play a key role in maintaining fisheries productivity, providing breeding, nursery, feeding, and living habitats for different life cycle stages of nearshore and offshore Traditional fishers near mangrove forests. Photo © Thomas Wyness/Shutterstock.com (top left and right), © kuzina/Shutterstock.com (bottom) Role of Fisheries in Achieving National Objectives, 26 Opportunities, and Challenges finfish, crustaceans, cephalopods, and other mollusks. These ecosystems benefit both nearby and distant fisheries. For example, it is estimated that, globally, “a single acre of seagrass can support upwards of 40,000 fish and 50 million small invertebrates” (Reynolds 2018). Several studies also under- line the importance of mangroves to fisheries productivity. Survey work carried out in Chilaw, Negom- bo, Puttalam, Rekawa, and other lagoons suggests a close link between ecosystem health and species diversity, fish catch, and income opportunities (Gunawardena and Rowan 2005; IUCN 2008; Pinto and Punchihewa 1996; Ranahewa et al. 2018; Sarathchandra et al. 2018). A recent study indicates that reef and mangrove-associated species may contribute as much as 40 percent of Sri Lanka’s coastal fisheries catch by weight and 30–40 percent by value (Emerton 2014). Mangroves in Rekawa have been valued at around $750 per hectare per year for their support to lagoon and coastal fisheries (Gunawardena and Rowan 2005), and in Hambantota they are estimated to contribute up to $2,600 per hectare (Ra- nasinghe and Kallesøe 2006). Sri Lanka’s policy framework for climate change includes mechanisms to mitigate impacts on coastal ecosystems. The 2012 National Climate Change Policy specifically mentions the impor- tance of climate change adaptation in coastal zone management, with reference to sea-level rise. Building on the policy, the National Adaptation Plan 2016–2025 identifies nine key sectors and priority areas, among which are food security (including fisheries), the coastal and marine sector, ecosystems and biodiversity, and tourism. The 2016 Nationally Determined Contributions recognize that the coastal region is susceptible to sea-level rise and include contributions for fisheries, biodiversity, and coastal/ marine sectors; they specifically include “restoration, conservation and managing coral, sea grass, man- groves and sand dunes in sensitive areas” as planned actions and state the intention to establish 1,000 hectares of coastal forests and green belt along the island. Sri Lanka also has in a regulatory and institutional framework for seafood quality and safe- ty. Seafood exporters and exports are regulated by the Fish Products (Export) Regulations published in 1998. DFAR’s Fishery Products Quality Control Division plays a critical role in ensuring the highest quality standards and food safety compliance for fish products exported by Sri Lankan seafood proces- sors to international markets. NARA contributes by producing laboratory reports for the fish exporters, analyzing their fishery products, processing water and ice samples for both biological and chemical parameters, and testing the effectiveness of cleaning procedures in fish-processing factories in their ISO-accredited laboratories. Challenges A good portion of coastal and multiday fisheries are already overfished, requiring rebuilding. Implementing fishery management plans (FMPs) implies some level of control of fishing capacity and effort with which DFAR has limited experience. As part of this advisory services and analytics (ASA) work, the Bank is supporting DFAR in developing management plans for two fisheries based on stock assessments that NARA has carried out also under this ASA. The management planning process will be supported through the Bio-LEWIE exercise to help determine how various management measures would impact stock recov- ery rates and what economic impact these various measures would have on fishing communities. This in- formation is important because stock rebuilding requires limiting effort and/or catches for a given period of time, with possible direct impacts on incomes of fishers, indirect impacts on the men and women working along the value chain, and induced impacts on the rest of the local economy. Currently, targeted mitigation strategies for addressing the possible socioeconomic implica- tions of rebuilding fish stocks are lacking. The well-recognized national Samurdhi program does not Priorities for Sustainably Managing Sri Lanka’s Marine Fisheries, Coastal Aquaculture, and the Ecosystems That Support Them 27 allow for targeting fishing families who might be impacted by the implementation of FMPs. Targeted assistance is also needed to assist those willing to reduce their dependence on fishing and seek other live- lihood options. Various services that could be offered do not appear to yet exist (see recommendations below). Informality in the sector also makes delivering services in a targeted manner more challenging. The Fishermen’s Pension Scheme that was operated by the Agriculture and Agrarian Insur- ance Board and provided disability, retirement, and other benefits to fishing families seems to be insolvent. This represents a significant gap in the social safety net for fishing families and makes fishing a more vulnerable profession (Amarasinghe 2020a). Illegal, unreported, and unregulated (IUU) fishing is another challenge within the national jurisdiction and beyond, with both enforcement capacity and the legal basis for prosecution of illegal fishing being weak. In Sri Lanka, IUU fishing consists mainly of usage of unauthorized nets, other illegal gear and explosive devices, unauthorized transshipment, unauthorized catch of specific species (including notably shark fins, turtles, lobsters, sea cucumbers, and conches). Coastal ecosystems are degrading. Population growth in the coastal zone, infrastructure expan- sion, and production increase in natural resource–based industries such as fisheries, tourism, and min- ing have put pressure on the health and function of coastal ecosystems. As a result, many coastal ecosystems show signs of stress and degradation from habitat destruction and pollution, which could be contributing to the decline of some stocks in some areas. Healthy coastal ecosystems play a key role in maintaining natural stock levels of fish. Therefore, it is essential to understand the ecology of fish habitat and to integrate that in fisheries and coastal zone management plans as part of the overall fishery management strategy (see Appendix D). Climate change poses several challenges that impact the sustainability and economic viability of both marine capture fisheries and coastal aquaculture. Impacts such as sea-level rise and in- crease in the frequency of extreme weather events lead to structural damages, associated financial loss- es, and potential escape of farmed fish/shrimp to freshwater or marine ecosystems and its consequences on biodiversity. Climate change also effects an increase in water temperature and ocean acidification, leading to changes in typical growth patterns of both wild and farmed species, affecting the timing and success of spawning and ultimately of harvests. New and different disease challenges can emerge along with the spread of alien invasive species that more favor the changing climatic patterns. These are sub- jects for much concern, needing prioritized attention and systematic study so the industry can climate proof its development path and remain sustainable in the long run. 2.5.2 Coastal Fisheries Opportunities Higher export revenues and more secure jobs are possible through access to higher-value market segments enabled by the eco-labeling of sustainably managed exportable species. This could include such species as lobster, squid, cuttlefish, wild-caught shrimp, and mud crab. In 2018, the blue swimming crab (BSC) fisheries in Palk Bay and the Gulf of Mannar became the first fisheries in Sri Lanka and the only BSC fisheries in South and Southeast Asia to be eco-recommended by the Mon- terey Bay Aquarium’s Seafood Watch program. The eco-recommendation has enabled one processor to access premier markets for “sustainably sourced seafood” in North America (see Box 2.2). Sus- tainable management of locally consumed coastal fish, such as small pelagics, will ensure long-term Role of Fisheries in Achieving National Objectives, 28 Opportunities, and Challenges Box 2.2. Sri Lanka Blue Swimming Crab Fishery Improvement Project The Sri Lanka Blue Swimming Crab (BSC) Fishery BSC catch, and the ecological impact of BSC fisheries Improvement Project (FIP) was initiated by the on marine habitats using geographic information National Fisheries Institute Crab Council (an systems (GIS). A postgraduate at the University of association of North American crab importers) Sri Jayawardenepura is currently researching the and the Seafood Exporters’ Association of interaction between large marine mammals and Sri Lanka in May 2013 and launched by the reptiles and BSC fisheries using remote sensing data Ministry of Fisheries in December 2013. A rapid and GIS. The combined results of these students’ assessment of the two main fisheries identified research suggest that the ecological impact of BSC key areas where improvements were necessary, fisheries on NTS, habitats, and the wider marine including understanding the status of the stocks; ecosystem is a low to moderate conservation concern. understanding the fisheries’ ecological impact on nontarget species (NTS), habitats, and the A voluntary Code of Conduct for Responsible BSC ecosystem; and fishery management at local and Fishing was developed by the FIP with BSC fishers and national levels. The FIP’s goal was to achieve a DFAR in 2017. Surveys conducted jointly by DFAR and level equivalent to sustainably managed fishery the FIP indicated that fishers in both fisheries achieved against the Marine Stewardship Council’s Fisheries more than 90 percent compliance with the code in Standard within five years. 2018 and 2019. A regulation to establish a minimum mesh size for BSC fishing (4.5 inches) and a minimum Sri Lanka’s BSC fisheries are “data-poor” and weight for export (>100 grams) has been drafted by “resource-poor” fisheries. In 2014, the FIP adopted DFAR in consultation with fishing communities and and developed a length-based approach to the seafood export industry. DFAR is in the process spawning potential ratio (LBSPR) and continues of finalizing the regulation prior to submission to to use it to estimate and communicate the Parliament. annual status of the two stocks to fishers, the crab exporters, DFAR, and the National Aquatic BSC seafood exports were valued at more than $15 Resources, Research and Development Agency. million in 2019, supplying markets for fresh, frozen, The LBSPR model (www.barefootecologist. and pasteurized crab in Southeast Asia, Europe, and com.au) is technically robust, simple to use, and North America. In January 2018, the two fisheries requires only size frequency data from the fishery became the first fisheries in Sri Lanka and the only to generate an estimate of the status of the stock. BSC fisheries in South and Southeast Asia to achieve Annual stock assessment results suggest that over a GOOD ALTERNATIVE recommendation from the the last five years the LBSPR of BSC stocks in Palk Monterey Bay Aquarium’s Seafood Watch program.a Bay and the Gulf of Mannar have fluctuated at or The recommendation has enabled Taprobane Seafood above the target reference point for a sustainably Group Pvt Ltd, Sri Lanka’s top exporter of pasteurized managed fishery. BSC products, to access new, premium markets for eco-labeled seafood products in the United States. Students from Ocean University, Uva Wellessa University, and the University of Colombo have A Marine Stewardship Council (MSC)-approved contributed vital information and data on BSC preassessment of the fisheries in December 2018 fisheries’ impact on NTS, habitats, and the wider suggested that the fisheries had achieved a level marine ecosystem. Five undergraduates completed equivalent to a PASS with conditions against the MSC’s their dissertations on the ecological impact of BSC Fisheries Standard but would FAIL a full assessment fisheries on NTS using a standardized protocol because of data deficiencies for 6 out of MSC’s 28 developed by the FIP and Marine Stewardship principle indicators. In May 2020, an MSC-approved Council’s Productivity and Susceptibility Analysis. reassessment concluded that the fisheries had Three more undergraduates worked on the reached a level equivalent to a PASS without conditions impact of stake-net fishing on BSC and NTS, the against the MSC’s Fisheries Standard and would likely reproductive biology of pale-edged stingrays in the pass a full assessment. Source: Dr. Steve Creech, Coordinator, Sri Lankan Blue Swimming Crab Fishery Improvement Project, 2020. a. “Recommendation: Blue Swimming Crab,” Monterey Bay Aquarium Seafood Watch, accessed June 24, 2021, https://www.seafoodwatch.org/recommendation/ crab/yellow-crab-blue-swimming-crab-sri-lanka-palk-strait-and-palk-bay-gillnets-and-entangling-nets-unspecified?species=285. Priorities for Sustainably Managing Sri Lanka’s Marine Fisheries, Coastal Aquaculture, and the Ecosystems That Support Them 29 provision of fish protein to the population and revenues to fishing communities. Sri Lanka’s experience with the BSC exemplifies how active community engagement in management planning and imple- mentation can result in demonstrable improvements in fishing practices, stock status, and market recognition. This experience offers important practical lessons for the management of other fisheries. Efforts are under way to strengthen capacity for regular and systematic stock data collec- tion and assessments, informing the development and periodic updating of sustainable FMPs. Under a bilateral agreement between the governments of Norway and Sri Lanka, the Institute of Marine Research in Bergen and NARA have been working together to enhance regular and system- atic collection of both (fisheries-dependent) data from commercial landings and (fisheries-indepen- dent) data through marine research and sampling. Those data could be used to formulate recommen- dations for the development of coastal FMPs (IMR 2020). The time series of stock data are expected to be available for conventional stock assessments within three or more years. Under the same project, guidance is being provided on the principles of FMP development for small pelagics on the west coast and demersal species in the southeast region. Under this ASA, with technical assistance provided by the Food and Agriculture Organization (FAO), NARA scientists have carried out stock assessments for small pelagics on the west coast and spiny lobsters in the Hambantota District. The results of these stock assessments inform DFAR FMPs for those fisheries. Data-poor assessment methods allow swift estimations of stock status essential for sci- ence-based management planning for a number of species. While conventional stock assessments require time series data stretching over several years, nonconventional data-poor methods rely on length data. Such data may be collected with limited effort and cost and used in stock assessment methods using publicly available analytical packages. This method has been used successfully for the blue swim- ming crab (Box 2.2). The Hambantota lobster stock assessment carried out by NARA employed the same method. This method holds promise for several other high-value coastal species, including cuttlefish, squid, and seer. Policy reforms have been adopted to address stock degradation, including the Fishery and Aquatic Resources Act and its revisions. FARA—and subsequent amendments, regulations, and schedules—is a comprehensive piece of fisheries legislation, written to an international standard. FARA contains sufficient provisions to enable coastal fish stocks to be managed sustainably in collaboration with coastal fishing communities (that is, collaborative management). FARA states that “the fishers of any area may request the director general, in writing, to designate a specified area of Sri Lanka waters or both such waters and the land adjacent thereto, as a Fisheries Management Area (FMA).” These areas are to be governed by Fisheries Management Coordinating Committees, which include representatives from a wide variety of govern- ment agencies, local elected leaders, and representatives of fisher communities. These committees are required to meet at least once a month and submit a written Fisheries Development and Management Plan to the director general that includes proposed regulations on fishing gear, equipment, and fishing methods; prohibitions on taking particular species of fish or aquatic resources; and proposals for mon- itoring, compliance, and surveillance. FARA also includes provisions for the creation of Fisheries Com- mittees, which are nested underneath Fisheries Coordinating Committees, comprise local registered fisherfolk, and provide services to fisherfolk, including assistance in obtaining boats and gear and social Role of Fisheries in Achieving National Objectives, 30 Opportunities, and Challenges welfare activities. These committees must “maintain a register of fishers residing or engaged in fishing, within the area of authority of such committee.” Fisheries cooperative societies have for decades provided critical social welfare and eco- nomic services to fisherfolk and could become essential actors in the planning and imple- mentation of FMPs. However, the introduction in recent years of a parallel system of rural fisheries organizations seems to have complicated issues of representation of local fishing interests (Amaras- inghe 2020a). With greater support, fishing cooperative societies may provide credit access, education and health services, access to fishing gear, and other important services, depending on capacity of the specific organization. Additionally, these organizations are the main representatives of coastal fisher- folk when coordinating with government agencies such as DFAR or advocating with local politicians on behalf of fisherfolk. Though they are usually welfare-centric, well-organized cooperative societies could help expand the role of fishers along the value chain and are needed to play an important role in fisheries co-management. Challenges The current degraded state of the coastal fish stocks precludes a sustainable increase in har- vest to substitute for imported fish for local consumption. Stock surveys carried out by the R/V Dr. Fridtjof Nansen in 1978–1980 and in 2018 provide strong evidence for a significant decrease over four decades in the overall biomass of coastal stocks. As Table 2.8 indicates, in 1978–1980 the total biomass was estimated at 400,000–500,000 MT, while in 2018 this amount was estimated at only 175,000 MT. Drawing on the findings of these stock surveys, Gunasekara et al. (2019) reported a relatively strong decline over the past four decades in catch rates of several commercially highly important demersal fish families, especially along the west coast. Furthermore, Aluwihare, Jayasinghe, and Vijayanathan (2019) and Aluwihare, Jayasinghe, and Fernando (2019) reported population declines in some demersal nonmigratory reef-associated fish, such as spangled emperor and pink ear emperor. During the last four decades, the overall demersal category of fish declined from 250,000–350,000 MT to 53,000 MT. Differing results from research of the important small pelagics fishery along the west coast also suggest a high level of uncertainty regarding stock status. The stock assessment carried out by NARA under this ASA (Haputhantri and Sharma 2021) reports that coastal small pelagic fish appear to be at full resource utilization, implying that fishing effort should not exceed current levels. In contrast, the R/V Dr. Fridtjof Nansen found that small pelagic species have a low abundance in ar- eas surveyed and Aluwihare, Jayasinghe, and Dalpathadu (2019) reported the declining trend in stock of some important small pelagic fish, such as spotted sardinella, because of overfishing. Under these circumstances, management should be precautionary, with the focus of fisheries management on re- covery where necessary and long-term sustainable management. Table 2.8: Biomass of Coastal Pelagic and Demersal Species Estimated by the R/V Dr. Fridtjof Nansen Stock Surveys, 1978–1980 and 2018 (MT, thousands) Aug.–Sept. 1978 April–June 1979 Jan.–Feb. 1980 2018 All pelagic species 150 55 100 122 Small pelagic species 21 Large pelagic species 101 All demersal species 250–350 53 Total 400–500 175 Priorities for Sustainably Managing Sri Lanka’s Marine Fisheries, Coastal Aquaculture, and the Ecosystems That Support Them 31 The decline in coastal fish stocks is largely explained by increased harvest from coastal fish- eries and increased fishing effort. According to MOF catch data, the quantity of fish harvested from coastal fisheries has increased by 411 percent over the last 58 years, from 48,768 MT in 1960 to 242,580 MT in 2019. The catch volume first exceeded the estimated maximum sustainable yield (MSY) in 2012. Coastal fisheries production reached a peak of 278,850 MT in 2014 before decreasing to 249,020 MT in 2018. The increase in fish production is correlated to increases in the number of fishers and vessels over time. The number of marine fishers increased from 68,900 in 1982 to 155,014 in 2000/2001 to 224,610 in 2019.21 The number of fishing vessels increased from 27,269 in 1995 to 47,787 in 2019 (Figure 2.5). Figure 2.5: Coastal Fish Production, Fishing Vessels, and Fishers, 1995–2019 Number of coastal fishing vessels Coastal fish production (MT) Number of active fishers Source: MOF 2017; MOF 2018a; MOF 2019. Misguided trade policies may have exacerbated the uncoordinated post-tsunami assistance in leading to overcapacity and overfishing of coastal stocks. During the tsunami of December 2004, many fishing vessels were lost; efforts by external donors to alleviate poor fishing communi- ties’ loss of livelihoods were largely uncoordinated and led to a sharp increase in the number of boats harvesting Sri Lanka’s marine fisheries (Figure 2.5) and to newcomers taking up fishing as a source of livelihood (Amarasinghe 2020a). In addition, to promote local fish canneries and job creation, the government at times introduced a tax on imported canned fish. This may have acted as an incentive to increase harvest, contributing to overfishing. Two recent stock assessments carried out by NARA with technical assistance provided un- der this ASA confirm the precarious status of coastal fisheries. Specifically: • Small pelagics fishery in western Sri Lanka. Analysis carried out under this ASA suggests that the small pelagic stock is likely at optimal resource utilization with an estimated MSY around 30,000 MT. A simple length-based analysis indicates that the stock is probably at full exploitation levels as well, so the weight of evidence suggests that the fishery is in the vicinity of optimal ef- The statistics on fishers are not coastal fisheries specific; however, there is believed to be significant overlap of fishers engaged 21 in coastal fisheries and multiday fisheries. Role of Fisheries in Achieving National Objectives, 32 Opportunities, and Challenges fort (Haputhantri and Sharma 2021). A variety of analytical techniques were used to estimate the status of the stock, including a Jabba assessment on one of the primary stocks caught in the small pelagics fishery, spotted sardinella (Amblygaster sirm). However, there is a large amount of uncer- tainty related to the analytical approach and the current stock status of the small pelagics fishery in western Sri Lanka could vary between severely depleted and no overfishing. Contributing to the uncertainty is that small pelagic species populations can vary significantly from year to year because of environmental factors. Moreover, given that these fish school and the purse seine gear is efficient at catching these aggregates, there is probably some form of hyperdepletion occurring on the stocks. This information relating to the stock status of the small pelagics fishery on the west coast re- flects conditions prior to the May 2021 maritime disaster involving the cargo ship MV X-Press Pearl; it will be important to update the findings based on the outputs of the damage assessment surveys the government intends to carry out soon. The incident’s resulting chemical spill could potentially have far-reaching implications on the ecosystems and coastal fish species of the af- fected western coast. A revised sampling design and procedure to estimate species-specific landings and length com- position by species is under way in the Norway–Sri Lanka bilateral project. In addition, a survey obtaining small pelagic abundance in nearshore areas is under way. This would begin to provide a longer time series of data and a stronger foundation for conventional assessments. In the interim, data-poor approaches as presented here should be pursued. Given the large uncertainty in the assessment, a lower total allowable catch for the near future (around 20,000–25,000 MT) and a reduction in effort, using the precautionary principle, is recommendable until the estimates may be revised with better data and survey information. This information, along with a clear picture of fishing capacity, should form the basis for the development of a management plan with extensive stakeholder participation. • Lobster fishery in Hambantota. The spiny lobster (Panulirus homarus) was examined using a data-poor LBSPR-based assessment approach. A target spawning-stock-biomass-per-recruit (SPR) value of 0.3 was determined to be feasible for management for this species. The status of the stock is at a SPR value below 0.2—that is, the stock is less than 20 percent the size of the virgin biomass. An SPR value of 0.2 is normally a limit reference point in most fisheries, so being below that level indicates that the stock is severely overfished. The target SPR would be 0.3, indicating a healthy fishery and stock. Simple approaches such as limiting entry into the fishery, closing the fishery during spawning season, and effectively enforcing a minimum size limit along with spatial closures would recover the stock in a few years (Liyanage and Sharma 2021). Habitats of spiny lobsters are known to be rocky and coralline formations in the sea where there is maximum cover. In 2009, NARA conducted habitat mapping as part of the stock assessment survey of the lobster fishery on the south coast that revealed that 95 percent of the lobster hab- itats were marginal. Further, it was observed that lobster fishers brought considerable amounts of coral to the shore entangled in their nets, both observations pointing to potentially significant impacts on lobster habitats (Liyanage and Long 2009). Priorities for Sustainably Managing Sri Lanka’s Marine Fisheries, Coastal Aquaculture, and the Ecosystems That Support Them 33 Figure 2.6: Declining Catch per Unit Effort in Hambantota, 1990–2017 (MT) Source: Weralugolla 2019. Note: Effort is a “composite variable” of several individual variables, including the number of crafts, number of crew members, skill of the crew, catchability of the fishing unit, type and quantity of gear carried, and time spent on fishing. CPUE = catch per unit effort. Degrading stocks and an increasing number of fishers and vessels have meant de- clining rents and livelihoods. The average annual catch from coastal fisheries de- clined from 5.78 MT per vessel in 1995 to 5.08 MT per vessel in 2019. 22 While islandwide stud- ies on the evolution of catch per unit effort over time are not available, a study carried out in Hambantota in southern Sri Lanka found that in 2017 it was only one quarter of that in 1990 (Figure 2.6) (Weralugolla 2019). The decline in resources and lack of alternative livelihoods have been reported to lead some fishers to resort to destructive fishing methods (Amarasinghe, Peramunegama, and Thileepan 2018). The scientific information, catch and effort data, and institutional capacity currently avail- able are not sufficient to estimate stock status for important coastal fisheries using conven- tional stock assessment methods. A lack of regular, reliable information on the state of fish stocks by species constrains DFAR’s ability to manage them. Conventional stock assessment methods require considerable scientific knowledge about the target species, 5 to 10 years of catch and effort data from each fishery (population + vessel type + gear type), and the ability to apply complex mathematical models to the species-specific scientific and catch and effort data (FAO 2006). However, NARA does not have sufficient human and or physical resources to collect scientific and catch and effort data from more than 700 landing centers along the coastline. Assessing the stock status of multiple small-scale 22 In 1995, the total number of coastal fishing boats was estimated at 27,269 and the total coastal fisheries production at 157,500 MT; therefore, the average annual catch was 5.78 MT per boat. In 2019, the number of boats increased to 47,787 and fisheries production increased to 242,580 MT, but the average annual catch decreased to 5.08 MT. At the same time, anecdotal evidence indicates that part of the registered vessel stock is not actively used, suggesting that the overall average catch per vessel may be somewhat higher. The number of new recruits to the sector has been increasing in the last few decades, reflecting increasing population, low education, and lack of alternative employment skills to seek a livelihood outside tradition. Role of Fisheries in Achieving National Objectives, 34 Opportunities, and Challenges Box 2.3 Complementarity Between the Stock Assessment-Related Activities Supported Under the Sri Lanka–Norway Bilateral Project and This ASA The Sri Lanka–Norway Bilateral Project (2) background on the fisher, (3) Phase II 2020–2022, “Improved management fisheries information, (4) biological of the marine resources in Sri Lanka,” information, (5) management issues consists of three work programs: WP 1, and considerations, (6) management Fisheries dependent data; WP 2, Fisheries recommendations, (7) action plan independent data; and WP 3, Fisheries – future research and management management. The data situation is gradually actions, and (8) implementation of the improving through the work of WP 1 and management plan. The stock assessment WP 2 and the increased knowledge is used supported under this ASA provides two in the development of fishery management key ingredients to this management advice. WP 3 has been in progress since plan: stock status, which had been not February 2019 and includes drafting and included under (4), and stakeholder implementation of two management plans, consultations, which are critical for the namely one for the small pelagic fisheries on implementation of the management the west coast and another for the demersal plan (8). To this end, under this ASA, the finfish fishery on the southeast coast. The World Bank provided technical assistance targeted outcome for the work program is to NARA to conduct data-poor and “management decisions are in accordance conventional stock assessments on with the precautionary approach and are small pelagics on the west coast. In the based on improved scientific research and follow-up activity, the Bank is supporting fisheries statistics.” management plan implementation through technical assistance to DFAR. The draft management plan for the Both activities are contributing to the small pelagic fishery on the west coast institutional capacity development of covers the topics of (1) policy goals, these two agencies. Source: Haputhantri 2021. fisheries involving more than 40,000 fishing craft is challenging, if not impossible, using conventional stock assessment methods. Currently, NARA, DFAR, and the Institute of Marine Research in Norway are working under the Sri Lanka–Norway Bilateral Project Phase II to improve data collection capacity and practices, with the aim of achieving sustainable management of fisheries resources in Sri Lanka. The technical assistance provided by the Bank under this ASA and follow-up work is complementary to those efforts as detailed in Box 2.3. NARA’s ability to implement stock assessments, whether conventional or nonconventional/ data-poor, is also limited by staff constraints. While under the ASA, an in-depth institutional as- sessment of NARA (or other subsidiary institutions under the MOF) has not been carried out; it was observed that few NARA staff appear to be skilled in stock assessment, and the individuals involved in stock assessments are also often required to carry out multiple parallel assignments, including admin- istrative tasks. There also appears to be significant turnover in the scientific cadre of the organization. Yet, the conduct of stock assessments of all commercial coastal fisheries in a periodic manner requires a core group of dedicated staff with a high level of skill in this field. Priorities for Sustainably Managing Sri Lanka’s Marine Fisheries, Coastal Aquaculture, and the Ecosystems That Support Them 35 Gaps are evident in the implementation of FARA, including fisheries management areas. FARA is a comprehensive piece of fisheries legislation, written to an international standard with suffi- cient provisions to enable coastal fish stocks to be managed sustainably in collaboration with coast- al fishing communities (that is, co-management). However, DFAR and NARA have faced challenges translating policy into practical FMPs with science-based mechanisms such as target reference points, which are essential for sustainable management of fisheries. Progress using spatial management has also been limited. Although 17 fisheries management areas have been declared, none is operational, and no active fisheries reserves are in place. A 2019 survey of fisherfolk, community organizations, and relevant state actors identified the use of destructive gear, IUU fishing, and poor concern for protect- ing resources during breeding periods as pervasive coastal management issues (Amarasinghe 2020a). No analysis has been conducted on the short- or long-term economic impacts of improved fisheries management, and current losses from overfishing have not been quantified. The National Fisheries and Aquaculture Policy of 2018 has not been approved by Parliament, thus there is no national fisheries policy in place with legal standing. However, the MOF is currently remodeling the policy taking into account the Small-Scale Fisheries Policy of 2019 and the Inland Fisheries Policy of 2021. Institutional capacity limitations at fishery districts and central DFAR and NARA preclude development and implementation of FMPs consistent with FARA. DFAR maintains offices in each of the 15 coastal districts, and inconsistency between district boundaries and those of the 17 fisheries management areas lends itself to administrative and decision-making challenges that may be contributing to the failure of management area implementation (Creech 2020). The difficulties faced by the public administration in addressing the concern about the status of coastal fish stocks are primarily a consequence of a lack of fisheries management at the local level (DFAR) and insufficient scientific research about the stock status of key coastal species, to inform annual decision-making about species-specific coastal fisheries management (NARA). DFAR is constrained by the lack of an administratively and technically appropriate model for the management of coastal fisheries. NARA is constrained by a lack of resources (physical and human) and finances to conduct field research on the stock status of key coastal species. The recovery of degraded coastal fishing stocks may require a substantial reduction in the number vessels and people engaged in fishing. This would cause social problems, however, if careful mitigation measures were not planned ahead of time. Small-scale fishing communities are al- ready largely poor and have been affected by the COVID-19 pandemic. Social assistance must include a combination of cash transfers, facilitation of alternative livelihoods that are financially sustainable and socially/culturally acceptable, and skill development, especially among the youth, for jobs outside the fisheries sector based on market demands and the aspirations of fisherfolk. Developing new product categories from coastal fisheries for the domestic market will be a major challenge given that Sri Lankans have a strong preference for purchasing whole fish, head-on without processing, or value addition. Individual fish are either sold whole or gutted, de-headed, cleaned, and chopped into roughly 50-gram pieces by the vendor after purchasing, for the preparation of fish curries. Thus, under the current precarious state of most coastal fisheries that pre- cludes any increases in catch, no new opportunities or potential is foreseen to add value to fresh fish products sourced from coastal fisheries targeting domestic markets (Creech 2020). Role of Fisheries in Achieving National Objectives, 36 Opportunities, and Challenges While sustainable management and eco-labeling may allow access to premium markets, higher prices are not always transmitted to producers, reducing the incentives to produce sustainably. Small-scale fishers in Sri Lanka experience a number of value chain issues. Access to small or remote landing centers is poor: coastal fishers landing their catch at these centers receive low- er prices for their catch than do coastal fishers landing the same species at larger anchorages or landing centers located in or close to urban or peri-urban areas or adjacent to main coastal roads because of the poor condition of rural roads. Poor access to small and or remote landing centers discourages ven- dors, subagents, and agents, thereby reducing competition for the day’s catch (Creech 2020). In addition, environmental health and hygiene at anchorages and landing centers are low. Clean water is essential to enable fish to contribute to healthy diets as are good hygiene and sanita- tion where fish are landed and processed. In anchorages and landing areas, water sources used for ice making and washing fish are often polluted by upstream domestic, agricultural, and industrial sources or by the landing center itself when seawater is used to wash fish. Anchorages and landing centers in coastal fisheries are generally environmentally unhealthy, polluted places. They are wet, watery places from sea-soaked fish and melting ice. Petrol, kerosene, and engine oil, when spilled, mix with seawater and ice melt, contributing to coastal pollution, as do damaged fishing nets and gear that are discarded around the periphery along with broken polystyrene boxes (Creech 2020). Sanitation for workers is also often lacking or inadequate. Many coastal fisheries land low-value fish that are salted or dried on the ground in or near these landing centers, creating food safety concerns (NARA 2021a, 2021b). The erosion of customary tenure rights to the beach and adjoining lands has emerged as a threat to small-scale fishers’ ability to access fishing grounds and thus secure their liveli- hoods. Traditionally, rural coastal areas and beaches offered convenient craft anchorage areas and access to fishing grounds to small-scale fishers. However, the piece dividend and overall economic Traditional tenure rights to beaches are critical for traditional fishers' access to fishing grounds. Photo © Honza Hruby/Shutterstock.com (top left), © Melinda Nagy/Shutterstock.com (top right) and © dodes11/Shutterstock.com (bottom) Priorities for Sustainably Managing Sri Lanka’s Marine Fisheries, Coastal Aquaculture, and the Ecosystems That Support Them 37 growth during the past 10–15 years fueled investments on coastal lands by hoteliers and industrial enterprises. These “new stakeholders” often also have tended to have more economic and political clout than small-scale fishers, rendering the latter relatively powerless in the competition for the use of coastal areas. While the Coast Conservation Department (CCD)—the agency mandated to manage the coastal zone—has been providing “beach access roads,” sometimes tourism-related constructions and fencing by hoteliers bar entry to the beaches. Inability to access fishing grounds has put many a fisher’s livelihood at jeopardy, exacerbating the impact of reduced beach area availability for craft anchorage because of beach erosion and climate change. The FAO Voluntary Guidelines for Securing Sustainable Small-Scale Fisheries in the Context of Food Security and Poverty Eradication (2015) therefore strongly emphasize the need to recognize, respect, and record legitimate tenure rights of small-scale fisher communities, including their customary rights (Amarasinghe 2020a). Current management practices for ecosystems that support fisheries feature overlapping mandates, lack of coordination, and conflicts between resource users, though co-manage- ment platforms such as special area management (SAM) may be part of a solution. Author- ity over activities that affect coastal ecosystem resources is split among organizations, including the Coast Conservation and Coastal Resource Management Department (CCCRMD), the MOF and its subsidiaries, the Department of Wildlife Conservation, the Forest Department, the Sri Lankan Navy (for enforcing maritime law), and various levels of elected local government. Coastal communities are rarely consulted in land and resource governance decisions, and the lack of a robust intergovernmental and interstakeholder mechanism for coordination and collaboration has been a major barrier to taking integrated management of coastal resources forward. In recent decades, Sri Lanka has tried integrated coastal zone management models as a comprehensive strategy to cope with the impacts of individual resource use decisions using community cooperation and collaboration. Lagoon fishery management authorities and SAM committees are key examples of such efforts that offer valuable lessons for future application. Though not always successful, the SAM process has been used positively toward the man- Co-management platforms may help address fishers' and tourism interests, reef habitat conservation, and the risk of coastal erosion. Photo © lzf/Shutterstock.com Role of Fisheries in Achieving National Objectives, 38 Opportunities, and Challenges agement of coastal resources within SAM areas such as Hikkaduwa and Rekawa. In 2011, the required provisions were introduced to the Coast Conservation Act, and the Coastal Resources Management Plan 2018 emphasizes SAM planning and implementation. Each SAM site is managed by a SAM coordi- nating committee with representation from all coastal stakeholders, and such a platform holds promise for addressing multistakeholder conflicts in the coastal zone, including tenure issues. 2.5.3 Multiday Fisheries Sri Lanka is at a crossroads with important decisions to make about its multiday fisheries (MDF) fleet, its role in the regional management of tuna fisheries in the Indian Ocean, and its future interest in competing in high-value but evolving global markets for tuna. Opportunities With only about 16 percent of tuna landings currently being exported,23 there is significant potential to increase their value and export revenues without increasing catch, or poten- tially while decreasing catch. Sri Lanka’s approximately 4,800 MDF vessels are relatively small and not equipped with adequate refrigeration or freezing equipment. They fish for weeks at a time, not days, reducing significantly the quality of their catch, making the majority unsuitable for export. While the domestic market can absorb these volumes, landed prices are significantly lower. Two mutually reinforcing factors drive this situation: (a) the growth in the fleet from 1,300 in 2005 to nearly 5,000 vessels today, and (b) the overfishing of yellowfin and bigeye across the region, making it harder for each vessel to catch fish. A smaller fleet of larger vessels that could freeze tuna at ultra-low tempera- ture levels could catch the same amount or fewer fish. Most, if not all, of the catch would meet the demanding standards of high-value export markets. Job opportunities may exist in the construction and maintenance of modernized MDF land- ing infrastructure, in processing new products, and potentially with redirecting fishing to healthy fish stocks. MDF fleet and landing infrastructure modernization would likely lead to new jobs for building, servicing, and maintaining these facilities. In addition, Sri Lanka may find it worthwhile to explore the potential of increasing processing and value addition in country, such as fileting/loining, extracting omega-3–rich oil from tuna heads, or developing new products for the domestic or export markets, such as fish burgers or fish sausages. Finally, with swordfish and skipjack tuna stocks in a healthy state, there may be the potential to shift fishing effort away from yellowfin toward these spe- cies by developing and testing specialized gear and techniques. Here, too, new products, value chains, and associated processing jobs could be generated. Additionally, given that smaller MDF vessels are be- coming increasingly uncompetitive in the tuna fishery, and recognizing that MDF vessels need to dedi- cate time to catching both bait as well as tuna, the government should explore the feasibility of helping smaller vessels specialize in targeting bait fish and selling it at sea to larger vessels. This might help reduce the length of the fishing trips while helping to retain fishing jobs on smaller vessels that would otherwise become uneconomical. Another option for preserving tuna value prior to landing might be to add a carrier vessel with freezing capacity to provide transshipping services to the MDF fleet. Such an investment would imply significant additional capital and operating costs and would require careful analysis in terms of ownership structure, financial viability, and benefits to the existing fleet. In 2019, total tuna exports were 14,252 MT, while the combined catch of skipjack tuna (47,230 MT) and YFT (44,760 23 MT) totaled 91,990 MT, giving a ratio of 15.5 percent. Priorities for Sustainably Managing Sri Lanka’s Marine Fisheries, Coastal Aquaculture, and the Ecosystems That Support Them 39 Sri Lanka currently has access to lucrative international markets, but it will need to act stra- tegically on the issues of sustainability and quality to retain or increase its market share. Ac- cess to high-value markets in Europe and North America is increasingly conditioned on demonstrable progress toward sustainable management of fisheries. Nongovernmental organizations in some of Sri Lanka’s export markets have begun to urge consumers to avoid YFT sourced from the Indian Ocean to reduce the pressure on the overfished stock (Beament 2019). In addition, recently several supermarkets and brands in the United Kingdom have taken a voluntary action to cut their sourcing of YFT from the Indian Ocean by half, with the aim of pressuring the IOTC to ramp up its regulatory efforts to rebuild the YFT stock (McVeigh 2020). This move reflects the market’s continued and growing interest in sustainability certification, such as through the Marine Stewardship Council. This creates marketing opportunities for companies and countries that decide to take their fisheries down the eco-labeling path. It would be important for Sri Lanka and its private sector to explore opportunities for enhanced market access or price premia, building on their efforts through the ongoing Longline Fishery Improve- ment Project (FIP) (see Box 2.4 and Appendix E). At the same time, Sri Lanka has successfully accessed secondary markets in recent years to reduce its market risk, even though the unit price received for these markets is lower (Figure 2.7). Figure 2.7: Annual Export Value and Unit Price Received for Tuna by Target Region, 2010–2019 Source: Original figure using monthly export data from the Statistics Unit, Ministry of Fisheries, https://www.fisheries.gov.lk. Note: Unit price is calculated from total export amount and value data by region. Sri Lanka has taken important steps toward an improved MDF governance regime in re- sponse to the European Union red card, IOTC resolutions, and market demand. These steps include the introduction of electronic fish catch data collection in parallel with paper logbooks and deployment of onboard observers on all large vessels (IOTC 2019a), as well as the implementation of a mandatory vessel monitoring system (VMS) for high seas operating vessels, all of which contribute Role of Fisheries in Achieving National Objectives, 40 Opportunities, and Challenges Box 2.4 Sri Lankan Longline Fishery Improvement Project In an effort to enhance the governance of with conditions of MSC’s Fishery Standard the multiday fisheries, since April 2017 a (that is, SG > 0.60). However, all three tripartite coalition of the Seafood Exporters’ fisheries FAILED the pre-assessment because Association of Sri Lanka (SEASL), government two performance indicators scored less than authorities responsible for the regulation 0.60. and management of the fishery and export promotion, and the longline boat Table B2.4.1. Results of MSC 2018 Pre- owners’ associations engaged in harvesting assessment of Sri Lanka’s Longline Fisheries yellowfin and bigeye tuna and swordfish Performance Indicators ≥80 60-79 <60 Overall have been implementing the Sri Lankan Yellowfin Tuna 12 .14 02 0.68 Longline Fishery Improvement Project. Bigeye Tuna 12 13 02 0.69 The project’s long-term goals are for the Swordfish 12 13 02 0.69 longline fishery to continue indefinitely at Source: SEASL 2019. a level that maintains the ecological health and abundance of Indian Ocean yellowfin and bigeye tuna and swordfish stocks The project’s implementation progress to and the diversity, structure, and function date has been assessed as advanced. It has of the Indian Ocean ecosystem on which made significant progress in meeting an they depend, and to minimize the adverse IOTC requirement for monitoring harvest effects that the longline fishery causes, from fisheries for tuna and tuna-like species with management systems implemented using a creative approach that takes into in a responsible manner, in conformity with account the specific characteristics of the local, national, and international laws and Sri Lankan MDF vessel fleet (Appendix E). regulations, which maintain the present A number of key actions are necessary to and future economic and social options and achieve the project’s objectives: (a) Continue benefits arising from the fishery, in a socially to collect IOTC fisheries information and responsible and economically fair manner. data using the local observer protocol with Regarding the Marine Stewardship Council observers on the west coast (Dikkowita and (MSC) Fisheries Standard, the FIP objective Negombo); (b) Introduce and implement is for one or more of the fisheries to achieve the local observer protocol with DFAR, a level equivalent to an unconditional pass, boat owners and skippers on the south where the scoring guidepost (SG) is over coast (Matara); (c) Develop and introduce 0.80 (SG > 0.8), by 2023. The project seeks a procedure that will ensure the successful to minimize any adverse effects the fisheries live release of endangered, threatened and may cause by implementing a management protected species accidentally caught in the system in conformity with national and longline fishery; (d) Research and develop a international laws. Through these activities, national policy to enable Sri Lanka to respond the project is addressing all 28 of the to IOTC’s Harvest Control Strategy, Rules indicators associated with the MSC Fisheries and Tools for yellowfin and bigeye tuna and Standard. swordfish fisheries; (e) Improve the collection and analysis of IOTC fisheries information An MSC-approved pre-assessment of Sri and data by the National (Scientific) Observer Lanka’s longline fisheries for yellowfin and Programme on vessels more than 24 meters bigeye tuna and swordfish conducted in long; and (f) Review and update the NPOA 2018 suggested that the three fisheries were IUU Fishing 2018–2022. operating at a level consistent with a PASS Source: “Sri Lanka Tuna and Swordfish – Longline,” Fishery Improvement Project, Progress Tracking Database & Tools, Fishery Progress, https://fisheryprogress.org/ fip-profile/sri-lanka-tuna-and-swordfish-longline. Priorities for Sustainably Managing Sri Lanka’s Marine Fisheries, Coastal Aquaculture, and the Ecosystems That Support Them 41 to compliance with the IOTC resolution concerning Mandatory Statistical Reporting Requirements for IOTC Contracting Parties and Cooperating Non-contracting Parties (CPCs). Sri Lanka’s adoption of electronic data collection system using mobile apps and tablets also increases the efficiency of data reporting, and analysis for decision-making, in relation to Resolution 18/07. Nonetheless, Sri Lanka con- tinues to face challenges in complying with Resolution 11/04 on a Regional Observer Scheme, which requires that trained observers be deployed on selected vessels for the duration of a fishing trip and collect a range of scientific data upon returning to land.24 Sri Lanka has been experimenting with a crew-based observer scheme for its smaller vessels (see Appendix E) and should also explore modern technology in the form of small cameras and data storage equipment. This is another solution rapidly gaining adoption on many longline tuna fleets around the world and might be easily adapted to the Sri Lankan context. However, illegal, unreported, and unregulated fishing is observed in both Sri Lanka’s EEZ and beyond the exclusive economic zone, and there remain some disagreements between Sri Lanka and the IOTC regarding compliance with related IOTC resolutions. In September 2020, the IOTC Compliance Committee raised concerns25 regarding compliance with Resolution 19/04 con- cerning the IOTC record of vessels authorized to operate in the IOTC area of competence (see Appen- dix F). In September 2020, the IOTC prepared a draft IUU vessels list,26 including a disputed five vessels registered to fish in Sri Lanka’s EEZ but that were prosecuted for IUU fishing within the waters of the British Indian Ocean Territory without a license. In Sri Lanka, vessels greater than 24 meters that fish in offshore waters are obliged to install transponders of VMS, and therefore the vessels with EEZ fishing permits did not have transponders. In 2013, Sri Lanka developed a National Plan of Action to Prevent, Deter, and Eliminate IUU Fishing (DFAR 2013), and it would be advisable to review effectiveness of its implementation and explore possible improvements in its monitoring, control, and surveillance (MCS) systems.27 Western consumers are increasingly valuing social or ethical factors in their purchasing de- cisions, which may create a branding opportunity and price premium for some vessels in the MDF fleet. Large industrial vessels that stay at sea for months or an entire year are perceived by many Western consumers as violating decent working conditions and, in extreme cases, even human rights. The result of this increased public awareness has been that Western retailers have begun more in-depth assessments of supply chains from a social context. This analysis has considered areas that are not just limited to forced labor violations but also health and safety, fair pay, and contractual ar- rangements (to name a few) (Leschin-Hoar 2018). When Sri Lanka’s MDF fleet only fished for a few days, the market might have perceived Sri Lankan seafood through a highly favorable social lens, not too different from the blue swimming crab fishery: “local fishers catching a few fish at a time in their local waters and being compensated fairly.” This could once again become a point of differentiation and an opportunity for a price premium for smaller vessels fishing closer to shore, especially handline vessels that might target swordfish, skipjack, mahi-mahi/dolphinfish, or other underexploited resource 24 https://www.iotc.org/cmm/resolution-1104-regional-observer-scheme. 25 IOTC Circular 2020-39 was prepared from the draft IOTC IUU vessels list for 2020, including the fishing vessels IMULA 0641 KLT (LAKNA DHEE), IMULA 0541 KLT (CHATHURANGA 02), IMULA 0096 KLT (NISANSALA 01), IMULA 0811 GLE, and IMULA 0195 TCO (MANGALA), all flagged to Sri Lanka. https://www.iotc.org/documents/draft-iotc-iuu-vessels-list-2020-0. 26 The IOTC Draft IUU Vessels List, September 21, 2020. https://www.iotc.org/documents/iotc-draft-iuu-vessels-list. 27 The national plan with regard to MCS systems is based on the Gazettes of 1997 and 2011, which make the use of transponders compulsory for the local multiday fishing boats fishing in offshore waters (Gazette No. 1730/9, November 1, 2011), and for all foreign fishing boats fishing in high seas that have been issued with permits to land their catches in a port of Sri Lanka (Gazette No. 972/4, April 21, 1997). Role of Fisheries in Achieving National Objectives, 42 Opportunities, and Challenges (the use of gillnets would probably disqualify a vessel from this type of certification because of bycatch issues). To promote decent working standards in the fishing sector, the International Labour Organiza- tion (2020) recently completed a gap analysis and outlined the benefits and challenges of ratifying the Work in Fishing Convention of 2007. Certifications such as Fair Trade USA and Naturland (Germany) have begun certifying socially responsible fisheries. Overall, social compliance is very likely to become a more and more important part of supplying high-value markets. The MDF fleet is likely going to need to invest in this area to ensure it can keep pace with international social requirements Sri Lanka has experience as an active member of the IOTC and the G-16 Indian Ocean coastal states and can further exercise leadership in pursuing aspirations for higher benefits from Indian Ocean tuna and other fish resources and their sustainable management. With an ap- proximately 1,620-kilometer-long coastline and 517,000-square-kilometer EEZ, Sri Lanka aspires to derive larger benefits from the ocean’s resources, including notably tuna, to provide prosperity and splendor to its people. Sri Lanka can pursue these aspirations through continuous active and effective participation in the IOTC scientific and political processes. Specifically, this includes assessing proposed resolutions, developing own resolutions potentially in collaboration with G-16 countries, and adopting and implementing resolutions, including those regarding contribution to the overall harvest reduction in the YFT stock rebuilding plan. Sri Lanka may consider seeking technical assistance for institutional capacity enhancement to this end. Sri Lanka may seek enhanced subregional coordination among coastal states that are part of the G-16. Such initiatives would enjoy credibility and be built on Sri Lan- ka’s and other G-16 countries’ full compliance with the IOTC conservation and management measures and the YFT rebuilding.Challenges Challenges Each of the challenges listed below contribute to a significant and growing market risk, mean- ing that high-value export markets may soon begin to close to Sri Lanka’s tuna exports unless mitigatory measures are taken, including taking advantage of the above-mentioned opportunities. The main constraint for the multiday fisheries is the degraded stock status of yellowfin tuna resulting from weak governance in the IOTC. The long-term financial and economic viability of the Sri Lankan MDF is directly linked to the success of the IOTC in adopting—and the contracting parties ef- fectively implementing—a regional robust stock rebuilding plan.28 In 2019, the IOTC Scientific Committee (SC) designated the YFT stock as overfished and subject to overfishing,29 while that of bigeye tuna was assessed as not overfished but subject to overfishing, and that of skipjack tuna was determined to be not overfished and not subject to overfishing (IOTC 2019a).30 The unfavorable YFT stock status had already been established in 2015,31 leading to an IOTC resolution to adopt an interim rebuilding plan aiming at re- 28 Calculated based on “2018 exports of 14,787 tons of processed tuna were valued at US$133 million (82% from yellowfin tuna ex- ports, 15% from bigeye, and 4% from skipjack)” (IOTC 2019b, 12), and total fish export value in 2018 of $295 million (MOF 2018a). 29 Overfished: “A stock that is overfished has a biomass level depleted to a degree that the stock’s capacity to produce maximum sustainable yield (MSY) is jeopardized. A population can be overfished but be managed under a rebuilding plan that over time returns the population to a level that can support the MSY.” Overfishing: “A stock that is subject to overfishing has a fishing mortality (harvest) rate that is higher than the rate that produces maximum sustainable yield (MSY). MSY is the largest long- term average catch or yield that can be taken from a stock or stock complex under prevailing ecological, environmental condi- tions and fishery technological characteristics.” As defined by FishWatch, NOAA, https://www.fishwatch.gov/sustainable-sea- food/faqs/overfishing-vs-overfished-the-same-thing. 30 However, in the December 2020 IOTC Scientific Committee meetings, concern was expressed that “[t]otal catches in 2018 were 30 percent larger than the resulting catch limit from the skipjack HCR for the period 2018–2020.” The management advice stat- ed that the commission needs to ensure that catches of skipjack tuna in the 2021–2023 period do not exceed the agreed limit (https://iotc.org/meetings/23rd-scientific-committee). 31 The IOTC 18th Scientific Committee in 2015 noted that YFT is overfished and subject to overfishing based on guidelines on target and limit reference points in Resolution 15/10 (superseding Resolution 13/10) and a stock assessment conducted in 2012 (IOTC 2015). Priorities for Sustainably Managing Sri Lanka’s Marine Fisheries, Coastal Aquaculture, and the Ecosystems That Support Them 43 ducing the total catches of YFT to sustainable levels. Thus, in 2016, for some IOTC Contracting Parties and Cooperating Non-contracting Parties (CPCs), a catch target was set relative to their 2014 baselines, de- pending on fleet/gear type and exceedance of a minimum baseline catch. Resolution 16/01 on an Interim Plan for Rebuilding the Indian Ocean Yellowfin Tuna Stock applied to “to all fishing vessels targeting tuna and tuna like species in the Indian Ocean of 24 meters overall length and over, and those under 24 meters if they fish outside the EEZ of their flag state, within the IOTC area of competence.”32 Resolutions in 2017, 2018, and 2019 maintained the same catch reduction targets.33 For Sri Lanka, the resolutions apply only to its longline fleet, requiring it to keep the annual catch of this fleet below 7,762 MT, or 90 percent of 8,625 MT (Table 2.9).34 Sri Lanka was able to surpass this reduction requirement in 2017 by 25 percent, arguably because of the lingering effects of the European Union red card on tuna imports from Sri Lanka in 2015 and 2016 (Table 2.9). However, the catch target was exceeded in 2018 and 2019.35 Table 2.9: YFT Nominal Catch in Sri Lanka, by Year and Fleet (MT) 2014   2013 Target 2015 2016 2017 2018 2019 (Baseline) Gillnet, BEEZ 1,589 n.a. 1,131 407 73 85 47 Longline, BEEZ 8,226 8,625 7,762 5,934 3,937 6,448 8,554 10,746 PSRN, BEEZ 403 167 n.a. 109 215 43 32 77 Gillnet, EEZ 9,655 n.a. 5,074 2,710 3,068 1,394 1,977 Longline, EEZ 10,911 n.a. 8,924 13,363 22,263 25,687 21,989 Ring net, EEZ 2,455 n.a. 3,424 1,751 5,460 2,859 1,832 Handline, EEZ 510 n.a. 208 913 470 1,087 7,943 Trolling, EEZ 2,109 n.a. 204 2,944 85 80 107 Beach seine, EEZ 1,531 n.a. - - 56 32 37 TOTAL 32,231 37,769 25,008 26,240 37,965 39,810 44,756 Source: Data set “Nominal Catches by Species, Gear, and Vessel Flag Reporting Country,” Indian Ocean Tuna Commission, Victoria, Seychelles (accessed April 29, 2021), https://iotc.org/data/datasets/latest/NC-ALL; IOTC 2020c. Note: BEEZ = beyond the exclusive economic zone, EEZ = exclusive economic zone, n.a. = not applicable, PSRN = purse seine ring net. 32 Catch restrictions by gear were defined as follows (https://www.iotc.org/cmm/resolution-1601-interim-plan-rebuilding-indi- an-ocean-yellowfin-tuna-stock): • Purse seine: a. CPCs whose purse seine catches of yellowfin reported for 2014 were above 5,000 MT to reduce their Purse seine catches of yellowfin by 15 percent from the 2014 levels; • Gillnet: CPCs whose gillnet catches of yellowfin reported for 2014 were above 2,000 MT to reduce their gillnet catches of yellowfin by 10 percent from the 2014 levels; • Longline: CPCs whose Longline catches of yellowfin reported for 2014 were above 5,000 MT to reduce their Longline catches of yellowfin by 10 percent from the 2014 levels; • CPCs’ other gears: CPCs whose catches of yellowfin from other gears reported for 2014 were above 5,000 MT to reduce their other gear catches of yellowfin by 5 percent from the 2014 levels. 33 2017: https://www.iotc.org/cmm/resolution-1701-%E2%80%A8-interim-plan-rebuilding-indian-ocean-yellowfin-tu- na-stock-iotc-area-competence; 2018: https://www.iotc.org/cmm/resolution-1801-interim-plan-rebuilding-indian-ocean-yel- lowfin-tuna-stock-iotc-area-competence-0; 2019: https://iotc.org/cmm/resolution-1901-interim-plan-rebuilding-indi- an-ocean-yellowfin-tuna-stock-iotc-area-competence. 34 See also IOTC (2018), Table 3. 35 It is important to note, however, that Sri Lanka has significantly reduced both its EEZ and beyond the economic exclusive zone catches, which “are considered to be one of the least catch controllable and least environmentally sustainable gears” (Resolution 16/01, p. 1, https://www.iotc.org/cmm/resolution-1601-interim-plan-rebuilding-indian-ocean-yellowfin-tuna-stock), as well as trolling and beach seining in the EEZ. Role of Fisheries in Achieving National Objectives, 44 Opportunities, and Challenges Poor implementation to date of agreed catch restrictions is almost certain to result in the IOTC’s need to soon adopt more severe restrictions to rebuild the YFT stock since overfish- ing continues to drive down YFT biomass. The Report of the 22nd Session of the IOTC Scientific Committee states that it “NOTED that despite the progress that has been made to reduce the fishing pressure on the yellowfin stock, the gear groups that are subject to Resolution 18/01 (superseded by 19/01) have not fully achieved the targeted catch reduction as set out by the resolution, and many of the fleets that are not subject to the catch reduction have increased their catches. The SC AGREED that one option to improve the reduction of yellowfin catches would be to apply the catch limit to all gears/fleets” (IOTC 2019a). This would apply to Sri Lanka’s entire fleet, including the EEZ longline fleet whose YFT catch in 2019 was double that in 2014, and the handline EEZ fleet whose 2019 level was 13 times the 2014 level.36 During its June 2021 annual meeting, the IOTC adopted Resolution 21/01 on an interim plan for rebuilding the Indian Ocean yellowfin tuna stock in the IOTC area of competence, which set catch limits on YFT. This resolution is broader and more ambitious than the previous rebuilding plan (Resolution 19/01), which it supersedes. It asks for further reduction of Sri Lanka’s catch limit for 2021 and subsequent years. In 2021 (the current year), Sri Lanka’s catches would need to be reduced by at least 27 percent, and possibly more, to comply with the new resolution. However, beyond the challenge this represents for the Sri Lankan MDF, the overall effectiveness of this resolution has been called into question given that the decision was not unanimous, with at least five CPCs expressing their intent to formally object. Beyond the weakness of the IOTC itself, Sri Lanka also risks being perceived in certain mar- kets as not doing enough to fish sustainably. The Sri Lankan Longline FIP (see Appendix E) is intended to serve as a road map toward sustainability and certification. Seafood buyers, retailers, and nongovernmental organizations pay close attention to FIPs for signs of regular progress. The govern- ment, the fleet, and exporters could take a number of steps that would send a strong signal to markets regarding their commitment to sustainability, including a more aggressive implementation of all IOTC resolutions, including Resolution 11/04 concerning the regional observer scheme, and its national plan of action to fight IUU. In this regard, and in addition to actions taken by Sri Lanka to improve the status of YFT in the Indian Ocean, any effort to generate greater transparency and traceability in the MDF would be seen as a positive. Spoilage of fish in unrefrigerated MDF vessels is another challenge for increasing fish ex- ports. The quality of ice used in MDF vessels is often low, mainly because it is produced using con- taminated water and its quantity is often insufficient compared to the trip length. NARA estimates the economic value lost due to spoilage at 40 percent, equivalent to some 22 billion Sri Lanka rupees per year (NARA 2020).37 These conditions can also lead to histamine poisoning of consumers of Maldive fish since skipjack tuna caught by MDF vessels is the main species used for this low-cost and popular product. The MOF is exploring various strategies to overcome this problem, including (a) improving fish handling on board vessels, (b) retrofitting vessels with refrigeration systems, (c) providing vessels with 36 It may also be argued that by virtue of using purse seines minimally and having reduced the use of gillnets significantly, the Sri Lankan MDF fleet has less impact on this immature share of the YFT stock than fleets that use those types of gear extensively. 37 Quoted in NARA (2020), but not verified by the World Bank. NARA reports that the economic loss is due to loss of quality resulting from spoilage, not loss of quantity from fish being discarded. In fact, even spoiled fish is used in the local market after being dried; however, the market value of such fish is much lower than what it could fetch in the export market if it were land- ed in high quality. The total annual economic loss estimate appears to be based on this value differential. Priorities for Sustainably Managing Sri Lanka’s Marine Fisheries, Coastal Aquaculture, and the Ecosystems That Support Them 45 oceanographic data to help them locate tuna schools and thus reduce trip duration, and (d) strength- ening regulations on ice quality. Once landed, hygiene and food safety concerns continue for fish des- tined for domestic markets as washing, temporary storage, handling, and processing in landing centers and onward transportation are generally carried out under unsanitary conditions (NARA 2021a, 2021b). DFAR reports that fish-handling techniques applied on board MDF vessels are often not con- ducive for ensuring high-quality tuna. Steps must be taken quickly and correctly by crew members on tuna longline vessels before storing the fish on ice. While not particularly complex, this requires training and experience. DFAR, with support from the FAO, has invested in recent years in training crew members in the MDF on the necessary steps and techniques required. A new regulation is also being prepared with provisions on proper fish handling. At the same time, it is unclear whether many or most crew on all vessels are incentivized to focus on quality versus quantify of fish caught and stored. A small project led by NARA, in partnership with DFAR, the National Engineering Research and Development Centre of Sri Lanka (NRDC), and the FAO, seeks to identify and pilot a ves- sel refitting design. The design objective is to maintain skipjack tuna caught by smaller category 2 vessels using gillnets at a temperature between –2°C and +2°C for 45 days. One vessel is being retro- fitted and experimental trips are projected to begin in the months ahead. If successful, this could help improve the quality and volume of an important source of fish for the domestic market. The design will likely be applicable only to category 2 vessels. Further exploration on technical and financial feasibility for the rest of the MDF fleet will be needed as the vessels vary considerably among the five categories and within each category (MEP 2021). A financial analysis of refitting MDF vessels indicates high costs and limited profitability. A survey of 378 MDF vessels, conducted under this ASA in April–May 2021, indicates that most of the fleet currently operates profitably, with net annual per vessel income ranging from $20,000 for the smallest vessels to $250,000 for the most successful category 5 vessels. However, the fleet is susceptible to a combination of shocks, such as the need to reduce catches to comply with rebuilding plans, possible increases in operating (fuel, labor, ice) costs, and shifting market preferences. Survey data were also used in a financial analysis to estimate likely changes in profitability among all five vessel categories resulting from possible investments in retrofitting either onboard refrigeration or freezing systems. Financial models indicate that retrofitting is unlikely to be a profitable option for improving product quality and profits except in the largest (category 5) vessel. If other attributes such as traceability and sustainability could be secured and if this would garner at least a 10 percent price markup, then it might make sense for smaller vessels to consider investing in refrigeration (freezing would still not be logis- tically viable) (MEP 2021). Further detailed analysis would be needed to validate these findings at the level of individual vessels. Government support to financially viable retrofitting schemes using scarce public funds may be justifiable when combined with other measures contributing to stock restoration, an im- portant public good. Vessel owners remain wary of major capital investments in their vessels for fear of increased operating costs and climate and market risks. This is especially true for increasing the size of vessels. Even with a major grant component, a 2016 initiative to enlarge some vessels up to 55 feet was rejected by owners as too risky, according to DFAR. Under circumstances where investments in vessel retrofitting and fleet modernization are strictly conditional on compliance with measures that support the IOTC YFT stock rebuilding plan, such public support to private entities would contribute to a public good of improved stock health and hence be justifiable. Role of Fisheries in Achieving National Objectives, 46 Opportunities, and Challenges Furthermore, the government is taking measures to improve the MDF fleet’s ability to lo- cate schools of migrating fish through new technology (“fish forecasting”) and training of skippers (GoSL 2019). These measures are intended to reduce the time and financial cost to vessels for a given amount of harvest and also reduce the degree of quality loss. However, this could also stim- ulate higher overall catches of an already overexploited yellowfin stock unless applied in concert with effective enforcement of harvest reduction commitments, fleet management, and oversight. The government is also considering further fleet development, for which it has submitted plans to the IOTC (Table 2.10 and Table 2.11). To this end, the government is considering the develop- ment of a shipyard to construct/maintain multiday vessels near Trincomalee Harbour (GoSL 2019). A government plan to develop a harbor in Oluvil for the operation of large-scale boats vessels has already been realized. While modernizing the MDF fleet would make it more efficient, these plans, too, need to be carefully assessed to avoid increasing overall fishing capacity and effort around the overexploited YFT stock. The government would be well advised to reassess its fleet development plan in light of the recent IOTC resolution reducing catches to rebuild the YFT stock. Table 2.10: Fleet Development Plan for Tropical Tuna, 2021–2025 Category of vessel Base Achievement anticipated year Type Mean GT Sizes (2020) 2021 2022 2023 2024 2025 Longline and gillnet 19.03 Less than 15 m 1,996 0 0 0 0 0 (combination) vessels 52.91 15 m–24 m 0 10 15 20 25 30 18.28 Less than 15 m 1,828 50 75 100 125 150 58.91 15 m–24 m 29 30 40 40 40 40 Longline vessels 282.54 24 m–45 m 23 25 30 35 35 35 1,140.82 45 m–75 m 0 1 2 2 2 3 17.63 Less than 15 m 0 30 40 50 60 60 Small-scale ring net vessels 25.83 15 m–24 m 0 10 10 15 25 25 286.89 24 m–45 m 0 1 2 2 2 3 Purse seine vessels 1,185.12 45 m–75 m 0 1 1 1 1 1 Source: IOTC 2020a. Table 2.11: Fleet Development Plan for Swordfish, 2021–2025 Category of the vessel Base year Achievement anticipated Type Mean GT Sizes (2020) 2021 2022 2023 2024 2025 Longline and gillnet 19.03 Less than 15 m 0 0 0 0 0 0 (combination) vessels 58.91 15 m–24 m 0 1 2 2 2 3 Longline vessels 282.54 24 m–45 m 0 1 1 1 1 1 Source: IOTC 2020a. Upgrading the MDF fleet will likely lead to a shift in jobs, with potential social impacts that need to be addressed. Larger and more technologically advanced vessels may require fewer crew members to operate it, reducing fishing jobs in the subsector. Indirectly, a decrease in the share of lower-quality fish for domestic markets will impact workers in local value chains, potentially reducing Priorities for Sustainably Managing Sri Lanka’s Marine Fisheries, Coastal Aquaculture, and the Ecosystems That Support Them 47 the number of fish drying jobs, which are carried out mostly by women. Given that export-quality tuna passes through efficiently operated processing companies in Sri Lanka, there would need to be a sizable increase in raw material (which is unlikely given the status of the stock) for tuna processors to signifi- cantly increase their labor force. Therefore, a shift to exports would likely result in an overall reduction of lower-wage jobs done by lower-income segments of the society. On the other hand, the building and maintenance of a modern fleet will generate newer and more skilled jobs. Similarly, the potential expansion of the skipjack and swordfish harvest and their processing into new products, as suggested above, would generate new jobs for both men and women. The potential losers in this shift of jobs could be compensated through social transfers, skill development, and promotion of viable alternative income-generating activities financed from increased export earnings, through the development of a “productive inclusion strategy,” which covers these options in a systematic manner (see Section 3.2.3). Importantly, it is worth reiterating that fleet development, including refitting with sea- water refrigeration systems, advanced technology to locate schools, and enhancement of landing infrastructure, may drive an increase in YFT catches. Incurring high investment costs, and the improved capacity thus created, understandably leads vessel owners to attempt to maximize harvest, which would impact negatively on YFT stock recovery efforts. To mitigate this risk, govern- ments often develop long-term fleet management plans that cap effective fishing capacity (not just the number of vessels) in line with sustainable harvest levels. Notably, harvest-level shares are allocat- ed to individual vessels and carefully monitored so that the total harvest by the fleet stays within preset sustainable boundaries. Vessel owners claim that predation of hooked yellowfin on MDF longlines by cetaceans is as high as 50 percent and thus a major factor in their profitability, and the need to extend the length of fishing trips and catch more yellowfin. MDF vessel owners’ association representatives report that small whales/large dolphins are regularly seen following boats when fishing gear is set and have learned to wait for tuna to get hooked before eating most of the catch, leaving only the heads.38 Owners have experimented unsuccessfully with some acoustic technology and remain frustrated and concerned by these interactions. 2.5.4 Coastal Aquaculture The sustainable intensification of an export-oriented aquaculture subsector creates op- portunities for significant increases in seafood supply, employment, and revenues to both government and the private sector. To capture this potential, the government has elabo- rated an ambitious program for the development and expansion of coastal and freshwater aquaculture. The NAQDA sector development plan for 2020–2025 sets yearly targets for increasing production volumes and export earnings for high-value shrimp (P. monodon and L. vannamei), sea bass, mud crab, sea cucumber, seaweed, and milkfish. The plan envisages increasing annual production, export earnings, and jobs in coastal aquaculture from 7,568 MT, $24 million, and 7,350 in 2019 (Table 2.6) to, respectively, 60,000 MT, $450 million, and 32,000 in 2025 (Figure 2.8). Realizing these targets will require considerable investment from both the public and private sectors. 38 ASA consultation mission meeting with Tyron Mendis, Ruwan Fernando, and Ruwan Pradeep, the president, secretary, and treasurer, respectively, of the All Island Multiday Boat Association, July 23, 2021. Role of Fisheries in Achieving National Objectives, 48 Opportunities, and Challenges Figure 2.8: Targeted Coastal Aquaculture Production, Jobs, and Export Earnings Source: NAQDA 2021. Opportunities The growing global demand for seafood offers an opportunity for Sri Lanka to become a global aquaculture product supplier by expanding, diversifying, and intensifying its coastal aquacul- ture (FAO 2020). Already, over half of fish, shellfish, and seaweed consumed or used by people globally is produced on farms. Consolidation and the shift to more environmentally sustainable production systems have reduced the rapid rate of expansion witnessed in the 1980s and 1990s, but aquaculture still grew at 5.3 percent between 2001 and 2018 (FAO 2020), while capture fisheries have continued their global decline. Sri Lanka can play a role in meeting this global demand by diversifying primary products and deepening value addition, creating skilled, better-paid jobs, especially for women and youth. The ornamental fish industry also has potential. Although exact figures on the value and trade of the ornamental fish industry do not exist, the estimated export value of ornamental fish and invertebrates im- ported into different countries worldwide was approximately $348 million in 2014 (Biondo and Burki 2020). Pet industry surveys have estimated the aquarium industry worth at more than $1 billion (for example, Cato and Brown 2003). Although most fish kept in aquariums are from fresh water, the acquisition of marine ornamental fish has greatly increased. A typical reef tank makes use of live rock, both hard and soft corals, invertebrates such as crustaceans (for example, crabs, hermit crabs, shrimps), mollusks (for example, snails, clams, and scallops), echinoderms (for example, starfish, sand dollars, sea urchins), and a wide variety of colorful fish. Consequently, the market value spent on many species of marine origin associated with the ornamental trade has greatly increased. For example, the retail value for a kilogram of coral reef fish des- tined for the aquarium trade may be worth $500 to $1,800, while a marine fish used for human consumption can be priced between $6 and $16.50 per kilogram (Cato and Brown 2003; Wabnitz et al. 2003). The “ecosystem approach to aquaculture” (EAA; Box 2.5) reduces financial and environmental risks, while increasing efficiency to improve total cash flow and product quality to access more lucrative markets. At the same time that markets are growing and increasing the opportuni- Priorities for Sustainably Managing Sri Lanka’s Marine Fisheries, Coastal Aquaculture, and the Ecosystems That Support Them 49 Box 2.5 The Ecosystem Approach to Aquaculture Aquaculture growth invariably involves the Figure B2.5.1. Transitioning from a Conventional increased usage of land, water, and other Approach to an Ecosystem Approach to Aquaculture natural resources. Globally, aquaculture has increasing social and economic impact Conventional Ecosystem approach approach through the production of food, contribution Top-down Participatory to livelihoods, and generation of income. One objective: production Multiple objectives However, when badly managed, aquaculture Sectoral Interaction with other sectors can affect ecosystems functions and services, Farm scale (most common) Multiple (nested) scales with negative environmental, social, and Predictive Adaptive economic consequences. Often, poorly Scientific Knowledge Extended knowledge managed aquaculture development is a Prescriptions Incentives result of a lack of awareness of ecosystem Corporate Public/Transparent processes and links between ecological and social processes, a lack of integrated Source: FAO 2010. multisectoral planning, and institutions incapable of implementing strategic of government. The premise of the EAA is in approaches, with priority afforded to short- the Convention on Biological Diversity, which term interests by private sector and the poor. defines EAA as a strategy for the integrated management of land, water, and living resources The Food and Agriculture Organization that promotes conservation and sustainable use (FAO) has made important advances in an equitable way. regarding the formulation of instruments and codes to facilitate sustainable The EAA guides “how to do aquaculture,” not development of the aquaculture sector. “what to do,” with the primary objective of Technical guidelines on the ecosystem ensuring human well-being and ecological well- approach to aquaculture (EEA) developed being and facilitating the achievement of both to support Articles 9 and 10 of the FAO through effective governance of the sector/areas Code of Conduct for Responsible Fisheries where aquaculture occurs and has potential for (CCRF) is an important one. According to development. It is based on three key principles: FAO guidelines, EAA is defined as an “a strategy for the integration of the activity Principle 1: Aquaculture development and within the wider ecosystem such that management should take account of the full it promotes sustainable development, range of ecosystem functions and services and equity and resilience of interlinked social- should not threaten their sustained delivery to ecological systems.” The prime goal of society. EAA is to overcome the sectoral and intergovernmental fragmentation of Principle 2: Aquaculture should improve resource management efforts and to develop human well-being and equity for all relevant institutional mechanisms for effective stakeholders. coordination among various sectors active in the ecosystems in which aquaculture Principle 3: Aquaculture should be developed in operates and between the various levels the context of other sectors, policies, and goals. Source: FAO 2010; FAO and World Bank 2017. Role of Fisheries in Achieving National Objectives, 50 Opportunities, and Challenges ties for profits and jobs, the need to conserve land, water, and biodiversity is driving “sustainable inten- sification,” growing more with fewer natural resources (GO-Science 2011). The EAA aims at integrating aquaculture activity within the wider ecosystem such that it promotes sustainable development, eq- uity, and resilience of interlinked social-ecological systems (FAO 2010). EAA technologies include solar energy, sophisticated feeds and feeding strategies, improved breeds, and high-tech water quality mon- itoring and management. Through EAA, the aquaculture industry has been increasing resilience and reducing volatility caused by diseases, climate change, and conflict with other natural resource users. Sri Lanka’s existing infrastructure, institutions, and human capital provide a good basis for adopting the EAA for reaching the targets specified in NAQDA’s plan. Existing infrastructure assets include roads, cold storage, and processing capacity already built for the capture fishery and aquaculture subsectors. Institutionally, besides NAQDA, the MOF houses NARA, which is Sri Lanka’s premier public sector research organization in fisheries and aquatic matters, mandated to support sec- toral policies and interventions through targeted research. As mentioned earlier in this chapter, both agencies are already engaged in piloting and demonstrating relevant practices. In addition, a number of well-established universities with specialized aquaculture departments provide academic research and train professionals. It is also worth mentioning that Sri Lankan farmers have developed import- ant management and operational skills over many years of shrimp farming. In general, Sri Lanka has high-quality human resources as indicated by its Human Development Index ranking of 72nd globally and 1st among the South Asian countries.39 Challenges While Sri Lanka’s natural resource base is generally conducive to aquaculture, identifying aquaculture zones, nevertheless, is a challenge because of competing uses and the existence of sensitive ecosystems. Sri Lanka’s coastal zone is complex with ongoing competition for space between new and traditional users. A brief field survey of the western and southern coasts from Co- lombo to Hambantota indicates this region has very little potential for coastal aquaculture because of urbanization and limited areas of sheltered lagoons and bays. Other constraints such as conflicts with wildlife, tourism, fisheries, and agriculture may limit potential of the southern coast. As such, the majority of habitat suitable for coastal aquaculture development may be in the Northern and Eastern Provinces, which are relatively less developed; however, plans exist for sectoral development there, too, notably tourism, requiring streamlining among different stakeholders and their interests. The Northern and Eastern Provinces are also rich in sheltered water bodies; however, some of these ecosystems are highly sensitive or show signs of stress, in terms of water quality, water exchange, water depths, sa- linity, and fish stock health. Any development that could potentially further impact or be impacted by natural coastal processes, such as water circulation or sedimentation, would require planning to identi- fy measures to mitigate/reverse these adverse environmental trends, such as watershed management, land-use zonation, regulation of uses, and adaptation. These measures can then be integrated into the overall physical planning for the target areas. Therefore, for identifying aquaculture zones, a com- prehensive spatial mapping will be imperative to understand ground realities, including notably local stakeholder preferences and environmental risks. It is also important to take into account which factors are critical for commercial viability. Zoning should fundamentally consider proximity to input and output markets, availability or plans for the establishment of support services, and access to infrastructure. 39 “Latest Human Development Index Ranking,” Human Development Report 2020, United Nations Development Programme, http://hdr.undp.org/en/content/latest-human-development-index-ranking. Priorities for Sustainably Managing Sri Lanka’s Marine Fisheries, Coastal Aquaculture, and the Ecosystems That Support Them 51 Within identified aquaculture zones, sustainable production levels of target species depend on biophysical conditions such as topography, soil texture, and water quality, which must be ascertained first. Within identified zones, existing “carrying capacity” models should be used to estimate the biophysical limit on production. For example, scarcity of water of required quality is a major constraint for shrimp culture, and mollusks are sensitive to the type of soil and soil pH. Similarly, coastal pollution implications from nutrient enrichment and wastewater and the assimilation capacity of the receiving environment would typically need to be factored into zoning and site identification. This would provide NAQDA with a clear picture of the potential for aquaculture within the area con- sidered along with realistic production figures (FAO 1998). In addition, there is a need for market information to identify product type, form, and prices related to the high-value species that NAQDA intends to diversify into. Where spatial mapping and carrying capacity analysis indicate favorable physical conditions to produce sizable quantities of a target species, quality market information is needed to estimate what profit margins might look like. The size of fish, the preservation state (fresh, frozen, pickled, salted, smoked, tinned), and product form (whole fish, headed gutted, fillets, fingers, and so on) are critical for making decisions on the scale of investment that might be warranted. The exact location of markets and the size of market segments (high-end/luxury, middle class, food-deficient) need to be identified so that processing and value ad- dition investments are tailored to demand. This information will allow calculations of profitability of a given product type in a given location in light of site-specific carrying capacity. Limitations in awareness and worker skills, and in ability to finance, constrain Sri Lankan small and medium enterprises from adopting new technologies. Access to finance is arguably the most significant challenge. In a study of six success stories in aquaculture development, Kleih et al. (2013) identified lack of credit as the major challenge to the adoption of sustainable technology. In Sri Lanka, too, obtaining loans is a key problem that the private sector faces in engaging in aquaculture ventures. Commercial banks shy away from offering and providing loans to the aquaculture industry because of real and perceived risks associated with the subsector, and when they do offer loans, the collateral they require and the interest rates they charge make the loans unaffordable for most fish/ shrimp farmers, especially small- and medium-scale farmers. Establishment of hatchery technology for commercial seed supply and production is an ur- gent priority for the proposed high-value species. Insufficient seed supply for stocking is a ma- jor challenge in the development of commercial-scale aquaculture in the country currently. Sri Lanka needs training and development in hatchery technology for marine finfish, sea cucumber, and crab, and this is an urgent priority. Other than shrimp, hatcheries for species such as sea cucumber and milkfish are not developed for commercial-scale production as few producers grow these species currently (for example, for sea cucumber, there are two small private sector hatcheries in Mannar). Seed collection is mainly from the wild for sea cucumber and imported for milkfish. NAQDA has just started a hatchery for sea cucumber and milkfish and is in the process of verifying the technology. All shrimp hatcher- ies depend on wild brood stocks for post-larval production, and the inadequate supply of wild brood stocks to hatcheries is a challenge. At present, a commercial crab hatchery does not exist to provide seed stocks and commercial feed, as crab fattening in Sri Lanka has not yet reached commercial scales. Since demand is big for mud crab, fishers are currently collecting wild specimens, so wild populations are declining. The strategies to achieve the forecasted production targets for shrimp, sea bass, crab, sea cucumber, and milkfish are broadly identified in the plan. It is envisaged that NAQDA will have to Role of Fisheries in Achieving National Objectives, 52 Opportunities, and Challenges rely heavily on community-based organizations and private sector hatcheries in addition to their own aquaculture development centers to produce the required seed. Technologies such as for breeding and grow-out for finfish and shellfish species are not well developed for some high-value aquaculture species. These technologies are well developed in- ternationally, and transfer of such technology is required to develop and establish successful culture practices here. A pertinent example is the use of circular tanks with HDEP lining and water aeration in L. vannamei farming practiced in Malaysia and Thailand. Further, adaptive technologies to be de- veloped include areas of health management and pathology, feed formulation, value addition, aqua- culture engineering, aquaculture economics, and fish/shrimp applied genetics. In addition, factors that reduce the impact on the environment, support the sustainable use of natural resources, and improve animal welfare are important for the future sustainability of the industry in Sri Lanka. The plan states that new best management practices, good husbandry practices, and disease management practices along with good biosecurity measures are crucial to the sustainability of aquaculture businesses (in support of this, the World Bank Group is undertaking a separate cost-benefit analysis of disease man- agement strategies under the ongoing Agriculture Sector Modernization Project). These best practices in production techniques can then mitigate impacts without the use of chemicals and drugs.Enhanced capacity for research and development and extension services is a necessary condition for competi- tive aquaculture development. Building technical capacity for aquaculture science so the country can compete with other similarly placed countries and participate in the global dialogue is an absolute necessity that will play a major role in the industry’s future. NARA, the government’s foremost aquatic and oceanic research agency, lacks a fully equipped marine research center for aquaculture. Strong scientific research is essential for guiding development activities in the aquaculture sector. National research priority needs should be identified collaboratively for coastal aquaculture development, thus preventing duplication of research efforts. While NARA has received assistance from the FAO to design a multispecies marine hatchery on a 3-acre plot of land in the North Western Province close to the sea, it lacks the funding to construct the facility. The country also needs a good disease diagnosis facility for research and development as health management in aquaculture is very important. The plan also re- iterates that there should be strengthened coordination between NAQDA and NARA through regular dialogue and discussions Addition of value to raw materials through processing can reap significant benefits in mar- ket positioning. By moving a product closer to final retail form and format, more jobs and margins can be captured locally, and shipping costs (and thus the carbon footprint) significantly reduced. Mar- ket research and representation at promotion events can help producers and processors identify what they should produce and in what form it would best capture market share. Chapter 3 Vision and Program of Priority Investments for Coastal and Marine Fisheries As an island nation, Sri Lanka must continue to depend on a healthy and productive ocean for its long-term growth and prosperity. This can be undermined by short-term thinking that fails to secure the health of natural capital assets like fish stocks and the coastal ecosystems that support them and that underpin long-term economic productivity, and to anticipate the likely impacts of cli- mate change on the marine environment. To avoid this, strategic investments should focus on con- tributing to the government’s national development targets and the Sustainable Development Goals (SDGs), especially SDG 14. Drawing from the findings of the various pieces of their analysis and in re- sponse to the direction provided by the Sri Lankan government counterparts, the Bank team suggests the following 10-year vision for Sri Lanka’s coastal fishing communities. Next, we present a program of short-, medium-, and long-term priority investments to achieve the vision. 3.1. Vision By 2032, the fisheries sector is made up of financially, environmentally, and socially sustainable small and medium enterprises (SMEs) that generate high-quality jobs and provide high-qual- ity and healthy seafood to the country and global markets.1 Fishing SMEs avail themselves of efficient and climate-resilient infrastructure for harvest, landing, access, and value addition, and have access to inputs, services, and a labor force skilled in modern, sustainable technologies. The profitability and sustainability of their businesses allow them fair access to commercial finance. An internationally ac- cepted set of biosafety, environmental, and social standards are in place and enforced effectively and fairly by the state. They provide for a globally respected Sri Lanka brand, allowing access to premium markets. • Vision for capture fisheries: Having invested for several years in helping fishing communities rebuild overfished stocks, the government now helps coastal fisheries maintain high levels of productivity, add value, and minimize risk in the face of climate change. As a result, Sri Lanka has secured the sustainability of domestically harvested fish for local consumption while increasing 1 Here, the term SMEs is used to denote, for capture fisheries, fishers from traditional fishing communities who own one or more small-scale coastal vessels and have developed sufficient business skills and knowledge of fishery resource management to make decisions in their long-term financial interest, employ their neighbors, and potentially expand their role up the value chain. For aqua- culture (which includes mariculture), farmers may include members of traditional fishing communities and other entrepreneurs. Vision and Program of Priority Investments for 54 Coastal and Marine Fisheries its revenues from higher-quality exports. Sri Lanka’s leadership in a strategic alliance with other coastal nations in the Indian Ocean has ensured a strong recovery of yellowfin and bigeye tuna stocks, which is now paying dividends in higher catches of larger fish closer to shore. Having been supported through the rebuilding period, the multiday fleet now operates transparently with fewer but safer and sustainable vessels able to compete successfully in the evolving global market for fresh and frozen tuna. Because of strong investments in the development and implementation of modern, ecosystem-based management of fisheries, fishers are no longer poor and operate as sustainable and financially viable SMEs with modern and safe equipment. They are informed participants in the management process and associate their financial future with the health of the fishery. • Vision for coastal aquaculture: Recognizing that aquaculture is the future of global seafood supply, Sri Lanka has established itself as a reliable, high-quality supplier of aquaculture-based seafood specializing in species and volumes that provide commercial viability. As such, it enjoys sizable export revenues and good, sustainable jobs. The sector is characterized by well-planned and sited, environmentally sustainable, intensive production systems operated by efficient, pro- fessionally managed SMEs that apply best-in-class technology. Private sector–operated hatch- eries efficiently respond to fish farms’ demands in terms of quality and species. The National Aquaculture Development Authority (NAQDA) and the National Aquatic Resources, Research and Development Agency (NARA), in cooperation with Sri Lanka’s well-established universities, provide research and development (R&D) and extension support. New enterprises are provided with efficient guidance in meeting environmental and social standards in coordination with the environmental regulatory agencies to swiftly secure environmental permits and ensure contin- ued compliance with permit conditions. Staffed with technicians skilled in modern technologies, farms and processing SMEs comply with global biosecurity and sustainability standards and thus have preferential access to premier markets. Where ecologically appropriate, degraded ecosys- tems have been restored, are conserved, and provide services to aquaculture farms, such as water purification and protection from climate events. Financing and training programs for alternative livelihoods have helped former fishers and their family members develop means to work in aquaculture, coastal tourism or other grow- ing sectors, or along the value chains. Investments in basic infrastructure along with careful zoning have stimulated private investment in aquaculture, expanding this subsector significantly and sustain- ably, providing thousands of jobs and producing a diverse set of high-value products to meet growing demand in both Western and Asian markets. More livelihood options and social protection/supports for fishing families have helped man- age access and effort in coastal and multiday fisheries to rebuild stocks. A diverse package of trainings, job placement, public works programs, financing, and social security services have supported fishing communities implement and comply with management (rebuilding) plans that they themselves participated in formulating. District offices coordinate closely with fisheries cooperative societies, other government agencies, and service providers to carefully target delivery of services. Key coastal ecosystems have been restored around the island, improving the productivity of both capture fisheries and aquaculture, and coastal fishing communities and fishing infra- structure are more resilient to extreme weather events and climate change. Fishing commu- Priorities for Sustainably Managing Sri Lanka’s Marine Fisheries, Coastal Aquaculture, and the Ecosystems That Support Them 55 nities and built infrastructure are better protected from storms and flooding and Sri Lanka is enhancing its climate mitigation contributions. Investments in a more diverse coastal economy plus investments in habitat restoration and smart coastal infrastructure have made coastal communities more econom- ically vibrant and resilient to climate change and other economic shocks (like the COVID-19 pandemic). Green harbors are more resilient to climate impacts and pollute the coastal environment less. Fishers’ safety at sea is better ensured through advanced affordable technology. 3.2. Priority Investments, Policy Actions, and Institutional Capacity Development While the vision presented above is ambitious given political economy and fiscal space con- straints, the resource management outcomes embedded in it are feasible technically and desirable from an environmental sustainability and climate change adaptation point of view. The vision can be achieved with a program of strategic investments and policy and institution- al capacity development actions by the government, and the active engagement of fishers and the broader private sector. We present these in a series of recommendations sequenced into short-, me- dium-, and, where appropriate, long-term actions and investments, starting with those that are most urgent or of the highest priority. We begin with overarching recommendations for capture fisheries, followed by specific guidance for coastal and multiday fisheries, then coastal aquaculture, and finally livelihoods and resilience of coastal fishing communities. These recommendations are mainly for the government and designed in a way to incentivize and enable fishers’ and private sector engagement, including investments, entrepreneurial creativity, and compliance with the regulatory framework. These recommendations are fully aligned with the green, resilient, and inclusive develop- ment (GRID) framework established by the World Bank to guide its support to client coun- tries for recovering from the COVID-19 crisis. Notably, in terms of the green element, the em- phasis on sustainable management of the fisheries and the ecosystems that support them recognizes the dependence of long-term economic returns on the health of these natural resources. There is also a strong emphasis on the financial and social sustainability to guide the use of the natural resources to generate economic growth. Regarding resilience, this advisory services and analytics (ASA) work strongly emphasizes climate-resilient infrastructure for fisheries and communities alike, as well as live- lihoods diversification to reduce dependence on fisheries that are subject to shocks such as those induced by pollution, diseases, or demand fluctuations. The livelihoods diversification focus is also con- sistent with the inclusion element of the GRID framework because it ensures that those who have to reduce their catch or leave the sector as part of the shift to sustainable practices find ways to adapt within the evolving labor markets and considers the differentiated roles that women and men play in the fisheries sector. Broad themes of the program should do the following: a. Adhere to a long-term perspective regarding success. Fishery resources can take years to re- build, and short-term interventions should be designed so the sector can stay on track while continuing to secure jobs and food for the country. b. Balance a focus on outputs/production with one on essential inputs/natural capital that enables the long-term economic growth of the fishing sector. Vision and Program of Priority Investments for 56 Coastal and Marine Fisheries c. Invest in scientific information for better decision-making. d. Ensure all private sector stakeholders, especially fishers themselves, are actively engaged in sci- ence-based management planning, decision-making, and implementation. e. Incentivize and empower the private sector to innovate and grow the economy sustainably. 3.2.1. Capture Fisheries With the abovementioned principles in mind, the Bank team proposes the following strate- gic investments for all marine capture fisheries. Additional targeted investments specific to the coastal and multiday fisheries subsectors are also listed below. Short-term investments refer to actions that can and should be taken with some urgency and may well need to continue over time, while mid- term and (where relevant) long-term investments refer to initiatives to be taken by the government that build on short-term actions or are not as urgent. Capture fisheries overall require careful but strong investments to ensure a wide set of pub- lic goods are present to enable sustainable growth in the sector. This includes both natural capital (plenty of fish in the water) and human and built capital. In the short term, the focus should be on building these key public goods; in the medium term, the government could invest in more targeted support of sustainable enterprises. Recommendations specific to coastal fisheries and multiday fisher- ies (MDF) are presented after these general recommendations that apply to both subsectors. Short Term (1–5 years) Direct a significantly greater proportion of existing institutional capacity toward support- ing the development and implementation of sustainable fishery management plans in accor- dance with the Fisheries and Aquatic Resources Act (FARA) and Ministry of Fisheries (MOF) objectives presented in the National Fisheries and Aquaculture Policy it published in 2018. This could be underpinned by investments in needed facilities and equipment to enable increased im- plementation and regulatory oversight. Investments should also seek to boost monitoring, control, and surveillance (MCS), strengthen judicial procedures against illegal fishing, and promote transparency. Invest in state-of-the-art technology and human capacity to ensure timely and streamlined collection and analysis of catch data along with periodic assessment of stock status,2 to enable the rapid adoption of previously agreed management measures. Innovative technology to allow fishers to share data, improve safety at sea, access markets more directly, and deliver a better product is becoming less expensive, especially for small-scale fisheries. This would include expanding various types of vessel monitoring systems (VMS) to vessels of most sizes, but it could also extend to electronic observer systems. The Department of Fisheries and Aquatic Resources (DFAR) and NARA could also provide fishers with access to these systems as part of a broader monitoring and data-shar- ing platform. Key information should be organized in a transparent fisheries and seafood data man- agement system that would enable traceability to help companies meet food safety standards, help buyers determine where the fish they are buying comes from, and to minimize illegal, unreported, and unregulated (IUU) fishing. 2 While recognizing that multispecies assessments are important to do, this report focuses on single-species stock assessments as immediate goals to achieve. Multispecies assessments require immense data to be done correctly and therefore pose an unrealistic challenge given the current state of Sri Lanka’s institutional capacity and data availability. Regardless, single species assessments are a harbinger of the state of the resource base when a highly resilient or productive stock like a sardine or herring is on the possible brink of collapse. If these are indeed caught in a multispecies context, the other stocks are in a likely worse situation. Priorities for Sustainably Managing Sri Lanka’s Marine Fisheries, Coastal Aquaculture, and the Ecosystems That Support Them 57 Unsanitary landing of fish. Photo © Val Shevchenko/Shutterstock.com (left), © Anton Gvozdikov (right) Invest in basic climate-resilient and green infrastructure and public services in and around key harbors used by the MDF fleet as well as landing sites for coastal fisheries to improve the quality and value of all landed seafood, and to meet domestic and international food safety standards. Of paramount importance is the provision of clean water for washing and ice making; reliable electricity; boxes, pallets, and trollies for handling fish; and improved rural roads by DFAR in coordination with other relevant government agencies and local governments. This should be complemented with appropriate waste disposal and recycling in ports to minimize the pollution generated by fishing activities. This would also include manual and mechanical fish unloading systems, sanitary facilities, as well as improved unloading and sorting areas (including cold storage facilities for temporary storage of fish and facilities for grading fish using organoleptic tests and rapid tests), all of which in combination would greatly improve food safety, enhance value, and minimize product losses. Fish grading will require dedicated personnel with regular and consistent site presence to ensure that minimum food safety standards are met. To address the socioeconomic impact of initiatives for sustainable fisheries management and to meet catch reduction needs, support livelihood diversification for those who need to reduce effort and/or exit the sector. Various financial and social supports should be explored in ad- dition to training programs to allow affected individuals and their family members to seek employment opportunities in other parts of the fishing sector or value chain as well as other “blue” sectors. Such a program could help promote compliance with management efforts and reduce pressure to allow fish- ing capacity to grow in the medium to long term (see Section 3.2.3). Medium Term (3–7 years) Create a sustainable fisheries investment fund to complement the public infrastructure with private investments in such things as ice-making, refrigeration, processing, and value addition. Various design and operational structures could be considered, but the fund would essen- tially serve as an additional mechanism to help increase the economic potential of the private sector while further incentivizing sustainable practices. It could offer loans or matching grants to SMEs and include a capacity-building component to build the business skills of fishers who wish to operate more like SMEs. To ensure these investments do not stimulate more fishing effort, they could be conditioned on a history of good reporting and compliance with management plans and focus on helping fishers Vision and Program of Priority Investments for 58 Coastal and Marine Fisheries add value to their catch rather than increase their catch. Where relevant, investments could be made in businesses further up the value chain but again be linked to active engagement in the management process, including data sharing. 3.2.1.1. Coastal Capture Fisheries The following recommendations specifically target the coastal fishery subsector, to be ap- plied in combination with the general recommendations above. To ensure coastal fisheries’ continuous contribution to Sri Lankans’ food security and ex- ports, their sustainable management must be treated as a priority. To this end, in the short term, institutionalization of science-based management with the active participation of stakeholders is required. In the medium term, attention should turn to restoring degraded essential fish habitats, build- ing climate resilience while ensuring the gains made in stock rebuilding are secured through stronger oversight for compliance and the fine-tuning of management plans in light of changes in stock status. Short Term (1–5 years) Invest in an accelerated program designed to conduct timely stock assessments and roll out multiple fishery management plans for key coastal species important for meeting the grow- ing demand in both international and domestic markets. This would include technical train- ing and practical capacity building of government staff, fisheries, and other actors (including wom- en) working in the sector, to engage in the development and implementation of management plans (co-management). There is a need to increase NARA’s staff capacity to carry out (or oversee) periodic stock assessments through training and enhanced focus of scientific staff already involved in stock as- sessments, and possibly engaging new scientists with skills in this area. Emphasis should be placed on continuous, rather than one-time, training, potentially in cooperation with the Food and Agriculture Organization (FAO) or reputable research institutions. NARA may also consider collaborating with Sri Lankan universities to carry out stock assessments on a contractual basis. Management-planning should be “bottom-up” and build on traditional methods used by communities to limit fishing effort and take into account diverse intergroup dynamics and presence of migratory fishers in the community. The management unit could be a stock, a group of stocks, a fisheries management area, or a combination of both, depending on what would be most effective ecologically and practically. Management of small pelagic stocks could include the use of a total allowable catch and quotas, be these communal or individual. For area-based management, ter- ritorial user rights may provide strong incentives for rebuilding of demersal or benthic resources such as lobster. Planning through a co-management process consistent with (a) the ecosystem approach to fisheries,3 (b) the FAO Code of Conduct for Responsible Fisheries (FAO 1995), and, most importantly, (c) the FAO Voluntary Guidelines for Securing Sustainable Small-Scale Fisheries4 would help ensure the improved design of management measures along with greater ownership and compliance. 3 The ecosystem approach to fisheries is intended to match the broader scope of the FAO Code of Conduct for Responsible Fisheries and one definition includes an extension of conventional fisheries management, recognizing more explicitly the interdependence between human well-being and ecosystem health and the need to maintain ecosystems’ productivity for present and future generations, such as conserving critical habitats, reducing pollution and degradation, as well as purpose of an ecosystem approach to fisheries is to plan, develop, and manage fisheries in a manner that addresses the multiplicity of societal needs and desires (Staples and Funge-Smith 2009). 4 The FAO Voluntary Guidelines for Securing Sustainable Small-Scale Fisheries is a tool to guide all actors in dialogue, policy, and actions seeking to help fishers and fish workers secure sustainable small-scale fisheries and strengthen human rights. It provides a holistic and people-centered approach designed to be implemented at the national and local levels (FAO 2015). Priorities for Sustainably Managing Sri Lanka’s Marine Fisheries, Coastal Aquaculture, and the Ecosystems That Support Them 59 In Sri Lanka, these FAO guidelines have been incorporated to some extent into the 2019 Small- Scale Fisheries Policy and 2021 Inland Fisheries Policy, and the 2018 National Fisheries and Aqua- culture Policy is being remodeled taking into account these policies. The completion of this process and adoption by the Parliament of such a revised national fisheries policy would strengthen the policy basis for sustainable and inclusive fishery management. The Mexican Pacific rock lobster fishery provides a good example of long-term success in small-scale fisheries co-management (Box 3.1). Fishers who are fully brought into the management process should be supported to participate in community surveillance. Nonetheless, investments would also need to be made in two important areas: • To ensure management plans and harvest control measures are based on the best available sci- ence, NARA will need to invest in human capacity, facilities, and equipment to analyze more data faster and apply data-poor or conventional stock assessments as appropriate. • Once management plans have been formally adopted through a co-management process, there will still be a great need for enforcement. Fishing organizations and communities that sacrifice to ensure sustainability should not be undermined by those seeking to benefit through illegal fish- ing. DFAR in conjunction with other maritime and legal authorities needs to build the legal basis, procedures, and culture for enforcement and prosecution of illegal fishing. Therefore, investments will need to be made in training, equipment, and procedures to ensure that consensus-based management plans are abided by.5 Strengthen fisheries cooperative societies to provide better economic outcomes for their members and secure their engagement in data gathering, management planning, imple- mentation, and compliance. The cooperative movement has a strong history in Sri Lanka and the fisheries cooperative societies should become a key mechanism through which both men and women in the fisheries sector can participate in decision-making regarding matters of sustainability and their economic well-being. In coordination with the Ministry of Cooperative Development, the cooperative societies should receive capacity building, strengthening their organizational capacity to operate as more effective representatives of their membership and their economic interests. This would enable more cooperatives around the country to serve as qualified recipients or intermediaries for the financial instru- ments, as well as distributors of social protection and other benefits we refer to in these recommenda- tions (see Section 3.2.3). Safeguard the tenure rights of traditional coastal fishing communities to coastal lands, to enable direct access to fishing grounds and preservation of livelihoods. This should be done within a strengthened framework of integrated coastal management. Mechanisms such as special area management (SAM) planning need to be strengthened and expanded where integrated decision-mak- ing can be facilitated, which can serve as an effective platform where all fisher communities can raise their concerns over access to coastal resources to engage in economic activity in a fair and just manner. Strengthened cooperative societies should ideally have strong representation in these platforms where conflicts over their tenure rights can be negotiated and settled. In phase 2 of this ASA, DFAR will develop management plans for the Hambantota spiny lobster and Western Province small 5 pelagic fisheries. As part of that exercise, local and central institutional capacity-building and local infrastructure development needs will be identified. Vision and Program of Priority Investments for 60 Coastal and Marine Fisheries Box 3.1. Successful Co-management of the Mexican Pacific Lobster Fishery Since the 1930s, the Mexican government has scale climate fluctuations caused by El Niño, the given the exclusive rights (concessions) to lobster catch has remained below maximum capture California lobster (Panulirus interrup- recommended catch limits over the past few de- tus) along the Pacific coast of Baja California cades. This is largely due to the effectiveness of to fishing cooperatives. The concessions last the co-management process established by the 20 years and allow the members of each co- government. Equally important is that these lob- operative the exclusive right to fish for lobster ster fishermen are among the most financially in a clearly established zone. Nine of the 26 successful small-scale fishermen in Mexico (Mc- lobster cooperatives fishing in this region form Cay et al. 2014). part of the Regional Federation of Coopera- tive Societies of Baja California (FEDECOOP). Several factors contribute to the overall success FEDECOOP comprises 1,200 fishermen from of this fishery: 13 communities that capture 80 percent of • Strong tenure rights with exclusive access the lobster in the region, using traps, 5- to limited to cooperative members 7-meter-long fiberglass boats, and 60–115 • A high degree of coordination, communica- horsepower outboard motors. FEDECOOP tion, and co-management with regulatory has become a powerful actor in this part of agencies that facilitates adaptive manage- Mexico, helping to generate sustainable and ment climate-resilient lobster fishing and livelihoods, • Strongly enforced community-based fish- as well as empowerment and a sense of pride ing rules that effectively control fishing ef- among its members. fort within concessions • Cooperatives providing other benefits and While each co-op is responsible for catching, services including jobs, financing for fishing landing, processing, and transporting lobster, equipment, and social benefits including in- FEDECOOP markets the product, of which 90 vestments in education, roads, and electric- percent is exported to Asia. The federation has ity (CRC 2014) also made considerable investments in attain- Over time, the economic stability generated by ing high levels of knowledge. For example, it the investments in effective fishery management has staff biologists who collect and analyze have generated a shift from a short-term “pro- data, conduct stock assessments, and liaise duction” mindset to a long-term “value” mind- with the fisheries science agency. Leadership set among fishermen. As a result, in 2004 the and transparent decision-making also play a Baja California red rock lobster fishery, became role when working with government officials the first small-scale developing world fishery to to establish regulations through co-manage- achieve Marine Stewardship Council certification ment. Finally, the cooperative members who for environmental sustainability. This certifica- have exclusive rights to catch lobster also may tion was renewed in 2012 and 2017 and continues carry out surveillance, detain illegal fishers, and today. turn them over to authorities. Despite large- Priorities for Sustainably Managing Sri Lanka’s Marine Fisheries, Coastal Aquaculture, and the Ecosystems That Support Them 61 Medium Term (3–7 years) Invest in the conservation and restoration of essential fish habitats to increase productivity and build climate resilience in the fishing sector and coastal communities. NARA and DFAR should work with fishers to identify and demarcate coastal and marine ecosystems such as coral reefs, seagrass beds, and mangroves and integrate their protection into management plans. Areas import- ant for reproduction and recruitment of juvenile fish could be set aside, and permanent or temporary no-fishing zones could be established to enhance fish biomass and serve as a buffer against the po- tential impacts of climate change. Restoration programs should be implemented for degraded habitats, especially for ecosystems like mangroves that can also provide valuable co-benefits such as carbon sequestration, protection of coastal communities from storm damage, and prevention of coastal ero- sion. Restoration activities should be carefully designed and managed over time to ensure their success. These initiatives should draw their labor preferentially from fishing families to provide an alternative or supplemental livelihood as management plans may require fishers to reduce catches in the short run (see Section 3.2.3). NARA should work closely with fishing organizations to monitor and assess the status of these essential fish habitats to detect any degradation resulting from external factors and develop response strategies with fishing communities and other government agencies.6 Institutionalize the fishery management process by budgeting for and conducting annual/ regular stock assessments and updating management plans accordingly, along with contin- uous MCS. To ensure sustainability of key public services, any major investments in the fisheries sector should include a review of NARA’s and DFAR’s institutional structures, budgets, and human resources and consider supporting a restructuring to ensure continuity. Key performance indicators of institu- tional success should be increasingly focused not on production but on the core business of ensuring fisheries are abundant and climate resilient for current and future generations. 3.2.1.2. Multiday Capture Fisheries The following recommendations specifically target the multiday fisheries, to be applied in combination with the general recommendations above. To ensure a bright future for Sri Lanka’s MDF, the priority should be to contribute effectively to the rebuilding of the yellowfin tuna (YFT) stock and to improve the value of the landed catch. This should be initiated in the short term with the activities and investments listed below and will need to continue over time. In the medium term, the focus should be on actions to ensure the MDF continue to supply high-value markets as their requirements continue to shift. Attention must also be paid to those impacted by possible downsizing and modernization of the subsector. In the long run, with a stable fleet and well-managed fishery, attention can turn to investments that will generate fur- ther marginal gains through R&D for further product diversification and infrastructure enhancements. Short Term (1–5 years) Design and implement a YFT catch reduction plan in line with the Indian Ocean Tuna Com- mission (IOTC) YFT rebuilding plan. A credible plan and demonstrable reductions in catches will build credibility with Western markets, allowing Sri Lanka to retain or perhaps expand its market share for fresh chilled products. Demonstrating compliance with international obligations and commitments under the IOTC will distinguish Sri Lankan YFT from other possible sources of tuna in the Indian Ocean A habitat assessment will be caried out during phase 2 of this ASA and make specific recommendations on resto- 6 ration if it is found to be degraded. Vision and Program of Priority Investments for 62 Coastal and Marine Fisheries in the eyes of buyers and retailers, particularly in Europe. It will also directly improve the Sri Lankan YFT fishery scoring against the Marine Stewardship Council (MSC) certification standard. To achieve this, it is strongly recommended that Sri Lanka do the following: • Exercise more robust oversight of the MDF, including applying VMS and all the associated re- quirements to the entire MDF fleet. • Improve catch-data collection and reporting by vessels, including bycatch and secondary species such as sharks. • Consider phasing out or minimizing the use of gillnets on vessels targeting high-value tuna, in parallel with activities to enhance livelihoods and resilience in coastal communities. The use of gillnets may become a barrier to expanding access to Western markets. • Ensure that the ongoing fish forecasting service provided to vessels to enhance catch efficiency is in concert with the abovementioned management measures. Strengthen government capacity to play a stronger role in the IOTC and as an influential voice among coastal states. The financial viability of the MDF is directly linked to the success of the IOTC in rebuilding the Indian Ocean YFT stock. We recognize that this success is dependent not only on Sri Lanka’s policies but on those of several regional actors. Additional analysis is needed to create an effective strategy for the country’s role in regional policies. DFAR and other relevant government agencies should therefore acquire the expertise not only to react effectively to what emerges in the IOTC meetings, but also to proactively lay out a regional strategy for an effective rebuilding plan that is in their national interest and in the interest of a sustainable resource and fishery. Conduct detailed technical, financial, and social analyses of how different onboard refrig- eration technologies, combined with improved fishing and handling practices and shorter fishing trips, could impact the fish quality of the landed product, the profitability of differ- ent-sized vessels, and crew income. The broad array of MDF vessel sizes and designs demand a more granular analysis of the potential viability of retrofitting vessels before a program can be designed and implemented. A wide array of established and new technologies (for example, solar and exhaust heat–driven refrigeration) should be carefully considered with regard to applicability and cost. The analysis should produce approximations of the best combination of trip length, handling techniques, and technology to maximize vessel profitability of different-sized vessels; how these changes could impact vessel operations and crew member livelihoods should also be assessed. With support from IOTC scientists, and in close collaboration vessel owners, carry out ap- plied research to identify mitigation measures to reduce predation of hooked tuna by ceta- ceans. This could build on NARA’s ongoing project to test a variety of deterrents to minimize predation and include acoustic optical signals and longline setting practices, among others. In partnership with the industry, pilot the most promising combination of modifications for a representative subset of vessels for each category and disseminate lessons to facilitate adop- tion. This pilot would validate and improve upon the results of the previously mentioned analysis. The government could invest in testing different combinations technologies and fishing practices in perhaps as many as 40 vessels representative of the wider fleet. Lessons gathered from this pilot would feed into the design of a successful fleet improvement program. Priorities for Sustainably Managing Sri Lanka’s Marine Fisheries, Coastal Aquaculture, and the Ecosystems That Support Them 63 Roll out a fleet improvement program for the existing fleet based on audits of individual vessels determined to be suitable for adopting the most promising combination of effective measures. Vessels of various sizes that meet certain financial and technical viability criteria would receive financing to invest in improved refrigeration and training on best practice in handling tuna to improve quality (see sustainable fisheries fund, in Section 3.2.1). It is expected that this package of in- vestments by individual vessels in combination with public investments in shore-based infrastructure would help improve the quality of the landed product and profitability of much of the MDF fleet in spite of the need to reduce catches in the short run. Medium Term (3–7 years) Consider replacing some of the existing MDF fleet with newly designed and built modern “multiweek” longline vessels equipped with ultra-low temperature (ULT) technology. As the global market for high-quality tuna continues to increase its preference for ULT frozen product, Sri Lanka will need to adapt or find other (likely) less valuable markets. Remaining in the high-value global market for yellowfin tuna implies transitioning some of the existing fleet to more efficient, safer, and larger vessels. To reduce overall capacity and because the new vessels would be more efficient, it would be essential to work with vessel owners to replace a set of vessels from the existing fleet with fewer vessels of overall lesser fishing capacity as measured by tonnage, well space, or similar metric. Continu- ing to flag foreign-owned and -operated longline vessels will support the processing and export busi- nesses but not help the domestic MDF fleet and may accelerate their demise. Flagging foreign vessels will also add national capacity “on paper” and increase Sri Lanka’s overall landings, further increasing its contribution to overfishing and threatening Sri Lanka’s reputation and brand in Western markets. Therefore, for Sri Lanka to maintain a competitive domestic fleet, the government may wish to aid the private sector to invest in a gradual and organized transition over the next few years to a smaller number of larger vessels, owned and operated by Sri Lankans. The transition would best be guided by a feasibility study. Implement an R&D program to identify selective fishing gear and techniques that enable vessels that exit the longline/YFT fishery to transition toward targeting healthy fish stocks such as swordfish, skipjack, or other pelagic species closer to shore. Once viable options are identified, the sustainable fisheries investment fund (see Section 3.2.1) could provide financing to help owners adapt their vessel and gear and train their crew to target the new species. This would help reduce the YFT catch and provide a viable economic alternative to certain vessels. Explore the potential role for at-sea transshipment through the use of refrigerated carrier vessels (mother ships) to help improve the quality of landed catch. This would require an anal- ysis of the financial feasibility of various operating models and cost structures and include the costs of human observers to ensure data collection, legality, and traceability. Establish a multipronged marketing initiative to sustain the financial viability of the MDF. This would include funding to promote (a) Sri Lankan tuna purchases in Middle East markets and mar- kets where ULT freezing requirements are not yet in place, (b) swordfish and other pelagic species in Europe and other high-value markets, and (c) the identification and access of MDF seafood to the do- mestic tourism sector and other high-value domestic markets. This effort would be greatly strength- ened by the investments described above in traceability and improved governance. Vision and Program of Priority Investments for 64 Coastal and Marine Fisheries Long Term (5–10 years) Once improvements in the quality of MDF landings are made and management oversight of the fleet is strengthened, explore the potential for broadening revenues across the MDF value chain through more diverse and value-added product offerings. The government could provide for technical assistance and pilot projects for the private sector to analyze and test the poten- tial of product lines targeting both domestic and international markets. If successful, this would expand in-country processing and raise landed prices for fishers of tuna headed to the domestic market. Ex- amples of value-added tuna products that have been marketed internationally include omega-3-rich oil derived from by-products, fish burgers, fish sausages, and fish jerky. To the extent it becomes necessary, expand a green ports initiative to include deepening key fishing harbors and enhancing the related services to accommodate larger vessels. Once identified, the ports best suited to accommodate longline vessels will need to be dredged and ancillary services expanded to provide fuel, provisions, repairs, and maintenance. 3.2.2. Coastal Aquaculture The following recommendations are informed by the experiences of other countries that have also experienced boom-and bust-cycles in their aquaculture industry and set out to transition to long-term sustainable growth. For example, China, India, and Vietnam, three of the leading aquaculture coun- tries, have announced national plans to modernize the sector according to the ecosystem approach to aquaculture and known biosecurity standards. While all the recommended interventions are of more or less equal importance, some interventions take longer to mature than others. Within the context of NAQDA’s 6-year plan, it is advisable to undertake spatial planning and capacity building immediately so that these can be in place to support and guide the private sector as they build upon a sound man- agement framework, to ensure that the industry does not repeat the error of the 1990s, of surpassing the environmental carrying capacity of the local ecosystems. Short Term (1–5 years) Develop and maintain institutional capacity to adequately handle the environmental sus- tainability aspects of the coastal aquaculture development plan outlined above. Therefore, tasks to be carried out include conduct, facilitation, or oversight, as appropriate, of spatial planning; identification of potential sites for aquaculture; monitoring of environment; effluent monitoring; pre- vention of self-pollution; strategic environmental assessments (SEAs); environmental impact assess- ments; and biodiversity, climate change, and sustainability issues related to aquaculture. In carrying out its functions, the relevant units under MOF should closely coordinate and cooperate with existing environmental regulatory agencies to avoid duplication. Essentially, the technical skills of staff in these units should be continuously updated in line with advances in the subsector. Carry out strategic environmental assessments of aquaculture development in priority coastal provinces. These assessments support the decision-making process on how to develop aquaculture in a sustainable manner. By employing a range of analytical and participatory approaches to link environmental considerations with economic and social considerations, the assessments help set environmental boundaries and risk mitigation measures for sustainable intensive aquaculture. For example, in the Northern Province, the SEA supported by this ASA in phase 2 will study the baseline of coastal hydrology, ecosystem processes, environmental and socioeconomic parameters, expected cli- mate change impacts, and resource use patterns, and diagnose coastal natural capital and ecosystem Priorities for Sustainably Managing Sri Lanka’s Marine Fisheries, Coastal Aquaculture, and the Ecosystems That Support Them 65 risks and opportunities for coastal aquaculture development, considering technologies that farmers are expected to adopt. In the process, development plans for other sectors that may also be using the same natural resources or be impacted by their use will be reviewed, and stakeholder consultations will be carried out. While SEAs are not site-specific impact assessments (unlike environmental impact assessments), they do identify “environmentally low risk areas” for aquaculture development. Carry out zonal planning in priority coastal provinces. This planning process focuses on the en- vironmentally low risk areas identified in an SEA (Figure 3.1). The process identifies “aquaculture zones,” which consist of sites sharing the same water supply, by considering proximity to input and output mar- kets, and transportation infrastructure. A key aspect of the zonal planning process is stakeholder consul- tations and negotiations to resolve conflicts with stakeholders representing non-aquaculture interests. Importantly, zonal planning needs to establish rules of operation within each zone. Specifically, carrying capacity analyses need to be conducted to determine the amounts of production, feed and medicine, and stocking density (propensity to disease) by target species for sustainable production. Furthermore, market studies should be carried out to identify credible species, products, and markets coupled with profitability analyses of model farms considering the carrying capacity. Sustainable production volumes for the zones should be estimated by overlaying satellite-guided biophysical site selection and marketing and peri-urban infrastructure linked to existing carrying capacity models. This would provide NAQDA with insights on production potential, investments, and infrastructure requirement for each coastal dis- trict/province. Establish a sound regulatory framework. • Institute comprehensive and binding user rights and policies that protect and enable small com- panies. • Establish clear rules and legal provisions that can assure investors of due process in the event of conflict. Invest in basic infrastructure in the designated aquaculture zones. Infrastructure investments may include power lines, pond water supply, access roads, and waste and wastewater management facilities. These infrastructure elements are public goods since they are unlikely to be established by individual farmers and exclusion of individual farmers is difficult in most cases.7 On the other hand, the government would be well advised to exercise caution in establish- ing aquaculture production parks in aquaculture zones or elsewhere considering less than encouraging international experience with industrial parks. Despite good intentions behind them, industrial parks designed by governments often fail to attract private sector occupants in a timely manner because of inadequate siting, which may be due to political motivations rather than business profitability considerations or design failures. As the United Nations Industrial Development Organization (UNIDO) found “[l]ack of effective marketing and investment facilitation activities can lead to failure to attract quality investment to an industrial park, even though it may have strong infra- structure, legal arrangements and services in place” (UNIDO 2019, 21). Consequently, the low number of fee-paying SME occupants can lead to insufficient administrative budgets to fund key common services, including waste and wastewater management. Therefore, it is recommended that such parks be designed with strong private sector participation and that binding commitment be obtained from private investors at the planning stage. Top-down planning should be avoided. The government may Vision and Program of Priority Investments for 66 Coastal and Marine Fisheries Figure 3.1.: Potential Steps in the Spatial Planning and Management Process for Aquaculture a. Coastal and marine aquaculture b. Inland aquaculture Identification of aquaculture zones Identification of aquaculture zones Selection of farm sites with zones Selection of farm sites with zones Grouping of farms into management areas Grouping of farms into management areas Source: FAO and World Bank 2017. Priorities for Sustainably Managing Sri Lanka’s Marine Fisheries, Coastal Aquaculture, and the Ecosystems That Support Them 67 also consider supporting satellite farming systems (where a central large farm provides inputs to small and medium farms and marketing facilitation for their products). Invest in capacity development for extension, R&D, and vocational training, as these are necessary for global competitiveness and dialogue. The government should invest in a fully equipped NARA marine research center for aquaculture and establish a disease diagnosis facility for R&D on health management in aquaculture. It will also be important to identify national research pri- orities for coastal aquaculture development collaboratively with the private sector and universities for optimum benefit and preventing duplication of research efforts. Develop extension capacity not only within NAQDA but also in cooperation with universities. Vocational training for technicians to be em- ployed along the value chain will be crucial for the successful use of state-of-the-art technology in the subsector. Finally, strengthening coordination between NAQDA and NARA through regular dialogue and discussions is advisable. Medium Term (3–7 years) Support SMEs to establish aquaculture farms and processing businesses using sustainable technologies in the identified aquaculture zones: • Provide training and knowledge transfer to SMEs and current and potential aquaculture work- ers. To this end, establish a coastal aquaculture development and demonstration center for an efficient, climate-smart hatchery and production system technology for targeted food and/or ornamental finfish, shellfish, and seaweed. Ensure the center’s financial sustainability through a mix of adequate budgetary allocation and moderate fees from beneficiaries. • Support SMEs in developing business plans. This would complement the zone-level market stud- ies (see above) that consider site-specific conditions to determine product type and form and involve, among others, a profitability analysis of different product and technology options. The support should be through sharing the costs of the services, such as a voucher to be used toward the payment of a certified industry specialist or through contracting a specialist company that will provide the service at a subsidized rate. • Facilitate access to finance through (a) cofinancing, such as a matching grant/loan scheme, a credit line, fiscal incentives, innovative public-private partnerships, or a payment for ecosystem service scheme; or (b) risk reduction schemes such as insurance or loan guarantees. NAQDA’s Coastal Aquaculture Development Plan envisages setting up a revolving fund for the industry through the charge of a levy on high-value export species. The fund would help meet work- ing and investment capital deficits at lower interest rates and on fewer collaterals and restric- tions. However, these are typically functions of commercial banks and it may be wise to examine whether NAQDA can take on this role without a cost to its other key functions. Support the private sector to invest in hatcheries and feed production systems for high-val- ue aquaculture products as well as other supporting services, notably transport and cold The technical report on coastal aquaculture that will be delivered in phase 2 of this ASA will provide more granular recommen- 7 dations on infrastructure investments for the Northern Province. Vision and Program of Priority Investments for 68 Coastal and Marine Fisheries storage. Government hatcheries and feed mills are often well-intentioned efforts to overcome short- term constraints to production growth, but they usually end up as underfunded, inadequately staffed, and inefficient government infrastructure (“white elephants”). Rather than building and operating busi- nesses, the role of government is to attract private sector investors with tax and other incentives and then provide helpful technical advice to overcome the inevitable problems confronting new operations, whether feed and seed, or other enterprises such as processing, production, and input supply. Invest in restoration and management of ecosystems in catchment areas of aquaculture sites/zones to maximize ecosystem services needed for sustainable aquaculture intensifi- cation and coastal fisheries. Notable ecosystem services that aquaculture activity will benefit from include water quality enhancement, waste assimilation, protection from climate impacts, nutrient re- cycling, and creation of artificial reefs and other aquatic habitats essential for capture fisheries. Pilot programs for stock enhancement of targeted species might be considered based on additional interna- tional expertise. Restoration of ecosystems should be carried out with a sound scientific understanding of ecosystem functioning, status of its health, and opportunities for management that will maximize benefits of certain ecosystem services, such as mangroves and coastal marshes for water quality reg- ulatory services. The targeted ecosystems will be those where aquaculture activities will be sited and those that will be impacted by aquaculture industrial processes, such as lagoons. Furthermore, it is advisable that in such areas ecosystem management plans be prepared and institutional arrangements be made for their effective implementation. 3.2.3 Enhancing Livelihoods and Resilience in Coastal Fishing Communities The transition to sustainable fisheries management harbors opportunities for new and bet- ter jobs, especially in the medium to long term, but also potential losses of livelihoods in the short term, which need to be mitigated. As discussed above, high-value resources like lobsters and yellowfin tuna are in dire need of rebuilding and it is likely that other stocks such as sea cucumber will demonstrate a similar need for rebuilding once assessments are conducted. Fully exploited stocks that make up Sri Lanka’s small pelagic fisheries risk becoming overexploited if fishing capacity and effort are not carefully controlled. Unlike aquaculture, which has the potential to grow significantly and create new jobs throughout the value chain, implementing management plans in both coastal and multiday fisheries to result in a sustainable and profitable sector may create new job opportunities (see op- portunities above), but it is also likely to limit the incomes of some groups when catches are reduced for some period of time. Care must be taken to ensure that the burden of a transition does not fall unevenly on certain segments of the fishing community by providing those who obtain their livelihood from fishing with a coherent set of incentives and supports so the adjustment occurs smoothly. By em- powering fisher organizations and giving them a voice in the decision-making process, members who may value traditional fishing practices and culture over higher incomes from alternative livelihoods can be supported in continuing to fish sustainably. Measures intended to address the potential negative livelihood impacts of the transition to sustainable fisheries management should be holistic and flexible to meet the diverse socio- economic and cultural circumstances of fishing communities. In recent years, holistic approach- es to help the poor and vulnerable enter and stay in the workforce, such as “productive inclusion,” have been applied to address transitions in various sectors and are now also used in the fisheries sector, such as in Costa Rica (World Bank 2020). Approaches like productive inclusion look at the entire labor mar- ket, policies, and support systems to help families find the best combination of training, educational, or social supports for their specific needs. Thus, they may include examination of skills that are currently Priorities for Sustainably Managing Sri Lanka’s Marine Fisheries, Coastal Aquaculture, and the Ecosystems That Support Them 69 or are emerging to be in demand against the skills that fishing communities have or aspire to acquire, considering the social and cultural background, and aim to match such demand and supply through active job counseling and training. They may provide grant or loan cofinancing for micro or small busi- nesses by individuals or groups, or for local infrastructure investments that fishing communities have identified as priorities to enhance their well-being and resilience. In some cases, social cash transfers may be needed for vulnerable individuals who are unable to secure livelihoods by participating in the labor force. For the program to be effective, key issues need to be considered in its design: (a) The package of supports must be designed carefully with fishers, service providers, and other relevant government agencies; (b) targeting, or the process of defining and verifying who qualifies as a beneficiary, must be done carefully and with active outreach; (c) services should be bundled to the extent possible in an effort to address the needs of the entire family; and (d) it is important to not lose sight of the overall policy objective for the fisheries sector and wider coastal community. With this in mind, the following recommendations focus on providing a variety of livelihood support mechanisms to complement the improved fisheries management recommendations mentioned above. The government of Sri Lanka may invest in a package of supports to vulnerable fishing fami- lies, enabling them to reduce their dependence on fishing and seek other livelihood opportu- nities during the transition to sustainable fisheries management. This package of services and benefits can be tailored to each community and household. It requires effective coordination among government agencies and clear incentives/conditionalities to achieve desired outcomes (reduced fish- ing effort and less economic risk for families in coastal communities). As a first step, DFAR may con- sider investing in a comprehensive fishery census and update of the registry of fishers and vessels as well as fish workers (including women working in value chains). This registry is essential for DFAR to understand the true size of the sector and to identify those who need to be engaged in the ongoing co-management and value addition process and who will qualify for an expanded package of targeted and conditional social protection benefits. Working collaboratively with service providers (for example, well-organized fisheries cooperative societies or other social protection organizations and government agencies), DFAR could support the most vulnerable groups of people—including families of fishers who exit the sector or women working in the value chain, impacted by a reduction in product flow— through the use of cash transfers, among other methods. Again, care must be taken to apply the FAO Voluntary Guidelines for Securing Sustainable Small-Scale Fisheries and to allow for traditional and cultural values to be preserved through co-management. For the MDF subsector, owners and crew of vessels that do not qualify to participate in the fleet improvement program recommended above could receive assistance through a targeted livelihood transition program. Other types of transfers could be considered to incentivize certain behaviors that benefit the fishery, like data collection and reporting. The package of social supports could include retraining as well as training to develop skills and job placement programs for fishing family members who wish to seek work in other sectors of the blue economy. In some cases, it may be appropriate for labor market policies to incentivize preferential hiring of former fishers. Business-skill trainings along with small grants could also be provided to support the development of SMEs unrelated to fishing itself. Finally, as mentioned above, demand for labor could also be generated through public works focused on restoring degraded essential fish habitats and other related infrastructure projects for greater coastal resilience and im- proved value chains. Vision and Program of Priority Investments for 70 Coastal and Marine Fisheries Design and launch a revised and financially self-sufficient fisheries pension scheme. In the recent Hambantota survey of fishers, one of the most frequently mentioned shocks (after COVID-19) was “serious illness or injury.” Providing social security to the fishers during any disability or at the time of their old age was one of the main objectives of the now-defunct Fishermen’s Pension Scheme. No scheme can be self-sustaining if it continues to depend on government funds. Rather, it must en- sure that member contributions are adequate to pay pensions. One mechanism would be to link this scheme with the requirements of being a registered fisherman and member of a community organiza- tion such as a fisheries cooperative society, which could ensure that the default rate (of pension install- ments) is kept to a minimum by linking it up with other schemes, such as the cooperative loan scheme. Fisher selling a day's catch in Mirissa. Photo © Claudiovidri/Shutterstock.com Chapter 4 Conclusion Fishing and seafood are an important part of the Sri Lankan economy, culture, and society. Seafood accounts for around 50 percent of animal protein and 11 percent of all protein consumption, which is significantly higher than the global averages of 17 percent and 7 percent, respectively. This siz- able domestic demand means that very little fish is wasted. The sector also employed around 300,000 people in 2019, supporting households comprising about 3.6 million people, or 17 percent of the pop- ulation. Sri Lanka’s seafood export industry is also not negligible, targeting a diverse set of high-value products to both Western and Asian markets and generating $299 million, or 1.5 percent, of total export revenues in 2019, although there is scope for enhancing this performance, as discussed in detail in this report. However, as is common in many parts of the world, most fishers in Sri Lanka make relatively low incomes and face numerous risks to shocks and stressors. The current COVID-19 pandemic has caused many fishing households to lose what little savings they had or become further indebted because of disruptions in value chains and curfews. However, the major factors hindering prosperity in the fisheries sector are limitations in sector and resource management. While sound policies ex- ist, primarily in the form of the Fisheries and Aquatic Resources Act (FARA), poor implementation of co-management has led to what appears to be a general pattern of excess fishing capacity and effort that over the years has resulted in depleted fish stocks. The history of the aquaculture subsector reflects a similar story of poor regulatory over- sight, resulting in a boom-and-bust cycle, degraded coastal habitats (mangroves), and abandoned shrimp farms in the 1990s. Improved farm management practices allowed for a modest rebound in the 2000s and a more recent expansion to the farming of other species such as sea bass, seaweed, and sea cucumber. This positive trend in aquaculture can be expanded and accelerated with careful planning, zoning, and regulatory oversight plus smart support to mitigate risks and enable private sector invest- ment. See Figure 4.1 for the coastal aquaculture development theory of change. In contrast, capture fisheries will need to rebuild to secure long-term employment and shared prosperity, especially given the impacts that climate change is likely to have on Sri Lanka’s 72 Conclusion marine environment. A pathway of investments can ensure that within several years the fisheries sec- tor is made up of financially, environmentally, and socially sustainable small and medium enterprises (SMEs) that generate high-quality jobs and provide high-quality and healthy seafood to domestic and global markets. In coastal fisheries, these investments begin with strengthening the governance and man- agement of coastal fisheries. Of particular importance is investing in the capacity to regularly collect and analyze data with the express purpose of producing a clear picture of the status of fish stocks and delivering regular/annual management recommendations regarding effort controls, catch limits, and other management measures. Concurrently, the capacity of both the Department of Fisheries and Aquatic Resources (DFAR) and fishing organizations (cooperatives) to develop, implement, and enforce co-management plans needs to be quickly developed. With this added capacity, management plans can be based on both up-to-date scientific data and traditional management practices, resulting in consensus with fishing communities and a higher likelihood of effective implementation, compliance, and achievement of management goals. Both fishers and resource managers need to be equipped with technology and digital tools to gather, share, and analyze information, making fishing safer and easier to monitor, and helping fishers make better informed decisions about when and how to fish and sell their catch. See Figure 4.2 for the coastal fisheries development theory of change. Improving infrastructure to provide clean water, reliable electricity, and efficient logistics is key to the future of this subsector and particularly important for creating economic oppor- tunities for poorer fishers and related service providers in more remote landing sites. Some of the larger investments will be led by the public sector, but smaller and more targeted investments (mechanization, ice-making, storage/refrigeration) are best led by the private sector. Here, the govern- ment has an opportunity to direct private investment on a sustainable path by creating a sustainable fisheries investment fund to provide loans or matching grants designed to expand the economic foot- print of SMEs in the earlier stages of the value chain. Because the productivity of coastal fisheries depends on healthy nearshore and coastal ecosystems, investments need to be made to minimize the risk to coastal fisheries produc- tion from external threats such as pollution, habitat conversion, and climate change. The National Aquatic Resources, Research and Development Agency (NARA) and DFAR should work with fishers to identify and demarcate coastal and marine ecosystems such as coral reefs, seagrass beds, and man- groves, to integrate their protection into management plans. Investments need to be made to restore degraded habitats, especially mangroves, with labor drawn preferentially from the fishing families as management plans may require limiting catches seasonally or in these important zones. Eventually, for the fisheries sector to become the cornerstone of a sustainable blue economy, Sri Lanka will need to embrace integrated multisector marine spatial planning and stronger coastal zone management. Existing intersectoral conflicts in the coastal zone may be exacerbat- ed as the maritime economy rebounds quickly and without appropriate regulatory oversight. This is evident in the reported conflicts between fishing communities and tourism development and more starkly in the recent shipping accident and chemical spill near Colombo. Fisheries management areas need to be harmonized with special management areas, coastal zone regulations, and aquaculture development zones. This will require much stronger interagency coordination and decentralization. Priorities for Sustainably Managing Sri Lanka’s Marine Fisheries, Coastal Aquaculture, and the Ecosystems That Support Them 73 Similar investments are required in multiday fisheries. Here the goal should be to restructure and modernize the MDF fleet to ensure it remains competitive in evolving global seafood markets. The MDF fleet will need to be carefully analyzed to determine which vessels can be retrofitted with refrigeration equipment, which can adopt ultra-low temperature technology, which can be supported to target healthy stocks, and which need to exit a fishery. In particular, a multipronged program of technical assistance, financing, marketing, and livelihood transition supports needs to be developed to enable Sri Lanka to remain active in the Indian Ocean tuna fishery in a sustainable manner. Given that the future of the Sri Lankan MDF is linked to the effectiveness of the Indian Ocean Tuna Commission (IOTC) in rebuilding the yellowfin tuna stock, Sri Lanka should play a more proactive role in the IOTC, allocating its diplomatic resources to building consensus among like-minded coastal states. Western markets that buy from Sri Lanka closely track tuna management in the Indian Ocean, and it would be in Sri Lanka’s interest to invest in differentiating its product from other possible sources. This would include expanding a vessel monitoring system to all MDF vessels and helping vessel owners adopt digital reporting that complements more robust government monitoring at landing sites. This plus stronger prosecutions of illegal fishing and more complete compliance with IOTC resolutions would help Sri Lankan yellowfin progress toward the environmental certifications desired by high-value export marked. See Figure 4.3 for the MDF development theory of change. Transitioning the capture fisheries sector onto a sustainable path with lasting economic benefits for fishing communities will have short-term impacts on the workforce—many new jobs will emerge, but some will be lost in the short run from the need to manage resources better. The government should invest in a package of supports that target vulnerable fishing families wishing to reduce their dependence on fishing and seek other livelihood opportunities during the tran- sition to sustainable fisheries management. Numerous options exist to bundle services and benefits in ways that support entire families, but efforts need to be designed carefully with fishing communities and relevant government agencies. These investments are needed to produce positive returns for a resilient and increasingly prosperous fisheries sector that takes full advantage of growing global and domestic de- mand for seafood. 74 Conclusion Figure 4.1: Coastal Aquaculture Development Theory of Change1 Priority investment, policy action, Intermediate High-level institutional capacity development outcome outcome 1. Strengthening the governance and management of Environmentally coastal aquaculture low risk areas for aquaculture Develop and maintain institutional capacity to adequately determined; handle the environmental sustainability aspects of the coastal remaining risks aquaculture development plan. mitigated. Aquaculture zones Governance and Carry out strategic environmental assessments of aquaculture and sustainable management of development in priority provinces. production coastal aquaculture levels identified; strengthened to Carry out zonal planning in priority coastal provinces. commercial ensure long term viability ascertained sustainability Invest in restoration and management of ecosystems in catchment Ecosystems areas of aquaculture sites/zones to maximize ecosystem managed and services needed for sustainable aquaculture intensification restored; ecosystem and coastal fisheries. services enhanced. Establish a sound regulatory framework incl. comprehensive and Small companies binding user rights and policies and clear rules and legal provisions. enabled and protected; investors assured of due process in the event of conflict 2. Investing in sustainable coastal aquaculture value chain Invest in basic infrastructure in the designated aquaculture zones. More private producers and processors operational Support SMEs to establish aquaculture farms and processing businesses using sustainable technologies in the identified SMEs supported aquaculture zones. effectively by extension Coastal aquaculture services and R&D; production and more workers skilled exports increased; Invest in capacity development for extension, R&D, and vocational in modern aquaculture jobs created training technologies available Support the private sector to invest in hatcheries and feed More hatcheries, production systems for high-value aquaculture products as well as feeding systems other supporting services, notably transport and cold storage. operational Short term (1-5 years) Medium term (3-7 years) Long term (5-10 years) 1 In Figures 4.1, 4.2, and 4.3, yellow-colored boxes denote short term (1-5 years) actions, green-colored boxes medium term (3-7 years) and blue-colored boxes long term (5-10 years). Priorities for Sustainably Managing Sri Lanka’s Marine Fisheries, Coastal Aquaculture, and the Ecosystems That Support Them 75 Figure 4.2: Coastal Fisheries Development Theory of Change Priority investment, policy action, Intermediate High-level institutional capacity development outcome outcome 1. Strengthening the governance and management of coastal fisheries resources Direct a significantly greater proportion of existing Coastal fisheries stock institutional capacity toward supporting the development and status tracked on time implementation of sustainable fishery management plans. Invest in boosting monitoring, control, and surveillance; strengthen judicial procedures against illegal fishing; promote transparency. Invest in state-of-the-art technology and human capacity to ensure timely and streamlined collection and analysis of catch data along with timely reporting of stock status to enable the rapid adoption of previously agreed management measures. Invest in an accelerated program designed to conduct timely stock Coastal Fish stocks are assessments and roll out multiple fishery management plans for Key coastal fishery fisheries rebuilt, climate key coastal species in a “bottom-up” manner and considering management governance resilient; traditional methods and social and cultural dynamics. plans developed, improved fishing is a less implemented, and and risky and more enforced managed economically Institutionalize the fishery management process by budgeting for sustainably valuable sector and conducting annual/regular stock assessments and updating management plans accordingly, along with continuous MCS. Complete the process of remodeling the 2018 National Fisheries and Aquaculture Policy, taking into account the 2019 Small-Scale Fisheries Policy and 2021 Inland Fisheries Policy. Strengthen fisheries cooperative societies to provide better economic outcomes for their members and secure their engagement in data gathering, management planning, implementation, and compliance. Safeguard the tenure rights of traditional coastal fishing Fishers’ livelihoods communities to coastal lands, to enable direct access to fishing more secure and grounds and preservation of livelihoods. diversified Support livelihood diversification for those who need to reduce effort and/or exit the sector; establish functional pension scheme. Ecosystems Invest in the conservation and restoration of essential fish habitats services for to increase productivity and build climate resilience in the fishing fisheries conserved sector and coastal communities. / restored 2. Investing in sustainable coastal fisheries value chain Climate resilience, Coastal fisheries sanitation, and quality and value Invest in basic climate-resilient and green infrastructure and logistics at landing increased public services in and around key landing sites. sites improved Create a sustainable fisheries investment fund to complement the More fishing and public infrastructure with private investments in such things as value-chain SMEs ice-making, refrigeration, processing, and value addition. operate formally, transparently, and in compliance with management plans Short term (1-5 years) Medium term (3-7 years) Long term (5-10 years) 76 Conclusion Figure 4.3: Multiday Fisheries Development Theory of Change Priority investment, policy action, Intermediate High-level institutional capacity development outcome outcome 1. Strengthen the governance and management of multiday fisheries (MDF) resources Invest in boosting monitoring, control, and surveillance; strengthen judicial procedures against illegal fishing; promote transparency. Catch monitored & restrictions Invest in state-of-the-art technology and human capacity for enforced better timely and streamlined collection/analysis of catch data, and vessel monitoring systems to most vessels and potentially, electronic observer systems. YFT stock recovered (Under Design and implement a YFT catch reduction plan in line with full international National compliance cooperation) the IOTC YFT rebuilding plan. with IOTC resolutions incl. YTF rebuilding Strengthen government capacity to play a stronger role in the plan ensured IOTC and as an influential voice among coastal states. 2. Invest in sustainable MDF value chain Climate resilience, Invest in basic climate-resilient and green infrastructure and sanitation, and public services in and around key harbors. logistics at harbors improved Carry out applied research to identify mitigation measures to reduce predation of hooked tuna by cetaceans. Conduct a detailed technical, financial, and social analysis of how different onboard refrigeration technologies, combined with improved fishing and handling practices, and shorter fishing trips could impact the fish quality of the landed product, the profitability of different-sized vessels, and the incomes of crew members. Onboard value loss Pilot the most promising combination of modifications for reduced a representative subset of vessels for each category and disseminate lessons to facilitate adoption. Roll out a fleet improvement program for the existing fleet New, high-skilled based on audits of individual vessels determined to be suitable for jobs created adopting the most promising combination of effective measures. Explore the potential role for at-sea transshipment through refrigerated carrier vessels (mother ships) Export revenues and fisher Replace some of the existing MDF fleet with modern “multiweek” longline vessels with ULT technology if feasible. incomes increased sustainably. Expand a green ports initiative to include deepening key fishing Higher value harbors and enhancing related services to accommodate larger markets accessed vessels, if needed. Establish a multipronged marketing initiative based on increased quality and contribution to the YFT rebuilding plan. 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Locations of Coastal and Multiday Fisheries Figure A.1: Areas Relevant to the Definition of Coastal and Multiday Fisheries Note: Territorial sea = 12 nautical miles (22.22 km), contiguous zone = 22 nautical miles (40.74 km), exclusive economic zone = 200 nautical miles (370.4 km). Priorities for Sustainably Managing Sri Lanka’s Marine Fisheries, Coastal Aquaculture, and the Ecosystems That Support Them 89 Appendix B. Fisheries Development–Related Activities Specified in the National Policy Framework Activities Coastal Fisheries • Introduce scientific methods to increase fish population in coastal areas. • Improve the environmental conditions in lagoons. Multiday Fisheries • Modernize all existing fishery harbors and construct new fishery harbors if needed. • Develop fishery harbor in Oluvil for operation of large-scale boats. • Develop refrigeration systems using seawater for multiday fishing craft and encourage the use of solar power. • Enable domestic fishing companies to expand fishing in international seas. • Develop facilities to construct and maintain large multiday fishing craft in Trincomalee. • Commence a program jointly with the fisheries community associations and the National Aquaculture Development Authority for the expanded breeding of both sea- and freshwater fish. Aquaculture • Provide low interest loans, tax benefits, insurance, consultancy, and market coordination assistance to develop inland and aquaculture fisheries. Cross-cutting • Buildup of all fishery harbors, anchorages, and landing sites with modern communication facilities, refrigeration, fuel supply, and sanitation facilities. • Introduce an interest-free loan scheme for innovations to improve the quality of fish catch throughout the value chain. • Expand production of canned fish by providing facilities to private companies and entrepreneurs. • Develop a program to involve women in fishery-related household industry. • Develop a conflict settlement agreement with India, to eliminate unauthorized fishing in northern and eastern seas and strengthen navy and coastal guard units. • Introduce a productive insurance scheme for the fishing community. • Implement a program of technical and managerial training in fishery activities for the youth using the Ocean University. • Develop systems of pricing of fish products so that both producers and consumers achieve a fair deal. Source: GoSL 2019. 90 Appendix Appendix C. The Ministry of Fisheries and Its Subsidiary Organizations The Ministry of Fisheries is mandated to manage Sri Lanka’s fisheries and aquaculture activities, includ- ing through its subsidiaries the National Aquatic Resources, Research and Development Agency, the National Aquaculture Development Authority, and the Department of Fisheries and Aquatic Resources, the latter of which holds primary responsibility for day-to-day management of fisheries and has offices in each district. Act through which Organization Mandate Physical and human resources it has jurisdiction Ministry of Fisheries and Aquatic The highest authority for The ministry is based in Colombo Fisheries Resources Act, marine fisheries and aquatic and has a total of 38 staff. DFAR, (MOF) No. 02 of 1996, as resources. Responsible NARA, NAQDA, Ceylon Fishery amended to the cabinet and the Harbours Corporation, Ceylon government of Sri Lanka for Fisheries Corporation, the National utilizing fisheries and aquatic Fisheries Federation, and the resources for present and Peliyagoda Fish Market fall under future benefit to Sri Lanka. MOF jurisdiction. Responsible for formulation of a national fisheries policy. Department Fisheries and Aquatic Handles day-to-day Has a strong administrative capacity of Fisheries Resources Act, management of fisheries. at the national and district levels; and Aquatic No. 02 of 1996, as Responsibilities include head office is located in Colombo Resources amended registration of fishing and it maintains 14 District Fisheries (DFAR) vessels; issuing fishing Offices, one each in 12 coastal permits; implementation of districts and two in Puttalam development programs for District. It also has established fisherfolk; ensuring quality 20 Communications Centers to control through issuing communicate with offshore and licenses and inspecting fish high seas fishing vessels while at processing establishments; sea and set up DFAR offices in 15 ensuring compliance with harbors to monitor and control international law in the high offshore and high seas fisheries in seas, including maintenance accordance with the requirements of a vessel monitoring of the Indian Ocean Tuna system; conducting Commission. training programs for fisherfolk; and protection of fisheries resources through management of fishing fleets and gear. Priorities for Sustainably Managing Sri Lanka’s Marine Fisheries, Coastal Aquaculture, and the Ecosystems That Support Them 91 Act through which Organization Mandate Physical and human resources it has jurisdiction National National Aquatic Sri Lanka’s top fisheries and NARA’s head office and most of Aquatic Resources Research aquatic resources research its staff are based in Colombo and Resources & Development organization responsible for NARA has a strong administrative Research and Agency Act, No. 54 of collecting, disseminating, and and technical capacity at the Development 1981, as amended publishing scientific data and national level. NARA officers Agency ensuring technical expertise have a theoretical understanding (NARA) is integrated into national of stock assessment methods. development programs for NARA maintains 5 regional aquatic resources. Research research centers in Kadolkele, responsibilities include Rekawa, Kalpitiya, Kapparathota, oceanography; hydrography; and Panapitiya, and a Center for improvement of fishing Ocean and Fisheries Information craft, gear, and methods; in Beruwala. It also has access to social and economic aspects the RV Samudrika, a Navy research of the fishing industry; vessel that is being upgraded to aquaculture development; collect fish stock data. and postharvest processing and marketing of aquatic products. The 1981 NARA Act contains provisions to enable NARA to assess the status of fish stocks. National Fisheries and Aquatic The main state-sponsored NAQDA’s head office is in Aquaculture Resources Act, No. 53 organization mandated for Colombo. It maintains 22 District Development of 1998 the development of the Aquaculture Extension Offices, 8 Authority aquaculture and inland Freshwater Aquaculture Breeding (NAQDA) fisheries sector in Sri Lanka. Centers, 3 Freshwater Prawn Goals include developing Breeding Centers, 2 Ornamental aquaculture operations to Fish Breeding Centers, and a increase fish production, multispecies marine finfish promoting employment hatchery. It also operates the opportunities through Kalakewa Inland Fisheries and aquaculture development, Aquaculture Training Institute, promoting high-value species which conducts training for NAQDA for aquaculture, conserving staff, fish farmers, and other and rehabilitating aquatic interested parties. Staff totals 708 resources devastated by people. poor aquaculture practices, and facilitating eco-friendly aquaculture practices. It has developed a Coastal Aquaculture Development Plan for 2020–2025. Source: Creech 2020. 92 Appendix Appendix D. Coastal Ecosystem Degradation1 The degradation of coastal ecosystems such as seagrass beds, mangroves, coral reefs, lagoons, and estuaries that provide essential breeding and nursery grounds for many economically important coastal fish species contributes significantly to coastal fish stock depletion. In Sri Lanka, coastal lands and resources have been sub- jected to overexploitation. Population growth in the coastal zone, infrastructure expansion, and production increase in natural resource–based industries such as fisheries, tourism, and mining have put enormous pressure on the coastal ecosystems (Figure D.1). Figure D.1: Trends of Economic Activity in the Coastal Zone, 2000–2018 Coastal DSD population Sri Lanka tourism Accommodation capacity Total 30 10 South coast resorts 7 Rural Bednights (million) Rooms (‘000) 6 Municipal/urban 25 People (million) 8 East coast resorts 5 20 4 6 15 3 4 10 2 1 5 2 0 0 0 2000 2002 2004 2006 2010 2012 2014 2016 2000 2002 2004 2006 2010 2012 2014 2016 2000 2002 2004 2006 2010 2012 2014 2016 2018 2018 2018 2008 2008 2008 Source: DCS 2012, 2019, 2020 Source: DCS 2019 Source: SLTDA 2010, 2019a Coastal fisheries production Offshore fisheries production Shrimp aquaculture production 300 200 10 Tonnes (‘000) Tonnes (‘000) Tonnes (‘000) 250 8 150 200 6 150 100 4 100 50 2 50 0 0 0 2000 2002 2004 2006 2010 2012 2014 2016 2000 2002 2004 2006 2010 2012 2014 2016 2000 2002 2004 2006 2010 2012 2014 2016 2018 2018 2018 2008 2008 2008 Source: CBSL 2019 Source: CBSL 2019 Source: NARA 2015, 2018, NAQDA 2020 Ilmenite production Rutile production Cement production 80 5 3.0 70 2.5 Tonnes (‘000) Tonnes (‘000) Tonnes (‘000) 60 4 50 2.0 3 40 1.5 30 2 1.0 20 1 0.5 10 0 0 0.0 2000 2002 2004 2006 2010 2012 2014 2016 2000 2002 2004 2006 2010 2012 2014 2016 2000 2002 2004 2006 2010 2012 2014 2016 2018 2018 2018 2008 2008 2008 Source: CBSL 2010, 2019 Source: CBSL 2010, 2019 Source: CBSL 2010, 2019 Source: Emerton, Miththapala, and Suthakaran 2020. 1 This appendix draws largely on Emerton, Miththapala, and Suthakaran (2020). Priorities for Sustainably Managing Sri Lanka’s Marine Fisheries, Coastal Aquaculture, and the Ecosystems That Support Them 93 It is essential to understand the ecology of fish habitat and to integrate same in fisheries and coastal zone management. As stated, one reason for the decline in catch (in addition to issues mentioned in the main report) is the loss and degradation of fish habitat. Thus, in addition to assessing the status of fish stock, it is important to collect up-to-date information on the ecology and biology of commercially important species for their sustainable management. Sensitive coastal habitats are those that are ecologically important and support important assemblages of commercial and noncommercial fish species. Some of these habitats, as described below, are essential to the ecological and biological requirement for critical life history stages of exploited fish species and may require special manage- ment to naturally improve stock status and long-term sustainability. While Article 31B of the Fisheries and Aquatic Resources Act (FARA) states that fishery management plans “may include proposals for the preservation locations” of ecological significance in a fishery management area, no such area is fully operational. Greater emphasis should be placed on the use of zoning for the protection of essential fish habitats, which is a tool widely used to manage marine habitat in other parts of the world, ensuring that species subjected to commercial exploitation have a healthy future. It is estimated that, globally, “a single acre of seagrass can support upwards of 40,000 fish and 50 million small invertebrates” (Reynolds 2018). Mapping of Sri Lanka’s seagrass meadows only recently started, and there is no published data on their economic value.2 Seagrass meadows are often im- pacted by increased sedimentation caused by erosion from onshore and offshore activities, dredging, and illegal fishing methods such as mechanized bottom trawling (although illegal, this fishing practice, along with other destructive fishing practices such as blast fishing, continue in waters of Sri Lanka). Important habitats for seagrasses, such as mangroves, are also being depleted in the northwestern re- gion of Sri Lanka because of population expansion, growth in the aquaculture and tourism sectors, and boat landings. Anchoring in Kalpitiya is also known to be a common cause of destruction of seagrass meadows. Similarly, mangroves and reefs have known benefits to fisheries. A recent study suggests that reef and mangrove-associated species may contribute as much as 40 percent of Sri Lanka’s coastal fisheries catch by weight and 30–40 percent by value (Emerton, Miththapala, and Suthakaran 2020). According to Marine Environment Protection Authority (MEPA) General Manager Dr. Terney Pradeep Kumara, 90 percent of Sri Lanka’s coral reefs, a majority of which are found along the eastern, western, and southern coastlines, are already dead and the remaining ones face continued threats from pollu- tion, tourism, and destructive fishing.3 A study conducted in Sri Lanka on 200 hectares of a mangrove in the Rekawa lagoon ecosystem identified that this complex ecosystem provided economic contribu- tions worth $98,600 annually toward coastal fisheries and $60,000 annually by providing protection against storms and coastal erosion. At present, a larger share of shrimp production in the country is based on wild catch. The benefits of mangroves on offshore fisheries have also been noted, as many fish species use mangroves as nursery areas. A recent proposal to covert part of the Wedithalathive Nature Reserve situated on Sri Lanka’s northwestern coast, which is a very rich and vibrant ecosystem of mangroves, tidal mudflats, salt marshes, seagrass beds, and coral reefs, to an aquaculture park has sparked much controversy and concern among conservationists and the public. This is a classic situa- tion where detailed assessments on ecosystem services and valuations are warranted, to understand 2 “Seagrass Meadows,” Conservation Sri Lanka, IUCN, http://iucnsrilanka.org/conservation-sri-lanka/coastal-and-marine-ecosys- tems/seagrass-meadows/. 3 “90 Percent of Corals in Our Waters Are Dead,” News.lk, June 11, 2019, https://news.lk/news/political-current-affairs/item/25937- 90-percent-of-corals-in-our-waters-are-dead. 94 Appendix long-term economic losses and gains so that policy action can be duly informed to ensure sustainable development. In 2010, the extent of mangroves in Sri Lanka was estimated at 15,670 hectares, which is about 0.2 percent of the total forest cover (Ranawana 2017). Reefs are the breeding and nursery grounds of many species, including economically im- portant reef fish and other species such as spiny lobsters, sea cucumbers, and chanks. The well-being of coral reefs is severely compromised by human activities that damage the reef structure and reduce the diversity of reef species. In 2009, the National Aquatic Resources, Research and Devel- opment Agency (NARA) conducted a stock assessment survey of the lobster fishery along the south coast that indicated that the abundance for all species of lobster was declining. As part of this study, lobster habitats were mapped (seagrass, coral reefs, limestone, sandstone), which indicated 95 percent of the habitats were marginal. It was observed that lobster fishers brought considerable amounts of coral to the shore entangled in their nets (Liyanage and Long 2009). The use of explosives to catch reef fish is the most destructive fishing method. Although blast fishing is illegal under the Fisheries and Aquatic Resources Act, most fishers turn to this method as it is quick and cheap (a stick of dynamite along with the detonator costs only 1,000 Sri Lankan rupees) and catches large numbers of fish. The southern and eastern coastal areas of Sri Lanka are well known for blast fishing. Reefs get damaged or destroyed when fishing nets become entangled on them. Often entangled nets are abandoned, and these continue to trap fish and other species.4 Sediment and nu- trient pollution from poor land management and untreated wastewater discharge as well as climate change are some of the other leading causes that put undue stress on coral ecosystems. Frequent and increased magnitude of bleaching events in the country’s reefs are closely linked to the gradual rise in sea surface temperature compounded by other stress factors. Figure D.2 displays the impact of the 1998 coral bleaching event on reefs in the Bar Reef and Hikkaduwa marine parks. Coral reef percentage plummeted from approximately 80 percent in Bar Reef and 60 percent in Hikkaduwa to less than 10 percent in both locations after the bleaching event. In coral reefs, reconstruction of the damaged hab- itats can take decades (Rameez 2018). Lagoons and estuaries also provide significant economic benefits in terms of fisheries that are derived from the large population of shellfish and finfish found in these ecosystems. About 45 estuaries covering some 93,075 hectares lie along Sri Lanka’s approximately 1,620-kilome- ter-long coastline (CCCRMD 2018). They support approximately 1 percent of the population and con- tribute more than $39.6 million to the fisheries industry.5 The Puttalam Estuary alone supports around 165,000 people both directly and indirectly through fishery. However, these ecosystems have come under increasing pressure from unsustainable development and a burgeoning population depending on an increasingly dwindling resource base. In Sri Lanka, the number of individuals who depend on estuaries and coastal lagoons has more than tripled since 1948, signifying the increasing pressure and resource extraction these ecosystems have faced over the last decades; for example, in Thondaimanaru Lagoon, in the north, fish species have dropped by 32 percent in just a decade. 4 “Destructive Fishing,” IUCN Sri Lanka Country Office, https://www.iucn.org/sites/dev/files/import/downloads/destructive_fishing. pdf. 5 “Coastal and Marine Ecosystems,” Conservation Sri Lanka, IUCN, http://iucnsrilanka.org/conservation-sri-lanka/coastal-and-ma- rine-ecosystems. Priorities for Sustainably Managing Sri Lanka’s Marine Fisheries, Coastal Aquaculture, and the Ecosystems That Support Them 95 Figure D.2: Change of Coral Cover, 1998–2007 (%) 90 Bar Reef 80 Hikkaduwa 70 Coral Cover (%) 60 50 40 30 20 10 0 1998 2000 2002 2004 2007 Year Source: “Coral Reefs,” Conservation Sri Lanka, IUCN, http://iucnsrilanka.org/conservation-sri-lanka/coastal-and-marine-ecosystems/coral-reefs/. Threats to the coastal environment are multiple and arise from many different sources. As described above, many are associated with rapidly intensifying land and resource demands, human ac- tivities, and economic pressures—even though Sri Lanka has a comprehensive body of regulations, re- strictions, procedures, and plans governing environmental management and the development of lands and resources in the coastal zone. For example, hard and soft corals are protected under the Fauna and Flora Protection Ordinance and destructive fishing is banned; four marine protected areas and three large fisheries management areas have been declared under the Fauna and Flora Protection Ordinance and the Fisheries and Aquatic Resources Act. Yet weak enforcement and inadequate management capacity among agencies with the mandate to protect coastal resources remain major challenges. For example, both the Department of Wildlife Conservation and the Department of Fisheries and Aquat- ic Resources do not have adequate resources in equipment and manpower to police and manage large marine areas. Further, intersectoral and stakeholder coordination issues continue to pose a major challenge. A plethora of agencies work in the coastal zone, often with little or no cooperation. Lack of effective, coordinated action between sectors is widely recognized to be a challenge that has long plagued integrated coastal management processes, and a key factor permitting many environmentally damaging activities to occur in the first place. The use and management of coastal natural capital and ecosystem services is governed by a complex, and often contradictory, web of different institutions, interests, and development imperatives. Related to this, broader governance issues persist. As such, substantial gaps in policy implementation exist that have resulted in the weak integration of coastal ecosystems in many sectoral policies and plans. 96 Appendix Appendix E. Sri Lankan Longline Fishery Improvement Project A Government–private sector partnership for improving multiday fishery governance1 The IOTC adopted Resolution 11/04 on a Regional Observer Scheme in 2011. The resolution sets out the minimum recording requirements for fisheries for tuna and tuna-like species in the Indian Ocean Tuna Commission (IOTC) area of competence.2 The government of Sri Lanka initiated an observer scheme in compliance with Resolution 11/04 in 2013. However, the small size of Sri Lankan multiday fishing vessels was quickly highlighted by independent observers as a safety concern. Of Sri Lanka’s 1,838 multiday fishing vessels currently registered to fish in the IOTC area of competence, 98.7 percent are less than 24 meters in length overall. Sri Lanka’s large fleet of small-scale vessels rep- resents 34 percent of the total number of vessels registered to fish in the IOTC area of competence (5,430). The average length of IOTC-registered Sri Lankan vessels is 12.6 meters (41.34 feet). Thus, most Sri Lankan longline vessels are too small and inadequately equipped to safely deploy independent ob- servers. Therefore, an alternative approach is necessary to enable Sri Lanka to collect verified fisheries information and catch data related to the fisheries for tuna and tuna-like species, in compliance with IOTC Resolution 11/04. In 2018, the fishery improvement project (FIP) launched an action to investigate whether skippers operating longline multiday fisheries (MDF) vessels that are less than 24 meters could be trained to collect independently verifiable fisheries information and data using a simple measuring board and a GPS-enabled digital camera. The action was cofinanced by SEA PACT, a group of leading North American seafood companies dedicated to driving stewardship and continuous improvement of social, economic, and environmental responsibility throughout the global seafood supply chain. The success of the action suggested that skippers could be trained as local observers (LOs), which would enable Sri Lanka to collect verified fisheries information and catch data related to the fisheries for tuna and tuna-like species, in accordance with IOTC reporting requirements. In December 2019, the FIP commenced the second LO program in collaboration with 18 multiday boat owners and skippers, the Information Communication and Technology Division of the Department of Fisheries and Aquatic Resources (DFAR), and District Fisheries Offices in Negombo and Chilaw. The skippers were trained to collect IOTC fisheries information and data using a new LO information and data collection protocol, between December 2019 and March 2020. Seventeen LOs returned with in- dependently verifiable digital data for one or more longline sets. The new LO protocol enabled the FIP to collect more IOTC fisheries information and data (40 variables) compared to the first deployment of LOs (36 variables). 1 All information in this section is drawn from Sri Lankan Longline Fishery Improvement Project documents. 2 “Competence: Area & Species,” Indian Ocean Tuna Commission, https://iotc.org/about-iotc/competence. Priorities for Sustainably Managing Sri Lanka’s Marine Fisheries, Coastal Aquaculture, and the Ecosystems That Support Them 97 Ninety-eight percent of the IOTC’s minimum recording requirements for fisheries for tuna and tu- na-like species in the IOTC area of competence was successfully collected from 55 sets over a period of 5 months. The new LO protocol enabled the FIP to collect 96 percent of the trip information, 91 percent of the gear information, 91 percent of the set information, 114 percent of the catch data, and 97 percent of the scientific data required by the IOTC. The cost of collecting IOTC fisheries information and data using the LO protocol from 17 trips was $2,750 ($50 per set). The results of the most recent deployment of LOs further demonstrated the effectiveness of the LO information and data collection protocol to collect independently verifiable catch and other scientific data related to fisheries from Sri Lanka’s large fleet of small-scale longline fishing vessels that fish outside the country’s exclusive economic zone. Information and data about endangered, threatened, and protected species (for example, oceanic whitetip shark and turtles) accidentally caught by longline fishing vessels is also collected and analyzed using the LO protocol. The information and data collected from 88 longline sets using the LO protocol by FIP in 2019 and 2020 suggest that Sri Lanka’s longline fisheries for yellowfin tuna, bigeye tuna, and swordfish have a reasonable chance of moving from FAIL to a PASS with conditions against the Ma- rine Stewardship Council’s Principle Indicators 2.3.1 and 2.3.2 in early 2021. This outcome is contingent upon the FIP continuing to collect fisheries information and data about the longline catch using the new LO protocol. 98 Appendix Appendix F. Compliance with IOTC Resolutions Table F.1: IOTC Compliance Committee Comments on Sri Lanka’s Compliance with Resolutions and Responses Provided by Sri Lanka as of July 2020 Indian Ocean Tuna IOTC 16th session of Commission (IOTC) Compliance Committee’s Sri Lanka’s response on July 31, 2020 Resolution Comments (2019) 11/04: On a • Has not implemented 5 • Majority of Sri Lankan fishing fleet consists of percent mandatory at vessels in the range of 10–15 m in length without the Regional Observer sea requirements. minimum requirements viz: safety, accommodation, Schemea and space for deploying the observers. • Though vessels <24 m operate outside EEZ, Sri Lanka is not in a position to deploy onboard observers for safety issues. • Sri Lanka is implementing the EMS pilot project with the technical assistance of IOTC on this regard.b • However as per point 4 of the resolution, small vessels are being monitored by the field samplers where the coverage is >5 percent. There is no separate template to submit land-based sampling data under Resolution 11/04. Hence, the length data obtained at the landing points submit to IOTC incorporating to the data submit in June under Resolution 15/02 each year. • Sri Lanka is experimenting with a crew-based observer scheme to fulfill scientific data reporting in a cost-effective manner in small boats (see Appendix E). 15/02: Mandatory • Has not reported • Lack of human resources caused lag for further Statistical Reporting nominal catch for the improvement of coastal data sampling, collection, Requirements for coastal fisheries at and compilation. IOTC Contracting IOTC Standard. • To overcome this issue, Sri Lanka introduced an Parties and • Has not reported electronic data collection system through a tablet, Cooperating Non- catch and effort for which increases the efficiency of data reporting as contracting Parties the coastal fisheries at explained in the section under 18/07 implementation (CPCs)c IOTC Standard. report 2019. • Has not reported size • Development and establishment of a robust fisheries frequency for the information system is essential for coastal fisheries coastal fisheries at of Sri Lanka. To achieve this target, the “Sri Lanka– IOTC Standard. Norway” bilateral project to improve port sampling procedures is being conducted by the National Aquatic Resources, Research and Development Agency (NARA) and the Institute of Marine Research in Bergen, Norway. This will lead to upgraded coastal date collection in coming years. The project is ongoing up to 2021. 17/05: On the • Has not reported size • Sri Lanka paid special attention on further Conservation of frequency on sharks. improvement of data collection of sharks in 2019 and Sharks Caught in the data will be submitted in June 2020 (revised to Association with be submitted by December 2020 according to the Fisheries Managed recent Compliance Report for 2020). by IOTCd Priorities for Sustainably Managing Sri Lanka’s Marine Fisheries, Coastal Aquaculture, and the Ecosystems That Support Them 99 Indian Ocean Tuna IOTC 16th session of Commission (IOTC) Compliance Committee’s Sri Lanka’s response on July 31, 2020 Resolution Comments (2019) 15/04, 19/04:f • Has not fully • Actions have been taken to complete the list of IOTC Concerning the implemented the list authorized vessels by giving all information as per IOTC Record of of authorized vessels the template provided from 2019 onward. Vessels Authorized above 24 m in LOA, to Operate in Missing call sign, IMO the IOTC Area of and vessels below Competence 24 m in LOA, Missing call sign, GT, invalid authorization period. 01/06: Concerning • Has not provided the • Sri Lanka attempted to balance the gap of 21 kg the IOTC Bigeye bigeye tuna annual bigeye tuna in the annual report of 2017; however, Tuna Statistical report for 2017, as it has not reported. Steps have been taken to keep Document required by Resolution clear records on this regard. Programme 01/06. • This resolution is not applicable as of 2020, as Sri Lanka does not export frozen bigeye tuna, according to the Code of Conduct Implementation Report, submitted on July 31, 2020.g Source: Sri Lanka’s response to feedback letter, addressed to IOTC Compliance Committee, July 31, 2020, https://iotc.org/documents/sri-lanka-7. a. https://www.iotc.org/cmm/resolution-1104-regional-observer-scheme. b. According to the report on update on the implementation of the Regional Observer Scheme (ROS) presented at the 23rd IOTC Scientific Commit- tee, December 7–11, 2020, Sri Lanka has successfully managed to provide a number of LL trip reports compiled through the old version of the ROS e-collection tool and more reports are expected to be submitted by the end of 2020 and the beginning of 2021. https://iotc.org/documents/SC/23/07E. c. https://www.iotc.org/cmm/resolution-1502-mandatory-statistical-reporting-requirements-iotc-contracting-parties-and. d. https://www.iotc.org/cmm/resolution-1705-conservation-sharks-caught-association-fisheries-managed-iotc. e. According to the IOTC Compliance Report for Sri Lanka on July 31, 2020, the IOTC received data of size frequency for shark species not reported for all fisheries catching sharks, but length data are still under process to produce in class intervals; thus, it will be submitted before December 31, 2020. https://iotc.org/compliance/monitoring. f. Sri Lanka responded to the IOTC Compliance Committee comment referring to Resolution 15/04 in their table. Resolution 15/04 is superseded by Resolution 19/04, so the table here has two reference numbers. https://www.iotc.org/cmm/resolution-1504-concerning-iotc-record-vessels-autho- rised-operate-iotc-area-competence; https://iotc.org/cmm/resolution-1904-concerning-iotc-record-vessels-authorised-operate-iotc-area-compe- tence. g. https://www.iotc.org/documents/sri-lanka-9. 100 Appendix Appendix G. The Bio-Lewie Methodology And Past Applications To Fisheries Bio-LEWIE Methodology The local economy-wide impact evaluation (LEWIE) modeling approach builds on the microeconom- ic agricultural household modeling framework used in development economics, in which household groups are producers and consumers (Taylor and Filipski 2014). In fisheries, fishing households both produce and consume fish, similar to agricultural households that produce and consume crops. LEWIE constructs microeconomic models of different household groups (in this study, fisher, non-fisher, poor, nonpoor using micro-survey data. Then it combines these micro models into a general equilibrium model of the local economy, which could be a fishing community, a fishing community and nearby market center, a coastline, or even the entire coastal band around Sri Lanka. Defining what is meant by “local economy” is an important step in carrying out any LEWIE study. Within the LEWIE model, as within real-world local economies, different household groups interact in markets, and this transmits impacts from one group to another as well as between households and local production activities. Bio-LEWIE combines a LEWIE model with a bioeconomic model of the fishery. Bioeconomic models are a staple for microeconomic studies of fisheries, fishing household economies, and fishery manage- ment. An important thing bioeconomic models highlight is how the recovery of fish stocks, through better management, affects future productivity in the fishery. Bio-LEWIE takes this a step further, showing how the short-run costs of improved fishery management, particularly lower fish harvests while stocks are being restored, ripple through the economy of fishing communities, transmitting costs from fishing to non-fishing households. Non-fisher households lose as producers and workers when they cannot sell as many goods and services to fishing households or to one another, and they can lose as consumers if local fish prices rise. In the long run, however, as fish stocks recover and productivity in the fishery increases, these same kinds of market linkages can transmit benefits from fishing to non-fishing households. To capture and quantify these short- and long-run impacts, Bio-LEWIE extends traditional LEWIE models in two ways. First, it carefully models fishing and related activities by fishing households and the dual nature of these households as producers and consumers of fish. Fish production uses a harvest function that depends on the status of fish stocks, as in a standard bioeconomic model. Fishing house- holds, like crop producers, set the value of the marginal product they receive from their labor equal to the opportunity cost of this labor. In the process, they ignore the value added generated by the fish stock (and the negative impact their harvesting decisions have on the fish stock). This means that, if a fishing household’s opportunity cost or shadow wage is low, as is typical for poor households with few other livelihood options, the household is likely to allocate too much time to fishing, even when the economic benefit of doing so is small. Overfishing and a “tragedy of the commons” situation are likely to be the result. Each fishing household receives, as income, the rents it generates from its fish- ing activities, as it would in a small-scale fishery where households have small boats and fishing gear. (Our model will also account for hired labor in fishing activities, which is likely to be more important in multiday offshore fishing operations.) Priorities for Sustainably Managing Sri Lanka’s Marine Fisheries, Coastal Aquaculture, and the Ecosystems That Support Them 101 The second important extension of Bio-LEWIE is to include a dynamic fish stock model that adjusts in response to harvesting pressure and other relevant environmental factors. In standard bioeconomic models, the population dynamics of fish stocks are represented by a growth model (often of the logistic form; the functional form will be decided upon while designing the Bio-LEWIE model). A logistic growth model with harvest calculates the fish stock in the following period as a positive function of the fish stock this period and the intrinsic growth rate of the fishery, and a negative function of the amount of fish har- vested in the current period. Modeling the fish stock in this way differentiates fishing from other activities in the model by making future productivity in the fishery depend on current fishing pressures. Prices link households and economic activities in the Bio-LEWIE model, as in other LEWIE models. The local price of fish (also export prices for tuna, lobster, crab) typically plays an important role in Bio-LEWIE models, by transmitting changes in local supply and demand into incentives for fishers to increase or decrease their harvesting activities. For example, if the local demand for fish rises and this puts upward pressure on the fish price, the incentives for fishing households to intensify their har- vesting effort increase. This can put upward pressure on local wages, drawing workers out of other activities (like crop production) into fishing. As more fish are harvested, the fish stock decreases, as represented by the fish stock model embedded in the Bio-LEWIE. This exacerbates the tragedy of the commons situation, causing the fishery to become less productive over time unless effective fish man- agement practices are put in place. The Bio-LEWIE model captures the dynamic interactions between fish stocks and local economic growth by using a recursive dynamic modeling approach. Once the model is constructed, we can use it to simulate the impact of an action (for example, fishery management policy), market change, or other shock (for example, an increase in tourism or a social cash transfer poverty program) in the short run and long run. As the local economy adjusts to the shock, wages and prices change, including fish prices, and this changes fish harvesting decisions in the first time period. The fish stock adjusts to the shock, and the dynamic fish stock equation shows how this changes the fish stock in the following period. In the second time period, the change in the fish stock becomes a new shock on the local economy, the economy adjusts, and the fish stock changes again. This process continues for however many periods we wish to use the model to track changes in the local economy and fish stock over time. The recur- sive dynamic approach distinguishes Bio-LEWIE from other LEWIE and most other general equilibrium models for policy analysis, which (except for a few highly aggregated computable general equilibrium models) are comparatively static in nature. Past Studies Examples of the use of Bio-LEWIE models for fishery and other policy impacts include the following: Manning, Taylor, and Wilen (2018) showed how capital restrictions in fisheries sectors have a diversity of impacts on different sectors of the economy. Efforts to manage fisheries through capital restrictions (restrictions on the number of boats), illustrated by Sri Lanka’s 2015 decision to stop construction of coastal crafts (small mechanized crafts), can decrease incentives to exploit fisheries and shift effort from coastal fisheries to other sectors (or fisheries subsectors). Trade shocks that negatively affect fish production can have similar impacts.1 Lindsay et al. (2020) use a bio-LEWIE model for Indonesia to show how pairing an agricultural stimulus with increasing enforcement of existing fishery regulations may lead to a win–win situation for rural coastal economies. 1 The 2015 European Union ban on seafood imports from Sri Lanka appears to have affected some SDGs positively regarding the environment but negatively on incomes and poverty (Sandaruwan and Weerasooriya 2019). 102 Appendix Gilliland, Sanchirico, and Taylor (2019) showed that social cash transfers can lead to an increase in local demand for food, including fish, and through this an increase in fish prices. Regulations relaxing loan repayments, by increasing households’ disposable income, can have a similar impact. Rising fish prices stimulate fishing effort, and this increases the need for management strategies to be developed and enforced to prevent resource degradation. Often, fragile small-scale fisheries are part of ecosystems that also attract tourists. Interactions be- tween tourism and resource conservation can be important, as tourists consume fresh fish in local restaurants and tourism revenue stimulates the local economy, increasing local households’ demand for fish, as well. Gilliland, Sanchirico, and Taylor (2020) use a bioeconomic LEWIE model to show how tourism expansion affects a local fishery over time, and how changes in both tourism and the fishery affect the incomes of different household groups. They find that tourism increases local incomes in the short run, as well as consumption, but this causes a decline in the local fish stock that, in turn, erodes incomes over time, especially for fishing households.