The economics of overfishing: can we sustainably feed the world’s appetite for fish?

Overfishing is not just an environmental crisis, it is also an economic one. The fishing industry generates billions of dollars in global trade, but its practices are depleting the world’s fish stocks at unsustainable rates. According to the UN’s Food and Agriculture Organisation (FAO), over a third of the world’s fishery stocks are now classified as overfished, meaning that they are being harvested faster than they can naturally replenish.

This poses significant risks not only to marine ecosystems but also to economies and food security worldwide. Here, we explore the economic incentives that are driving overfishing and the potential solutions that could help reverse the trend.

Global trade and the overfishing dilemma

In 2018, the international trade in fish and aquaculture products was valued at USD 150 billion, while the value of just the first sale of fish sold both domestically and internationally was an astonishing USD 401 billion, according to the FAO. Fish is a crucial source of protein for over 3 billion people globally, especially in coastal and developing regions. As demand for seafood grows, so does the pressure on fish stocks, creating a tension between short-term economic gains and long-term sustainability.

Overfishing is driven by a combination of factors, including technological advances in fishing, globalised trade, and government subsidies that encourage increased fishing activity. According to a study in the International Journal of Ocean Affairs, governments provided around USD 35 billion in subsidies to the fishing industry in 2018, supporting costs such as fuel, new vessels, and fishing gear.

Many of these subsidies exacerbate the problem by encouraging overcapacity in the fishing industry, allowing more boats to fish larger areas, often leading to the overexploitation of fish stocks. As fish populations dwindle, the economic consequences can be severe: reduced catches, lower incomes for fishermen, and increased food prices for consumers.

Reforming fishing subsidies: a step towards sustainability

One of the most urgently needed solutions is the reform of harmful fishing subsidies. In June 2022, a landmark agreement was reached with the World Trade Organisation (WTO), aimed at curbing subsidies that fuel illegal, unregulated, and unreported fishing activities. The WTO’s Agreement on Fisheries Subsidies, once ratified by two-thirds of its members, will prohibit subsidies for fishing overfished stocks and provide measures to prevent illegal activities.

However, as of July 2023, only 78 out of the required 110 countries have ratified the agreement, which means the full implementation is still pending. This delay highlights the complex political challenges of reforming an industry that is deeply embedded in many national economies.

Read also: Five ways to save our oceans

For numerous countries, particularly developing ones, fisheries are an economic lifeline. Balancing economic interests with environmental stewardship requires international cooperation and robust enforcement mechanisms. If successful, this reform could reduce the global fishing fleet’s environmental impact and encourage more sustainable practices across the industry.

Aquaculture: a double-edged sword

As wild fish stocks have declined, aquaculture – the farming of fish in controlled environments – has rapidly grown to meet global demand. Today, more than 50% of the fish we consume comes from aquaculture, according to the FAO. On the surface, this appears to be a solution to the overfishing crisis – by farming fish in ponds or pens, we can reduce the pressure on wild populations while still meeting consumer demand.

However, aquaculture has its own economic and environmental challenges. Many fish farms rely on fishmeal – a protein-rich feed made from small, wild-caught fish, according to the World Wildlife Fund (WWF). This practice can have devastating impacts on poorer countries that depend on these small fish for their own food security. By diverting these resources to industrial fish farms, local communities may face increased food prices or shortages.

Further, the environmental impacts of aquaculture – including water pollution, habitat destruction, and the spread of diseases to wild fish populations – raise concerns about its long-term sustainability. In the face of these challenges, the industry is coming under increasing scrutiny from both regulators and consumers, who are demanding more transparency and environmentally friendly practices.

Read also: The proteins of 2050? Insects and meat substitutes

To address these challenges, investments in more sustainable aquaculture practices, such as plant-based feeds or closed-loop farming systems, could help mitigate the environmental damage while ensuring a steady supply of fish to the market.

Illegal and unregulated fishing: a global economic threat

Another major issue undermining efforts to sustainably manage global fish stocks is illegal, unregulated, and unreported (IUU) fishing. According to the FAO, IUU fishing accounts for up to 20% of the global fish catch, equivalent to about 26 million tonnes of fish every year. This not only depletes fish populations but also costs the global economy billions in lost revenue.

One of the main drivers of IUU fishing is the sheer number of unregulated vessels operating worldwide. Without proper monitoring and enforcement, illegal fishing operations can thrive, particularly in international waters where jurisdiction is limited.

Combatting IUU fishing requires significant international coordination. Many countries lack the resources to effectively police their waters, making it easier for illegal operations to continue unchecked. However, emerging technologies such as satellite tracking and drones are providing new tools for monitoring fishing activities and enforcing regulations.

Read also: How tech is being used to keep fisheries in line

Cracking down on illegal fishing could restore billions in lost revenue, protect jobs in the legitimate fishing industry, and help stabilise fish populations. The challenge lies in securing the political will and financial investment necessary to make these efforts effective on a global scale.

The economic case for sustainable fishing

The World Wildlife Fund estimates the total asset value of the world’s oceans at USD 24 trillion – this includes the fish they provide, the transport they enable, and the carbon they absorb. The economic impact of overfishing is clear – from government subsidies that incentivise overcapacity, to illegal fishing operations that deplete stocks, the current model is unsustainable.

Ultimately, sustainable fisheries management is not only about protecting the environment; it is about securing the long-term economic viability of the fishing industry and ensuring food security for millions of people. Through international cooperation, and by investing in sustainable practices, we can strike a balance between meeting global demand for fish and preserving marine ecosystems for future generations.

As we face an escalating environmental challenge, the need for such action has never been more urgent. We have already breached six of the nine planetary boundaries identified by science as underpinning environmental stability. As we push past these limits – such as ocean acidification, climate change, biodiversity loss and deforestation – research suggests that these boundaries interact, creating further impacts on other boundaries and systems. 

At Lombard Odier, we believe that we must move from an extractive economy to a regenerative, nature-positive economy. Instead of exhausting our planet’s finite resources we must harness nature’s ability to create self-sustaining value. In the world’s vital fisheries, this means ending overfishing and finding innovative ways to make aquaculture more sustainable, allowing fish stocks to recover, biodiversity to return, and damaged marine ecosystems to be restored.

According to the UN, the world’s oceans absorb a quarter of all man-made greenhouse gas emissions and 90% of the excess heat these emissions generate. For the millions of people that rely on oceans for their livelihoods, the billions that rely on them for food, and for all of us that rely on their power to limit climate change, ocean health is essential, and sustainable fishing has a vital role to play.