Ocean Nexus Special Report - Nova Scotia Lobster Fishers in Response to COVID-19

OCEAN GOVERNANCE, LAW, AND POLICY

A Policy Analysis for Nova Scotia Lobster Fishers in Response to COVID-19

CREDITS OVERVIEW

Yulan Kim, PhD

Postdoctoral Fellow

Nippon Foundation Ocean Nexus & Evans School of Public Policy and Governance, University of Washington

Rebeca de Buen Kalman, PhD Policy Fellow

Nippon Foundation Ocean Nexus

This report analyzes policy options to address the economic vulnerability of Nova Scotia lobster fishers to acute shocks, using COVID-19 as a case study It evaluates trade-offs across four policy options cash transfers, loans, price guarantees, and public marketing highlighting equity and effectiveness considerations to inform more resilient, responsive fisheries policy in Canada

OceanNexusSpecialReport|2025

oceannexus.org

YulanKim

RebecadeBuenKalman

Acknowledgements

WeextendourheartfeltgratitudetoDr GrantBlume,Dr WilfSwartz,andDr YoshitakaOta fortheirinvaluableguidanceinconceptualizingthisprojectandtheirinsightfulfeedbackon multipleiterationsofthismanuscript

This research was made possible through funding and support from Nippon Foundation Ocean Nexus, hosted at the University of Rhode Island In collaborationwithTheNippon Foundation, Ocean Nexus champions transformational social change through actionable ocean governance research. Our research expands upon The Nippon Foundationʼs program for policy research capacity building through an interdisciplinary social science research approach At Ocean Nexus, we aspire to create equitable oceans for humanity

Learnmoreathttps://oceannexusorg/about/

ExecutiveSummary

This report presents a policy analysis focused on the problem that many fishers inNova Scotia lobster fisheries are economically vulnerable to acute shocks We leverage COVID 19 as a case of an acute shock to analyze the effectiveness of policy options in addressingtheeconomicvulnerabilityofNovaScotialobsterfisherstoacuteshocks

We begin by defining acute shocks in the context of fisheries and present a typology of acute shocks and their impacts on the economic security of fishers. Our definition and typology make an important contribution to future research by providing a common understandingofacuteshocksinthecontextoffisheries.

We next define the key terms inthepolicyproblemtoclarifytheboundaryandscopefor our analysis and our focus on commercial lobster fishers in Nova Scotia We review the policy context of Nova Scotialobsterfishersʼeconomicvulnerability,theobservedimpact ofCOVID 19ontheincomeandemploymentstatusofNovaScotialobsterfishers,andthe measurestakenbytheCanadianGovernmenttosupportNovaScotialobsterfishersduring thepandemic.

We then present the criteria andhypotheticalpolicyoptionsonwhichwebasethispolicy analysis. The four policy options include 1 direct cash transfers, 2 emergency loans, 3 price guarantees, and 4 a public marketing program We analyze each of these policies against a setofrelevantcriteria:1thepolicyʼseffectivenessinrecoveringincomeloss,2 cost, 3 timeliness, 4 duration of policy implementation, 5 distributive equity, and 6 proceduralequity

Using the insightsfromouranalysis,wepresentthekeytrade-offsforeachpolicyoption Ouranalysisintuitivelyhighlightsthatthereisacleartrade-offbetweentheeffectivenessof a policy in recovering income loss and a policyʼs cost to the government. We estimate a price guaranteepolicymosteffectivelyrecoversanestimated16%oftheincomelossdue toCOVID 19butcarriesthehighestcostfortheNovaScotiangovernment Wealsoidentify acleartrade-offbetweentheeffectivenessandequityofthepolicies Thepriceguarantee anddirectcashtransferoption,whichweestimatearemosteffective,scorerelativelylower in terms of distributive and procedural equity. Meanwhile, the public marketing program whichisestimatedtohavethelowesteffectivenessispotentiallythemostequitableoption.

Fisheries will continue to navigate through acute shocks that instigate both demand-side andsupply-sidechallengesintotheforeseeablefuture.Whileouranalysislooksatasmall

segmentofthefisherpopulationinasingleCanadianprovince,theinsightsfromthisreport serveasavaluableresourceforpolicymakersbroadlyastheycontemplatehowtoaddress theeconomicvulnerabilityofthefisheriesandaquaticsector.

1.Introduction

The outbreak of COVID 19 had grave impacts on the global economy This includes the fisheries and aquaculturesectorwherethepandemicinterferedwiththeentireproduction chain by impeding the harvesting, processing, storage, transportation, and marketing of fish TheFoodandAgricultureOrganizationoftheUnitedNationsFAOestimatesthat595 million people worldwide were engaged in the primary sector of capture fisheries and aquaculture production in 2018 Food and Agriculture Organization, 2020. This figure grows to more than 250 million people when considering those employed in secondary sectorsFoodandAgricultureOrganization,2020 Henceitisreasonabletoexpectthatthe disruptions caused by COVID 19 have affected a significant proportion of the world's populationwhodependonfisheriesfortheirlivelihood

COVID 19exposedthevulnerabilityoftheworldʼsfisheriesandaquaculturesectortoacute shocks.Earlypublicationsfindthatdeclinesinlandings,demands,andpricesforfishhave led to significant economic losses for fishers around the world Food and Agriculture Organization,2021;OECD,2020;Manlosaetal.,2021;Whiteetal.,2021;Avtaretal.,2021; Menhat et al, 2021; Sunny et al, 2021 This report examines COVID 19 as a case ofan acuteshockandpresentsananalysisofpoliciestomitigatetheimpactsofacuteshockson the economic vulnerability of individual fishers We borrow from the political science literaturetodefineshocksasexogenouseventsthatcausesignificantchangestothestatus quoMargalit,2019;“Shock,ˮn.d.)sincewefindnowidelyaccepteddefinitionof“shocksˮ withinthefisheriesliterature.Specifically,wefocusoncommerciallobsterfisheriesinNova Scotiatoanalyzethepotentialeffectivenessofpolicyinterventionstoreducetheeconomic vulnerability of self-employed fishers to acute shocks We assume the effects of acute shocksareadirectcauseofeconomicvulnerability,whereeconomicvulnerabilitymaybe conceptualized as a state of transitory poverty Béné, 2009 We use estimations of the incomelossthatNovaScotialobsterfishersincurredasaresultofCOVID 19asaproxyto measurefishersʼvulnerabilitytoacuteshocksHoddinott&Quisumbing,2008.

Theintendedaudienceofthisreportispolicymakerswhomanagetheworldʼsfisheriesand aquaculture sectors. Thecontextofthisanalysisisboundedwithinasinglefisheryinone CanadianprovinceofCanadabutourfindingsareinformativetopolicymakerselsewhereas theyseektoaddresstheimpactofacuteshocksonfisheriesandaquaculture Weanalyze a set of policies to be potentially implemented by the Government of Nova Scotia in collaboration withotherpublicorganizations Atthesametime,wefindthatsimilarsetsof OceanNexusSpecialReport|APolicyAnalysisforNovaScotiaLobsterFIshersinResponsetoCOVID 19 7

policies including cash transfers, loans, and direct marketing programswerewidelyused bygovernmentsaroundtheworld.

The organization of the policy analysis presented in this report follows the process illustrated in Figure 1. We first define the problem thatNovaScotiapolicymakersfacedat the onset of the COVID 19 pandemic: many fishers in the NovaScotialobsterfisheryare economically vulnerable to acute shocks We then identify causal drivers underlying the economic vulnerability of Nova Scotia lobster fishers and review policies that the federal and provincial governments of Canada introduced to mitigate the impact of COVID 19 in 2020. We review a set of policy options to address the economic vulnerability of lobster fishers along with the criteria to systematically analyze these policies. Based on this analysis, we examine the key tradeoffs to emerge between these options. Finally, we conclude with a discussion of the policy implications that arise from our analysis with a focusonenhancingtheresilienceoftheglobalfisheriesandaquaculturesectorintheface ofacuteshocks

Figure1ThePolicyAnalysisProcess

2. The Problem: Many Fishers in Nova Scotia Lobster Fisheries are

EconomicallyVulnerabletoAcuteShocks

In this report, we focus on the problem that manyfishersinNovaScotialobsterfisheries areeconomicallyvulnerabletoacuteshocks.Thissectiondefineskeytermsandconcepts inthecontextofthispolicyproblemtoclarifythescopeofanalysis

2.1AcuteShocks

No consensus exists among researchers or policymakers in terms of whatconstitutesan acute shock to fisheries There is no classification scheme or typology to differentiate among types of shocks other than that proposed by Hoddinott and Quisumbing 2008, whoclassifyshocksbytheirimpactonassets,economicactivities,andoutcomesofthose activities. We therefore offer a clear, fisheries-specific definition of acute shocks and presentaclassificationschemetofacilitateouranalysis.

Wedefineacuteshockstofisheriesasexogenouseventsthatcausesignificantandintense changes to the status quo in a period spanning several days up to several months. Margalit, 2019; “Shock,ˮ nd; Hooren et al, 2014 1 These events are unpredicted disruptions that interfere with the routinemanagementoffisheries Acuteshockshavean immediate impact on the economic vulnerability of fishers as opposed tochronicshocks whichhaveamoregradualimpact.Forinstance,disruptionsfromanextremeheatwaveare suddenbutareexpectedtosubsideovertimewhereasrisingsealevelsareanexampleof achronicshockwithimpactsthatbuildupovertime.

Table 1 classifies how distinct types ofshocksrelatetoobservableeffectsthateventually contribute to fishers' economic vulnerability We classify acute shocks to fisheries into three broad categories including biological shocks, geophysical shocks, and political-economicshocks Inallcases,weassumetheeconomicactivityoffisherswillbe constrained as an immediate result of a shock These economic impacts include both supply-side constraints that prevent fishers from harvesting fish and demand-side constraints that lead to foregone revenue because fishers cannot sell their catch. In the context of supply-side constraints, safety and health hazards of continued operation, physical damage to fishing stock and fishing grounds, and damage to fishing equipment andinfrastructurearesomelogisticalchallengesthatimpedethesupplyoffish Disruptions

1 As important as an exogenous shockʼs duration is its magnitude; a lesser-magnitude event on a longer time horizon would likely constitutea“crisisˮforwhichpolicymakersarebetterequippedtohandle(Hooren,Kaasch, &Starke,2014

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to the labor market and the seasonalcatchcycle(typicallydefinedunderregulations)are additional factors that may impact fish supply as a result of an acuteshock.Fishersalso face economic vulnerabilities arising from a lack of demand caused by an acute shock. Disruptionstothesupplychaincanmakeitimpossible,forinstance,forfisherstoselltheir fish to secondarysectorsthatprocess,transport,andmarketthefish Additionally,lackof demands from end-consumers are demand-side challenges that contribute to the economicvulnerabilityoffishers

Table1 ImpactofAcuteShockstoFisheriesandCorrespondingShort-termSymptomsthat ContributetoEconomicVulnerabilityofFishers

Supply-SideEffectsofShock:UnabletoHarvestFish

Safety and Health Hazard sfrom Fishing

Geophysical shocks Natural disasters (hurricanes, earthquakes, tsunamis, floods, droughts,heat waves, wildfires, ozonepeaks, etc)

Biological shocks Developments anddiseases affectingfish andfishing zonesAlgal blooms, aciditypeaks, etc)

Diseases affecting humans COVID 19

Political-eco nomic Shocks Accidents affecting fisheries (eg,oilspills, nuclearspills, etc)

Accidents affecting markets (economic recessions, tradewars, terrorism, etc)

Lossof fishand fishing grounds Lossof equipment and infrastructure

Disruption tothe labor market

Demand-SideEffectsof

Shock:UnabletoSellthe Catch

Logisticalchallenges OperationalChallenges Disrupted supplychain (processing, storage, transportation, marketing, andtrade) Dropin demand from end-cons umers

v Heat waveson kelp forestsin California ArafehDalmau etal, 2020

v

Tsunami Acehonboat fleetsin Indonesia Tewfiketal, 2008

Disrupted seasonal cycledue to regulations

v v

Hurricane Katrinaon fishingports, seafood processing facilitiesin GulfCoast Buck,2005 Hurricane Mariaon customer baseloss Agaret al,2020

According to our classification scheme we assume COVID 19 initiated abiologicalshock TheCOVID 19pandemichasimposedsafetyandhealthhazardstofisherswhileinterfering

with labor supply and fishing seasons which disrupt the supply of fish. COVID 19 also raises demand-side challenges by dismantling the supply chain whiledirectlylimitingthe consumptionoflobsterthroughdine-inrestrictionsetc.Theresultwasthecompoundingof an economic shock on top of what started out as a biological shock Thus, we observe compoundingbiologicalandeconomicshocksasaresultofthepandemic

2.2NovaScotia

Nova Scotia is a province that contributes significantly to the fisheries production of Canada (see map in Figure 2 below) In 2019, the Canadian fisheries and aquaculture sector (including secondary sectors) produced over 12 billion CAD in gross value of outputs, employing over 83,600 people Fisheries and Oceans Canada, 2021b, 2021c).

NovaScotia,inparticular,employed18,688intheprimarysectoroffishharvestingin2019, accounting for more than a third of total fisheries employment in Canada Fisheries and OceansCanada,2021c) LobsterisNovaScotia'smostvaluablefisheriesproduct In2019, 50,800 tons of lobster valued at 880 million CAD were landed, accounting for approximately half of the total lobster landings in CanadaFisheriesandOceansCanada, 2021a).

Figure2.LocationofNovaScotia

Lobster is an economic juggernaut of Nova Scotia. Considering all other species,lobster landingsconstitutedonly19%ofthetotal264,715metrictonslandedFisheriesandOceans Canada,2021d)butcontributednearly58%totheoverallvalueofNovaScotiafisheriesin 2019 Fisheries and Oceans Canada, 2021d) Canadian researchers Nikoloyuk and Adler 2013suggestthatastheprofitabilityofotherspeciesdeclines,lobsteristheonlyspecies that provides inshore fishers a sustainable means of income in the province Historically, lobster was eclipsed in Nova Scotia by a dependence on groundfish but the 1990s groundfish stock collapse forced fisheries towards lower trophic species such as lobster and shrimp. Today, the inshore lobster fishery provides the greatest driver of fish harvesting employment in the province and, inmanycases,isoneoftheonlysourcesof economicactivityinruralcoastalareas

The Department of Fisheries and Oceans DFO is the federal-level agency in charge of managing Canadian fisheries The agencyʼs primary purpose is to conduct orderly management of fisheries to ensure resource conservation The Department is organized into seven geographical regions where programming and administration are coordinated based on the unique needs of each region.InNovaScotia,fisheriesaremanagedbythe MaritimesandGulfregionaloffices,encompassingtheBayofFundyandAtlanticcoastline and the Gulf of St Lawrence, respectively Lobster fishing takes place in specific management zones within each region, known asLobsterFishingAreasorLFAs InNova Scotia, there are 15 LFAs spread along the coastline and one LFA offshore Amapofthe LFAsispresentedinFigure3 ThenestingofLFAswithindifferentregionsischaracteristic ofthefragmentationthatexistswithinthelobsterfishery.WithineachLFA,fishingactivityis regulatedbyeffortinputcontrolsincludinglimitedentrylicensing,traplimits,andtheuseof closed seasons. However, there are no restrictions on the volume of lobster landed FisheriesandOceansCanada,2020

Figure3.MapofNovaScotiaLobsterFishingAreas

2.3LobsterFishers

In the Nova Scotia lobster fishery, fishers are generally self-employed individuals who makeacatch,participateinanyworkincidentaltomakingorhandlingcatch,orengagein the construction of a fishing vessel for personal use or the use of a crew Employment Insurance Fishing)Regulations,1996 Fortheanalysisinthisreportwefocusspecifically on captains that hold lobster licenses and their crew that fish for commercial purposes 2 There were 3,488 lobster licenses issued to fish harvesters in Nova Scotia in 2019, with 2,885 in the Maritimes region and 603 in the Gulf region Fisheries andOceansCanada, 2021d). License owners constitute individual owner-operators of each enterprise. Each lobster license is fished by an independent owner-operatorwithanadditional1to3crew

2 In Nova Scotia, First Nation fishers catch lobster for sustenance and have launched their own rights-based lobster fishery in mid-September 20202 which sparked conflict between themandcommerciallobsterfishers. This ongoing dispute is part of a more significant, long-running conflict betweentheSipekne'katikFirstNation andnon-indigenouscommerciallobsterfishersinsouthwesternNovaScotiaSupremeCourtofCanada,1999. Given thedifferentmeaningsandvaluelobsterfishinghasforthispopulation,understandinghowCOVID 19has affected First Nation fishers and identifying the most desirable policy solutions to support these populations wouldrequireanindependentanalysiswithadifferentproblemdefinitionandanalyticalscope.

OceanNexusSpecialReport|APolicyAnalysisforNovaScotiaLobsterFIshersinResponsetoCOVID 19 13

members on their vessel Fisheries and Oceans Canada, 2020. Crew members arealso recognized as self-employed harvesters and are usually paid a wage according to a formulabasedonthecatchlandedratherthanafixedhourlyordailywage.Thesizeofthe crewdependsonattributesthatvarythroughouttheprovincesuchastimeofyear,distance from shore, or vessel size Lobsterisfishedonaneardailybasisduringtheseason,with harvestersbringingtoshorethecatchfrom250 375trapsandsellingtheircatchtobuyers atthewharf

2.4EconomicVulnerability

Economic vulnerability is a state of transitory poverty distinct from long-term poverty Béné, 2009. Béné underscores the importance of distinguishing between long-term poverty and vulnerability in fisher communities articulating that fishers can be "highly vulnerableevenwhentheirincomesliewellabovetheaveragelocalincome"Béné,2009, p 911 Studiesthatproposemeasuresofeconomicvulnerabilityreflectthisviewbytaking into account how a certain level of welfare is attained and preserved over time Béné, 2009;Christiaensen&Boisvert,2000;Hoddinott&Quisumbing,2008

LobsterfishersinNovaScotiafacehighuncertaintyintermsoftheirincome,whichiswhy we focus primarily on income stability in thisanalysis.Earningsareinfluencedbyseveral variables such as market conditions, the volume of lobster held by processors and shippers,thestrengthoftheCanadiandollar,andlocalcompetitionamongbuyers.Thereis noformalprice-settingmechanisminNovaScotia,andharvestersareoftenunawareofthe price of their catch until after the catch is landed Thériault et al, 2013 This lack of information sharing generates uncertainty and contention between fishers and buyers Pricesmayfluctuatedailyormoregraduallythroughouttheseason Inrecentyearsprices have ranged between $6.00 to $9.00 CAD per pound Fisheries and Oceans Canada, 2020. Other conditions including weather patterns and climate, fuel prices, as well as seasonal fishing schedules designated for stock preservation also add uncertainty to fishersʼincome

3.1FactorsContributingtotheEconomicVulnerabilityofLobsterFishersinNovaScotia

The inherent uncertainty of lobster harvesting leaves fishers vulnerable to losses from acute shocks despite the health of the lobster stocks and strong growth in landings and export values A major uncertainty arises from seasonality The varying length of fishing seasons rangingfromeightweekstosixmonths meansthatsomelobsterharvesters have a brief window of time to earn their annual income from their primary revenue-producing fishery. A shock that prevents them from harvesting during seasons predisposes some harvesters to a greater degree of vulnerability than those who have a more extended period available to continue fishing to recoup losses that have occurred throughout their season If the shock persists, harvesters with longer seasons will be subject to similar financial challenges Because of the seasonal nature of fisheries work, many fish harvesters depend on aspecializedEmploymentInsuranceFishingBenefitsEI FishingBenefits)programtosupplementtheirincomeoutsideofthefishingseason.Unlike traditional Employment Insurance, eligibility for EI Fishing Benefits is based on previous earnings rather than hours worked Canada Revenue Agency, 2017 This condition of eligibilitycanamplifycostsassociatedwithunanticipatedlostearningstofishharvesters

The growing reliance of the lobster industry on high-volume exports to international markets brings about a vulnerability to changes in global market systems Anincreasein liberal trade policies, coupled with decreases in communication and transportationcosts, has contributed to the globalization of seafood markets Gephart et al., 2016; Stoll et al., 2018. Access to large international markets has allowed for unprecedented growth and value in the lobster fishery in Nova Scotia. However, the overreliance on international markets creates a vulnerability to unpredictable exogenous changes in these distant markets Coastalcommunitiesandthefisheriesthatsupportthemareexposedtoeconomic hardship when trade dynamics and price fluctuations createperiodsofinstabilityStollet al., 2018. During the global economic crisis of 2008, the lackofdemandforluxuryfood products severely depressed the price of lobster to as low as $2.75 per pound, coupled with risesinoperatingcosts(StandingSenateCommitteeonFisheriesandOceans,2009. Additionally,politicallymotivatedshocks,suchastheUStradewarwithChinafrom2018to 2019,contributetovastfluctuationsindemandleadingtouncertaintyforlobsterfishers

ImpactonLobsterSupplyandDemand

Fisheriesasanindustrywereconsideredessentialandthuscouldcontinueoperationsbut the COVID 19 pandemic still affectedlobsterfisheriesinNovaScotiainmultipleways.On the demand side, supply chains were disrupted and demand from end consumers decreased The NovaScotialobsterindustryreliesheavilyonexports Borderclosureand pandemic-induced restrictions caused significant logistical challenges Bennett et al, 2020 Shipments to China, one of Nova Scotia's top export countries and where the pandemicstarted,haltedasearlyasJanuary2020Withers,2020a) Sincelobsterisoften consumed in restaurants rather than at home, the closure of restaurant dining and in-person gatherings also contributed to the collapse in demand for lobster. Additionally, lobster is considered a luxury rather than a necessary good. Therefore, the recession causedbythepandemicreduceddemandforlobsterevenfurther

Supply-side challenges were also observed Logistically and operationally, physical distancing rules between workers and sanitization of workspaces increased operation costs Quarantining rules and border restrictions prevented many seasonal workers from working in Canada in 2020 causing a labor shortage in asectorhighlyreliantonmigrant workersWithers,2020b).Morelobsterhadtobestoredasprocessingcapacityfellalong withdemands,puttingpressureonstoragecapacity.

ImpactonIncomeandEmployment

All these events, in turn, had implications for Nova Scotia lobster fishers. The decline in both prices and landing translates to decreased income for lobster fishers (cite Canada statshere) COVID 19restrictionsalsoresultedinashortenedordelayedseasonforsome harvestersSmith,2020 AccordingtoasurveyoffisheriesworkersinCanadabyNguyen 2021, three-quarters of respondents experienced a decrease in overall income and fisheries-related income due to the pandemic. While two-thirds of respondents reported they could meet basic needs, only a third were confident they could afford a significant unexpectedexpenseNguyen,2021.

NovaScotialobsterfishers'incomein2020waslikelysupplementedbyvariousadaptation strategies when their income from lobster harvesting declined In the national survey of fisheries workers, 70% of respondents reported tapping into employment insurance EI FishingBenefitsortheFishHarvesterBenefitandGranttosupplementtheirincome,while slightlyoverhalfofrespondentsturnedtopersonalsavingsNguyen,2021.Inaddition,the

19 16

number of EI claims doubled in 2020 compared to prior years Government of Canada, 2020b; Statistics Canada, 2019. This means that Canadian fishers' income from fishing was reduced, but at the same time, their income was partly supplemented by EI Fishing Benefitswheneligibilitycriteriaweremodifiedduetothepandemic

3.3TheCanadianGovernment'sPolicyMeasuresinResponsetoCOVID 19

There are various policy tools that a government can use to support populations experiencing hardship in times of crisis We summarize policies implemented by the CanadianGovernmentatboththefederalandprovinciallevelsinAppendixA Thescopeof thereviewcoverspoliciestargetedexclusivelytosupportfishersinNovaScotia,aswellas othergeneralpoliciesthatcouldbeaccessedandtakenupbyNovaScotialobsterfishers.

A review of the Canadian Governmentʼs responses indicates that three categories of policies were implemented in response to the pandemic: direct payments, service provisions and operational support, andpriceguarantees.Directpaymentswereprovided in the form of cash transfers either to individual fishers or enterprises with little to no conditionsforrepayment TheCanadianGovernmentalsomodifiedtheeligibilitycriteriafor Employment Insurance Fishing Benefits to allow for more fishers to qualify for benefits Service provisions and operational support policies provided more indirect support for fishersandbusinessesintheformofconditionalloansorconditionalcostsupporttargeting specific costs such as expenses associated with employeesʼ sick leave or mandatory isolation NewfoundlandalsohasaStandingFishPrice-SettingPanelwhichcanproposea fishpricethatisbindingonallprocessersthatpurchasethespecies Thepanelintroduced a special agreement to change the price-setting mechanism to mitigate hardships introducedtothefisheryduetoCOVID 19

Table 2 Federal and Provincial Level COVID 19 Policies Relevant for Lobster Fishers in NovaScotia

General support relevantto lobster fishers

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Fisheries specific support

CanadianFishandSeafoodOpportunities Fund(costsharedwithprovincial governments)

CanadianSeafoodStabilizationFund

FishHarvesterGrantandBenefits

EligibilitymodificationforEmployment InsuranceFishingBenefits

AtlanticFisheriesFund(costshared withFederalGovernment)

4. Analyzing Public Policy to Address the Economic Vulnerability of

LobsterFishersinNovaScotia

We present analysis criteria and policy options in this section. Our analysis employs six criteria to analyze four policy options designed toamelioratetheimpactsofCOVID 19on thevulnerabilityoflobsterfishersinNovaScotia Wefirstpresentthecriteria:effectiveness; cost;timeliness;implementationduration;distributiveequity;andproceduralequity Thisis followed by a description of the policy options and their subsequent analysis The four policy options weanalyzeincludedirectcashtransfer;emergencyloans;priceguarantee; andapublicmarketingprogram.

4.1Criteria

Criterion1Effectiveness

The policies analyzed in this report address the problem that too many fishers in Nova Scotia lobster fisheries are economically vulnerable to acute shocks. The effectiveness criterion provides evidence to assess the extent to which implementing the proposed policies will address thisproblemBardach&Patashnik,2016 Sincewedefineeconomic vulnerability in terms of income instability, the policies in this analysis are focused on stabilizingtheincomeofNovaScotialobsterfishersfollowingCOVID 19 Weoperationalize incomestabilityasameasurableconstructaccordingtothefollowingequation:

This equation gives us the portion of the income loss recovered as a direct result ofthe policy in percentage terms. Based on available data on lobster landingspublishedbythe GovernmentofCanada,weestimatethattheaverageannualnetincomeforlobsterfishers intheregiondeclined71%in2020relativeto2019

Criterion2Cost

This criterion measures the total cost of implementing each policy to the provincial governmentofNovaScotiainCAD

Criterion3Timeliness

We define this criterion as the number of days it takes until thepolicybenefitsreachthe lobsterfishersfromtheonsetoftheshock.

Criterion4ImplementationDuration

This criterion measures the number of months it takes the government to complete the implementationofthepolicyfrominitiation.

Criterion5DistributiveEquity

Distributive equitygaugestheextenttowhichapolicyintentionallydistributesitsbenefits, costs, rights, responsibilities, and risks within and among historically advantaged and disadvantaged groups We use this equity criterion to acknowledge the contextual advantages, needs, and circumstances of those affected by the policyLawetal,2018 There have been income inequities among groups commercial of lobster fishers in Nova Scotia who constitute the beneficiaries of the policies we analyze Fisheries andOceans Canada, 2007. The status of the captain or crew is one among several factors that contribute to income inequality among fishers. Inthisreport,wedesignatelobsterfishers who are crew as the focus of the equity criteria We assume they are in positions to experience greaterincomevulnerabilitygiventheiroveralllowerincomelevelandthefact that their ability to earn wages is dependent on the decision of captains The equity criteriontakesintoaccountthedisproportionateimpactofacuteshocksoncrewmembers and analyzes how well the proposed policies consider the impact of policies among captains and crew. We use the following distributive equity scale developed by De Buen KalmanandBlume2021toallowforasystematiccomparisonacrosspolicyoptions

Table3DistributiveEquityScale

DistributiveEquity

Thedistributionofapolicy'scostsandbenefits

A policy allocates costs and burdens to the politically powerful and economically privileged while benefits are allocated to groups that are simultaneously most affected bythepolicyproblemandatthehighestlevelsofsocialvulnerability

A policy's benefits are intentionally distributed to disadvantaged, vulnerable, or marginalizedgroupsaffectedbythepolicyproblem,butsuchgroupsalsobearaportion ofthepolicy'scostsorburdens.

Scale

Highly equitable

Moderately equitable

Policy option has a "do no harm" neutral effect on the groups affected by the policy problem. No discernible equity impact

A policy's benefits are primarily distributed to the most privileged/advantaged and the policy's burdens may be disproportionately experienced by the most vulnerable, but such allocations are not to the extent that threaten equity gains from previous policy initiatives.

A policy's benefits flow to the politically powerful and economically privileged and costs/burdens are disproportionately experienced by vulnerable groups to such a magnitude that previous equity gains experienced by the most vulnerable may be erodedwithinthepolicy'scontext.

Criterion6ProceduralEquity

Moderately inequitable

Highly inequitable

Procedural equity measures the extent to which a policy option's authority is dispersed amonggroupsandactorssothattheycanrepresentanddefendtheirinterestsinamanner that acknowledges participation as a rightGustavssonetal.,2014.Weusethefollowing scale developed by De Buen Kalman andBlume2021toassesshoweachpolicyoption faresintermsofproceduralequity.Thiscriterionconsiderstherelativestandingoflobster fisherstootherstakeholdersoftheNovaScotialobsterfisheryincludingpolicymakersand large-scaleseafoodprocessingandretailingcompanies

Table4ProceduralEquityScale

ProceduralEquity

Theacknowledgmentofparticipationasaright

A policy option acknowledges participation as a right where sectoral representatives and local groups engage in decision-making processes that lead to an implementable policy option; policy elites and technocrats commit full support to the participatory processanditsoutcomes.

A policy option provides for functional participation in which sectoral representatives and groups representing local interests may engage in decision-making but only to meetpredeterminedobjectives.

Scale

Highly equitable

Moderately equitable

A policy option has a "do no harm," neutral effect on the existing power structures in which policy is created and implemented, where sectoral representatives and No discernible equityimpact

historically disenfranchised communities are neither consulted nor actively disenfranchised.

The policy process is controlled entirely by elites and technocrats without regard for localdecision-makingauthorityorprocesses. Moderately inequitable

The policy process iscontrolledentirelybyelitesandtechnocratstosuchanextentthat sectoral representatives and historically disenfranchised communities mostaffectedby theproblemarefurtherisolatedfromanydecision-makingpower

4.2PolicyOptionsandAnalysis

Highly inequitable

The main objective of this policy analysis is to assess different policy options that could havebeentakenbytheGovernmentofNovaScotiatomitigatetheimpactofCOVID 19.We aimtopresentananalysisthatbestcapturestheindependenteffectsoffourdistinctpolicy options Thepolicyanalysismatrixwhichsummarizesouranalysisoftheoptionsbasedon thecriteriaispresentedinTable5below

Table5 PolicyAnalysisMatrix

Effectiveness:Income Stabilitypercentageof incomelosspolicyis estimatedtorecover

Cost:totalcosttothe GovernmentofNova ScotiaCAD

Timeliness:daysuntil supportinitiallyreaches fishers

Implementationduration: monthstocomplete implementationofthe policysinceinitiation

DistributiveEquity:extent towhichtheallocationof apolicy'scostsand benefitsacknowledges existingpowerstructures andvulnerabilities

ProceduralEquity:extent towhichthepolicy acknowledges participationasaright

Nodiscernable equityimpact Moderately inequitable Moderately inequitable Moderately equitable

EstimatedImpactofCOVID 19onLandings,Values,andAverageNetIncome

WefindthatCOVID 19reducedlobsterpricesandlandingbyapproximately20%and60% respectively based on data released by the Government of Canada (see Appendix B for detailedestimates) Fromthiscalculation,inturn,weestimatethatthereisa71%decrease intheaverageannualnetincomeforlobsterfishersin2020relativeto2019 Thistranslates intoanapproximately53,000CADlossinannualnetincomeforindividuallobsterfishers.

PolicyOption1.Directcashtransfer

This option explores the impact of a direct cash transfer of 2000 CAD per month to all lobster fishers in Nova Scotia regardless of their employment status. The direct cash transferisguaranteedforaninitialperiodofthreemonthswiththepossibilityofextension for up to twelve months considering the gravity of the shock Ouranalysisisbasedona three-monthdirectcashtransferscenario Thisoptionisdirectlyaimedatindividuallobster fisherstostabilizetheirlivelihood Thelumpsumtransferwillexpeditefinancialassistance asthereisnoneedforacomplicatedidentificationstrategy Alllobsterlicenseholdersand crewwhohaveearningsfromthepreviousyearwillautomaticallyreceivethetransfer.The application and approvalprocessrequiredforothersupportprogramssuchastheFishing EIiseliminatedasenforcementofeligibilityrequirementsisunnecessary.

Intermsofeffectiveness,directcashtransfersareestimatedtorecover11%oftheincome loss experienced by lobster fishers by generating anadditionalincomeof6,000CADper fisher Directcashtransfersareexpectedtoreachlobsterfishersinapproximately80days, with an implementation duration of three months forthegovernment(seeAppendixDfor timelinesscalculations).ThispolicyoptionisestimatedtocosttheNovaScotiaDepartment of Fisheries & Aquaculture approximately 52.32 million CAD. This is based on the calculation that each of the 8720 lobster fishers in Nova Scotia will receive a 2000 CAD transferforathree-monthperiod

Weestimatethatdirectcashtransferswillhaveamoderatelyinequitableoutcomeinterms of distributive equity This option equally benefits all lobster fishers without any consideration oftheircurrentrelativepowerstructuresorresourceaccessibility Atbest,a direct cashtransferpolicyoptionwillmaintainexistinginequitybetweengroupsasitdoes OceanNexusSpecialReport|APolicyAnalysisforNovaScotiaLobsterFIshersinResponsetoCOVID 19 23

not recognize the disproportionate impact of COVID 19 on crew. This policy has no discernable equity impact on procedural equity. As a top-down government decision, lobster fishers would not play a role in determining the amount of the cash transfers. Policymakersareassumingthatcashtransferswillbebeneficialinmitigatingtheimpactof COVID 19foralllobsterfisherswithoutinvitingstakeholderinputstodeterminewhatforms ofsupportwillbemosthelpful Ontheotherhand,whilefishersmaynotparticipateinthe decision-making process, fishers have the autonomy to determine how they will use the cash. Given that fishing activities were allowed to continue under COVID 19 regulations, fishers are provided a choice between continuing and ceasing their operations as the Government of Nova Scotia guarantees a basic level of income regardless of their employment status Put another way, this policy option imposes the lowest level of conditionality, giving fishers freedom to self-determine how to spend the benefits and whethertheywillcontinuetofish

PolicyOption2 Emergencyloans

This option provides lobster license holders with emergency loans to compensate for operation costs. Operation costsincludecostsoflabor,fuel,equipmentmaintenance,and upgrades, additional safety and health equipment purchases etc. License holders will qualify for conditional loans that can be used to cover these costs. The loans will be provided with principal payment deferrals and interest relief for up to 24 months The repaymentperiodwillbefixedastenyearsata5%interestrate TheGovernmentofNova Scotia will work with the Nova Scotia Fisheries & Aquaculture Loan Board and private financial institutions that currently provide individualized loans for Nova Scotia fishers to implement this policy. The underlying logic of this policy option assumes that loans will allow lobster enterprises to continue operations by mitigating the supply-side impacts of COVID 19. The loans will support enterprises to cover higher operation costs during the pandemic which is due to the need to acquire additional equipment or labor shortage resulting from gaps of migrant workers We expect the loans will mitigate the economic vulnerabilityofindividuallobsterfishersbygeneratingadditionalincomethroughcontinued operations as loans will be taken out by enterprises that otherwise would not have been abletocontinuefishing.

We estimate that the policy will effectively recover 3% of the loss in income due to the shock. This estimation is based ontheassumptionthatlaborcostscomprise35%oftotal operation expenses Fisheries and Oceans Canada, 2007 This policy will cost the GovernmentofNovaScotiaapproximately364millionCADovertwoyears,mostofwhich goes toward interest relief The cost estimate is conservative assuming that only 40% of

NovaScotialobsterenterpriseswilltakeoutaloantocoveroperationalcosts.Thebasisfor thisassumptionisthefindingthatover60%ofworkersinagriculture,forestry,fishing,and huntingdidnotreportaneedforfundingorcreditduringtheearlymonthsofthepandemic Government of Canada, 2020a) We estimate that the timeline for these loans to reach lobster fishers will be approximately 230 days given our calculation that it tookover200 days for the Fish Harvester Benefit and Grant to open applications and an additional 20 days for loan approval (see Appendix D for detailed timeliness estimations and data sources). The durationforimplementationisatotalof240monthsaccountingforthefact that the loans will require continued management until the end of the repayment period whichissetattenyears.

Weassessthispolicyoptiontobemoderatelyequitableintermsofdistributiveequity.The sole decision of accesstothispolicyʼsbenefitsdependsonthedecisionoftheenterprise owner, who are the license-holding captains, as the individual crew isnoteligibleforthe emergencyloans Despiteprovidingsupportattheenterpriselevel,however,weexpectthe benefits will reach individual crew members in the form of greater employment opportunitiesandadditionalincomeasenterprisescontinueoperations.Further,weexpect the benefits of this policy will be more significant for small-scale enterprises that lack alternative lending options and/or havegreaterdebtratio However,wealsoconsiderthat this policy requires those who benefit from the loans to take on the economic burdenof loanrepaymentwhichmaintainsthestructuralinequalitiesthatputlobsterenterprises(and byassociation,lobsterfishers)inapositionofeconomicvulnerabilityinthefirstplace We rate the procedural equity of this option as moderately inequitable. The Government of Nova Scotiaandfinancialinstitutionswillmostlydictatethetermsoftheloansbeforethey are madeavailabletolobsterfishers.Bydesign,therewillbeconditionsthatrequireloans to cover the enterprise's operation costs To benefit from this policy, lobster fishers are required to continue operations which limits autonomous decision-making on whether to continueoperationsduringthepandemic

PolicyOption3 PriceGuarantee

Thepriceguaranteeoptionimplementsaguaranteedpriceandbuyerforlobstertoprotect the revenue stream of lobster fishers against shocks. For the first three months of the pandemic,theGovernmentofNovaScotiawouldpurchaselobsteruptothepreviousyearʼs volume landed at the current yearʼs average minimum shore price. We estimate that the government will buy about 12,700 metric tons of lobster (which is a quarter of the 2019 landing)atthe2020minimumshorepriceof$632 Thepriceguaranteeoptionincentivizes lobsterfisherstocontinuefishingasusualregardlessoffluctuationsindemandsandallows OceanNexusSpecialReport|APolicyAnalysisforNovaScotiaLobsterFIshersinResponsetoCOVID 19 25

individual lobster fishers to sustain their usual wages by ensuring revenues for their operation. The Government of Nova Scotia will be responsible for arranging logistics to process, transport, store, and market the purchased lobster, which can be partially recoverable through retail earnings The Government may consider subsidizing other disaster relief programs or meal programs in publicly run institutions with the procured lobster TheSurplusFoodRescueProgramisoneexampleofafederal-levelpolicythatwill allowforthispossibility

We estimate the price guarantee option will have a 16% effectiveness in recovering the incomelossexperiencedbylobsterfishersin2020.TheoptionwillcosttheGovernmentof Nova Scotia a total upfront cost of 107millionCADtoprocurethelobster.Convertingthis cost to annual termsforpurposesofcomparison,thecostwillbenearly428millionCAD. However, a portion of this cost can be recoverable should the government resell the procured lobster for profit Timeliness is estimated at approximately 200 days which is mainly driven by the need to make logistical arrangements for the procured lobster The implementation duration is estimated as 12 months. The government will finalize lobster purchases in the first three months, and finalize the transfer of the procured lobster to retailersandconsumerswithinoneyearconsideringitsperishablenature.

The price guarantee option is not expected to significantly impact distributive equity. Benefits accrue to both license holders and crew and equally across LFAs We expect existing inequities between large and small-scale enterprises to be perpetuated to some extent Enterprisescapableofsustaininglarge-scaleoperationsintimesofcrisiswilllikely benefit more from the policy by making a greater catch We expect this option to be moderately inequitable in terms of procedural equity. The government will make most decisions regarding purchasing terms and requires individual fishers to take on healthor safetyrisksbycontinuingoperations.

PolicyOption4.PublicMarketingProgram

The Government of Nova Scotia will support lobster marketing by launching a public marketingprogramunderthisoption Therearetwocomponentstothisprogramincluding the establishment of an e-commerce platformthatwillallowdirectmarketingoflobsterto individual consumers, and the initiation of a three-month public information campaign to promote lobster consumption. We design thispolicysothatthee-commerceplatformwill continue as a regular program of the Government of Nova Scotia given the continuous benefits it generates for lobster fishers and the high upfront investment costs. The GovernmentofNovaScotiawillleadthedevelopmentoftheprogramtogenerateadditional

revenue for lobster fishers through increased sales. In doing so, the Government will engage local groups in developing marketing content for the information campaign and setting up initial structures of the e-commerce platform. Several focus-group style meetings will be held, inviting small groups of lobster fishers and other relevant stakeholders to contribute ideas prior to developing the e-commerce platform and information campaign content Additionally, iterativeworkshop-stylemeetingswillbeheld during platform and content development to gather feedback for improvement The purpose of this policy design is to ensure that the platform isdesignedinauser-friendly way for lobster fishers to market their fish and that the information campaign advertises accurate and appealing content which will contribute to greater demands. Adopting a business-to-consumer B2C model through the e-commerce platform allows the government to absorb risks and costs that arise from the failure of the production chain while at the same time targeting low demands During the pandemic, organizations connecting fishers to consumers have proliferated and allowed fishers to successfully retain earnings by working around disruptions in the stages of processing, storage, transportation,andmarketingOECD,2020.

Weestimatethatthisoptionwilleffectivelyrecover2%oftheincomelossoflobsterfishers. Thisestimateassumesthattheprogramwilleffectivelyboostsalesby5%SeeAppendixC fordatasources) TheminimalcosttotheGovernmentofNovaScotiawillbeapproximately 110,000CAD Theprimarydriverofthiscostistheannualsalarytohireaprogrammanager as continued maintenance of the e-commerce platform is required The annual salary is estimatedat70,000CADBasedonseveralsearchesforsimilarpositionsintheGovernment of Canada. Costs for creating the e-commerce platform are estimated byreferencingthe service fees of several private service providers. We budget for a basic e-commerce platformasheavytrafficisnotexpected Wealsobudgetforarelativelysmalleradvertising campaignthatwillnotsurpasstheAtlanticTradeAgreementthresholdtoensuretimeliness The agreement designates that smaller paid print and social media campaigns under 25,000CADcanproceedwithoutcompetitivebiddingthroughCanada'sAgencyofRecord AOR.Thisregulationsuggestssuchcostswillbesufficientforimplementingsmaller-scale informationcampaigns.Estimatesforadvertisingcostsalsoconsideradvertisingexpenses of the Fisheries and Oceans DFO Canada which was 63,050 in fiscal year 2019 2020

Given the DFO's advertising expenses, it is reasonable to expect that a smaller-scale campaign under 25,000 CAD will suffice for this provincial-level policy In terms of timeliness,weestimatethatthesalesbenefitsofthisapproachwilltakeapproximately190 days to reach lobster fishers by generating sales income. Information sources for this estimation can be found in AppendixD.Thedurationforthisimplementationisundefined

given that we designed the program to be continued as a regular program of the GovernmentofNovaScotia.

Thepublicmarketingprogramisexpectedtohavenodiscernabledistributiveequityimpact based on our analysis. The option is not tethered toward benefiting crew members. Therefore,weforeseenomajorredistributionstoaddressexistinginequities Ourestimation accounts for the fact that large-scale enterprises can benefit more because they have greateroperationalcapacitytoadapttoandseizenewmarketopportunitiescreatedbythe e-commerce platform Fixed investments required to enter the newmarketingplatform such as the input of time to register as a seller and update products on the site can present more significant challengestosmall-scaleenterprises.Weanalyzethatthepublic marketingprogramismoderatelyequitableintermsofproceduralequity.Thisoptionoffers a participatory component that recognizes the voices of lobster fishers indevelopingthe policy contents However, participation will not necessarily be centered on historically disenfranchised communities which is why we expect it to have a moderate impact in enhancingproceduralequity.

5.FromAnalysistoKeyTradeoffs

This section highlights key tradeoffs between the policy options analyzedintheprevious section In terms of effectiveness in recovering the percentage of income loss due to COVID 19,thepriceguaranteeoptionisthemosteffective,estimatedtorecover16%ofthe incomelossexperiencedbylobsterfishers Thedirectcashtransferoptionhasamoderate effectiveness of 11%. Emergency loans and the public marketing program are the least effective,recovering3%and2%oftheincomerespectively.

AmajortradeoffforhighereffectivenessisahighercosttotheGovernmentofNovaScotia. We find that intuitively the effectiveness of policies is proportionate to the costs. We convert the costs of the policy options to annual costs to allow for fair comparison The priceguaranteeoptionwhichhasthehighesteffectivenessisalsothecostliestwithatotal annual cost of approximately 428 million CAD This is followed by the second most effective policy, direct cash transfers, which will cost approximately 209 million CAD. Emergency loans haveamoremoderatecostatabout1.8millionCAD.Theannualcostof the public marketing program is the lowest at 110,000 CAD. We observe that the public marketing program achieves a similar level of effectiveness with emergency loans at a fractionofthecost

Considering timeliness, direct cash transfers stand out allowing the Government of Nova Scotiatoreachlobsterfishersmostquicklywithinapproximately80days Allotheroptions willtakemorethandoublethistimetodelivermuch-neededsupporttolobsterfishers,with emergencyloanstakingthelongesttodeliversupportatanestimated230days.Inaddition to timeliness, we also consider implementation duration. Each policy option has distinct durations for implementation. A longer duration for policy implementation requires governmentstotakeongreatermanagementresponsibilitiesoveranextendedperiod We designed the direct cash transfer for three months, which leads to the shortest implementation duration as minimal additional management isrequiredoncethetransfers are made. The price guarantee also has a relatively short implementation duration of 12 months which istheestimatedtimelinetocompletethetransferoftheprocuredlobsterto retailers and consumers. Emergency loans require a 12-year duration forimplementation. The initial principal payment deferrals and interestreliefareprovidedfor2years,andthe repaymenttermisfixedat10years Continuousmanagementofloanswillberequireduntil they are fully repaid by lobster fishers The public marketing program does not have a designated completion date as we designed the e-commerce platform to continue as a regularprogramoftheGovernmentofNovaScotia.

Despite requiring continued investment of government managementcapacitiesovertime, thepublicmarketingprogramisthemostequitableoptiongiventhatitdoesnotaggravate existing inequities in distribution while providing participatory venues to enhance procedural equity The emergency loan option addresses some existing inequities in distribution by supporting enterprisesthatlackresourcestosustainoperationsintheface of shocks However, in terms of procedural equity, the decision-making process is susceptibletodominationbytechnocratsandpowerfulfinancialinstitutionsthatdefinethe terms oftheloanandholdthepowertoapproveordenyloans.Bothdirectcashtransfers andpriceguaranteesdonotcontributetoaddressingexistinginequities.

6.Conclusion

COVID 19hastriggeredgovernmentsaroundtheworldtoreconsidertheirpreparednessfor acute shocks We leveraged the case of COVID 19 to present a policy analysis on four distinct policy options designed to address the economic vulnerability of Nova Scotia lobsterfisherstoacuteshocks:directcashtransfer;emergencyloans;priceguarantee;and a public marketing program. We analyzed the effectiveness, cost, timeliness, implementation duration, and distributive and procedural equity implications of these options.Wereviewedthekeytradeoffstoemergebasedonouranalysis.

Prior to analyzing the policy options, we presented a typology of acute shocks and their impactsonfisheries Thetypologyidentifiesbothsupply-sideanddemand-sidechallenges thatfisheriesexperienceasaresultofvarioustypesofshocks Thetypologyallowedusto better map the underlying causes of our policy problem by identifying differentchannels through which COVID 19 impacted the Nova Scotia lobster fishery. The typology is expected to be helpful for researchers and practitioners to foresee the range of impacts that willresultfromaparticulartypeofshockaswemoveforwardwithresearchtobetter understandacuteshocksinthecontextofmanagingfisheriesandoceans

We also presented a thorough review of the policy context We reviewed factors contributingtotheeconomicvulnerabilityoflobsterfishersinNovaScotiafocusingonhow COVID 19 affected the demand and supply of lobster as well as the income and employment status oflobsterharvesters Wealsosummarizedfederalandprovincial-level policies of the Canadian government that were relevant for lobster fishers during the pandemic. We identified key data sources for our analysis through this review. We were able to confirm data on lobster landing volumes and values for Nova Scotia which constitute key data used in our analysis However,thelaginthepublicationof2020data contributed to challenges in producing a more timely report Additionally, it is difficult to conductafine-grainedassessmentoftheimpactofCOVID 19onlobsterfishersgiventhat dataonlobsterlandingandvolumeareonlyreportedonanannualbasis.Theavailabilityof more frequent data points, for instance quarterly or monthly lobster landing data, would makeitpossibletoestablishamuchmoredetailedassessmentoftheimmediateimpactof COVID 19andhowthisimpactchangesovertime Giventhestrong,immediateimpactsof acute shocks, data collected and reported in more frequent intervals will be crucial in advancing our preparedness We also found thatrecentdataontheincome,employment status, and operations particular to lobster fishers were not openly available Thislackof data leads to our heavy reliance on the CostsandEarningsSurvey2004AtlanticRegion

report to estimate current-level data points for the analysis. The lack of data impedes evidence-informed policymaking as we must base our analysis on estimated values and assumptions.

In the foreseeable future, fisheries will continue to navigate through acute shocks that instigatebothdemand-sideandsupply-sidechallenges Whileouranalysislooksatasmall segmentofthefisherpopulationinasingleCanadianprovince,wehopethatinsightsfrom this report will serve as a valuable resource for policymakers around the world as they contemplatehowtoaddresstheeconomicvulnerabilityofthefisheriesandaquaticsector

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StandingSenateCommitteeonFisheriesandOceans,W 2009 CrisisintheLobster Fishery https://sencanada.ca/Content/SEN/Committee/402/fish/rep/rep05jun09-e.pdf StatisticsCanada.2019,February21.NumberoffishingEmploymentInsurance beneficiaries. https://www150statcangcca/n1/daily-quotidien/190221/cg-b005-enghtm

Stoll,J S,Crona,B I,Fabinyi,M,&Farr,E R 2018 SeafoodTradeRoutesforLobster ObscureTeleconnectedVulnerabilities FrontiersinMarineScience,5,239 https://doi.org/10.3389/fmars.2018.00239

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Withers,P 2020a,March13 LobsterbuyerscallsforshutdownofNS fisheryas coronavirusgutsworldmarkets CBCNews https://www.cbc.ca/news/canada/nova-scotia/nova-scotia-lobster-fishery-coronaviru s-1.5496194

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Appendix A The Canadian Governmentʼs Policy Responses to

COVID19

Below is a review of policies implemented by the Canadian Government in response to COVID 19 at both the federal and provincial levels. Interventions targeted specifically at fishersandthoseintroducedtosupportbusinessesandindividualsmoregenerallyareboth included Notably,Canada'ssupportaremostlydirectpaymentswithfewexamplesofother typesofsupport

1 DirectPayments

a) PaymentstoBusinesses

● Fish Harvester Grant provided direct payment to fishing sector businesses to compensate for the loss of revenue related to the pandemic.

● Canadian Fish and Seafood Opportunities Fund provided funding to support organizations to promote Canadian seafood by resolving cross-cutting market access issues and providing branding opportunities.

● CanadianSeafoodStabilizationFundwasprovidedtosupportfishand seafood processors to cover COVID 19 related costs incurred after March15,2020.

● Small Business Loan Guarantee Program of Nova Scotia The Co-operative Council dedicated a temporary COVID 19 Response StreamtosupportsmallbusinessesinNovaScotiathroughaccessto credit, cashgrants,andsupportdeliveredthroughparticipatingcredit unions.

● AtlanticFisheriesFundprovidedtheNovaScotiafisheriessectorwith paymentstoinvestinequipmentupgradesandat-workprotections

b) PaymentstoIndividuals

● Employment Insurance Fishing Benefitschangedeligibilitycriteriafor fish harvesters to allow for increased access in recognition that eligibilitymaybedifficulttomeetduringthepandemic.

● Fish Harvester Benefit provided direct payments to individual fish harvesters to compensate for the loss of income related to the pandemic

2 Serviceprovisionandoperatingcostsupport

● Business Credit Availability Program CEBA, SME Loan Guarantee, etc.) provided support through two streams: payroll stream and non-deferrable expenses stream. Direct payments were offered interest-free,partiallyforgivableloans(ifrepaymentcriteriaaremet)

● Mandatory Isolation SupportforTemporaryForeignWorkersProgram provided funding to businesses to compensate the costsofisolation protocols for temporary foreign workers due to federal isolation requirements.

● Regional Relief and Recovery Fund RRRF provided loans through CommunityBusinessDevelopmentCorporationstosupportruralsmall businessesinnon-metropolitanregionsinAtlanticCanada

● Canadian Seafood StabilizationFundprovidedfundingtosupportthe seafood processing sector to adapt to COVID 19, address market impactsanddealwithinterruptionstotheseafoodsupplychain.

● Extension of the layoff period for employees allowed businesses to keepemployeeslaidoffwithouthavingtopayseverancecosts.

● Paid Sick Leave Program reimbursed businesses for an employee's paywhentheemployeeneededtotakesickleave

● Canada Emergency Wage Subsidy and 10% Wage Subsidy offered fundingdirectlytoemployerstosubsidizeemployeewages

3 PriceGuarantee

● Standard Fish Price-Setting Panel in Newfoundland operated under the Fishing Industry Collective BargainingAct,2006tosettheprices for various fish and shellfish species in consultation with relevant parties Prices were determined based on a market price index and consideration of the market and other conditions likely toimpactthe fishery in that season Government of Newfoundland and Labrador, 2019.

AppendixBImpactofCOVID19onNovaScotiaLobsterFisheries

Anestablishedpracticeinpolicyanalysisistocomparepolicyoptionsagainstastatusquo scenariothatassumesnointervention However,ourpolicyanalysisisretrospectiveinthe sense that we consider policies thatcouldhavebeenimplementedbytheGovernmentof Nova Scotia Therefore, our analysis proceeds without a status quo option Instead, this appendixlaysouttheobservedandestimatedimpactsofCOVID 19onkeydatapointson NovaScotiaLobsterFisherieswhichconstitutethefoundationforouranalysis.Thedatais sourcedfromtheGovernmentofCanadaDepartmentofFisheriesandOceans.3

TableA1ObservedandEstimatedImpactofCOVID 19onKeyVariables

KeyDataPoints

The estimation of the individual average net income of lobster fishers is based on the followingequation:

Totalrevenue–totaloperationcosts)/numberoflobsterfishers

There are three key assumptions that are central to this estimation First, this equation is basedontheassumptionthatthetotalvalueoflobsterlandedequalsthetotalrevenuefor lobsterfishers Second,weassumethatCOVID 19hasnoimpactonthesizeofthelobster fishery in Nova Scotia. Therefore, the total number of lobster enterprises and fishers remains unchanged. Third, we also assume that operation costs per vessel in 2020 dropped 60% in proportion to the drop in overall lobster landings. Based on these assumptions, we estimate a 71% decrease in the individual annual net income of lobster fishersfrom2019to2020duetoCOVID 19

3 Datasource:https://www.dfo-mpo.gc.ca/stats/commercial/land-debarq/sea-maritimes/s2020pq-eng.htm

OceanNexusSpecialReport|APolicyAnalysisforNovaScotiaLobsterFIshersinResponsetoCOVID 19 39

AppendixCEffectivenessEstimates

Wemeasuretheeffectivenessofpoliciesaccordingtothefollowingformulawhichgivesus thepercentageoftheincomelossrecoveredasadirectresultofthepolicy:

The estimated 71% decrease in individual annual net income of lobster fishers translates intoa53,171CADlossinindividualaveragenetincomeoflobsterfishersfrom2019to2020. This constitutes the denominator of the formula. For each of the policy options, the followingequationswereusedtoestimatetheadditionalincomegenerated.

TableB1EstimatedAdditionalIndividualNetIncometoLobsterFishersasResultofPolicy

Directcashtransfer(costfor3months)

Additionalincome=cashtransferamount$*duration(months)

Assumethedurationofthepolicyis3months.

Emergencyloans(costfor2years)

Additionalincome=[(totalfundsloaned$*(portionofloanscoveringlabor%/totalnumber oflobsterfishers

Assume 40% of total Nova Scotia lobster enterprises will take out loans for the full amount of operationcosts.4

Assume35%ofoperationcostscoverlabor 5

Assumeafixedannualinterestrateof5%over10yearsbypolicydesign.

Assume captains will immediately use loans to cover operation costs so the loans reach crews shortlyaftertheloansaretakenout.

Priceguarantee(costfor3months)

Additional income =[(previousyear'slanding(lbs.)-currentyear'slanding(lbs.))*0.25*current year'slobsterprice$-additionaloperationcosts$/totalnumberoflobsterfishers

∙ Assumethedurationofthepolicyis3months.

Assume lobster fishers will fully harvest the additional volume of lobsterthatwillbeabsorbedby thegovernmentpurchase.

Assumegovernmentpurchasedoesnotimpactlobsterprices.

Publicmarketingprogram(costfor1year)

Additional income = [increased landing(lbs.) * lobster price $ - total operation costs $ / total numberoflobsterfishers

∙ Assume a 5% increase in total lobster landings as a result of the advertisement and direct marketing.6

Assumetheincreaseindemanddoesnotimpactlobsterprices.

4 Based on the fact that 60% of fishers did not access funding or creditinthethirdquarterof2020becauseit wasunnecessaryGovernmentofCanada,2020a).

5 Based on the fact that labor expenses were between 30% to 40% of total operation costs in most fleets FisheriesandOceansCanada,2007

6 Based on a survey of significant effectsofpublicadvertisingandmarketingprogramsBlisard,1999;Murryet al.,1993;Northcottetal.,2021;Regeretal.,2002;Scholderer&Grunert,2001

AppendixDTimelinessEstimates

WhileCOVID 19isanacuteshock,thepandemiccontinuedtopersistandevolveovertime Forpurposesofestimatingthetimelinessofeachpolicyoption,weusethedateofthefirst confirmed case of COVID 19 to indicate the occurrenceoftheshock InCanada,thefirst caseofCOVID 19wasconfirmedonJanuary28,2020 Therefore,wemeasurehowlongit took for the Government of Canada to roll out similar policies in response to COVID 19 usingJanuary28,2020,asthestartdate.Thefundamentalassumptionisthatitwilltakea similaramountoftimeforourproposedpolicyoptionstobeimplemented.Thetablebelow summarizes which policies were referenced to calculate the timeliness of each policy optionaswellasotherassumptions

TableC1TimelinessandPoliciesReferencedforEstimations

Directcashtransfer:80days

Policyreferenced:CanadaEmergencyResponseBenefitCERB7

The Government of Canada first opened applications for CERB on April669dayssincethefirst caseofCOVID 19andapplicantsstartedreceivingpaymentsintendays. Expect the direct cash transfer option will take no longer than CERB considering no applications arerequired.

Emergencyloans:230days

Policyreferenced:FishHarvesterBenefitandGrant

The Fish Harvester Benefit and Grant program opened applications on August 24, 2020 209 dayssincethefirstcaseofCOVID 19

∙ The Fish HarvesterBenefitandGrantprogramstatesittakesseveralweekstoreviewapplications 14days).

Weassumeitwilltakeanadditionalweektoprocessthetransfers7days).

PriceGuarantee:200days

Policyreferenced:SurplusFoodRescueProgram,StandardFishPrice-SettingPanelinNewfoundland

The Surplus Food RescueProgramwaslaunchedandopenedapplicationsonJune15,2020139 dayssincethefirstcaseofCOVID 19

Establishingthenetworkofdistributorstookanadditional2months60days).

The Standard Fish Price-Setting Panel in Newfoundland set a minimum shore price on May 1, 202048dayssincethefirstcaseofCOVID 19

Considering it will be necessary for the government to make logistical arrangements, we conservativelyassumethatitwilltakeabout200daystoimplementthepriceguaranteeoption. Publicmarketingprogram:190days

∙ Weassumeitwilltakethegovernment70daystofinalizeadecisiontoimplementthisoption.8

We assume the public marketing program option will be operable withinapproximately4months after the decision is made (assuming it will take 1 month to build an e-commerce platform, 2 months to train fishers and upload seller information, and 1 month to advertise and deliver transactionsforpayment).

7 CERB was one of the central policies of the Government of Canada which provided a cash transfer of CAD 2,000over4weekstoeligibleindividuals. OceanNexusSpecialReport|APolicyAnalysisforNovaScotiaLobsterFIshersinResponsetoCOVID 19 41

8 Basedonobservationsofthedurationtopubliclyannouncegovernmentdecisionssuchastheannouncement of a new set of economicmeasurestostabilizetheeconomybythePrimeMinisteronMarch18,202050days sincethefirstcaseofCOVID 19