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Fishing and Tourism in the Fijian Economy

IUCN ENVIRONMENTAL ECONOMICS OCCASIONAL PAPER 2

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Fishing and Tourism in the Fijian Economy

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Citation: Verdone, Michael and Seidl, Andrew (2012). Fishing and Tourism in the FijianEconomy. Gland, Switzerland: IUCN. 20pp.

ISBN 978-2-8317-1513-1

Layout by: Tim Davis, DJEnvironmental, Berrynarbor, Devon, UK

Available from: IUCN (International Union for Conservation of Nature)Publications ServicesRue Mauverney 28 1196 GlandSwitzerland Tel +41 22 999 0000 Fax +41 22 999 0020 [email protected] www.iucn.org/publications

We would like to acknowledge the thoughtful comments and review of Nicolas Pascal, Nicholas Conner,Taholo Kami and Bernard O’Callahan. Errors remain the authors’ responsibility.

Please direct questions or comments to [email protected].

Introduction .....................................................................................................................................4

1. Fiji’s Economy.............................................................................................................................51.1 Economy Composition .........................................................................................................51.2 Primary Sector .....................................................................................................................6

2. Fishing Industry ..........................................................................................................................72.1 Industry Overview.................................................................................................................72.2 Offshore Fishery ...................................................................................................................82.3 Artisanal Fishery ...................................................................................................................92.4 Subsistence Fishery ...........................................................................................................10

3. Tourism Industry & the Economy.............................................................................................113.1 Tourism Industry Overview..................................................................................................113.2 Tourism & Multipliers...........................................................................................................113.3 Tourism by Sub-Industry.....................................................................................................12

3.3.1 Hotel and Restaurant Sector ...................................................................................123.3.2 Transportation .........................................................................................................133.3.3 Sales: Retail & Wholesale ........................................................................................13

3.4 Tourism and Natural Resources..........................................................................................14

4. Conclusion ................................................................................................................................15

Resources Cited............................................................................................................................16

Figures

Figure 1: Fiji’s Annual Economic Growth ............................................................................................5

Figure 2: Fiji's Economy by Sector.....................................................................................................6

Figure 3: Primary Sector Revenue by Industry ...................................................................................6

Figure 4: Fishing Industry Revenue and Catch ...................................................................................8

Figure 5: Fishing Industry Employment ..............................................................................................8

Figure 6: Fish Catch by Industry ........................................................................................................9

Figure 7: Fiji Urban and Rural Populations .......................................................................................10

Figure 8: Fiji Tourism Arrivals by Country of Origin............................................................................11

Figure 9: Tourism Arrivals and Expenditures.....................................................................................12

Figure 10: Tourism Expenditures by Region .....................................................................................13

Figure 11: Primary Vacation Activities ..............................................................................................14

Fishing and Tourism in the Fijian Economy 3

TABLE OF CONTENTS

T his report presents an overview of theeconomy of Fiji with an emphasis on the

fishing and tourism industries and theircontributions to the broader economy. The fishingand tourism industries, whose productivitydepends on natural capital and efficient resourcemanagement, make significant contributions toFiji’s national economy. Maintaining thoseresource stocks through efficient resource

management is therefore important to the nationaleconomy of Fiji. This study highlights theimportant role natural resources fulfill not only inthe tourism and fishing industries, but in thebroader economy, in order to inform local policymaking and improve the focus and policyrelevance of subsequent environmental economicresearch in the country.

4 Fishing and Tourism in the Fijian Economy

INTRODUCTION

and volatile, but the high demonstrated growthrates in relatively stable times reflect the country’ssubstantial potential (Narayan et al., 2006; seeFigure 1).

1.1 Economy CompositionFiji’s formal economy is composed of threesectors (see Figure 2): the service sector2, theprimary sector3, and the secondary sector4. Thecomposition of Fiji’s economy has been relativelystable over the past three decades, but therehave been some minor changes. The secondarysector has increased in economic importance.Manufacturing’s share of GDP increased from12% in the late 1980s to 15% in the 1990s, withgrowth sustained by new hiring. The servicesector has also become a more prominentcontributor to the economy, increasing from 63%to 67% of GDP by 2009 (World Bank, 2011).

Fiji has the largest1 and most developedeconomy in the South Pacific. The country has

strong trade relationships with larger economiessuch as Australia and the EU, contains a diversearray of industries from textile production to filmmaking, and benefits from a rich endowment ofnatural resources that range from pristine coralreefs to tropical rainforests. However, politicalinstability and natural disasters have createdchallenging conditions for maintaining economicgrowth (Narayan et al., 2007).

Fiji’s economy has been affected by an unstablepolitical system for the majority of the past threedecades. There have been four coups during thattime, most recently in 2006. Rapid, andunpredictable changes in the political structurecreate institutional instability, reduce investorconfidence, and generally disrupt economicactivity. As a result, GDP growth has been erratic


1. FIJI’S ECONOMY

1 Fiji has the largest economy in the South Pacific as measured by revenue.2 The service sector contains all of the industries that provide value-added services (e.g. transportation, hotels, restaurants,and education).

3 The primary sector is composed of industries that use raw natural resources as a primary input (e.g. fishing, mining,logging).

4 The secondary sector contains all of the industries that use processed natural resources to produce output (e.g.construction).

Figure 1: Fiji's annual economic growth

1.2 Primary SectorIn 2009, the primary sector produced 14.7% ofFiji’s GDP with large contributions from theagriculture and forestry industries (See Figure 3;World Bank, 2011). The primary sector produces70% of Fiji’s exports, providing an important sourceof foreign exchange (ADB, 2005). Inside Fiji, thesector generates economic activity in the serviceand secondary sectors through the purchasing andselling of goods and services. Without the inputsprovided by the primary sector, the service andsecondary sectors would have to find substituteinputs or import inputs at higher costs. Primary


5 Subsistence activities take place outside markets and are therefore not captured by GDP. Any effort to quantify their valueis necessarily an estimate.

Figure 2: Fiji's economy by sector

production is not always recorded in the nationalaccounting and statistics and this obscuresimportant activities occurring within the sector. Fijihas a large subsistence economy whose activitiesare often overlooked or under counted in measuresof national productivity and of human well-being.Subsistence workers can participate in a number ofdifferent activities, although most subsistenceactivities involve agriculture and fishing. In Fiji,subsistence activities are estimated to be worthapproximately 4% of GDP and more than 21% ofthe primary sector’s value5.

Figure 3: Primary sector revenue by industry

some estimates suggest that subsistence fishingactivities produce as much as 4% of Fiji’s annualGDP (ADB, 2005). Subsistence fisheriesemployed approximately 3,000 people in 2003,and the fishing industry as a whole employed9,144 people, or 3.8% of the country’s workforce,in 2003 (ADB, 2005).

The fishing industry is maintaining its role as asignificant generator of economic activity, but it isundergoing structural changes, most notably inthe offshore commercial fishery. Figure 4 showsthat the fishing industry’s contribution to GDPgrew over the period 1995 to 2002 while labourdata from 2000–2006 shows that the industryreduced employment numbers while increasingrevenue. This suggests that productivity gainswere made with capital investments thatcompensated for the reduction in labour.

2.1 Industry OverviewThe offshore commercial, artisanal, andsubsistence fisheries make up Fiji’s fishingindustry and make important social and economiccontributions to the national economy. Theimportance of the fishing industry to Fiji and otherSouth Pacific nations is increasingly welldocumented as evidenced by Bell et al. (2008),who note:

“The extraordinarily high consumption offish by many Pacific Island Countries andTerritories underscores the vitalcontribution of fish to…the Pacific.”

Historically, Fiji’s fishing industry has created asignificant amount of economic activity, but it hasalso filled an important role in the lives of manyFijians. Artisanal and offshore-commercial fishingactivities accounted for 3.16% of Fiji’s GDP in2009 and while it is not officially recorded as GDP,


2. FISHING INDUSTRY

2.2 Offshore FisheryThe offshore commercial fishery is the largestproducer of revenue in the fishing industry and in2003 it produced approximately 26% of theindustry’s revenue (ADB, 2005; see Figure 5).When indirect revenues are accounted for (e.g.canning and processing) the fishery is responsiblefor approximately 40% of the industry’s revenues.Although the fishery employs fewer people thanthe artisanal or subsistence fisheries, it landed26% of the country’s marine catch in 2003because of its relatively high use of capital (ADB, 2005).

The offshore commercial fishery directly employs6% of the fishing industry’s labor force (ADB,2005), but the fishery indirectly employs manymore people by purchasing inputs and sellingoutputs to other industries. Fiji’s tuna canningindustry, which processes part of the offshorecommercial fleets catch, employs an estimated800 people (ADB, 2005). When forward andbackward linkages are taken into account, theoffshore-commercial fishery employs, both directlyand indirectly, approximately 2,000 people (seeFigure 5).


Figure 4: Fishing industry revenue and catch

Figure 5: Fishing industry employment

the fishing industry’s revenue and employapproximately 2,000 people (see Figures 5–6).Locally, the economic impact is likely to beimportant because artisanal fisheries generateeconomic opportunities in communities that havelow participation rates in the formal economy andsmaller, less diverse economic bases. Artisanalfishers sell their catch in local markets and spendlarge proportions of their earnings in localbusinesses (ADB, 2005), creating additionaleconomic benefit6.

2.3 Artisanal FisheryNo formal definitions are agreed for artisanalfisheries, but generally they refer to fishermen orwomen who practice small-scale commercialfishing with the goal of taking the catch to market.Artisanal fishers harvest fish from near-shorefisheries such as inland rivers, mangroves,lagoons, and shorelines (Singh, 2005).

Fiji’s artisanal fisheries make important economiccontributions to various levels of the economy.Nationally, Fiji’s artisanal fisheries generate 14% of


6 Multipliers reflect the economic idea that money spent in one area of the economy will induce economic activity in otherareas, increasing the net impact of a unit of economic activity.

Figure 6: Fish catch by industry

2.4 Subsistence FisherySubsistence fishers are almost universally ruraland rely on coral reef fisheries as their primaryfood source, livelihood, and income. Fiji’ssubsistence fisheries employ over 3,000 people(see Figure 5), many of whom have fewtransferable skills, making the fishery their onlyrealistic livelihood option. In addition to providingemployment, subsistence fisheries provide foodsecurity in the form of easy and reliable access tomarine resources. Subsistence communities livehand-to-mouth and many rural communities in Fijido not preserve their food, which meansaccessing the fishery is the first and only meansof providing food security. The overall importanceof the subsistence fishery is not reflected well.Current national accounting methodologies onlymeasure revenue and as a consequence thefisheries can often appear less valuable than theyare because non-tangible benefits, such as foodsecurity, are not taken into account.

The economic importance of the subsistencefisheries may begin to change as Fiji’s ruralpopulation continues a decade-long decline (SeeFigure 7). As rural incomes decrease and urbanincomes increase, rural inhabitants are bothpushed out of rural areas and pulled into urbanareas. As people move to urban areas and earnhigher incomes they may begin to rely onaquaculture to support more of their protein needsand the importance of the subsistence fisheriesmay decline. Alternatively, Bell et al. (2008)discuss several scenarios where urban demandfor fish increases to such a point that ruralcommunities begin exporting their catch to urbanmarkets, which would increase the importance ofrural fisheries to both the urban and ruraleconomies.


Figure 7: Fiji urban and rural populations


3.1 Tourism Industry OverviewFiji’s tourism industry benefits from the country’srich natural resources and generates significanteconomic activity for the national economy.Tourism generates more economic activity, interms of revenue, than any other industry and it isalso the country’s largest single source of foreignexchange7. Several thousand people areemployed, either directly or indirectly, by theindustry, creating economic activity throughout thecountry (FDE, 2010). The tourism industry’sprominent position in the economy emphasizeshow important it is to maintain Fiji’s naturalresources in order to maintain the tourismindustry’s economic contributions. Naturalresources support the tourism industry byencouraging tourists to visit the country and thedegradation of nature may cause tourists toconsider travelling to other destinations.

3.2 Tourism & MultipliersFiji’s tourism industry is heavily dependent ondemand from Australia, New Zealand, and theUnited States, which account for over 74% of Fiji’stourist arrivals (see Figure 8). Changes in demandcan reduce the revenue received by the tourism

industry as well as other industries that indirectlydepend on tourism.

Tourism arrivals are sensitive to political unrest andthe effect of unrest was seen when hoteloccupancy rates fell by 25% following the 1987coup and again by the sharp decline in tourismfollowing the unrest in 2000 (see Figure 9;Narayan and Prasad, 2002). ‘Sun and fun’tourism, where tourists choose amongst manypotential locations, is particularly sensitive tofactors one might find in the news like politicalupheaval and civil disturbance, violence, diseaseoutbreaks, and natural disaster. The politicalsituation has stabilized since then and tourismarrivals and expenditures are increasing onceagain. Interestingly, tourism expenditures havebeen increasing in line with tourism arrivals from1995 to 2009, suggesting that the propensity tospend is remaining relatively constant. Fiji’stourism industry could benefit more fromincreased tourism arrivals if there were more of therevenue stayed inside the country. According tothe Fiji Islands Trade and Investment Bureau, 94%of tourism projects started between 1988 and2000 were foreign owned.

3. TOURISM INDUSTRY & THE ECONOMY

7 The combination of activities in the Primary Sector generates more foreign exchange in total, but no single industrygenerates more foreign exchange than the tourism industry.

Figure 8: Fiji tourism arrivals by country of origin

restaurant industry, but the hotel industry employed approximately 10,000 people as of2009 (FIBS).

The hotel and restaurant industries are primarilylocated in areas frequented by tourists and as aresult some communities are more sensitive tochanges in tourism demand than others.

3.3 Tourism by Sub-Industry

3.3.1 Hotel and Restaurant SectorThe hotel and restaurant industries generatedapproximately 4.4% of Fiji’s GDP in 2009 and theindustries grew at a good pace before the globalfinancial crises began in 2008. The wholesale,retail, restaurant, and hotel industries employ over27,000 people (FIBS). It is not clear what fractionof the workforce were exclusively employed in the


Figure 9: Tourism arrivals and expenditures


Figure 10: Tourism expenditures by region

Approximately 70% of visitors spend their time intwo provinces, Ba and Nadroga and touristexpenditures are concentrated in a few areas (see Figure 10; FIBS). The figures reflect thevulnerability of tourism-based local economies tothe performance of the hotel and restaurantindustries and the benefit of planning foreconomic development that broadens the scope ofeconomic activities, shields against risk, and avoidsextreme variation in community economic health.

3.3.2 TransportationThe transportation industry facilitates themovement of goods from geographic areas of lowvalue to geographic areas where their value ishigher. The industry employed 9,184 people in2005 and generated approximately 10% of Fiji’sGDP each year between 2007 and 2009.Analysts forecast that the sector’s contribution toGDP will increase to 20% by 2014 (Natuva,2010).

The transportation industry is responsible formoving tourists between the main arrival hubs andvarious tourist destinations throughout Fiji. Visitorsarrive either by plane or ship and these

transportation services are rarely owned by Fijiancompanies. Tourism is moderately important tothe public transportation sector since 34% ofvisitors use it for on-island transportation. Only 5%of visitors rent cars for transportation, but theindustry’s revenues rely almost exclusively ontourism. A survey by the Fijian government foundthat 84% of tourists use taxis for on-islandtransportation suggesting that the taxi industryrelies on tourism more than other transportationindustries8 (FIVS, 2009).

3.3.3 Sales: Retail & WholesaleTourism generates strong demand for retail salesin Fiji. Approximately 78% of tourists report makingretail purchases while visiting Fiji, but thepropensity to make retail purchases varied by theorigin country. For example, 88% of Canadiantourists bought retail goods compared to just 59%of UK tourists (FIVS, 2009). Souvenirs are themost frequently purchased goods, but clothingand local handicraft sales also contribute toindustry revenues. At the time of this report therewere no meaningful tourism retail expenditure dataavailable, but the evidence suggests that tourismhas a significant impact on the retail sector.

8 Expenditure data are aggregated to reflect the money spent during an entire stay and it is not known how much moneywas spent on each good or activity during the visit. This presents a data challenge to estimate the importance of tourismto each sector of the transportation industry. While tourists may use one mode of transportation with greater frequency,they do not necessarily spend more money on that mode.


Figure 11: Primary vacation activities

3.4 Tourism and Natural ResourcesFiji’s natural environment and unique marineresources attract large numbers of tourists (FDE,2010). The Fiji Tourism Survey Report suggestsnatural resources are an important component oftourism demand and survey results demonstratethat most tourists participate in marine-relatedactivities. More than 75% of tourists surveyedreported that swimming was one of the primaryactivities of their vacation, underscoring theimportance of the marine habitat to tourism andthus to the economy (see Figure 11).

Fiji’s government recognizes the important rolenatural capital plays in the tourism industry and asa result, the government introduced the2007–2011 Tourism Development Plan to identifypractices and policies that would help tourismdevelop sustainably. The country also drafted apolicy document that outlines the five principlestourism operators must live by to be consideredas eco-tourism operators (CBD, 2010).


as forecasts suggest, the fisheries will increase ineconomic importance and the impact will be felt inboth urban and rural areas.

The tourism industry is integral to Fiji’s economy,but Fiji’s tourism demand is concentrated in threecountries. Australia, New Zealand, and the UnitedStates make up 74% of Fiji’s tourist demand.Tourism is generally regarded as a luxury good, soits consumption is closely tied to discretionaryincome. Fiji experienced downturns in the tourismmarket as a result of poor economic performancein other countries and future tourism demand willdepend on future economic performance of thosekey countries going forward. Australia’s economywas in recession in the early part of 2011, theUnited States economy is stagnating, and onlyNew Zealand’s economy has been growing. Thiswill not necessarily have a negative impact on thedemand for tourism because poorly performingeconomies do not affect all people the same way.However, near term tourism could be weaker thanprevious years.

The government of Fiji can maintain the economicsuccess of the fishing and tourism industries byconserving the natural resources that are soimportant to the continued success of eachindustry. One way this can be done is byincorporating the value of nature into nationalaccounting and decision frameworks so that theeconomic contribution of nature is clearly known.If the value of nature is recognized andemphasized, decision makers can use thatinformation to ensure nature remains a productiveasset of the national economy.

Fiji is the largest and one of the most diverseeconomies in the South Pacific region. The

country has significant trading relationships withAustralia, New Zealand, and the EU, amongothers, and it benefits from healthy tourismdemand, mainly from Australia, New Zealand, andthe United States. Fiji’s fishing industry isproductive and supports subsistence, artisanal,and offshore fishing fleets, which generatesignificant economic activity.

The offshore commercial, artisanal, andsubsistence fisheries each make their ownsignificant contributions to Fiji’s economy, but thenature of the contributions is changing.Employment opportunities in the industry as awhole have been in decline, while the revenueshave continued to increase. Statistics that provideinformation on the changing composition of theindustry apparently are not available. As a result, itis difficult to argue with confidence how therevenues are being maintained at the same timeemployment is shrinking, but one possibility is thatthe offshore fleet is using capital investment toreplace labor. Most of the capital is foreign ownedand many of the capital gains may not benefit thenational economy to the fullest degree possible.

The subsistence fisheries are also changing asrural inhabitants move to more urban areas. Thenet effect of increased urbanization is difficult topredict, but some estimates suggest thatincreasing urban demand for fish will put morepressure on rural fisheries as they attempt to meetthe demand. Moreover, rural fish demand is alsoexpected to increase, adding to the pressureplaced on the fisheries. If demand does increase

4. CONCLUSION

1. Amoe, Jone. Fiji Tuna and Billfish Fisheries.2005. Rep. Fiji: Fisheries Department,Ministry of Fisheries and Forests.

2. Asian Development Bank. 2002. Republic ofthe Fiji Islands: Fisheries Sector Review. T.Hand, D. Davis, and R. Gillett. Manila: ADB.Technical Assistance Consultant's Report.ADB. 2005.

3. Bell, J. D., Kronen, M., Vunisea, A., Nash, W.J., Keeble, G., Demmke, A., Pontifex, S.,Andréfouët, S. 2009. Planning the use of fishfor food security in the Pacific. Marine Policy33, 64.

4. Berdach, James T. Asian Development Bank.2005. Republic of Fiji Islands: CountryEnvironmental Analysis.

5. Cakacaka A, Jupiter S.D., Egli D.P., Moy W.2010. Status of fin fisheries in a Fijiantraditional fishing ground, Kubulau District,Vanua Levu. Wildlife Conservation Society-FijiTechnical Report no.06/10. Suva, Fiji, 21 pp.

6. Fiji Department of Environment. UnitedNations. 2010. Fiji's Fourth National Report tothe United Nations Convention on BiologicalDiversity.

7. Fiji National Nutrition Survey Main Report.2007. Rep. Suva, Fiji: National Food andNutrition Center.

8. Narayan, P. K. and Prasad, B. C. 2007. Thelong-run impact of coups on Fiji's economy:evidence from a computable generalequilibrium model. J. Int. Dev., 19: 149–160.doi: 10.1002/jid.1296

9. Narayan, Paresh K. 2000. "Fiji's TourismIndustry: A SWOT Analysis." Journal ofTourism Studies 11.2, 15-24.

10. Natuva, Timoci L. 2010. "Ministers SpeechColonel Timoci L. Natuva." Fiji, Lami. 23 Nov.2010. Speech.

11. Republic of the Fiji Islands: Fisheries SectorReview. Rep. Asian Development Bank.2005.

12. Singh, Warsha. 2005. An Appraisal ofArtisanal and Subsistence FisheriesMonitoring in the Fiji Islands. Rep. Departmentof Fisheries, Ministry of Fisheries & Forest.

13. United Nations. Food and AgricultureOrganization. 2009. National Fishery SectorOverview: Fiji.

14. World Bank. 2011. Data retrieved July 17,2011, from World Development IndicatorsOnline (WDI) database.


RESOURCES CITED

Photo credits:

Front cover: IUCN Photo Library © Lill Haugen; back cover: © IUCN/Jim Thorsell

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