By Hollie Booth, University of Oxford, Bangor University & Yayasan Kebersamaan Untuk Lautan (KUL)
Earlier this month, Kebersamaan Untuk Lautan (KUL) joined RISE UP for the Ocean at a workshop in Jakarta on one of the most consequential issues facing coastal communities today: the World Trade Organization’s (WTO) Agreement on Fisheries Subsidies. Convened by INDEF, together with IISD and RISE UP for the Ocean, the workshop brought together negotiators, researchers, civil society and representatives of Indonesia’s small-scale fishers around a deceptively simple question: how do we reform harmful fisheries subsidies without leaving coastal communities behind?
A pivotal moment for ocean governance
Fisheries subsidies are where trade policy and ocean health meet head-on. Each year, governments spend an estimated US$22 billion on subsidies that increase fishing capacity – cheaper fuel, bigger vessels, more gear. However, these subsidies drive overfishing: currently the greatest threat to marine ecosystems and species. Moreover, the subsidies and the negative impacts they cause are typically inequitably distributed.
The WTO’s first Agreement on Fisheries Subsidies (“Fish 1”) was a landmark agreement adopted in 2022 which prohibits subsidies for vessels or operators engaged in i) illegal, unreported and unregulated (IUU) fishing, ii) fishing of overfished stocks, and iii) fishing on the unregulated high seas. But the current phase of negotiations (“Fish 2”) aims to address an arguably more difficult and consequential challenge – subsidies that drive overcapacity and overfishing. For Indonesia, where millions of households depend on small-scale fisheries for food, income and identity, the stakes could not be higher.
A genuine dilemma
This is where the dilemma at the heart of the workshop, and Fish 2 negotiations, emerges. Capacity-enhancing subsidies are a recognised driver of overfishing and reform is overdue. Yet where government support reaches coastal communities, withdrawing it abruptly with nothing to take its place carries real and immediate welfare risk. Unsurprisingly, the prospect has met with concern from fisher folk and civil society organisations. The workshop set out to bridge that gap: between the WTO negotiating table and the everyday realities on Indonesia’s coast.
Not all subsidies are equal
KUL’s contribution was to reframe the debate. Discussion of fisheries subsidy reform has been dominated by a single question: which subsidies to ban. While far less attention has been paid to what could take their place. At KUL, we aim to protect marine biodiversity whilst supporting the wellbeing of coastal communities through incentive-based programs. Based on our portfolio of incentive-based pilot programs, we argue that positive subsidies, financial instruments that reward positive actions or outcomes for the ocean, are a neglected but powerful complement to prohibition.
The same public money, redirected, can pull in the opposite direction. Where a vessel-construction grant adds fishing capacity, a buyback removes it; where free gillnets lower the cost of damaging gear, a gear-exchange scheme lowers the cost of selective gear. In short, we argue that shifting the conversation from what to ban towards what to build could mitigate overfishing, protect small-scale fishers and speed up Fish 2 negotiations by alleviating concerns of fish folk and developing coastal states.
Evidence from the Indonesian coast
This is not just a theoretical proposition but backed by empirical evidence. Over the past six years, KUL has worked with small-scale fishing communities, government and researchers from the Universities of Oxford, Bangor and IPB to co-design, pilot and rigorously evaluate a portfolio of positive-subsidy programs.
In East Lombok, fishers in a shark longline fishery voluntarily retired their vessels through a fair, fisher-led auction — permanently reducing capacity, while owners and crew received compensation to invest in new livelihoods. In Aceh, vessels exchanged bycatch-intensive gillnets for selective fish traps, eliminating the bycatch of Critically Endangered species whilst increasing fisher income. Across Aceh and West Nusa Tenggara, a “compensate-to-release” scheme has rewarded fishers for the safe release of more than 3,000 threatened animals, with household wellbeing maintained or improved.
The common thread is simple: the trade-off between mitigating overfishing and protecting coastal livelihoods can be managed with the right positive, performance-based instruments.
Left: a fisher poses with a Critically Endangered scalloped hammerhead in a fish market. Centre: a fisher in KUL’s compensate-to-release program safely releases a scalloped hammerhead. Right: a fisher shows a video of a shark release to receive their compensatory payment. Credit: Francesca Page for KUL.
A constructive path for Fish 2
We argue that Fish 2 should distinguish capacity-reducing instruments, such as buybacks, from capacity-enhancing ones, such as construction grants, disciplining subsidies by what they do, not by the budget line they sit on. Fish 2 could also preserve clear policy space for transparent, evidence-based positive subsidies. And at home, governments can redirect harmful subsidies towards instruments that support a fair transition to sustainability, reform within the existing budget, not new spending. We have set out this evidence-based position in a short policy brief for negotiators and policymakers, which you can read here in English and Bahasa Indonesia.
Fishers as partners
If there was one message we carried home from the workshop, it is this: small-scale fishing communities must not be seen as a problem to be regulated, but as partners in co-designing mutually beneficial solutions. Reframing fisheries subsidy reform from a narrowing list of bans into a positive agenda offers a constructive opportunity: one that advances the goals the WTO Agreement and protects coastal communities.
Our thanks to INDEF, IISD and RISE UP for the Ocean for convening the conversation, and to the fishing communities whose insight underpins everything described here.