The Economic Impact of Whaling

September 27th, 2014
in econ_news, syndication

Written by , GEI Associate

Historically, whaling has been a traditional and commercial practice by many nations globally. In the mid-1800s, the United States had approximately 700 whaling vessels that were used commercially. During whaling operations from 1932 to the summer of 1933, 28,915 whales were caught. However, in 1986, the International Whaling Commission banned commercial whaling of all great whales. Since then, whaling has been conducted under the notion that it is done for scientific research, and has a set quota for each year’s harvest. In 2014, whaling has lost most of its fervor, but is still alive.

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It is rooted deep in the traditional societies of a few countries, mainly Japan, Norway, and Iceland. In 2013, Japan harvested 251 southern minke whales in the Antarctic Ocean. During the 2013 whaling season in Iceland, they caught 134 fin whales. However, markets in 2014 are showing a lack of zeal on the consumer side for whale meat and other whale products. In Japan, whale meat consumption has shrunk considerably. In 2012, the demand for whale meat in Japan was 1% of the peak demand in the 1960s. During the same year, Japanese whaling programs harvested 1,211 tons of whale meat, yet failed to sell 908 tons of it.

It’s hard to see how an industry could survive after only being able to sell 25% of its total harvest for the year, which is the reason why the Japanese government has been heavily subsidizing their whaling operations. By the end of the 2014 fiscal year in September, government subsidies for whaling operations in Japan are expected to reach $50 million. In 2011, $23 million from an earthquake and tsunami reconstruction fund had been diverted into whaling operations to help pay down debts the industry had. While the Japanese government holds the position that these subsidies are helping an important industry, many argue that the country would be better off economically if they supported whale-watching tourism instead of whaling operations.

Iceland has also been running into obstacles and very low demand for their whale products. After the whaling season in 2006, Icelandic whaling firms had to dump 179 tons of whale meat, which was approximately one-third to one-half of the total whales killed that season. Whaling operations in Iceland also harm other economic sectors, such as their farming exports. In 2013, Iceland’s export of lamb to the United States fell short of the predicted 250 tons. This is attributed to the fact that the grocery store chain, Whole Foods, has stopped advertising Icelandic lamb in response to the whaling.

Norway is another country that still practices commercial whaling, and it is not immune to the economic consequences of this practice. The government of Norway has spent millions of dollars in subsidies to keep their whaling industry afloat, and spent $4.9 million since 1992 on public campaigns to attempt to gain public support for whaling. Whaling companies in Norway have come up with creative ways to “sneak” whale meat into common consumer food items. In 2005, a prominent whaling company, Karsten Ellingsen, launched a new product called, “Lofotburger.” This burger was made up of 50% minke whale meat and 50% pork.

However, Karsten Ellingsen soon realized that even these creative marketing techniques weren’t going to save their whale meat sector. In 2008, the company announced that they were considering cutting whale meat out of their sales completely, as there were more profitable projects to focus on, such as salmon aquaculture. Another whaling company, Hopen Fiske & Sild Company, also suffered from decreased popularity in whale meat as they declared bankruptcy in the same year.

Whaling doesn’t just affect the economies of the countries that participate, as many countries have strong whale watching and other ecotourism industries. In 2009, the global whale watching industry generated over $2 billion in revenue and employed 13,000 people. Even though $2 billion worldwide isn’t a huge number, many developing coastal nations benefit greatly from this industry. It is predicted that the whale watching industry could add over $400 million in revenue and 5,700 jobs each year to the international economy, with at least half of that growth benefiting developing coastal nations.

Despite the negative consequences of whaling, this practice still provides some benefits to the economies of Japan, Iceland, and Norway. In Japan, the revenue of whaling in 2008-09 was $81 million, however it has since dropped and in 2010-11, it was only $22 million. In Iceland, a report stated that whaling could add up to $94 million to the Icelandic economy by hunting whales that were decreasing fish stocks. Almost all of the whale meat harvested in Iceland is exported to Japan, however there is a growing demand for it in the domestic market. In 2006, only 1.1% of households ate whale meat weekly, and by 2010, around 5% of households ate whale meat weekly.

Whaling is a controversial issue that focuses mainly on the environmental impact of the practice; however the economic impact also shows reason for concern. Even though the practice still creates jobs and brings in some revenue to the economy of these nations, their governments are providing heavy subsidies, especially in the case of Japan, to sustain these industries. The demand for whale meat and whale products is also decreasing worldwide, with some companies, such as the Whole Foods, placing trade embargoes on whaling nations. As environmental awareness grows worldwide, more companies and countries will most likely take a similar stance, and the whaling industry will either have to receive more subsidies, or finally expire.









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