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International Journal of Trade, Economics and Finance, Vol. 3, No. 1, February 2012
16% were marine fish, 8% were corals and 11% were other favoring the importers. This is due to the fact that the
invertebrates [8]. The majority of ornamental fish traded are importing countries generally have a buying power that
freshwater and farm-bred, whereas marine ornamental fish dwarfs the financial resources of the fish collectors in
species and invertebrates are mainly wild-caught [7]. developing countries, and so are largely the ones who control
Aquarium animals are the highest value-added product the economics of the market [8]. This is illustrated by the
harvested from coral reefs, with aquarium fish selling for an guide below, which dictates the pricing of marine ornamental
average of $248 per pound compared to food fish at an fish [12]:
average of $3 per pound [10].
-Cost of fish to importer (landed cost) = export price (free
on board) + freight and insurance.
III. ENVIRONMENTAL PROBLEMS ASSOCIATED WITH THE -Wholesale price = landed cost x 2.
TRADE -Retail price = wholesale price x 2.
The extractive nature of fish collecting, which often occurs
in developing countries that lack adequate resources and This is again proven by the specific example of the
mechanisms for reef conservation, has serious impacts upon collection of a single Naso Tang (Acanthuridae) in the
the fragile coral reef ecosystems in which it occurs. The Philippines [13]:
ecosystems of coral reefs are among the “most diverse and
valuable ecosystems on earth” [2], supporting one million A collector gets: US$0.26
species of animals and plants and an estimated eight million The exporter price is: US$2.50
species that are yet to be discovered [2]. However, studies The shipping cost* is approximately: US$9.00
have found that 25% of coral reefs around the world have The retail price is approximately: US$53.00
already died or are severely damaged, and a further 30% are *to the USA/Canada
under serious threat [11]. Overfishing, global warming,
TABLE I: PRICES PAID TO COLLECTORS FOR ORNAMENTAL FISH
destructive fishing practices and coastal development
ALONG THE MARKETING CHAIN
represent the major threats to coral reefs [11]. For example, in
Honaunau, Hawaii, abundance of the top ten aquarium fish Paid to collector
species has decreased by 59% over the last 20 years [2]. In Non-certified Certified
Species Middle-man
particular, the international trade of ornamental fish impacts exporter exporter
upon reefs through overfishing and the use of destructive Banded coral shrimp 0.02 0.05 0.05
fishing practices such as cyanide poisoning and explosives Domino damsel 0.03 0.05 0.05
Percula clown 0.06 0.14 0.23
[2]. It is estimated that, since the 1960’s, more than one
Spotted grunt 0.06 0.12 0.13
million kilograms of cyanide have been used on Philippine
Chelmon butterfly 0.06 0.12 0.18
reefs alone [2]. In addition to this, the marine ornamental
Source: [1] C. S. Shuman, G. Hodgson and R. F. Ambrose. (March 2004).
trade often targets rare fish and coral species, which fetch the
highest prices, placing additional pressure on these species TABLE II: PRICES CHARGED BY SELLERS FOR ORNAMENTAL FISH
and their survival [2]. The fact that the trade is also highly ALONG THE MARKETING CHAIN
mobile is another characteristic that is conducive to
environmental degradation, in that, as soon as stocks are Charged by
seller
depleted in one area, collectors move to another area to inflict
similar damage. This means that the trade ultimately Species Exporter Whole-saler Retailer
disadvantages the environment and the communities where Banded coral shrimp 0.62 N/A 7.00
Domino damsel 0.28 1.45 2.00
fish collecting occurs, with little incentive present for the
Percula clown 0.77 7.95 12.00
long-term sustainable use of the environment and its
Spotted grunt 1.50 8.95 15.00
resources by a community, and few benefits passed onto local Chelmon butterfly 1.40 8.95 15.00
communities [2]. The majority of exporting countries (where Source: [1] C. S. Shuman, G. Hodgson and R. F. Ambrose. (March 2004).
fish collecting occurs) are developing countries, which often
lack the “institutional or financial capacity or political will” TABLE I shows the prices paid (US$) to collectors by
to mitigate the damage to coral reefs that occurs as a result of middlemen and exporters along with the proposed prices to
fish collecting [2]. Therefore, the international community is be paid for certified fish (by a certified exporter) in the
ultimately left responsible to generate resources and Philippines [1]. Table II demonstrates the prices charged for
cooperation and monitor the trade in order to protect the coral ornamental fish by exporters, wholesalers and retailers [1].
reefs from which ornamental fish are extracted [2]. In the Philippines in 1997, there were 3500-4000
individual fish collectors who produced a total export value
of US$8.5 million [8]. However, each individual collector
IV. ECONOMIC PROBLEMS ASSOCIATED WITH THE TRADE only received approximately US$17.50 as a monthly wage
The imbalance between importing and exporting countries [8]. These problems often arise because the actions of the
in the ornamental fish trade also reflects itself in the collectors, who generally come from small countries and
inequitable profit distribution between importers and therefore small economies, have negligible effect on world
exporters, with the benefits of the trade predominantly markets. Therefore, they are said to be “price-takers” in the
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International Journal of Trade, Economics and Finance, Vol. 3, No. 1, February 2012
world economy and cannot affect the world price (the price certification program publicized as a means to promote the
prevailing in world markets) of marine ornamental fish [14]. sustainability of marine ornamental fish populations and the
In addition to this, the social cost faced by ornamental fish coral reef ecosystems through market mechanisms [2]. These
collectors due to the low price they are paid for the fish they mechanisms involve allowing consumers to recognize and
collect and the negative externalities caused by collection support responsible collectors by selectively purchasing from
(e.g. localized reef destruction and biodiversity loss), is much them [10]. The presence of MAC certification labels on
greater than the price paid for the fish by consumers in retailed marine ornamentals targets the purchasing power of
importing countries [14]. A vicious circle is thus created, consumers by ensuring the quality and sustainability of
whereby low prices entice collectors to increase their catch, traded organisms [10]. E.O. Wilson described such a system
often by using unsustainable or harmful fishing methods, as seeking to “give the invisible hand of free market
ultimately causing long-term damage to the environment and economics a green thumb” [20]. The third-party certification
the industry [8]. system developed by MAC provides internationally
approved standards for the trade in marine ornamental fish to
ensure the continuing health of marine ornamentals and their
V. ECO-CERTIFICATION habitats. By minimizing environmental destruction and
There is an “urgent need to develop positive trade promoting conservation and sustainable use within the
regimes” [2] to improve the sustainability of the ornamental industry, MAC also hopes to provide for the continuing
fish trade by enforcing import bans on organisms that are livelihoods and reduction of poverty for rural villagers in
caught on reefs without sustainable management plans. This developing countries from which ornamental fish are
is designed to ensure that consumer demand does not exported. The MAC certification system seeks to achieve
exacerbate the degradation of coral reefs. The recent spur in these goals by utilizing market forces in the developed
“green consumerism” has involved greater consumer countries that import ornamental fish. It is hoped that
preferences for companies and products with minimal increased publicity surrounding MAC certification will
environmental impacts [15]. Thus the new strategy to achieve motivate consumers to prefer MAC certified organisms over
ocean conservation is through consumer markets [16]. The lower quality, uncertified organisms [10]. The certification
main tool to achieve this is through the use of certification system was developed in 2001 and the first certifications
programs, which utilize the consumer market for the were awarded in 2002 [21]. MAC certification is currently
conservation of coral reefs [16]. Eco-certification programs the only certification system that applies specifically to the
influence consumers to reduce the environmental impacts of trade in marine ornamental fish. The only other agreement
their consumption by purchasing only those products that are that monitors the trade is the Convention on International
produced and distributed in an environmentally friendly Trade in Endangered Species of Wild Fauna and Flora
manner [17]. Three main benefits of the use of eco-labeling (CITES). This convention is a legally binding international
in fisheries are the promotion of consumer choice, agreement that regulates the international trade in threatened
improvements in economic efficiency and the enhancement organisms. However, currently, CITES does not affect
of market development [18]. The short history of the use of domestic trade and only applies to hard corals, seahorses,
eco-certification as a management tool for fisheries gained giant clams and live rock, limiting its effectiveness in
momentum in 1996 through the development of the Marine ensuring the sustainability of the trade [22].
Stewardship Council (MSC) [19]. The MSC was developed The three areas that MAC certification encompasses are
with the focus of global certification of the sustainable ecosystem and fisheries management; collection, fishing and
performance of fisheries [19]. The system encompasses any holding; and handling, husbandry and transport. Ecosystem
organization that processes, wholesales or retails the certified and fisheries management refers to MAC’s intention to
product [19]. Despite initially poor reception for the MSC, ensure habitat, stock and species management and
the system is now expanding and garnering increased support conservation in collection areas by validating that
from fishing-related industries, governments and NGO’s as a management is conducted according to sustainable principles.
tool to achieve increased sustainability in fisheries [19]. Collection, fishing and holding refers to the handling,
Major fisheries are now signing up to the MSC certification holding, packaging and transport of organisms that occurs
program at an accelerating rate [19]. This growth reflects the prior to export. In order to gain MAC certification, these
increasing consumer acceptance of the MSC certification processes must be conducted in such a manner as to ensure
system. However, ongoing challenges faced by the MSC the health of the organism and the environment. MAC
include maintaining consistency, effective management, certification also monitors all handling, husbandry and
stakeholder involvement, accountability and efficiency [19]. transport that occur along the commercialization chain. A
certified product must pass from one MAC certified industry
operator to another along the entire length of the chain [21].
VI. MAC CERTIFICATION Paul Holthus, executive director of MAC, stated that,
Long term economic benefits can only be obtained from whereas currently it is not uncommon for 15-20% of marine
marine resources, such as ornamental fish, if responsible ornamentals in each shipment to be dead upon arrival, MAC
harvesting and handling are ensured in order to minimize guidelines allow a maximum of only 1% dead on arrival and
both overfishing and damage to coral reefs. With these goals 1% dead after arrival for each link in the industry supply
in mind, the Marine Aquarium Council (MAC) initiated a chain [23].
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International Journal of Trade, Economics and Finance, Vol. 3, No. 1, February 2012
VII. THE ECONOMICS OF MAC CERTIFICATION will examine the findings of three studies which analyze the
MAC certification covers all elements of the marketing receptivity of consumers to MAC certification. In doing so,
chain, including collection areas, collectors, exporters, this paper will also discuss whether MAC certification is an
importers and retailers [10], [21]. Certified parties can effective way to maximize the economic benefits of the
display a MAC certification label advertising the assessed ornamental fish industry and minimize the environmental
sustainability of the traded organism [21]. In endorsing MAC damage by influencing consumer choice. It is hypothesized
certification as a solution to the inherent problems of the that MAC certification will indeed provide economic benefits,
marine ornamental trade, it has been claimed that the both through reduced losses and mortality of fish and due to
economic benefits of the system will spread from consumers consumer perceptions that MAC certified fish have
and retailers to collectors. Specifically, the guaranteed “increased value relative to uncertified competitors” [24].
quality of certified fish is hoped to result in greater profits for
collectors by improving market access and bargaining power
[10]. This in turn has the potential to reduce the incentive for IX. STUDY: SPRUILL AND DROPKIN (2001)
overexploitation and use of destructive fishing practices [1]. This study, conducted in 2001 by the organization SeaWeb,
In one case, an aquarium fish collector in the Philippines involved an informal survey of 77 aquarium hobbyists
who would previously have received US$0.75 for a common attending a conference of the Marine Aquarium Societies of
tomato clownfish (that would most likely have been caught America [16]. The findings of this study suggest great
using cyanide) now receives US$2.50 for the same fish, all receptivity among aquarium hobbyists to a program such as
due to his recent MAC accreditation [10]. At the other end of MAC certification. The survey found that large numbers of
the marketing chain, consumers may also receive financial participants were willing to modify their purchasing behavior
benefits through the certification system, as the certified to help the oceans and promote sustainability. Most
organisms they purchase are of a higher quality and so may individuals surveyed stated that they wanted to support an
live longer [1]. One ornamental fish retailer stated that the industry based on quality and sustainability. Some were very
quality ensured by MAC certification provided a interested in where the fish they purchased came from and the
“competitive edge” for his business [10]. Another retailer
manner in which they were collected. Generally, the
stated that the higher quality of the fish resulted in lower fish
individuals surveyed were willing to pay more for MAC
mortality, making fish-keeping easier and attracting more
certified fish that were classified as sustainable in both
people to the hobby, which is often perceived as difficult [10].
An additional aspect of MAC certification is its role in collection and handling.
increasing the value of ornamental fish, enabling retailers to
consider them as precious, rather than disposable, ultimately
resulting in more responsible fish-keeping [10]. X. STUDY: MAC (2002)
In 2002, MAC conducted a case study of four firms to
determine the costs and benefits of MAC certification to the
VIII. PROBLEMS FACED BY THE MAC CERTIFICATION US marine aquarium retail. MAC found that the certification
SYSTEM system had economic benefits for retailers due to the lower
The main challenge to the success of the MAC mortality rates of certified fish. However, the stores
certification system is garnering enough support for the examined in this study did not charge price premiums for
system and its role in ensuring sustainability in order to MAC certified specimens, so the findings do not take into
influence consumers to be willing to pay more for certified account the effect of the higher prices of certified fish on
organisms. Considering that the majority of exporting nations consumer choice [21].
are developing countries and lack sufficient resources to
implement MAC certification, funding for the enforcement
of the system is generated via tariffs placed on imported XI. STUDY: ALENCASTRO ET AL. (2005)
organisms, which are directed to the wealthier importing In this study, a survey of marine aquaria hobbyists was
nations [1]. It is hoped that such tariffs will also provide conducted [21]. The focus of this survey was to analyze the
additional input into local communities in the exporting importance of product attributes of marine ornamental fish on
nations [1]. Whereas these tariffs are an effective way to consumer choice. Such product attributes included the price
ensure continuous funding for the system, they result in of the fish, whether it was eco-labeled, a post-purchase
uncertified, cheaply collected organisms costing less than survival guarantee and whether the fish was wild-caught or
certified organisms [2]. cultured. The survey consisted of two scenarios: the first
Therefore, MAC certification must overcome the market involving a high value specimen, the blue-faced angelfish,
economics of the trade in order to influence consumers to and the second involving a cheaper specimen, the maroon
prefer certified organisms. Whereas some studies have clownfish. Both species are considered popular with
demonstrated that consumers would indeed be willing to pay hobbyists and are collected from areas that have experienced
more for a certified organism caught in an environmentally certain degrees of environmental damage (named in the
friendly manner, detailed economic analyses and surveys of survey as the Philippines and Indonesia). Firstly, the factors
consumers’ willingness-to-pay for certified organisms will that had an effect on consumer choice were determined
need to be undertaken to determine how the certification through the use of statistical models. These models were then
program will be received by consumers [1], [16]. This paper applied to the specific examples of the angel fish and
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International Journal of Trade, Economics and Finance, Vol. 3, No. 1, February 2012
clownfish to determine how likely a fish with specific were more familiar with the association of the prevention of
characteristics would be purchased. coral reef and ecosystem damage with MAC certification
The majority of participants surveyed were males aged showed a preference for MAC certified fish. This indicates
between 24 and 44, with above-average levels of education that marine ecosystem protection greatly influences
and annual income. The vast majority of participants consumer choice for marine ornamental fish among the
indicated that they highly valued the conservation of coral hobbyists surveyed. This in turn demonstrates potential for
reefs and wild stocks. Most of the participants appeared to be eco-certification systems promoting the environmental
avid hobbyists, demonstrating high level of involvement and sustainability of traded marine ornamentals. The findings of
knowledge within their hobby. For example, approximately the survey also suggest that making more hobbyists aware of
80% stated that keeping marine ornamental fish was their MAC certification and its role and credibility in improving
main hobby, 59% were members of an aquarium society, the sustainability of the ornamental fish trade may influence
88% had researched the specimens they keep and more than more hobbyists to prefer MAC certified fish over other
60% had paid more than US$50 for a single fish. However, purchase options. This is especially required since only 50%
the survey found that approximately 50% were not familiar of respondents had some level of familiarity with MAC.
with the MAC certification system. The findings of the Additionally, considering that only a relatively small number
survey suggest that price was a relatively unimportant factor of hobbyists were surveyed, these results may not be
affecting consumer choice in the retail of ornamental fish. In accurately indicative of the entire population of marine
fact, the survey interestingly found that price was positively ornamental hobbyists.
related to increases in purchase, meaning that participants
were more likely to buy more expensive fish. This may be
due to the fact that more expensive fish may be viewed as XII. CONCLUSION
being of higher quality. Cultured fish and those with an The trade of ornamental fish and aquarium supplies spans
extended life warranty were found to influence consumer the globe, with a total global retail value of approximately
choice to a similar degree as MAC certification. Contrary to US$500 million. However, the environmental impacts of the
expectations, the survey found that MAC certification had trade and the economic disparity between the importing and
weak or even negative effects on consumer choice, especially exporting countries can have social, environmental and
among those participants claiming to be familiar with the economic ramifications for the poorer exporting countries.
certification system. Such negative perception of the system The certification program initiated by the Marine Aquarium
was again highlighted by participant comments which Council (MAC) is a means to promote the sustainability of
revealed that they believed the MAC certification system marine ornamental fish populations and coral reef
lacked credibility. They also indicated that they believed that ecosystems through market mechanisms. This involves
cultured ornamental fish were the most sustainable purchase allowing consumers to recognize and support responsible
option and posed the smallest threat to the environment. collectors by selectively purchasing from them. It has been
In regards to the scenario involving the maroon clownfish, claimed that the economic benefits of the system will spread
cultured fish had a much greater probability of purchase than throughout the entire marketing chain. However, MAC
wild caught fish, not taking into consideration whether the certification must overcome the market economics of the
fish was MAC certified. However, participants generally trade in order to influence consumers to prefer certified
preferred uncertified fish, perhaps perceiving cultured fish as organisms. That is, consumers must be willing to pay more
an equally sustainable substitute for MAC certified fish of the for certified organisms collected in an environmentally
same species. If the fish was described as wild-caught, friendly manner. Studies of consumers’ willingness to pay
individuals were more willing to pay higher prices for MAC and the potential economic benefits of MAC certification
certification. This is as expected, with the individuals, who have shown that further promotion of MAC certification and
indicated concern for environmental conservation, perhaps its role in ensuring environmental sustainability is required to
perceiving the higher prices associated with MAC ensure the competitiveness of MAC certified fish with
certification as being indicative of greater environmental cheaper alternatives.
sustainability. However, such willingness to pay for MAC The findings of the three studies examined have somewhat
certification was less evident if the fish was cultured, perhaps heterogeneous verdicts on the success of the MAC
because the participants saw certification as unnecessary if certification system. However, the findings of the three
the fish was not extracted from the marine ecosystem and so studies are common in that they indicate definite potential for
would have no environmental impacts. the continuing development of eco-certification within the
The hypothetical scenario involving the blue-faced ornamental fish trade. This is evident through the high
angelfish demonstrated that the influence of a post-purchase priority given to environmental sustainability and product
survival guarantee on purchase decisions for wild-caught fish quality by retailers and consumers alike. Considering that the
was greater than the effect of MAC certification. Again, price role of the consumer is central to the success of eco-labeling,
was found to be a relatively unimportant characteristic, such potential can only be realized if consumer trust and
especially compared to the characteristics that promoted awareness within the certification system are established [19].
environmental sustainability. Areas of development to continue furthering the certification
While the survey indicated that the MAC certification system include appropriate promotion of the label,
system was generally negatively received amongst the transparency of the standards and assessment process of the
hobbyists surveyed, it also found that the participants who system and the provision of incentives for fisheries actors to
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International Journal of Trade, Economics and Finance, Vol. 3, No. 1, February 2012
seek certification [18], [25]. Ultimately, the success or failure [11] B. Best and A. Bornbusch, “Overview,” presented at the Annual
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