Cost Benefit Analysis of Vessel Monitoring System (VMS) in Indonesia for Managing The Transiton to Sustainable and Responsible Fisheries

presentationOne method to support a fisheries MCS system that recommended by the Food and Agriculture Organization (FAO) is using a Vessel Monitoring System (VMS). The VMS is a tools to analyze movement of fishing vessel. The costs and benefits of VMS investment can be estimated.\ud The analysis of the Indonesian VMS system revealed weaknesses and constraints. The most important weakness has to do with inefficient use of data caused by underdeveloped software solutions. System revealed substantial opportunities to improve the usefulness and effectiveness of the system by reducing time delay and developing a better system interface. The costs and benefits of the necessary investment were estimated. The costs are estimated at $1 million. The overall yearly loss of revenue due to illegal fishing in Indonesia was however estimated at around $9 million. Based on data on the extent of illegal fishing under different VMS systems suggests that an improved VMS might reduce illegal fishing by up to 50% over a 10 year period. Given these assumptions the benefits of the improvements to the VMS far exceed the cost, in fact the ratio of benefits to costs is about 17, the benefits are 17 times larger than the cost. The breakeven point is after only about 15 months, and the internal rate of return is 80%. The results of sensitivity analysis reveal that the result of positive net benefits is robust against very large changes in model assumptions