The economic feasibility of light-emitting diode (LED) lights for the Korean offshore squid-jigging fishery
Park, J-A and Gardner, C and Jang, Y-S and Chang, M-I and Seo, Y-I and Kim, D-H, The economic feasibility of light-emitting diode (LED) lights for the Korean offshore squid-jigging fishery, Ocean & Coastal Management, 116 pp. 311-317. ISSN 0964-5691 (2015) [Refereed Article]
Squid-jigging has one of the highest levels of fuel consumption and greenhouse gas emission per kg of
fish production of any of Korea's fisheries. The lights on squid-jigging vessels are the primary reason for
their high fuel use and account for about 65% of total fuel costs for these vessels. This suggests that a
high-efficiency lighting system would improve fisher's profits and reduce environmental impact. This
study analyzed the economic feasibility of changing the fishing lights on squid-jigging vessels from metal
halide (MH) lights to light-emitting diodes (LED) lights in terms of managing fuel costs and decreasing
greenhouse gas emissions. Net present value (NPV) and benefit-cost ratio (BCR) approaches were used
including with a sensitivity analysis of a governmental subsidy of the fishery for the use of LED lights.
Fuel use would be reduced by 65,163 kL (USD 54,999,302) and GHG emissions would be reduced by
172,486 tCO2e annually if all offshore squid-jigging vessels changed to LED lights. The annual economic
benefits ranged from KRW 1034.9 million (USD 932,351) to KRW 1724.9 million (USD 1,553,919) when
the minimum and maximum values for Korean carbon trading prices were applied, respectively.
Furthermore, the NPV and BCR results showed that it would be economically feasible to use LED lights if
a vessel operated for 10 years after changing its system. The NPV that included benefits of fuel reduction
and greenhouse gas emission reduction credits was 89% (USD 22,786) higher than when considering fuel
reduction alone. The benefit of Government subsidies for installing LED lights was sensitive to catch rate
and was only necessary if catches fell below 78.9% of that achieved with MH lights. The subsidy rate with
the NPV set to zero increased about 9.3% when the catch production ratio of squid decreased by 1%. This
analysis shows there is substantial opportunity for reducing emissions in fisheries by adopting lower
emission technology. Adoption can require Government intervention, such as with subsidy in this case
despite long run benefits of reduced fuel use and thus cost through the adoption of LED lights.