The economic feasibility of light-emitting diode (LED) lights for the Korean offshore squid-jigging fishery

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.