EUROPEAN COMMISSION Brussels, 24.2.2017 SWD(2017) 64 final COMMISSION STAFF WORKING DOCUMENT



IMPACT ASSESSMENT

Accompanying the document PROPOSAL FOR A REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

Establishing a multi-annual plan for small pelagic stocks in the Adriatic Sea and the fisheries exploiting those stocks



{COM(2017) 97 final}

{SWD(2017) 63 final}



TABLE OF CONTENTS Executive Summary Sheet Glossary List of acronyms 1.introduction: political and legal context 1.1.Rationale of the reformed Common Fisheries Policy and its main elements 1.2.Scope of the initiative 1.3.Legal context 2.What is the problem and why is it a problem? 2.1.The Problem: Overfishing 2.1.1.Underlying drivers of overfishing 2.1.2.Consequences of the overfishing of anchovy and sardine 2.2.The Problem: Ineffective governance 2.2.1.Underlying drivers of ineffective governance 2.2.2.Consequences of ineffective governance 2.3.The affected stakeholders 2.3.1.Fishing sector 2.3.2.Processing sector 2.3.3.Markets

2.4.Evolution of the problem 2.4.1.Environmental impacts 2.4.2.Socio-economic impacts 2.5.Retrospective evaluation of the existing policy framework 3.Why should the EU act? 4.What should be achieved? 4.1.General objectives 4.2.Specific objectives 5.What are the various options to achieve the objectives 5.1.Discarded policy option 5.2.Retained policy options 5.2.1.Option 1: No policy change - Status quo (Baseline option) 5.2.2.Option 2: EU multi-annual plan 5.2.3.Option 3: Attempt to change the current framework 6.What are the impacts of the different policy options and who will be affected? impacts 6.1.Option 1: Status Quo (Baseline) 6.2.Option 2: EU multi-annual plan (including sub-options) Environmental impacts Socio-economic impacts Market effects

6.3.Option 3: Attempt to change current framework Environmental impacts Socio-economic impacts Market effects 7.How do the options compare? 7.1.Assessment against the objectives: effectiveness To achieve and maintain Maximum Sustainable Yield for anchovy and sardine by 2020 at the latest. To achieve a sustainable fisheries sector To provide an effective management framework which is simpler and more stable and provides stakeholders with greater ownership. 7.2.Assessment against the environmental, economic and social impacts 7.3.Efficiency, coherence and acceptability 7.4.The preferred option 7.5.Limitations in the impact assessment 8.How would actual impacts be monitored and evaluated? 8.1.Monitoring 8.2.Evaluation 8.3.Compliance and control ANNEX I: PROCEDURAL INFORMATION ANNEX II: STAKEHOLDER CONSULTATION Experts' advice

Consultation with stakeholders ANNEX III: WHO IS AFFECTED BY THE INITIATIVE AND HOW ANNEX IV:ANALYTICAL MODELS USED IN PREPARING THE IMPACT ASSESSMENT ANNEX V: MAIN ELEMENTS OF THE COMMON FISHERIES POLICY ANNEX VI: BACKGROUND INFORMATION ON THE FISHERY AND THE STATUS OF ANCHOVY AND SARDINE IN THE ADRIATIC ANNEX VII: IMPACTS OF THE DIFFERENT OPTIONS FORECAST UNTIL 2021 ANNEX VIII: OVERVIEW OF FISHERIES MANAGEMENT ANNEX IX: MEASURES UNDERTAKEN OR PLANNED BY CROATIA, ITALY AND SLOVENIA TO ADDRESS THE IMBALANCE BETWEEN THEIR FISHING CAPACITY AND THE AVAILABLE RESOURCES ANNEX X: DETAILED INFORMATION ON DATA COLLECTION AND MONITORING PROVISIONS RELATING TO IMPLEMENTATION OF THE COMMON FISHERIES POLICY ANNEX XI: OVERVIEW OF CURRENT MANAGAEMENT MEASURES AT NATIONAL, EU AND INTERNATIONAL LEVEL INCLUDING RETROSPECTIVE EVALUATION OF THESE MEASURES Table 1 Closed seasons for fishing sardine and anchovy under GFCM and in the three Adriatic Member States ANNEX XII: PAST TRENDS IN SOCIO-ECONOMIC PERFORMANCE OF THE FISHING SECTOR FOR ANCHOVY AND SARDINE ANNEX XIII: COHERENCE BETWEEN DIFFERENT EU MULTI-ANNUAL PLANS AND OVERVIEW OF EU MULTI-ANNUAL PLAN FOR BALTIC FISHERIES ANNEX XIV: OVERVIEW OF THE PREFERRED OPTION – MAIN ELEMENTS OF AN EU MULTI-ANNUAL PLAN FOR SMALL PELAGICS AND THEIR FISHERIES IN THE ADRIATIC



Executive Summary Sheet Impact assessment on a Proposal for a Regulation of the European Parliament and of the Council establishing a multi-annual plan for the small pelagic stocks and their fisheries in the Adriatic Sea. A. Need for action Why? What is the problem being addressed? There are two main problems concerning small pelagic fish (anchovy and sardine) in the Adriatic: 1) they are severely overfished, due to overcapacity in the fleet, environmental factors (outside the scope), and inadequate management measures. 2) The governance framework is ineffective due to the inadequate management measures (limiting the effort that goes into the fishery, which is not adapted to the characteristics of these fish and the fishery) and the complexity and instability of the current rules. If nothing changes, there is a risk the stocks and the fisheries dependent on them will collapse, which will have negative impacts on predatory fish who eat anchovy and sardine, and negative socio-economic impacts for the fisheries sector and secondary sectors such as the processing industry. The most affected stakeholders are the Croatian and Italian fisheries sectors, and to a much smaller extent, those of Slovenia. The processing sector is the most important secondary sector, primarily in Croatia and Italy. What is this initiative expected to achieve The objectives, in order to deliver on the EU's Common Fisheries Policy (CFP), are as follows: -To achieve and maintain maximum sustainable yield for anchovy and sardine by 2020 at the latest; -To achieve a sustainable fisheries sector; -To provide an effective management framework which is simpler and more stable and provides stakeholders with greater ownership. It will also facilitate the implementation of the landing obligation. The initiative is expected to ensure recovery of anchovy and sardine by 2020 and to ensure the fisheries sector is sustainable, with improved salaries for fishermen (+4% on average), and increased profitability for the fishing sector (+8% on average). What is the value added of action at the EU level? Both anchovy and sardine stocks and the fishing vessels concerned move freely across international boundaries so action at Member State level alone is unlikely to be effective in achieving the objectives. For measures to be effective, these should be taken in a coordinated manner and made applicable to the whole area of distribution of the stock and to all fleets concerned. B. Solutions What legislative and non-legislative policy options have been considered? Is there a preferred choice or not? Why? The policy options considered were: - 0. Using non-legislative instruments or "soft law" (discarded early on); - 1. The status quo (Baseline scenario against which other options were compared); - 2. The development of an EU Regulation to manage anchovy and sardine, with the objective to have stocks sustainably fished by either 2018 or 2020 (two sub-options). Under Option 2, a new management mechanism is proposed, focusing on the output of the fishery, by setting catch-limits. This approach has been successfully tested in other EU waters, resulting in improved stocks status. - 3. Attempting to amend the current management framework (national and international legislation), which could result in a best-case or a worst-case scenario. The preferred choice is sub-Option 2 with the 2020 deadline as it delivers on all the objectives, unlike Options 1 and 3, and is more realistic and more acceptable to stakeholders than the sub-Option 2 with a 2018 deadline. Who supports which option? None of the consulted stakeholders have evoked soft law (Option 0) as a feasible option. Only one stakeholder (a national professional organization) responded that the current framework (Option 1) is sufficient. All respondents except Malta felt that amending the current framework would not be sufficient (Option 3). The Mediterranean Advisory Council (consisting of industry and civil-society representatives), NGOs, Public authorities, scientific institutes, and Croatia, Italy and Slovenia support Option 2, with a strong preference for the sub-option "2020". C. Impacts of the preferred option What are the benefits of the preferred option (if any, otherwise main ones)? The key environmental benefit would be that anchovy and sardine, after years of overexploitation, would be fished sustainably by 2020 and the fishing sector would be healthier and sustainable. The current management framework would also be simpler, more stable and transparent and would provide greater ownership to Member States and fishermen as they could be involved in designing some of the management rules. The increase in sardine and anchovy is also likely to benefit larger and valuable predators such as blue-fin tuna. Concretely, by 2021, an EU multi-annual plan is likely to result in improved stock sizes (by around 20% compared to the status quo) and better working conditions for fishermen (an increase in salary of +/- 5% and in profitability of +/-10%. What are the costs of the preferred option (if any, otherwise main ones)? Concretely, by 2021, to ensure fishing levels can be sustained in the long-term and that the fishing sector is sustainable and profitable, catches of anchovy and sardine would need to decrease (+/- 25-30%), which would result in a lower total revenue to the fishing sector (+/- 25%) and a decrease in employment (+/-10%). This concerns Croatia, Italy and to a minor extent Slovenian fishermen fishing with purse seiners or pelagic trawlers. As catches decrease, prices at first sale are likely to increase could compensate to some extent the reduced revenues of the fishing sector due to a decline in catches, but would be negative for consumers and the processing sector (in particular in Croatia and Italy), which may need to increase their imports from other countries. How will businesses, SMEs and micro-enterprises be affected? The CFP is a policy specifically geared to deal with SMEs, which are the norm within the fishing sector, rather than the exception. In the Adriatic anchovy and sardine fishery, almost all fishing firms and a wide majority of companies in the processing sector are micro-enterprises or SMEs. There is therefore no basis to exclude them from the scope of the initiative on the basis of their size or else the vast majority of the sector would be excluded rendering the initiative pointless. The EU multi-annual plan would therefore apply to all businesses including SMEs and micro-enterprises. All the impacts described above are therefore likely to apply to all enterprises, to a varying degree depending on how Member States will decide to allocate the necessary reductions in fishing to different fleet segments. Will there be significant impacts on national budgets and administrations? None expected – relevant monitoring and data collection already takes place and only frequency would need to increase. Will there be other significant impacts? Yes – the improved profitability of the fishing sector in the Adriatic will make the sector more competitive and, combined with improved salaries, will make the sector more appealing (Section 6.2). D. Follow up When will the policy be reviewed? The Commission should report to the European Parliament and to the Council on the implementation of the plan five years after the entry into force of the plan and every five years thereafter.





Glossary Biomass Blim Days at sea Demersal Discard plan Discards Unwanted catches returned to the sea during fishing operations either dead or alive. Exploitation pattern How fishing pressure is distributed across the age profile of a stock. Fishing mortality (F) An expression of the rate at which fish are removed from the stock from fishing operations (including fish subsequently discarded). It is approximately the stock annual removal expressed in percentage. FMSY A biological reference point. It is the fishing mortality rate that, if applied constantly, would result in an average catch corresponding to the Maximum Sustainable Yield (MSY) and an average biomass corresponding to BMSY. Fishing opportunities Fishing opportunities or Total Allowable Catches (TACs) are catch limits (expressed in tonnes or numbers) that are set for most commercial fish stocks. The Commission prepares the proposal, based on scientific advice on the stock status from advisory bodies such as STECF and ICES. Harvest control rules Landing obligation The obligation to land all catches in the respective fishery in accordance with relevant rules in the CFP Basic Regulation. Maximum Sustainable Yield (MSY) Theoretically the largest yield (or catch) that can be taken from a species' stock over an indefinite period. It is the maximum use that a renewable resource can sustain without impairing its renewability through natural growth and reproduction. Minimum Conservation Reference Size (MCRS) The size of living aquatic species taking into account maturity, as established by Union law, below which restrictions or incentives apply that aim to avoid capture through fishing activity. Mixed fisheries Fisheries in which several species are likely to be caught in the same fishing operation. Overexploitation A situation where observed fishing mortality (or exploitation) rates exceed targets. Pelagic fish In relation to fish, the term 'pelagic' refers to fish which live in the upper layers of the water column, near the surface, e.g. sardine, anchovy and sprat (which are small pelagics) Precautionary approach to fisheries management An approach to managing fisheries to ensure a high probability of avoiding undesirable outcomes. Typically this involves specifying a limit value of spawning stock biomass, then managing fisheries to make sure the stock stays above this level. A limit reference point may also be specified for fishing mortality, in which case management will aim to keep fishing mortality below this level. Recruitment The number of new fish added to the exploitable portion of the stock resulting from growth of juvenile fish into adults, or migration of smaller fish. Regionalisation The process by which the Member States with direct interest for fisheries of a given geographical region organize themselves with the aim to agree on common management measures. The agreed measures as joint recommendation are submitted to the Commission and after scientific assessment adopted as Commission delegated acts. Safeguard A precautionary measure designed to avoid something undesirable occurring Spawning Stock Biomass Numbers (weights) of individual fish which are old enough to reproduce. This generally corresponds to the minimum landing size and so defines the 'fishable' population. Stock The population of a given species that forms a reproductive unit and spawns little if at all with other units. The “total stock” refers to both juveniles and adults while “spawning stock” refers to the adult population (see above). TAC Total allowable catch; the maximum biomass of fish that can be caught from a given stock in a given year. Technical measures Measure establishing conditions for the use and structure of fishing gear and restrictions on access to fishing areas.



List of acronyms AC Advisory Council CFP Common Fisheries Policy DCF Data Collection Framework EESC European Economic and Social Committee EFCA European Fisheries Control Agency EFF European Fisheries Fund EMFF European Maritime and Fisheries Fund EWG Expert Working Group FMSY Fishing mortality that produces MSY FTE Full-Time Equivalent GES Good Environmental Status GFCM General Fisheries Commission for the Mediterranean GFCM-SAC or SAC Scientific Advisory Committee of the General Fisheries Commission for the Mediterranean GSA Geographical Sub-Area GVA Gross Value Added IA Impact Assessment IAR Impact Assessment Report IASG Impact Assessment Steering Group ICCAT International Commission for the Conservation of Atlantic Tunas MAP Multi-annual Plan MCRS Minimum Conservation Reference Size MEDAC Mediterranean Advisory Council MPA Marine Protected Area MS Member State MSFD Marine Strategy Framework Directive MSY Maximum Sustainable Yield NGO Non-governmental Organization PO Producers Organisation REFIT Regulatory Fitness and Performance Programme RFMO Regional Fisheries Management Organisation SAC See GFCM-SAC SME Small and Medium-Sized Enterprise SSB Spawning Stock Biomass STECF Scientific, Technical and Economic Committee for Fisheries TAC Total Allowable Catch TFEU Treaty on the Functioning of the European Union VMS Vessel Monitoring System



1.introduction: political and legal context This impact assessment (IA) concerns a proposal for a multi-annual plan to manage the small pelagic stocks (fish that live at the surface of the sea) and their fisheries in the Adriatic Sea in the context of the reformed Common Fisheries Policy (CFP) – “the Basic Regulationˮ – which entered into force in 2014. 1.1.Rationale of the reformed Common Fisheries Policy and its main elements Fisheries management is the regulation of the activities of fishermen. This involves defining what can and can't be fished (e.g. prohibited species or young fish under a certain size), how much can be fished (e.g. maximum amount of fish that can be caught or maximum number of fishing days); when fishing is authorized or banned (e.g. during spawning seasons) and where fishing is authorized or banned (e.g. in marine protected areas). Fisheries management is an exclusive policy of the European Union and it is regulated by the CFP. Its primary objective is that fishing and aquaculture activities should be environmentally sustainable and managed in a way that is consistent with the objectives of achieving economic, social and employment benefits (see Section 4). Fisheries, although accounting for a small segments of the European economy in absolute terms, is of crucial importance in relative terms in many coastal regions. Firstly, fishing provides a source of jobs and income to communities that have few alternative options. Secondly, in many areas the importance of these sectors goes beyond pure economics and touch upon the social fabric of communities, and upon the preservation and promotion of ancient traditions and cultures. While improved fisheries management is unlikely to contribute to an increase in jobs in the sector, it can stem the decline and with more fish available, can help to drive up profits and provide better salaries and better working conditions for fishers - and a more competitive industry altogether. Together with EU funding through the European Maritime and Fisheries Fund (EMFF), the CFP contributes to the EU’s growth and jobs agenda through an emphasis on sustainability and economic competitiveness. The CFP has the following management toolbox at its disposal:

How much to catch? oTotal Allowable Catch (TAC) and quota setting to define the maximum allowable catches for individual species. They form the basis for the allocation of national fishing quotas among Member States but have traditionally not been used in the Mediterranean. oDiscard plans, which lay out the conditions, including exemptions in well-defined cases, of which unwanted fish and what quantities can be thrown back in the sea. oFishing effort limitations serve to regulate how much to catch (e.g. how many hours or days vessels can spend at sea) which is the traditional way of managing fisheries in the Mediterranean. What, how, where and when to fish? oTechnical measures to set out rules concerning for example gear use, which aim to protect fish stocks (often juveniles) and their ecosystems and to avoid unwanted catches, and thus reduce discards Given the large number of tools that can be combined to manage fish stocks, the CFP provides for the adoption of multi-annual plans which aim to provide a dedicated framework to manage fish stocks in an integrated manner by fishery and by sea-basin. The rationale behind the multi-annual plans is to provide greater transparency, predictability and stability of the management rules. Multi-annual plans are nothing new and have been foreseen by the CFP since 2002. However, while multi-annual plans were an option in the previous CFP, after the 2013 reform they became a priority. The precise shape and content of future multi-annual plans were the subject of work by an inter-institutional task force involving the Commission, the European Parliament and the Council in order to provide guidelines on the structure and content of these multi-annual plans and to solve delicate issues on the sharing of competences among those EU Institutions (see also Annex V). Since the entry into force of the current Basic Regulation in 2014, only one EU multi-annual plan has been adopted, concerning the Baltic Sea. Other multi-annual plans are in preparation and the coherence between these initiatives is presented in Annex XIII. Greater flexibility and simplification was also included in the new CFP, by introducing the concept of regionalisation. In essence, regionalisation means involving Member States around sea basins in the conception and design of management rules for the interested parties, with a view to increasing their ownership by fishing operators, and thereby their enforcement and, ultimately, their effectiveness. Concretely, Member States sharing a fishing area can make joint recommendations on management measures, and the Commission can adopt these measures as delegated acts if empowered to do so. Such empowerment would typically be granted in a multi-annual plan. 1.2.Scope of the initiative The Adriatic Sea (hereafter referred to as the Adriatic) is an important sub-area within the Mediterranean, accounting for 32% of the total landings value and 14% of fishing vesselsin the Mediterranean. The most valuable and sought-after small pelagic species in the Adriatic are the European sardine Sardina pilchardus and European anchovy Engraulis encrasicolus (hereafter referred to as sardine and anchovy), with anchovy being the more valuable of the two and considered to be driving the fishery. The Adriatic small pelagic stocks represent a high economic income for the fisheries sector in that sea basin (estimated at 74 million EUR and corresponding to 18% of the total fish production in the Adriatic in 2013). Anchovy and sardine account for over 97% of catches of small pelagic fish in the Adriatic (see Annex VI). The stocks of anchovy and sardine move between the Northern and Southern Adriatic but the vast majority (94%) of landings (in 2013) of these species in the Adriatic take place in the Northern part (see Annex IV - Tables A8 and A9). In terms of catches, the share caught in the Northern part is considered to be even higher than this given that even some of the vessels whose port of registry is located in the Southern Adriatic actually fish and land in the Northern Adriatic. Anchovy and sardine in the Adriatic are part of a mixed fishery with a higher catch of sardine in the eastern side (Croatian and Slovenian coasts) and of anchovy in the western (Italian coast) side. Mixed fisheries are fisheries in which several species are likely to be caught in the same fishing operation (i.e. using the same vessel and gear): fishers unavoidably catch a mixture of species. They cannot control (or only to a limited extent) the composition of their catches. This means that fishing effort applied to anchovy cannot be separated from that applying to the sardine and accordingly, the two species should be managed together. This initiative intends to set the basis for management of small pelagic fisheries, in particular anchovy and sardine, in the Adriatic Sea (Geographical sub-areas (GSAs) 17 & 18 of the General Fisheries Commission for the Mediterranean) (see Figure 1). This initiative aims to address the problem of overexploitation of small pelagic stocks due to an unsustainable fishery and ineffective governance. The main objective of the initiative is to return the stocks and the fisheries sector to a healthy state by ensuring that the fishery is made sustainable and thereby ensuring that the fishing sector can continue to rely on this resource in the long-term.

This impact assessment will focus on assessing the impacts of introducing a multiannual management plan for small pelagic stocks in the Adriatic Sea compared with other policy options. 1.3.Legal context Council Regulation (EC) No 1967/2006 (the Mediterranean Regulation or MEDREG) is the framework for fisheries management in the Mediterranean. The MEDREG contains technical measures as well as a set of management measures to be adopted by the Member States (e.g. obligation to adopt national management plans for certain fisheries or specific gears). Currently, anchovy and sardine are managed in the territorial waters of Italy, Croatia and Slovenia by means of three national management plans, adopted under Article 19 of the MEDREG: a management plan for surrounding nets and for pelagic trawl nets adopted in 2011 by means of a Directorial Decree in Italy; a management plan covering different types of fishing gears, including surrounding nets targeting small pelagic, adopted in 2014 in Slovenia; and a management plan for "Srdelara" purse seine fisheries adopted in 2014 in Croatia. Each national management plan contains different rules to manage anchovy and sardine but they all focus on limiting the input to the fishery, by limiting fishing effort with specific technical measures (see Annex XI). At EU level, following the entry into force of the new CFP Basic Regulation and the landing obligation, a discard plan covering notably anchovy and sardine in the Adriatic was adopted for the period 2015-2017. This provides for limited quantities of anchovy and sardine to be discarded (thrown back into the sea) despite the landing obligation. In accordance with the CFP, the provisions of this Discard Plan should be integrated into a multi-annual plans for the fisheries concerned if a multi-annual plan is adopted. Another important tool to manage fisheries in the EU has been to prescribe technical measures (see Annex XI). So far, the technical measures in place for fisheries exploiting stocks in the Mediterranean, including in the Adriatic, are enshrined in the MEDREG. At international level, the General Fisheries Commission for the Mediterranean (GFCM) which is the Regional Fisheries Management Organization (RFMO) competent for managing fisheries in the Mediterranean, adopted in 2013 a management plan to regulate the exploitation of sardine and anchovy in the Adriatic . All vessels actively fishing for anchovies and sardines in the Northern Adriatic are subject to the provisions of this plan, including in high seas (i.e. international waters). The plan manages the fisheries mainly by regulating the fishing effort (e.g. number of vessels, number of days they can fish) and by setting a minimum size for catching anchovy and sardine. On top of this management plan, the GFCM adopted emergency measures for the year 2015 for the Northern Adriatic, whereby the maximum fishing days for vessels targeting anchovy were reduced (by 9%) and spatiotemporal closures were adopted to protect nursery and spawning grounds. For 2016, GFCM again adopted emergency measures, this time for both the Northern and Southern Adriatic. For 2017 and 2018, the GFCM adopted further emergency measures which were based on previous emergency measures but expanded to include a freeze on catches and on capacity as well as an obligation for Parties to close 30% of their nursery area for at least 6 months. In practice, to date the GFCM management plan has not been implemented in full. 2.What is the problem and why is it a problem? 2.1.The Problem: Overfishing

Overfishing is defined in terms of the objectives of the CFP, which is to have stocks at maximum sustainable yield. We therefore consider that overfishing takes place when the mortality caused by fishing is greater than the mortality compatible with MSY. According to the most recent data, around 93% of Mediterranean fish stocks assessed are overexploited whilst for many other stocks, the status still remains unknown. In a broad stakeholder consultation carried out in 2015 in the context of the retrospective evaluation of the MEDREG85, stakeholders overwhelmingly agreed that fish stocks in the Mediterranean are severely overexploited. Scientific assessment of the status of the stocks typically calculate a ratio of current fishing mortality levels compared with MSY fishing mortality and if this ratio is above 1 then the stock is considered to be overfished (compared to MSY). Anchovy and sardine are assessed by both the EU's scientific advisory body for fisheries (the Scientific, Technical and Economic Committee for Fisheries, STECF) and the GFCM's Scientific Advisory Committee (SAC) (see Box 1 in Annex VI). The most recent scientific advice from both of these bodies indicates that anchovy and sardine in the Adriatic are still being overexploited beyond their reproduction capacities and that the situation is getting worse as we are moving further away from sustainable fishing levels. In 2013, anchovy were exploited over 6 times sustainable levels and sardine over 3 times sustainable levels (See Annex VI). In other words, we are far from the target set out in the Basic Regulation, the Maximum Sustainable Yield (MSY). Both bodies recommended, as recently as 2015, that fishing levels need to be reduced for both species, and that in particular for anchovy this needs to be done immediately (see Annex VI). More specifically, the STECF in 2015 advised that to reach sustainable levels of fishing, catches need to be decreased considerably for both species and that to achieve this, the relevant fleets’ effort should be reduced, in order to avoid future loss in stock productivity and landings for the sector. STECF further advised that this should be achieved by means of a multi-annual management plan taking into account mixed-fisheries considerations114. 2.1.1.Underlying drivers of overfishing The key driver for the poor state of anchovy and sardine is overfishing: catches are too high compared to what the stocks can sustain in the long-term. Catch levels depend on several factors, such as how many boats are fishing the stocks, for how long, using what gear etc. (see Annex VIII, Figure 1). Overcapacity A fishing fleet that is in overcapacity has the ability to fish more than the fishery resource can sustain or more than a desired reference point (e.g. MSY). Overcapacity is considered as one of the leading causes of overfishing, notably in the Mediterranean Sea. Pursuant to Article 22 of the Basic Regulation, Member States are required to carry out an assessment of the balance between their capacity and the available resources ("fishing opportunities") and to put in place measures to adjust the fishing capacity of their fleet to the available resources. According to this self-assessment, and the planned reductions in capacity, the main fleet segments exploiting anchovy and sardine in the Adriatic are in overcapacity compared to the available fish. Specifically, Italy plans to reduce its capacity by at least 10 %, Croatia by 5-20% depending on the fleet segment. Slovenia carried out a large reduction in capacity in 2013, with a reduction of 38 % (expressed in GT) and for 20 % (expressed in kW) compared to 2010. Environmental factors Populations of small pelagic species, such as sardine and anchovy, are characterised by short life spans (e.g. 4-5 years for anchovy and sardine) tend to be more sensitive to environmental variability than other fishes, and are subject to substantial changes in abundance over relatively short time periods – so called “boom and bust” population dynamics. The overexploitation of anchovy and sardine stocks is compounded by environmental factors. Environmental conditions (e.g. temperature, salinity, change in nutrients, ocean currents) can influence the survival and recruitment of fish stocks and can further contribute to the negative status of stocks caused by overfishing. On the other hand, healthier fish stocks are more resilient to environmental fluctuations and thus ensure the exploitation in the long-term. In the case of anchovy in the Adriatic, recent evidence suggests that in particular, oceanographic conditions during winter influence anchovy abundance. This is thought to be linked to the salinity of the water entering the Adriatic from rivers on land, which affects the abundance of food for anchovy. The notorious collapse of the anchovy stock in the Adriatic during the late 1980s when a severe drop of anchovy catches was registered (catches decreased from over 50,000 tonnes to 7,000 tonnes in 1988), is believed to be related to high levels of fishing during the previous decades and a decrease of the sea surface temperature,. In fact, the low temperatures during the reproductive period highly reduced the recruitment during the following years, which led to the lowest population size ever observed. Similarly, a decline in river and land runoff may affect the productivity (i.e. lower concentration of nutrient), reducing the primary production and thereby reduce also the amount of food for anchovy and sardine. In the long term, the various environmental factors listed above, together with high fishing pressure, are likely to increase the vulnerability of the system and worsen the state of the fish stocks. This driver falls outside the scope of this initiative. 2.1.2.Consequences of the overfishing of anchovy and sardine Bad state of the anchovy and sardine stocks The poor state of anchovy and sardine has been confirmed by both the STECF114 and the GFCM SAC23. For both species, population levels are currently much lower than they have been in the past: the anchovy stock was at around 400 000 t in 2005 and now it is under 100 000 t (2014) whilst the sardine stock fluctuated between 300 00 t and 500 000 t from 1970-1990 but since then, it has been below 200 000 t for the past 15 years (see Annex VI). Based on the most recent data from scientific surveys, the last 3 years (2013-2015) show a declining trend in abundance and biomass for both anchovy and sardine in the Adriatic, including for juveniles, with some of the recent biomass levels being the lowest in the available time series. Recent increases in sardine stock (since 2000), although low in terms of historical levels, shows that there is still some potential for recovery for this stock. However, to ensure such recovery takes place, exploitation levels needs to be reduced and brought in line with maximum sustainable yield. In the case of anchovy, as a result of overfishing combined with environmental change, the population collapsed in the 1980s. Since then, the recovery of the anchovy stock has been only partial. Since 2005, the size of the anchovy stock appears to have declined sharply once again (See Annex VI). Catches are currently mostly dominated by juveniles and small-sized fish as fishing activity has already removed many of the large-size individuals from the population (See Annex VI). As anchovy stocks continue to decline, the risk is that fishers focus more on sardine and further compound the unsustainable fishing of the latter. Environmental consequences Overall, excessive levels of fishing, as well as damage to fish habitats, have caused major losses of biodiversity, changes in the structure of fish populations (e.g. fewer large individuals), appearance of invasive species, food web modifications (e.g. decline of top predators with cascading effects). Small pelagics in the Adriatic Sea and play an important role in the food web and their abundance is likely to control the abundance of larger predatory fish, marine mammals and seabirds. For example, the overexploitation of anchovy and sardine, and their historical declines, may cause knock-on effects in the food chain as these stocks serve as food to larger fish such as Blue-fin Tuna which is one of the most valuable fish species worldwide. Another environmental consequence of fishing, and overfishing, of fish stocks is the impact on other, non-target species which get caught during the fishing activity. Some of the vessels involved in the small pelagic fishery, such as pelagic trawlers, have unwanted catches of certain protected species including bottlenose dolphins, marine turtles, and sharks and rays. Socio-economic consequences: threat to the viability and profitability of the sector

As a consequence of this unsustainable overexploitation of anchovy and sardine in the Adriatic, and the associated decline in resource, the whole catching sector dependent on these stocks are at risk of also declining and even collapsing. Evidence of a decline in the catching sector is already visible, as witnessed by a decline in the salaries and profitability of the catching sector targeting anchovy and sardine in the Adriatic. Employment in several fleet segments has also been declining or stagnant (Annex XII). In addition the secondary sectors that rely on small pelagics such as the processing industry (canning and salting) have also been showing worrying signs, including a strong decrease in production recent years in Italy and Croatia . Reduced availability of anchovy and sardine for the fresh fish market in the Adriatic may be difficult to compensate as these species are too low value and too fragile to be transported by air from other sea basins. Ensuring that fish stocks remain within biological limits is therefore crucial not only for the ecological balance of the ecosystems, but also for the social and economic well-being of coastal communities. Healthy stocks provide a security to the fishing sector in terms of their economic activities and therefore guaranties in socio-economic terms. 2.2.The Problem: Ineffective governance The second problem which faces the anchovy and sardine fisheries in the Adriatic is ineffective governance, which is defined as a governance set up (in particular management measures) which is not achieving the desired objectives. The Basic Regulation lays out the principles of good governance which should be followed under the CFP (Article 3). This includes: taking into account of regional specificities, through a regionalised approach, the establishment of measures in accordance with the best available scientific advice, a long-term perspective, administrative cost efficiency, appropriate involvement of stakeholders, in particular Advisory Councils, at all stages, consistency with other Union policies, the use of impact assessments. Despite the numerous management tools that have been adopted for anchovy and sardine in the Adriatic (see Section 1.3), all these actions have not been sufficient to ensure the sustainable exploitation of these stocks. Furthermore, the problem of ineffective governance for small pelagics in the Adriatic is getting more serious over time, as witnessed by the fact we are moving further away from our objectives as the extent of overfishing is getting worse in recent years. There is a need to improve and simplify the management framework to ensure it effectively manages these shared resources. The specific drivers of this problem are detailed below. 2.2.1.Underlying drivers of ineffective governance Inadequate management measures Fisheries can be managed in different ways, essentially by managing either the effort that goes into the system (how much fishing takes place), which is referred to an input control, or by managing what comes out of the system (i.e. quantity of fish caught or landed), referred to as output control. To date, as presented in Section 1.3, anchovy and sardine in the Adriatic, under both the national plans and the GFCM management plan, have been managed through input control, and primarily through effort limitation. Given the on-going overexploitation of these stocks, it is evident that this approach has not succeeded in restoring stocks to a healthy status. This driver also contributes directly to the problem of overexploitation of the anchovy and sardine stocks. The current fisheries management system for small pelagics in the Adriatic has problems at several levels: The management plan adopted at international level, under the GFCM, has not been implemented fully since it was adopted in 2013. The management measures under the GFCM have also been modified annually since 2013 and are not sufficient to achieve the CFP targets of sustainable fishing by 2020 at the latest. The measures adopted at national level, to implement the international obligations and to implement the obligations under the EU's MEDREG have been modified regularly in recent years, are not sufficient to achieve the CFP's sustainability objectives, and differ between the Adriatic countries rendering them in some cases less effective. At both international and national level, management measures focus on input control and the reductions in input do not translate directly into reduced catches and fishing mortality, and make it very complicated to determine what a sufficient level of input control is to guarantee fishing mortality compatible with maximum sustainable yield. In the Adriatic small pelagic fishery, vessels tend to make short trips and to fish quite close to the coast, sometimes only fishing a few hours per day. If the number of days when fishing is allowed is reduced (as it has been under international measures), the vessels could compensate this to some extent by fishing more hours in the given days thus catching as much as they used to. For fishing sector who need to follow these rules, this instable framework and the different rules in the different areas of the Adriatic make it more complicated to comply with the rules. In several other parts of the European fishing sector, which were faced with similar problems of overexploitation and stock declines, there have been recoveries in the fish stocks and the fishing sectors following implementation of multi-annual management plans and a system of catch-limits (see Annex VIII). STECF has advised that managing fisheries targeting small pelagics using effort limitation implies a high risk due to the particular characteristics of the species and fisheries targeting them and has recommended that catch limits would be a more effective management tool for fisheries of small pelagic species in the Mediterranean,. Complexity of current rules Consultations have shown that, among stakeholders, there has been strong criticism of the complexity of the existing legislation. Several stakeholders, including the fishing industry, have complained about the many different management measures in place during the public consultation (see Annex II). An additional problem is the fact that the management framework is unstable, with management measures changing regularly over time (see Annex XI). There is currently no comprehensive framework to manage small pelagics in the Adriatic: these stocks are subject to management measures at different policy levels. Currently, there are three national management plans in place, using different management measures, as well as technical measures established under the MEDREG, a GFCM management plan, GFCM emergency measures since 2015, and a discard plan under the CFP.

The national plans and the GFCM plan are similar in that they focus on input control to manage the stocks. However, there are inconsistencies between the existing management measures, which add to the complexity (see Annex XI). This is due in part to the fact they have been adopted in different contexts (EU measures vs GFCM international agreement) and also due to the fact that the reform of the CFP and adoption of the new Basic Regulation, in 2014, took place after both the adoption of the MEDREG (and of the national management plans adopted thereunder) and of the adoption of the GFCM plan. For example, the periods when fishing is not allowed differ between the three Adriatic Member States. Therefore, a fisherman moving from one Member States' territorial waters to another will face different rules about when he can or cannot fish. This makes it more difficult to know and therefore to follow the rules, and it also means that closed seasons (which are designed to provide the stock with a period of no fishing mortality) are less effective, as fishers can go and fish the same stock in a different part of its range, where there is no closed season. In addition, the objectives of the national plans and the GFCM plan are incompatible: the GFCM plan is based on the precautionary approach and, since 2016, includes the objective of sustainable fishing (MSY) by 2020. The Italian plan does not include either MSY, or a deadline (2020), or the precautionary approach. The Italian and Croatian plans have defined targets for fishing mortality and biomass (Italy) as well as biomass safeguards (Italy) which are not compatible with MSY by 2020 and hence incompatible with the GFCM objective. Finally, the scope of the different management instruments are also different, with national management plans being adopted on the basis of fishing gears (e.g. a plan for purse seiners), whilst the GFCM management plan is developed on the basis of stocks (anchovy and sardine). There has also been a lack of stability in the measures adopted both at international level (GFCM rules) and at national level (national management plans adopted under the Mediterranean Regulation). The international rules have changed on a yearly basis since the GFCM management plan was adopted in 2013. The national measures have also changed frequently in Croatia, Italy and Slovenia in particular spatiotemporal closures (see Annex XI). This instability over time comes on top of the differences in rules set by different countries but which add an additional layer of complexity for fishers who may fish in several parts of the Adriatic, and be subject to several different sets of national rules (and international rules in international waters) As described in the Section 2.5, the provisions in the three national management plans and the emergency measures currently implemented under the GFCM will not enable sufficient reductions in catches to reach the sustainability targets of the CFP by 2020 at the latest. Finally, monitoring of whether, under the management framework, the 2020 sustainability objectives and target would be met is very complicated due to the variety of measures in place to reduce fishing mortality, which need to be assessed together to determine overall mortality. Indeed, assessing whether the combination of three sets of (possibly different) management measures, applied each to only a part of the stock would ensure sustainable fishing levels is much more complicated and uncertain compared to a single instrument and management approach. 2.2.2.Consequences of ineffective governance Difficulty to implement the rules This constantly evolving, complex, and inconsistent management framework makes it harder for the fishing industry to remain aware of the rules currently in force and therefore to implement them. Such a situation, in which the management measures change on a yearly basis also makes it very difficult for the fishing industry to adapt and predict what the situation will be like in the coming years e.g. how much they will be able to fish, at which times of year, in which areas, whether to invest in their vessels and equipment etc. There have also been shortcomings in the implementation and enforcement of the existing management framework. For instance, national management plans were only adopted between 2011 and 2013 (i.e. 4-7 years after the deadline set in Article 19 of the MEDREG). The GFCM Management Plan is not being fully implemented (e.g. the harvest control rules are not being followed, as scientists showed some concerns about the way reference points were calculated) and emergency measures – which are less comprehensive and far-reaching than application of the plan – have been applied instead. Difficulties for the sector to plan ahead The lack of stability also results in difficulties for the sector to predict when and how much they will be able to fish making it more difficult for the sector to carry out business planning such as deciding on whether to carry bout investments in their vessels or business. Lack of ownership Another consequence of the rules being so complex and in particular, changing so frequently, is that there is less ownership by stakeholders, in particular those that need to comply with the rules governing this fishery. Furthermore, Croatia, Italy and Slovenia feel that their regional specificities are not being taken into account and they have been urging for the specificities of the Adriatic to be taken into account in the management of the fish stocks there, and that this be done on the basis of the new tool, regionalisation, which was introduced by the 2014 CFP reform. This position was expressed notably in response to the public consultation (Annex II). However, implementing regionalisation, is not possible under the current framework that regulates anchovy and sardine in the Adriatic, as there is no legal framework to enable adoption of regional management plans or measures proposed by regional groupings of Member States (see Annex V). The current management tools are introduced either by each Member State (national management plans) or at international level by the competent Regional Fisheries Management Organisation (GFCM management plan). 2.3.The affected stakeholders The primary sector affected by the problems described above is the fishing sector from the countries fishing anchovy and sardine in the Adriatic, which is primarily Croatia and Italy, and to a very limited extent, Slovenia, Albania and Montenegro (together accounting for under 2% of the total catches) (see Annex III). Other upstream and downstream sectors that are linked to the primary (fishing) sector would also be affected by changes in the catch sector e.g. the processing sector that relies on sardine and anchovy, as well as the retail sector and consumers of these fish. Within this impact assessment, the focus is on the stakeholders affected by the problem in the primary sector, and in the processing sector which is the most important secondary sector in this region in terms of income (see Annex III - Table 1). The importance of the different sub-sectors44 as a proportion of the total fisheries sector (i.e. not only small pelagics) varies by country: In Croatia, the catching sector is the most important fisheries sub-sector in terms of income, accounting for over 60% of total fisheries income. In the Italian Adriatic and in Slovenia, processing is the most important sub-sector, accounting for over 70% (Italy) and 90% (Slovenia) of total fisheries income in the area (see Annex III – Table 1). The following section focuses on the EU stakeholders affected, on the basis that this impact assessment concerns an EU initiative and also given the fact the role of third countries is negligible in this fishery.

2.3.1.Fishing sector Two types of fishing gears are currently used to catch small pelagic species in the Adriatic: the mid-water pelagic trawl net towed by two vessels, which are used by Italy, and the purse seine, which are used in Croatia, Italy and Slovenia. Italy and Croatia take over 99% of EU catches of anchovy and sardine in the Adriatic (in terms both of quantity and value), and Slovenia less than 1%. Landings of anchovy are dominated by Italy (70% of total landings) whilst those of sardine are dominated by Croatia (77% of total landings) (see Annex III – Table 2). In the Adriatic, around 400 vessels target these stocks11 and just over 2000 employees are involved in the fishery (see Annex III – Table 4). In both Italy and Croatia, there are around 200 vessels fishing for pelagics in the Adriatic and the majority of vessels involved are large (over 18m in length) 90,. In Slovenia, there are only 4 vessels active in this fishery and these are all over 12m in length. Overall, 99% of landings of anchovy and sardine in the Adriatic are made by vessels over 12m in length. Regarding the importance of Small and Medium Enterprises (SMEs) in the fishing sector, data on the number of employees are only available at the Member State level, and not by region (i.e. not for the Adriatic specifically) nor by species or type of fishery (i.e. anchovy and sardine). However, if the number of vessels per enterprise is taken as a proxy for enterprise size, then the vast majority of enterprises in the catching sector can be considered as micro-enterprises: In Croatia, 77% of enterprises have only 1 vessel, and 96% have fewer than 5 vessels; In Italy, 87% of enterprises have only 1 vessel, and 97% have fewer than 5 vessels; In Slovenia, 71% of enterprises have only 1 vessel, and 99% have fewer than 5 vessels 2.3.2.Processing sector In terms of secondary sectors that are dependent on fisheries, the processing sector is the most important one, accounting for over 60% of total value generated by all fisheries sectors in the Adriatic and above 70% and 90% in Slovenia and Italy respectively9. Specifically for small pelagics, the processing sector (canning and salting) generates a significant activity in Italy and Croatia, where it represented around EUR 150 million in sales in 2014. However, production of canned anchovy and sardine has strongly decreased in recent years, from 20 500 t in 2009 to 13 000 t in 201432. Figures for the numbers of enterprises and employment within the sector in each of the Adriatic Member States are given in Annex III – Table 3. In terms of full time equivalents (FTE), the three Adriatic Member States have a total of over 6700 FTEs, with the vast majority being situated in Italy (77%) followed by Croatia (18%). In both Italy and Slovenia, 100% of these enterprises meet the definition of SMEs in terms of number of employees (i.e. <250 employees) whilst in Croatia this figure is 95% (Annex III – Table 3). 2.3.3.Markets Fishery and aquaculture products in the Adriatic are distributed by wholesale fish traders and only a minor part is sold directly by fishers or farmers. There are at present 28 Adriatic fish markets, divided into production and mixed markets9. Small pelagics in the Adriatic are partly sold to fish processors and fish-farming establishments (e.g. for Blue-fin tuna farming) or are placed on the fresh fish market9,32. Italy is the key market in volume for both anchovy and sardine. Croatia exports most of its production and Slovenia accounts only for negligible volume in landings and trade flows (below 1000 tonnes)35. Annex III presents greater detail on the trade balance and trade partners of these Member States. The trends in volumes of anchovy and sardine landed in Italy and of prices of first sale in recent year show an inverse correlation between the two: prices decrease when landings increase and vice versa (see Annex III – Figure 1 and 2). 2.4.Evolution of the problem How would the problem evolve, all things being equal? This is the situation that would occur if sardine and anchovy continue to be managed according to the current regulatory structure (presented in Section 1.3) and to be exploited at current levels. The modelling of the evolution of the problem in terms of environmental and socio-economic impacts by 2021 (as presented in Table 1 and detailed below) is based on the study on Management scenarios for the preparation of multi-annual management plans in the Mediterranean and the Black Sea"66. This study was conducted by a consortium led by COISPA Tecnologia & Ricerca and is presented in more detail in Annex IV including assumptions of the model and input data.

In addition, the modelling of the evolution of the problem in terms of stock status, over a longer time period, was carried out in a GFCM bioeconomic assessment of management measures for sardine and anchovy fisheries in the Adriatic in 201550 (see Section 2.5). 2.4.1.Environmental impacts Under these two options, if current fishing levels are maintained, both stocks would remain overfished and outside safe biological limits. In the medium-term (2021), the anchovy stock would not recover and would remain around recent levels (2014). For sardine the stock would decline slightly in 2021 compared to 2014 (-7%). However, if current fishing levels are maintained, simulations over a longer time period (until 2030) have found that current fishing mortalities are too high and if continued, anchovy and sardine stocks could collapse between 2020 and 2030, with a 47-75% chance of sardine stock falling below the critical point (Blim) by 2028 and a 70-75% chance for sardine. Typically, collapses are characterized by a reduction in catch to less than 10% of the maximum and by a long recovery time after reaching a biomass minimum. Such a collapse would have negative knock-on effects for predator species which feed on anchovy and sardine. 2.4.2.Socio-economic impacts If business continues as usual, based on past socio-economic trends for the main fleet segments exploiting small pelagics in the Adriatic, average salaries, profitability, overall revenues and employment are expected to decline or remain stable in the majority of fleet segments. Taking the fleet as a whole, in the medium-term (2021), catches of anchovy are expected to decrease very slightly compared to recent levels (2014), whilst catches of sardines are expected to increase by 17%. In 2021, the level of employment in the fishing sector, the average salary for an employee, and the total revenue of the fishing sector are expected to remain very similar to 2014 levels (between 2-5% increase). The profitability of the fishing sector, and therefore its competiveness, are expected to increase by 14% between 2014 and 2021. In the longer-term, if the Adriatic anchovy and sardine stocks collapse to very low levels, as happened e.g. in the 1980s, and as appears highly probable if current fishing levels are maintained (see Section 2.4.1) this would have serious consequences in terms of loss of employments, revenue and profitability for the sectors and communities depending on it (see Section 2.3 for the stakeholders affected by this problem). In terms of secondary consequences, a reduction or collapse in fish stocks is likely to result in reduced supply of fresh anchovy and sardine for consumers in the Adriatic. It would also result in a reduction in primary material for processing industries in the Adriatic, in particular in Croatia and Italy, which would be required to increase their imports of small pelagics from other areas (and possibly to switch species). Prices for consumers for fresh fish or canned products may increase as a result of a decrease in supply but this is unlikely to be significant (see Annex III). 2.5.Retrospective evaluation of the existing policy framework An on-going retrospective evaluation of the MEDREG85 found that, despite many of the MEDREG measures being implemented, the MEDREG appears to be failing on the majority of its objectives in the Northern Adriatic region, or results on effectiveness are inconclusive due to limited supporting evidence. For example, all National Authorities that were consulted in the context of this retrospective evaluation perceived little and no impacts of the MEDREG in reducing fishing effort in the Northern Adriatic region and that the MEDREG has had a limited impact on number of vessels and employment in Italy and Croatia. National management plans adopted by Member States have been thoroughly analysed by the STECF30 based on a dedicated study . STECF concluded that under the existing national management plans, reductions of the catches are insufficient to reach sustainable fishing levels by 2020 and therefore, STECF considers that, unless changes in the above aspects are made to the national management plans, it is very unlikely that the objectives of the CFP will be achieved. The main problems with the national management plans are the following: they do not contain the CFP objective of reaching sustainable fishing levels by 2020 at the latest; they take a national approach to management (by definition) which means the reference points (eg minimum biomass level) were determined at national rather than stock level which makes little sense biologically; different countries apply different management measures so different parts of the stock are managed in different ways; the plans only cover national waters whereas the two fish stocks are found also in international waters: the national plans therefore have gaps in their coverage and don't cover the activities of all fleets exploiting the resources (see Figure 1 ). STECF considers that for stocks shared by several countries, regional management plans are more appropriate and that a management plan which covers all fisheries for sardine and anchovy in the Adriatic should be developed50 (see Annex XI). Regarding the international measures implemented under the GFCM, a bioeconomic assessment of management measures for sardine and anchovy fisheries in the Adriatic was carried out by the GFCM in 201650. Simulations show that current fishing mortalities are too high, including under the emergency measures adopted by the GFCM, and if continued, anchovy and sardine stocks would remain outside biological safe limits or even collapse between 2020 and 2030 (see Annex XI). The reference points in the GFCM Management Plan have also undergone numerous reviews by the scientific community since the GFCM management plan was adopted in 2013 and there is agreement that the values in the plan are not appropriate23. The objectives of the GFCM plan are not fully aligned with those of the CFP: the GFCM plan is based essentially on biomass levels but CFP focuses on managing fishing mortality. The GFCM plan also does not include 2020 (at the latest) as a deadline to achieve sustainable fishing levels, as required under the CFP. In addition, in other parts of the EU, almost all important stocks and fisheries are managed by means of a multi-annual plan, adopted before the latest reform of the CFP. Almost all these plans were species-specific. Key lessons learned from implementing these plans include the fact that long-term planning works: many stocks under multi-annual plans have recovered including iconic species such as cod (depleted in the 2000s). These plans have also shown that managing a stock as a whole (rather than different measures for different countries fishing a shared stock) makes most biological sense.

3.Why should the EU act? The principle of proportionality requires that the involvement of the institutions must be limited to what is necessary to achieve the objectives of the Treaties. According to Article 3.1(d) of the TFEU106, the EU has exclusive competence for the conservation of the marine biological resources under the CFP, managed directly through EU regulations. Furthermore, both the fish stocks and the fishing vessels concerned move freely across international boundaries so action at Member State level alone is unlikely to be effective in achieving the objectives. For measures to be effective, these should be taken in a coordinated manner and made applicable to the whole area of distribution of the stock and to all fleets concerned. The initiative respects the principle of subsidiarity and fulfils its requirements. In addition, most contributors to the public consultation agreed that EU intervention is necessary, in the form of an EU management plan (see Annex II). However, it should be noted that one of the objectives of this proposal is to strengthen the regional governance mechanisms, as provided for under Article 18 of the Basic Regulation. The aim of Regionalisation is to increase the involvement of the Member States affected by regulation and thus their ownership of the measures. The Commission's role is to ensure that the adopted measures fulfil the objectives of the Basic Act. Regionalisation thus constitutes an important shift from instrument-based to results-based management (see Annex V for more details). 4.What should be achieved? The general objective and specific objectives and their relation to the problems being addressed by this initiative are presented in Figure 3 and detailed below. 4.1.General objectives The main objective is to contribute to the objectives of the common fisheries policy listed in Article 2 of Regulation (EU) No 1380/2013, namely: 1. The CFP shall ensure that fishing (…) activities are environmentally sustainable in the long-term and are managed in a way that is consistent with the objectives of achieving economic, social and employment benefits, and of contributing to the availability of food supplies. 2. The CFP shall apply the precautionary approach to fisheries management, and shall aim to ensure that exploitation of living marine biological resources restores and maintains populations of harvested species above levels which can produce the maximum sustainable yield (…) by 2015 where possible and, on a progressive, incremental basis at the latest by 2020 for all stocks. The CFP shall provide conditions for economically viable and competitive fishing capture and processing industry 4.2.Specific objectives Specific objectives are as follows: To achieve and maintain maximum sustainable yield for anchovy and sardine in the Adriatic by 2020 at the latest; To achieve a sustainable fisheries sector for small pelagics in the Adriatic;

To provide an effective management framework for small pelagics in the Adriatic which is simpler and more stable and provides stakeholders with greater ownership. The initiative will also facilitate implementation of the landing obligation established under the Basic Regulation, by providing a basis for derogations for small pelagics in the Adriatic in certain circumscribed situations. The initiative shall be coherent with the Union environmental legislation, in particular with the objective of achieving a good environmental status by 2020 as set out in Article 1(1) of the Marine Strategy Framework Directive (MSFD). Measures under this initiative should be taken in accordance with the best available scientific advice. 5.What are the various options to achieve the objectives 5.1.Discarded policy option A potential policy option which was discarded early on was that of using non-legislative instruments or "soft law" to address the problems identified in Section 2. Under such an option, the EU would try to address the problems of overfishing and ineffective governance by using tools such as guidelines, or communication campaigns. These could aim for example at promoting better fishing practices or improving awareness regarding the existing problems, to orient consumer choice and market demand, to improve ownership of fishing operators. However, such elements of soft law, while they could contribute to the objectives of the CFP, are by themselves insufficient to actually reach those ambitious objectives of the CFP and of this initiative. This is due, in part, to the specific nature of one of the problems this initiative aims to address, namely overfishing. Overfishing occurs in an open, unmanaged fishery as every fisherman tries to maximise his catch without paying attention to the long-term consequences for the state of fish stocks. An individual fisherman simply does not have an incentive to catch less than he can. In the end, when stocks decline, the outcome is unsatisfactory for all fishers. This situation is often referred to as "the tragedy of the commons". Additionally, without regulation, there is no incentive for fishers to avoid the young fish which have not yet had the chance to reproduce; this further deteriorates the state of the fish stock in question. Given this situation, regulation is needed to prevent overfishing and, for some fisheries, discarding. Not a single contribution during the consultation work that took place in the context of this initiative put forward soft law as an option to address the problems faced by the Adriatic small pelagic fishery (Annex II). Another policy option which was discarded was that of managing the small pelagic stocks purely through international measures, under the GFCM. The international level would in fact be the most appropriate given that anchovy and sardine stocks in the Adriatic are fished by EU Member States but also – to a minor extent – by third countries. In Regional Fisheries Management Organisations, such as the GFCM, decisions are taken by the Contracting Parties and the EU therefore has no guarantees that the measures which it proposes will be adopted. And even if sufficiently ambitious measures were adopted by the GFCM, there is always the potential that another Party could reopen these in future. There is also reason to doubt whether measures at international level would be properly implemented, given that in the specific case of anchovy and sardine in the Adriatic, an ambitious management has been adopted under the GFCM, but three years on it has still not been implemented in full. Therefore, this option was considered to contain too high a risk that the objectives of the CFP would not be met, in particular given the urgency (2020 at the latest) of having the stocks fished sustainably. 5.2.Retained policy options A screening of different policy options, of the outcomes of consultation work, and intensive discussion with the Impact Assessment Steering Group (see Annex I) led to the retention of three main policy options, including sub-options for one of them. These policy options aim to address the problems identified in Section 2 and thereby to meet the policy objectives set out in Section 4. The policy options must also be considered in the context of the time limitation set by the CFP: stocks should be fished sustainably by 2020 at the latest. The Baseline option (Option 1), against which the other options are compared, is the status quo, in which there is no policy change and management of anchovy and sardine in the Adriatic continues as it has in recent years. Option 2 involves the development of new EU legislation, in the form of an EU multi-annual plan to manage small pelagics and their fisheries in the Adriatic. The choice of an EU multi-annual plan is based on the fact that the Basic Regulation states that "Multiannual plans shall be adopted as a priority, based on scientific, technical and economic advice, and shall contain conservation measures to restore and maintain fish stocks above levels capable of producing maximum sustainable yield" (Article 10). The contents of multi-annual plan is framed in large part by the Basic Regulation as well as an inter-institutional agreement and the first such multi-annual plan that has been adopted (for the Baltic) as detailed in section 5.2.2. Under such a plan, the key policy choice concerns the deadline for achieving sustainable fishing: two sub-options are therefore compared, with 2018 and 2020 as the deadlines. Option 3 involves an attempt to amend the current management framework in order to ensure that it would enable the stocks to be fished sustainably by 2020 at the latest, and thereby to ensure a sustainable fisheries sector and to deliver on those specific policy objectives. Because the current framework consists of national and international legislation, the EU cannot guarantee the outcome of the process and two possible outcomes are considered: if the EU does not manage to amend the current framework, the fisheries will continue to be managed under the current framework (Option 1) whilst if the current framework is successfully amended such that the sustainability objectives of the CFP can be achieved, the outcomes would be those expected under Option 2 (see Figure 4 ). These policy options are detailed below. The modelling of the impacts of the policy options, as presented below, is based on the study on Management scenarios for the preparation of multi-annual management plans in the Mediterranean and the Black Sea"66 which is presented in more detail in Annex IV including assumptions of the model and input data. The stakeholders targeted by each policy option are the same for the different policy options, namely Member States' authorities and the fisheries sector as the key stakeholders.

5.2.1.Option 1: No policy change - Status quo (Baseline option) The first Option consists of the situation in which no new EU legislation is introduced and management of the stocks is based on existing tools (i.e. Status quo). Under this Option, anchovy and sardine in the Adriatic would continue to be managed under the three national management plans adopted under the MEDREG, an EU discard plan covering small pelagics in the Adriatic until end of 2017 and the management measures internationally agreed within GFCM (see Section 1.3). Member States would be subject to the obligations stemming directly from the CFP Basic Regulation, including the obligation to manage stocks sustainably by 2020 at the latest and the obligation to land all catches. Regarding the implementation of the landing obligation, under Option 1 – no additional EU legislation - it would not be possible to replace the discard plans after they have lapsed i.e. at the end of 2017. The landing obligation would thus be applicable to the whole fishery without the current exceptions65. Regarding the implementation of regionalisation (see Annex V), as a mechanism to adopt e.g. conservation measures, this would not be possible under Option 1, as regionalisation for conservation measures, as for derogations to the landing obligation, can only take place in the context of EU multi-annual plans. 5.2.2.Option 2: EU multi-annual plan Contents of the multi-annual plan Under this option, EU fishing activities targeting anchovy and sardine in the Adriatic are regulated by a dedicated EU management framework in the form of an EU multi-annual plan. The Basic Regulation contains provisions on the objectives and contents of multi-annual plans (in particular Articles 9 and 10) which therefore frame what can be included in such a plan (see Annex V & XIV for more details). Certain provisions of the EU fisheries Control Regulation may also be adapted in a multi-annual plan (see Annex XI & Annex XIV). Furthermore, the precise shape and content of future multi-annual plans were the subject of work by an inter-institutional task6 and the Adriatic small pelagic multi-annual plan should follow this as well as follow the approach taken in the Baltic Sea multi-annual plan (see Annex XIII). Each multi-annual plans based on the new Basic Regulation will therefore contains the same core elements, but tailored to each particular fishery. Nevertheless, when tailoring a multi-annual plan to the specific fishery there are potentially a number of choices to be made: i) the scope of the proposal in terms of species and geographical coverage; ii) deadline for achieving sustainable fishing; iii) conservation reference points including the sustainable fishing mortality range; iv) the management measures to ensure the targets are reached; v) how to introduce measures in the multi-annual plan relating to the landing obligation. In the case of the small pelagic fishery in the Adriatic, the contents of a multi-annual plan is presented below, including aspects for which choices need to be made and others for which this is not relevant due to the particular nature of this fishery: i) Scope of the multi-annual plan in terms of species and geographical coverage Which species should be included? Anchovy and sardine account for over 97% of catches of small pelagic fish in the Adriatic and are the only Adriatic small pelagic species which have been assessed by scientists (and therefore for which conservation reference points are available). Furthermore, anchovy and sardine are caught in relatively 'clean' fisheries, where there is minimal by-catch of other species the level of discarding is considered to be negligible, because the gears involved in the fisheries are fairly selective (see Annex IV). It is therefore not relevant or possible to manage other small pelagic species under this multi-annual plan on the basis of conservation reference points such as fishing mortality targets and biological safeguards. Stakeholders during the public consultation considered that the measures of a possible multi-annual plan should be focused on anchovy and sardine and considered that for the management of secondary target species the provisions of the landing obligation are sufficient. The scope of the current discard plan covering small pelagics in the Adriatic covers anchovy, sardine as well as mackerel and horse mackerel – these are the small pelagic species for which the landing obligation applies and for which specific derogations were considered necessary to facilitate the implementation of the landing obligation Why not manage anchovy and sardine under separate plans? Anchovy and sardine in the Adriatic are part of a mixed fishery which means that the same fishers and vessels (and gear) are used to catch both species and to a very limited extent, also secondary species such as mackerel or horse mackerel. It therefore makes sense to manage these species together rather than under separate multi-annual plans. Both anchovy and sardine are already managed together under the international GFCM management plan (see Section 1.3). This also follows STECF's recommendation, that a management plan which covers all fisheries for sardine and anchovy in the Adriatic should be developed for these shared stocks30. What should the geographical scope be? The anchovy and sardine that occur in the Adriatic are distinct stocks (i.e. populations) which are different to stocks in other parts of the Mediterranean. The anchovy and sardine stock move within the Northern and Southern parts of the Adriatic and are caught by vessels fishing in both parts of the Adriatic. In terms of geographic scope, the most appropriate management unit for these stocks is the whole Adriatic, to ensure the stocks are managed in their entirety. Developing a broader plan covering other stocks of anchovy and sardine in neighbouring sea basins does not make sense because the fleets targeting these stocks are different, and the stocks would have different statuses and biological reference sizes (e.g. target fishing mortality levels).

The EU multi-annual plan would cover all EU vessels fishing within and beyond EU waters hence the full coverage would be ensured in terms of the EU fishing sector. ii) Deadline for achieving sustainable fishing levels Article 2(2) of the Basic Regulation provides for a binding obligation to reach sustainable fishing levels but leaves some flexibility regarding the timeframe for reaching this target (by 2015 where possible and […] at the latest by 2020). A multi-annual plan should specify this deadline for the Adriatic small pelagic stocks. This deadline may have different impacts on the state of the stocks and the speed of recovery, as well as socio-economic impacts for the sector. The environmental, economic and social impacts of different timeframes should therefore be assessed. Two main sub-options in terms of deadline under an EU multi-annual plan have therefore been considered: by 2018 or by 2020 (see Figure 4 ). These dates were chosen for the following reasons: 2018 appears to be the earliest date by which the EU multi-annual plan could be adopted and measures thereunder could be implemented. 2020 if the latest date by which sustainable fishing levels need to be reached under the Basic Regulation. iii) Conservation reference points including the range of sustainable fishing mortality On the basis of Article 10 of the Basic Regulation, the multi-annual plan would contain the following reference points for anchovy and sardine: A range of target fishing mortality which is considered compatible with sustainable fishing (FMSY range). Safeguard values in terms of fish biomass which serve as triggers for management action: when the stocks concerned fall below these pre-defined sizes, safeguard measures should be adopted. As the multi-annual plan should be based on the best available science, the conservation reference points would be based on the latest scientific advice. At the time of drafting this impact assessment the latest scientific advice from the STECF, the Commission's scientific advisory body for fisheries, was that of their September 2015 meeting114 and these values were used to model the impacts under Option 2 (Annex IV). iv) Management measures to ensure the targets are reached As demonstrated by the scientific advice (Annex VI), current fishing mortality and hence catch levels will need to be adapted to reach sustainable levels by 2020 at the latest. This can be achieved in several ways, of which the main choice is whether to use input or output controls (see Annex VIII). Outside the Mediterranean, many EU fish stocks are managed using catch-limits (=output control), whereby a total allowable catch (TAC - for the whole stock) and national quotas (per Member State) are fixed annually or biennially (see Annex VIII). This allows fishing mortality to be controlled directly, through catches, rather than the current indirect methods based on input controls i.e. effort management. The use of TAC & quota in the Atlantic is thought to have contributed to the overall improvement in stock status, with an increasing number of stocks being fished sustainably in recent years. Given that the measures used to manage anchovy and sardine in the Adriatic to date (effort and selectivity = input control) have not been sufficient to ensure sustainable exploitation of the fishery (see Section 2.4), it seems necessary to propose a new management approach. Stakeholders during the public consultation were quite divided on the subject of catch limits (Annex II). The STECF, however, has recommended that output controls (catch limits) would be a more effective management tool for fisheries of small pelagic species in the Mediterranean37,38. For these reasons, the multi-annual plan would include catch-limits as the management approach. In practice, the plan would set the range of fishing mortality for anchovy and for sardine (at stock-level) that needs to be respected to ensure sustainable fishing levels are reached by 2020. Each year the Commission would adopt a proposal for TAC and quotas compatible with these target fishing mortality ranges, based on scientific advice. The Council should then adopt annual TAC and quotas in line with these fishing mortality ranges. The TAC and quota can be considered as a safeguard, i.e. a level of catches not to be exceeded. This approach would provide Member States with the flexibility, either nationally or on a regional basis, to choose the measures they want to implement to stay within their national quotas, such as reducing their fleet or limiting the days vessels will fish, or allocating quotas per vessel, or closing areas/periods to fishing etc. If Member States want to make regional decisions, they can do so, in line with the new mechanism of regionalisation introduced by the CFP, and for which there has been such a strong demand from all stakeholders, including Member States. The choice of the mechanism to achieve sustainable fishing levels would therefore be set in the multi-annual plan (annual TAC and quota) but the exact management tools to deliver on this would be left to Member States. This is in line with the request during the public consultation that the multi-annual plan focus on the orientation and determination of the objectives. v) Choice of how to introduce measures regarding the landing obligation As described in Annex V, the Basic Regulation allows the adoption of so-called "discard plans" through Regionalisation to adopt exemptions from the landing obligation for no more than three years. After the expiry of these discard plans, exemptions may still be needed, in order to allow for the discarding of species that survive discarding (i.e. it makes more sense for them to be thrown back in the sea if they will survive) and to allow for exemptions in situations where the landing obligation is a disproportionate measure (e.g. in terms of the cost of implementing the landing obligation). The Basic Regulation itself foresees in Article 15(5) that such exemptions should be adopted as parts of a multi-annual plan and could be done on the basis of Regionalisation. When drafting a multi-annual plan, the Commission will have to decide which elements of the future exemptions from the Basic Regulation will be included in the multi-annual plan itself and which elements will be adopted as a part of a Delegated Act to be adopted on the basis of Joint Recommendations by Member States.

However, the option of including exemptions in the plan itself does not make sense, as the contents of the discard plans that are adopted on the Basic Regulation may need to evolve. So far, Croatia, Italy and Slovenia have brought forward a Joint Recommendation concerning small pelagic fisheries in the Adriatic that is in force until end of 2017. Further Joint Recommendations could be submitted by Member States for these fisheries on the basis of new scientific research for example on survivability of species after discarding (something on which there are still large gaps in knowledge). In addition, respondents during the public consultation expressed a preference for not fixing measures in the multi-annual plan but leaving this to be decided through regionalisation. The adaptive, flexible approach of regionalisation would therefore be the preferred option for this element of the plan rather than having to amend the multi-annual plan through the ordinary legislative proposal. The choice of how to introduce provisions to implement the landing obligation is not considered to affect the possible environmental, social or economic impacts of an EU multi-annual plan or on the effectiveness in achieving the objectives. It has therefore not been considered in the different sub-options. Sub-options for an EU multi-annual plan On the basis of the section above, the key choice to be made by the legislators concerns the deadline by which stocks should be managed sustainably. Two possible deadlines were therefore considered as sub-options: Sub-Option 2 (2018) and Sub-Option 2(2020). For both sub-options, in terms of modelling of the likely impacts, it was assumed that a mixture of reduction in fishing activity and fishing capacity take place to ensure the required reduction in catch levels and fishing mortality (to achieve sustainable fishing levels)(see Annex IV). The way in which Member States choose distribute the reductions in fishing effort throughout their fleet will result in different impacts on different fleet segments. On this basis, for each sub-option, the range of possible impacts has been evaluated, based on the manner in which the reduction in activity/capacity is distributed throughout the fleets concerned. The reduction is either applied proportionally to the fleets' impact on the stocks (such that fleet segments having a greater impact on the stocks have to reduce their activity and capacity more than segments with a lower impact) or it is applied equally across all fleet segments (see Annex IV). The way in which reductions in fishing effort would be shared between fleet segments will not be specified through an EU multi-annual plan (and hence not a choice for the legislators), but is up to the Member State to decide. However, the information on the range of impacts of these sub-options may prove useful for Member States in taking decisions on how to allocate reductions in fishing mortality within their fleet. Accompanying measures under this option The Commission would invite the Member States concerned to repeal or adapt their national management plans given that the provisions on small pelagics therein would be superseded by the EU plan. Under this Option, the EU would make proposals to amend the GFCM management plan to align it with the EU multi-annual plan. The EU multi-annual plan, which would be adopted under the Ordinary Legislative Procedure, would translate the provisions of the Basic Regulation relating to the maximum sustainable yield objectives, regionalisation and the landing obligation into a specific geographically targeted proposal, while taking into account the most up–to–date scientific information about the small pelagic fisheries in that area. 5.2.3.Option 3: Attempt to change the current framework Under this option the current management tools, namely the combination of national management plans and of GFCM recommendations, would have to be revised in order to integrate the objectives of the revised CFP Basic Regulation. Regarding the national management plans: Under Article 19(3) of the MEDREG, Member States should ensure adequate scientific monitoring of the management plans and should revise management measures when required. Member States should therefore update their plans, on the basis of their scientific monitoring as well as the retrospective evaluation that was carried out by the STECF (see Section 2.6). The plans should be amended to incorporate the CFP sustainability targets by 2020 at the latest and the management measures should be adapted to ensure that these targets are met. In practice this would mean that fishing levels would need to be reduced and each Member States would choose how best to do this under their respective national plan. However, in practice the revised CFP and its obligations on Member States entered into force over 2 years ago, but to date none of the Member States involved in this fishery have revised their national plans, despite the fact that they are not fully in line with the Member States' obligations under the new CFP (see Section 2.5). Therefore, under this Option, the Commission would most likely need to intervene by asking Member States to update their national plans on the basis of Article 19(9) of the MEDREG. Under this Option, it is difficult to predict what the exact contents of the updated management plans would be and by when they would be adopted, given that these plans are national legal acts adopted by Member States, and that the exact content and the revision process do not depend on the Commission which can only have a steering role. Commission guidelines could be envisaged to guide the revision process. The Commission could also recommend that Member States co-ordinate the revisions of their plans with one another, to try and ensure that there is regional coherence in the measures adopted. The revised plans could be evaluated by STECF to verify that they are fully in line with the CFP's sustainability objectives. There could be a range of outcomes of the revision process, ranging from a situation in which the plans are not updated in time, or are not updated in a sufficiently ambitious manner to achieve sustainable fishing levels by 2020, to a situation in which the plans are updated rapidly and fully in line with CFP sustainability objectives. Even in the best case scenario, the geographic scope of the national plans would not cover the full distribution of the fish stocks, as the plans only apply to fisheries conducted within Member States' territorial waters but not to international waters. Therefore, given that the small pelagic stocks move freely within the Adriatic and are not limited to territorial waters of EU Member States, for this option to be effective, a revision of the international management plan (i.e. the relevant GFCM recommendations) would also be needed, as GFCM has jurisdiction in international waters. Such a revision should aim to fully integrate the objectives of the CFP into the GFCM recommendations. In terms of process, the EU would need to make a proposal at one of the GFCM Annual Sessions to amend the GFCM Recommendation GFCM/37/2013/1 (the GFCM management plan), which would then be open for negotiation/modification and then adopted or rejected by the other GFCM Contracting Parties. It is impossible to foresee which modifications would be introduced into the GFCM management plan and when a revised plan would be adopted. Ultimately, if the Commission succeeds therein and a proposal to amend the GFCM recommendation was adopted, the revised GFCM recommendations would have to be transposed into EU law, via the ordinary Legislative Procedure. If the proposal is not adopted by the GFCM, then the EU could make the proposal again the following year. As explained above, as the current measures do not depend directly on the Commission, but instead on Member States (for the national plans) and on an international organization and its Contracting parties (the GFCM plan). Therefore, there could be a range of outcomes under Option 1 depending on the extent and timing of the amendment of the current framework. Therefore, for the purpose of this analysis, two extreme outcomes are considered under Option 1: a best-case scenario in which all current management tools are updated rapidly and fully in line with the CFP sustainability objective, and a worst-case scenario in which the national management plans are not updated fully and in time to reach the CFP sustainability objectives of 2020 and in which the EU would fail to amend the GFCM Recommendation in time to reach the CFP sustainability objectives of 2020. In such a case, the small pelagic fisheries would continue to be managed under the current framework (Status quo) (see Figure 4 ).

Regarding the implementation of the landing obligation, under Option 3 it would not be possible to replace the discard plans after they have lapsed i.e. at the end of 2017. The landing obligation would thus be applicable to the whole fishery without the current exceptions (see Annex V). Regarding the implementation of Regionalisation for conservation measures, and for derogations to the landing obligation, this would not be possible under Option 3, as regionalisation, can only take place in the context of EU multi-annual plans59 (see Annex V). 6.What are the impacts of the different policy options and who will be affected? impacts On the basis of the study on Management Scenarios, the following indicators have been used to assess impacts of the different Options and sub-options in 2021 which is the first year after the CFP objectives of sustainability should be reached (at the latest – 2020): 1. Socio-economic impacts: catches of sardine and anchovy, the average salary (per employee), total revenues, net profit, the ratio between current and break-even revenues (CR/BER). As some of these indicators have both economic and social dimensions (e.g. salary, profits) the social and economic impacts are considered together in one section. 2. Environmental impacts: The stock size of anchovy and sardine has been used to assess quantitatively the impacts of the different sub-options. The knock-on effect of this stock size on the broader ecosystem (food chain) is also discussed. The socio-economic indicators focus on the fishing sector on the basis that: This is the primary sector that would be affected; The impacts would be more directly relevant to the fishing sector, and therefore the outcomes of the modelling is more precise than knock-on effects on secondary sectors where there is substantially more uncertainty in likely impacts; Detailed data at the required scale (in terms of geographic scope (only the Adriatic) and fisheries/species, including by fleet segment) is available through the EU's Data Collection Framework129 for the fishing sector only. In addition, an assessment of possible knock-on consequences in terms of market effects is included based on a report carried out by DG MARE and the EU Market Observatory for Fisheries and Aquaculture products (EUMOFA)32. This includes impacts on imports and exports, on prices at first sale of anchovy and sardine and on the processing sector (see Annex III). This assessment in done on a qualitative basis, based on general trends observer in the Adriatic small pelagic fishery and markets, and based on a comparable case study using sardine fisheries off the Spanish and Portuguese coast. Because of the uncertainty surrounding the way in which markets could react to changes in availability of anchovy and sardine from the Adriatic fisheries and the difficulty in modelling this accurately, the information should only be taken as indicative of possible future impacts. Small- and medium-sized enterprises (SMEs) All the impacts described below are expected to be particularly applicable to SMEs, as almost all fishing firms involved in this fishery and a wide majority of companies in the downstream supply chain (processing sector) are in fact micro-enterprises or SMEs: In terms of the fishing sector for small pelagics in the Adriatic, enterprises with fewer than five vessels account for 96% of the Croatian fishing sector, 97% of the Italian sector, and 99% of the Slovenian sector. In terms of the processing sector, in both Italy and Slovenia, 100% of processing enterprises meet the definition of SMEs in terms of number of employees (i.e. <250 employees) whilst in Croatia this figure is 95% (see Section 2.3). The CFP is a policy specifically geared to deal with micro-enterprises, as indeed SMEs are the norm within the fishing sector, rather than the exception. There is therefore no basis to exclude from the scope of the CFP firms on the basis of their size or else the vast majority of the fishing sector would be excluded and having a CFP would be effectively pointless. The environmental and socio-economic impacts of the different policy options are presented below and in Table 1 and in Annex VII in graphical format, including past trends and prediction of future trends until 2021. 6.1.Option 1: Status Quo (Baseline) The environmental and socio-economic impacts of Option 1 are presented in Section 2.4 and in Table 1 .

Scenario Option or sub-option Salary (euros) Profitability (CR/BER ratio) Rev. (million euros) Empl. (units) Catch Anchovy (tons) Catch Sardine (tons) Anchovy stock size (tons) Sardine stock size (tons) When will FMSY be reached for both stocks? Current situation (2014) 11 727 0.77 75.5 2011 24 969 73 423 68 298 383 710 N.A. Option 1: Baseline (Status quo) 12 146 0.88 78.4 2057 24 318 85 789 68 879 358 387 Never Option 2 Sub-option 2 (2018) Fishing reduction proportional to fleet segments' impact 9.7 17.1 -25.4 -12.8 -30.1 -32.2 24.0 22.8 2018 Equal reduction in fishing for all fleet segments 0.9 -1.0 -25.4 -6.4 -29.4 -31.5 18.8 19.8 2018 Option 2 Sub-option 2 (2020) Fishing reduction proportional to fleet segments' impact 6.4 13.2 -27.1 -12.8 -31.3 -36.0 21.2 22.0 2020 Equal reduction in fishing for all fleet segments -2.1 -4.7 -27.2 -6.4 -29.8 -35.2 22.2 17.6 2020 Option 3 Worst-case 0 0 0 0 0 0 0 0 Never Best-case -2.1 to 9.7 -4.7 to 17.1 -27.2 to – 25.4 -6.4 to -12.8 -29.4 to -31.3 -32.2 to -36.0 18.8 to 24.0 17.6 to 22.8 2018 to 2020 Key: Rev. = revenues, Empl. = employment, CR/BER = ratio between current and break-even revenues. Fmsy = sustainable fishing levels. The green values are higher than +5%, the red ones are smaller than -5% and the yellow ones are between -5% and +5%. 6.2.Option 2: EU multi-annual plan (including sub-options) Environmental impacts Under Option 2 (2018), the anchovy stock size would be between 82 000 t and 85 000 t in 2021, equivalent to 19-24% higher than under the Baseline Scenario. The sardine stock size would be around 429 000t to 440 000t in 2021, equivalent to 20-23% higher than under the Baseline Scenario (see Table 1 and Annex VII Figures 1 and 2). Under Option 2 (2020), the