In 2008-2009, Sweden implemented a vessel scrapping program for demersal trawlers funded by the European Fisheries Fund (EFF). The purpose was to reduce overcapacity, since the fleet was considered too large. However, funds received from scrapping might be used by fishermen to invest in other fleet segments. We analyze these side-effects of the scrapping program and conclude that:

• Many fishermen participating in the program did not leave the fishing sector.
• Part of the scrapping subsidies received was reinvested in new vessels in other fleets. The new vessels target other species, mainly lobster and mackerel.
• A potential side-effect of scrapping programs is thus generation of overcapacity in other fleets.

The results in this Policy Brief are based on a published article, Scrapping programmes and ITQs: Labour market outcomes and spill-over effects on non-targeted fisheries in Sweden.