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NW Fishletter #257, February 9, 2009

[4] Salmon Treaty's Endowment Fund Sinks With Stock Market

The $216-million endowment fund used by the U.S. and Canada to fund research projects helping to implement a salmon treaty has lost more than 30 percent of its value during the past year.

Since it sunk below its original $140-million basis, it's likely that no funding for research projects will be awarded this year. A final decision will come in April.

According to Angus MacKay, a staffer at the Pacific Salmon Commission in Vancouver, B.C., the endowment provided nearly $9 million for enhancement and research work in 2008.

"We thought we were ready to face any eventuality," MacKay told NW Fishletter last week. He said the fund is invested very conservatively, like university endowments.

Unfortunately, many of those funds have lost at least as much in value since the economy tanked.

MacKay said one of the treaty fund's rules calls for not releasing any money for projects if the endowment falls below its original $140-million level. The bilateral committee that governs the fund will meet in mid-April to make the final decision.

But with financial markets still in disarray, the immediate situation looks pretty bleak. The topic is sure to make the agenda at the salmon commission's annual meeting in Portland Feb. 9-13.

U.S. salmon commissioner Larry Rutter, who sits on the endowment committee, said it is likely some important work may not be funded this year, including retooling the computer harvest model used by both countries, as well as the launch of a $10-million study of "sentinel stocks" that is called for in the latest treaty agreement.

The 2008 agreement calls for spending $2 million a year for the next five years from the endowment (both northern and southern boundary funds) to fund rigorous spawning escapement assessment programs in 10 stocks from northern B.C. to Oregon.

It was reported that the sentinel stocks program began as a way to satisfy the state of Alaska's concern that poor escapement and coded-wire-tag data for chinook stocks on the west coast of Vancouver Island had led to a perception that the stocks there had a "conservation" problem. Canada broadened the program to include stocks harvested in all fisheries.

U.S. Commissioner Rutter said they were looking for a "patch job" to fund some of the work from other sources.

"This [decline] will have a lot of impacts," Rutter said. "It's quite substantial."

He said it was not only a financial calamity from declines in stocks and bonds held by the endowment, but about 35 percent of the funds had been in Canadian denominations. Since last May, when the U.S. and Canadian dollars were at parity, the Canadian dollar has dropped about 25 percent in value against the U.S. dollar.

However, Rutter said new work associated with the coded-wire-tagging program will be funded from another source of "new money." He said that some multi-year habitat enhancement work that would normally be funded by the endowment could be more easily postponed.

About 30 percent of the endowment is in a Canadian indexed bond fund, and 70 percent are in equities split between the U.S. and other countries to reduce risk. -B. R.

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