The debate over Japan’s controversial whaling program in the Antarctic usually focusses on its ecological impact and the diplomatic friction it causes with Australia and other anti whaling nations. But after years of skirmishes between Japan’s whaling fleet and activists from Green peace and Sea Shepherd, potentially the most compelling case against the annual slaughter of hundreds of whales centers on the simple matter of money.

Japan’s whaling industry can only survive with huge government subsidies and is effectively “dead in the water” as a commercial proposition, according to a new report by the International Fund for Animal Welfare (IFAW).

“Whaling is an unprofitable business that can survive only with substantial subsidies and one that caters to an increasingly shrinking and aging market,” the report said.

The government bankrolls Japan’s whaling fleet to the tune of around $10 million a year, the report said, but is unable to recoup its investment as thousands of tons of whale meat are left unsold amid a dramatic decline in the nation’s appetite for the delicacy.

“Whaling is an economic loser in the 21st century,” Patrick Ramage, director of IFAW’s whale program, said during the report’s launch at the FCCJ in early February. “We and others have for years been alleging that whaling has no economic future, but here it is in black and white.

The report, the first to draw on Japanese government figures, details the steady decline in whale meat consumption since its peak in the 1960s and the rising cost of keeping the aging whaling fleet seaworthy.

Government subsidies, thought to total at least ¥30 billion between 1987 and 2012, include ¥2.28 billion siphoned off from funds intended for the reconstruction of the region hit by the March 2011 tsunami.

Polling conducted on IFAW’s behalf by E-Square, a Japanese public research company, shows that whale meat consumption has fallen to about one percent of its peak in the 1960s. Current stockpiles of unsold produce have increased to nearly 5,000 tons, about four times greater than they were 15 years ago.

The government has tried to boost consumption by including the product in school lunches and through public auctions that bypass the traditional supply chain. Yet even after appealing directly to consumers during 13 public auctions held since October 2011, 75 percent of the meat went unsold, according to figures compiled last year by the journalist Junko Sakuma.

“Shrinking demand and slow sales show that this is a declining industry,” said Toru Watanabe, a policy analyst who chaired the team that drafted the E-Square report. “For these and other structural reasons, whaling is not economically sustainable.”

According to an IFAW-commissioned survey released late last year, almost 89 percent of Japanese had not bought whale meat in the previous 12 months. The report found that more than 50 percent of Japanese had no opinion on their country’s whaling program, while 26.8 percent said they supported it and 18.5 percent opposed it.

While Sea Shepherd activists have managed to limit the whalers’ ability to operate in recent years, Watanabe suggested direct action could hinder the environmentalist cause back in Japan.

A consensus has emerged that opposes any backing down by Japan in the face of what some critics have called sabotage by eco terrorists, he said, adding, “That will complicate the issue in the future violent incidents at sea actually help Japan promote whaling at home.”

Ramage acknowledged that campaigners faced a formidable task in persuading Japan to abandon its whaling program, citing a “committed core group” of fisheries, agency bureaucrats and politicians, who are trying to use international criticism to boost their case for lethal research.

“They’ve effectively married the funding issue to an argument that says anyone who criticizes whaling is anti Japanese, or that whale meat is fundamental to Japanese food culture,” he said. “But this report shows that the Japanese people don’t buy that argument any more than they’re buying whale meat.”

The IFAW report was released as tensions began to rise in the Southern Ocean, where, according to one expert’s estimate, the fleet expects to catch an estimated 300 whales this winterfar fewer than their usual target of just under 950 having left port several weeks late last year. The International Whaling Commission (IWC) banned commercial whaling in 1986, but a clause in the moratorium allows Japan to kill more than 900 whales every winter and to sell the meat on the open market.

Instead of killing the mammals, IFAW is calling on the government to support the country’s fledgling whale watching industry, which currently comprises about 30 ventures stretching from Hokkaido to Okinawa. “This is a whale centered business that is profitable and growing without government subsidies,” Ramage said, adding that policy makers he’d met in Tokyo had responded “positively” to the idea of expanding whale watching.

But he conceded that any decision to exploit whales as a tourist attraction, rather than as a product for consumption, would not be made at the IWC or on the perilous seas of the Antarctic. “That decision will be made here in Tokyo by Japanese decision makers for reasons that make sense to them,” he said.

Justin McCurry is Tokyo correspondent for the Guardian and Observer newspapers in London and principal Japan and Korea correspondent for Global Post.