Economics — Oil Spill in the Gulf

Economic Impacts to Fisheries and Coastal Habitat

(April 30, 2010)


Has Sea Grant generated any preliminary economic impact estimates of the Deepwater Horizon oil spill for commercial and recreational fisheries of the Gulf of Mexico?

No. At this point, it is too early to provide estimates of the economic losses expected to be
incurred as a result of the Deepwater Horizon spill. Numerous variables must be considered
when estimating the economic impact of an oil spill on natural resources. Spill-related factors
that remain largely unknown include: volume of the spill and ultimate duration of the leak; extent
of geographic spread; and site-specific concentrations of accumulated oil at sea and landfall
locations.

Fisheries-related factors that must be considered include: the intersection of traditional fishing
areas (commercial and recreational) in relation to the spill and species-specific and seasonspecific
variables related to reproduction and harvest. Finally, market-related factors must also
be considered, including: potential supply disruptions and losses due to management-based
closures and the potential for changes in consumer demand based on perceived consumption
risks.

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Will habitat and ecosystem service losses be accounted for in damage estimates?

In addition to commercial losses, impacts to habitat and ecosystem services areconsidered in
the wake of major oil spills. Natural resource economists have developed alternative, “nonmarket”
methods for estimating the replacement and service values of non-commercial flora and
fauna. Much of this valuation is conducted as part of the Natural Resource Damage
Assessment (NRDA) Process administered by the National Oceanic and Atmospheric
Administration (NOAA). For additional information on the NRDA process, go to:
www.darrp.noaa.gov/about/nrda.html

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What are the major commercial fisheries of the region threatened by the spill?

The estuarine influence of the Mississippi River makes the northern Gulf of Mexico one of the
world’s most productive commercial fisheries. Dockside values in 2008 for the five U.S. states
bordering the northern Gulf of Mexico exceeded $661.4 million. More than half of this value is
attributable to the shrimp fishery, which accounted for more than $366.5 million in income to
harvesters in 2008. Additional fisheries of major economic importance to the region include:
oysters ($60.2 million), crabs ($58.5 million) and menhaden ($64.3 million). Dockside fisheries
landings and values are provided by state and species in Figure 1.

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What about additional losses to seafood-dependent businesses?

It is important to note that dockside harvest values are only a part of the fisheries-dependent
economy. These values must be adjusted to incorporate additional economic activities along
the wholesale to retail market-chain continuum. The ultimate assessment of fisheries-related oil
spill impacts will require consideration of losses not only to harvesters, but also to seafood
dealers, processors, retailers and the tourism sector. Economic multipliers ranging from 1.5X to
3X of dockside value are typically used by university economists to capture the broader suite of
related business activities supported by domestic seafood landings.

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What are the major recreational fisheries of the region threatened by the spill?

The northern Gulf of Mexico supports a large number of recreational fisheries. Dozens of
inshore species are harvested, but some of the most popular coastal species include spotted
sea trout, red drum and southern flounder. In offshore waters, reef-dependent species of the
snapper and grouper complex account the largest portion recreationl landings. Migratory
pelagic species such as tunas and billfish are targeted in depths beyond 100 fathoms.

According to the U.S. Fish and Wildlife Service, approximately 2.48 million anglers purchased
marine fishing licenses in the five U.S. Gulf states in 2006. Many of these anglers rely on
fishing guides and charter services to access coastal fisheries. In 2009, the Gulf region had
more than 3,300 licensed charter boat captains (Figure 1). Sea Grant is currently conducting an
economic survey of the recreational-for-hire sector in the U.S. Gulf of Mexico. Results of that
survey will be available in late summer 2010 and should prove useful in gauging any losses
resulting to this sector as a result of the Horizon oil spill. http://library.fws.gov/Pubs/nat_survey2006.pdf

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Where can I find more specific fisheries landings data?

State and federal resource management agencies collect and maintain fisheries landings and
license data at the county/parish level. Information for Louisiana is available through the
Louisiana Department of Wildlife and Fisheries. Fisheries landings by parish are available for
Louisiana through the LSU AgCenter’s Summary of Agriculture and Natural Resources.
www2.lsuagcenter.com/agsummary/index.aspx

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