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Measuring Welfare Losses from Hypoxia: The Case of North Carolina Brown Shrimp

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  • Huang, Ling
  • Nichols, Lauren A.B.
  • Craig, J. Kevin
  • Smith, Martin D.
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    Abstract

    While environmental stressors such as hypoxia (low dissolved oxygen) are perceived as a threat to the productivity of coastal ecosystems, policy makers have little information about the economic consequences for fisheries. Recent work on hypoxia develops a bioeconomic model to harness microdata and quantify the effects of hypoxia on North Carolina’s brown shrimp fishery. This work finds that hypoxia is responsible for a 12.9% decrease in NC brown shrimp catches from 1999–2005 in the Neuse River Estuary and Pamlico Sound, assuming that vessels do not react to changes in abundance. The current article extends this work to explore the full economic consequences of hypoxia on the supply and demand for brown shrimp. Demand analysis reveals that the NC shrimp industry is too small to influence prices, which are driven entirely by imports and other domestic U.S. harvest. Thus, demand is flat and there are no measurable benefits to shrimp consumers from reduced hypoxia. On the supply side, we find that the shrimp fleet responds to variation in price, abundance, and weather. Hence, the supply curve has some elasticity. Producer benefits of reduced hypoxia are less than a quarter of the computed gains from assuming no behavioral adjustment.

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    Bibliographic Info

    Article provided by Marine Resources Foundation in its journal Marine Resource Economics.

    Volume (Year): 27 (2012)
    Issue (Month): 1 ()
    Pages:

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    Handle: RePEc:ags:mareec:133366

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    Web page: http://www.uri.edu/cels/enre/mre/mre.htm

    Related research

    Keywords: Hypoxia; dead zones; nutrient pollution; welfare analysis; bioeconomics; ecosystem-based management; Environmental Economics and Policy; Research Methods/ Statistical Methods; Q22;

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    References

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    1. Smith, Martin D. & Sanchirico, James N. & Wilen, James E., 2009. "The economics of spatial-dynamic processes: Applications to renewable resources," Journal of Environmental Economics and Management, Elsevier, vol. 57(1), pages 104-121, January.
    2. McConnell, Kenneth E. & Strand, Ivar E., 1989. "Benefits from commercial fisheries when demand and supply depend on water quality," Journal of Environmental Economics and Management, Elsevier, vol. 17(3), pages 284-292, November.
    3. Martin D. Smith, 2007. "Generating Value in Habitat-Dependent Fisheries: The Importance of Fishery Management Institutions," Land Economics, University of Wisconsin Press, vol. 83(1), pages 59-73.
    4. Smith, Martin D. & Zhang, Junjie & Coleman, Felicia C., 2008. "Econometric modeling of fisheries with complex life histories: Avoiding biological management failures," Journal of Environmental Economics and Management, Elsevier, vol. 55(3), pages 265-280, May.
    5. Massey, D. Matthew & Newbold, Stephen C. & Gentner, Brad, 2006. "Valuing water quality changes using a bioeconomic model of a coastal recreational fishery," Journal of Environmental Economics and Management, Elsevier, vol. 52(1), pages 482-500, July.
    6. Hicks, Robert L. & Schnier, Kurt E., 2008. "Eco-labeling and dolphin avoidance: A dynamic model of tuna fishing in the Eastern Tropical Pacific," Journal of Environmental Economics and Management, Elsevier, vol. 56(2), pages 103-116, September.
    7. Edward Barbier & Ivar Strand, 1998. "Valuing Mangrove-Fishery Linkages – A Case Study of Campeche, Mexico," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 12(2), pages 151-166, September.
    8. Keithly, Walter R., Jr. & Poudel, Pawan, 2008. "The Southeast U.S.A. Shrimp Industry: Issues Related to Trade and Antidumping Duties," Marine Resource Economics, Marine Resources Foundation, vol. 23(4).
    9. Sanchirico, James N. & Smith, Martin D. & Lipton, Douglas W., 2008. "An empirical approach to ecosystem-based fishery management," Ecological Economics, Elsevier, vol. 64(3), pages 586-596, January.
    10. C. Haynie, Alan & F. Layton, David, 2010. "An expected profit model for monetizing fishing location choices," Journal of Environmental Economics and Management, Elsevier, vol. 59(2), pages 165-176, March.
    11. Knowler, Duncan & Barbier, Edward B., 2005. "Managing the Black Sea Anchovy Fishery with Nutrient Enrichment and a Biological Invader," Marine Resource Economics, Marine Resources Foundation, vol. 20(3).
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    Cited by:
    1. Sergey Rabotyagov & Catherine L. Kling & Philip W. Gassman & Nancy N. Rabalais & R. Eugene Turner, 2012. "Economics of Dead Zones: Linking Externalities from the Land to their Consequences in the Sea, The," Center for Agricultural and Rural Development (CARD) Publications 12-wp534, Center for Agricultural and Rural Development (CARD) at Iowa State University.

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