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Economic Impacts of Hypoxia on North Carolina Brown Shrimp

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  • 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. Prior studies based on data aggregated at relatively large spatial (e.g.,1000s km) and temporal (e.g., annual) scales have typically not detected statistically significant effects of hypoxia on fisheries. Whether this finding is due to the low statistical power associated with the use of aggregate data or the lack of realized effects on fisheries is an open question. Recent work uses disaggregated fishing data (microdata) and finds significant but modest effects of hypoxia on recreational catches. However, previous work ignores important aspects of how hypoxia effects harvest. In particular, the effects of hypoxia on catch may not occur instantaneously but instead may involve a substantial temporal lag in which catches reflect cumulative past exposure to low dissolved oxygen. We develop a bioeconomic model that accounts for potential lagged effects using fishery-dependent data from North Carolina’s brown shrimp fishery. We find that hypoxia is responsible for an 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. We then explore the full economic consequences of hypoxia on the supply and demand for 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 roughly a quarter of the computed gains from assuming no behavioral adjustment. Comparing to other ongoing research, our results suggest that the benefits from rationalization are likely to exceed the benefits from dramatic improvements in water quality.
  • Keywords: Fishery Management, Fisheries Economics, Fisheries and Environment
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  • Huang, Ling, Lauren A.B. Nichols, J. Kevin Craig and Martin D. Smith. 2010. Economic Impacts of Hypoxia on North Carolina Brown Shrimp. 12 pages. In: Proceedings of the Fifteenth Biennial Conference of the International Institute of Fisheries Economics & Trade, July 13-16, 2010, Montpellier, France: Economics of Fish Resources and Aquatic Ecosystems: Balancing Uses, Balancing Costs. Compiled by Ann L. Shriver. International Institute of Fisheries Economics & Trade, Corvallis, Oregon, USA, 2010.
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  • US National Oceanic and Atmospheric Administration (NOAA) Fisheries Division, Agence Française de Développement, Ministère de l’Enseignement Supérieur et de la Recherche, Ministère de L’Alimentation de L’Agriculture et de la Pêche, Ministère de l’Énergie, du Développement Durable et de la Mer, La Région Languedoc Rouslilon, Département Hérault, Montpellier Agglomèration, The Department of Fisheries and Oceans, Canada, and AquaFish Collaborative Research Support Program (CRSP).
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