Environmental Economics

Climate adaptation in the lobster fishery in the Gulf of Maine (but don't get too excited)

Some people will get very excited by the title of this post (before the parenthetical) but don't for one minute think this adaptive behavior isn't costly (Heating Waters Force Change in Industries That Depend on the Ocean):

In Maine, lobsters are heading north and some lobstermen are moving into kelp farming. ...

Marine heatwaves are expected to become stronger and more frequent, according to a consensus of oceanographers and climate scientists.

One of the fastest-warming waters is the Gulf of Maine, forcing lobstermen to change tactics to save their businesses.

Summer surface temperatures between July and September in the gulf have risen four times the global ocean average since 1982. The entire region is warming more rapidly than 97% of the ocean’s surface because of overall climate warming and a shift in local currents, according to the Gulf of Maine Research Institute.

The warming is making life more unpredictable for the $388 million lobster fishing industry in Maine. The U.S. lobster catch has moved 162 miles northward and nearly 70 feet deeper over the past 50 years, according to the National Marine Fisheries Service, as the crustaceans seek refuge in colder water. The Maine lobster catch has fallen 26% since a record catch of 132 million pounds in 2016.

Some harvesters in the state are looking for new species, such as black sea bass, tuna or crabs.

Steve Train, a third-generation lobsterman in Casco Bay, Maine, has become a farmer. He started growing kelp–something still plentiful in the area–offshore of his property to earn money during spring months when lobstering is traditionally slow.

Train says kelp is no substitute for lobsters, still the most lucrative single-species commercial fishery in U.S. waters. But it can help as Maine’s coastal environment changes.

“The people who survive are going to have to be diversified so they can take the cream out of a few different fisheries and have a paycheck year round,” Train said as he pulled up a string of lobster traps onto his 32-foot boat Marcia, a few miles from the Portland wharf where he sells his catch. ...

In Casco Bay, Steve Train has watched Maine’s lobster population shift north, driven by changes in bottom water temperatures and the supply of the tiny animals that are the main food of baby lobsters.

Over time, Train has been moving his traps to deeper water and said he has noticed a faster temperature increase in the past five years. “I started setting gear in June where I thought the lobsters would be in August or September,” he said. “Everything the lobsters do is by water temperature.”

Train and other lobster fishermen own licenses that are tied to specific fishing grounds. So there are limits on how far north or offshore they can set their traps.

Train, 56, says his kelp-farming venture isn’t as easy as he initially thought. “Between the moorings, the storms, the tide, and the stretch of the line, there’s a lot of maintenance,” Train said. “But now I have another month or two filled in for cash flow.”

He said he is figuring out the best direction to suspend ropes in the water that are embedded with kelp seeds to avoid tidal currents that could damage his harvest. The seeded ropes mature into an underwater forest. He expects to be profitable this year, while expanding from 4 acres to 10 acres.

Each spring, Train collects wide fronds of brownish-yellow kelp and sells them to Atlantic Sea Farms, a Biddeford, Maine-based company that processes seaweed into kelp burgers, smoothie cubes, and pet-food additives. It has signed up 30 lobster fishermen across Maine since it launched in 2018, and another 19 are in line for a state license, according to CEO Briana Warner.

“We’re building an entirely new market,” said Warner, who sold 30,000 pounds of kelp products last year to grocery and restaurant chains.

Train said lobstermen he has known for decades are beginning to consider a future that will reward adaptability as waters continue to warm. “Even the people that are in denial are a little concerned,” he said.

So, the lesson from this case study is that, yes, people will adapt to climate change but the net benefits of their new behavior is lower with the climate constraint than business as usual pre-climate change. Economists who promote adaptation as a magical fix are doing a disservice. 

*****

And, inexplicably, in the middle of the article someone at the WSJ decided to question whether climate change is happening:

There are other possible explanations in addition to climate change and the El Niño/La Niña cycle. New pollution rules have cut airborne sulfur aerosol particles released by commercial ships over parts of the ocean, clearing the air and allowing more sunlight to reach the ocean surface. That in turn might be heating the water along some shipping routes, although the amount is in dispute, according to several recent estimates.

In January 2022, an underwater volcano near Tonga blasted 50 million tons of water vapor into the stratosphere. Some researchers believe that vapor might be acting as a planet-warming greenhouse gas and nudging up ocean temperatures. Both theories are still under investigation, and their overall impact is up for debate.

And you may find yourself in another part of the world

We started blogging again this year and it has been fun. I've managed to keep up with my quantity expections (quality is an issue) ... until I took two trips in April. I've found that I can't do everything anymore. Actually, I can't do hardly anything anymore, it seems, but keep up with my classes. I think I have finally caught up and have posts written for Thursday, Friday and Monday. 

The first trip was a two day trip to Charleston for the SAFMC's Socio-Economic Panel meeting. Here is a piece of what I helped write in our report in response to the questions posed in item 8 on the agenda:

• The economic definition of angler welfare is captured by the consumer surplus, or net willingness to pay, of recreational trips and harvest/catch. There are a number of studies that estimate these values for snapper-grouper in the South Atlantic.
• There are several methods that could be used to estimate economic values for the snapper-grouper fishery. There is existing MRIP data that can be used to develop revealed preference models of angler behavior. A stated preference survey could be developed to provide value estimates but this is costly and time-consuming. Given that there are usable value estimates for this fishery in the peer-reviewed literature, the SEP recommends that benefit transfer methods be used to support the MSE.

The second trip was the following week to Tampa for NMFS's 2023 Recreational Fisheries Economics Constituent Workshop (here is a description). I gave the first presentation where I was supposed to cover valuation methods in 10 minutes (10 minutes). One of the organizers told me afterwards that "you had the hardest job". IKR. Anyway, here is my presentation and, yes, I stayed within 10 minutes. 

In both locations I beat the drum that the National Marine Fisheries Service has the data available to annually estimate regional recreational demand models for management purposes. I got serious about this issue in 2013 and wrote this paper (SAFMC NRUM 2013) in a couple of days (if I remember correctly). I said the exact same thing at the 2014 Recreational Fisheries Economics Constituent Workshop (see #1 on the list). I think I have some folks half-way interested in this so we'll see if anything happens.

We're doomed: part 189

Or, at least salmon are doomed. From the NY Times (California Salmon Stocks Are Crashing. A Fishing Ban Looks Certain):

This week, officials are expected to shut down all commercial and recreational salmon fishing off California for 2023. Much will be canceled off neighboring Oregon, too.

The reason: An alarming decline of fish stocks linked to the one-two punch of heavily engineered waterways and the supercharged heat and drought that come with climate change. There are new threats in the ocean, too, that are less understood but may be tied to global warming, according to researchers.

The solution to the problem seems simple enough:

Fossil fuel emissions must be addressed, scientists say. ...

In a country where an increase in gas prices causes a national apoplexy, sure. 

This is going into my tragedy of the commons course material

From Marginal Revolution University's Women in Economics:

via Twitter: @Laurent Franckx

Env-Econ Book Review: The Fishermen and the Dragon

I just finished reading Kirk Wallace Johnson's The Fishermen and the Dragon: Fear, Greed, and a Fight for Justice on the Gulf Coast. Here's my book review (from the view of an Environmental Economist of course).

The Fishermen and the Dragon tells the true story of the evolution of the Texas Gulf Coast crab and shrimp fisheries in the post-Vietnam era. The era is important to the story because tension builds along the Texas coast when post-war Vietnamese refugees locate to the Gulf Coast creating economic competition and (racial) tension between the existing anglers and the refugees. The racial tensions play out against the backdrop of the encroachment of the Ku Klux Klan into post-war political asylum issues and the the environmental problems that come along with rapid industrialization of the Gulf Coast. 

So why would an environmental economist care? Honestly the story has a bit of everything: Tragedy of the commons, Coasian bargaining, Ostrom-like institutional building, credible (and incredible) threats, industrial organization, the role of government in regulating the commons, natural resource damages (oil spills), environmental and health externalities, social and environmental justice. 

Part Erin Brokovich (an initially reluctant environmental crusader), part John Grisham-like southern legal thriller tinged with undertones of racism, part Pat Conroy-like description of the hardships of coastal life, this true story reads like a popular fiction thriller.

If I have one complaint, it would be that there is a slight disjoint between the story of race tensions between the refugees and local fishers, and the story of corporate greed and environmental disaster. There is overlap in the main characters, but stories seem to be separated in both time and presentation.

Nevertheless, a good read with Env-Econ lessons abound. 

I give it a solid four out of five beers raised.

 

"MARINE RESOURCE ECONOMICS ANNOUNCES NEW CASE STUDIES SECTION"

I'm shouting because the journal is shouting:

Marine Resource Economics is now accepting submissions for a new section of the journal titled Case Studies, which is intended to provide an outlet for rigorous, theoretically grounded analyses of the governance of individual fisheries and/or aquaculture systems. The new section will be edited by Tracy Yandle of Emory University, and the editors expect the first Case Study to be published in the forthcoming volume of the journal.

“Case studies play a valuable role in the development of our understanding of effective marine resource governance, yet they are underrepresented in the economics literature. This new section presents a unique opportunity for researchers to apply an economic perspective to rigorous case studies—whether comparative case studies, or single case studies focused at a range of scales," said section editor Tracy Yandle. "I look forward to continuing the strong intellectual tradition of Marine  Resource Economics, while expanding its coverage to a broader range of settings and research methods.”

The Case Studies section joins four sections currently published in Marine Resource Economics: Articles, Perspectives, Systematic Reviews, and Book Reviews. Its published pieces will provide description and analysis of a particular regionally defined fishery, aquaculture system, marine resource, or comparisons of two or more cases, with an emphasis on an economic analytical perspective and focus on historic and/or current issues of marine or coastal zone policy and governance.

"I'm very excited for the potential of this new section to expand the reach of the journal to a wider range of scholars and resource management practitioners," said Joshua K. Abbott, Marine Resource Economics editor.

The editors encourage submissions focusing on small-scale fisheries and aquaculture in developing nations. Case studies drawing upon quantitative evidence are preferred, though qualitative analyses are also encouraged—particularly in data-poor settings. All submissions to the Case Studies section are subject to a single-blind peer review process. For more information, please review Marine Resource Economics Instructions for Authors webpage.

This is sure to be the home for many studies that haven't been able to find one in the past. 

Lobster tariffs

Put this one in our new "easy to win a trade war" category:

Next month, China is expected to impose an additional 25 percent tariff on American lobster as the sparring over trade continues and Mr. Trump threatens to impose tariffs on as much as $450 billion worth of Chinese goods.

Annie Tselikis, executive director of the Maine Lobster Dealers’ Association, said that Mr. Trump’s policy was having the unintended effect of further helping Canada’s lobster market, which doesn’t face the same duties when selling to China. And Canadian sellers were already benefiting from a new trade agreement with the European Union that slashed tariffs for them.

China buys about a fifth of American lobster exports, Ms. Tselikis said, and the value of those exports has nearly tripled in the last two years to $137 million.

“I’d love see these tariffs not go through for the sake of our industry and the Maine economy,” Ms. Tselikis said. “At this point it’s really about American jobs.”

Kristan Porter, the president of the Maine Lobstermen’s Association, said that he supported Mr. Trump’s efforts to renegotiate trade agreements to help American industry but hoped his was not harmed in the process.

“I’m sure everybody is playing their hands and we’re caught in the middle of it,” he said. “We’re hoping cooler heads prevail.”

Urban Dictionary puts it this way:

"[Hope] in one hand, [poop] in the other. See which one gets filled first." When a person wants the impossible.

At What Cost? Legislators come up with solutions to Harmful Algal Blooms. Environmental Economists come up with cheaper solutions.

The Legislature of the State of Ohio is currently considering legislation to reduce Phosphorous loadings into Lake Erie by 40%.  This is a good thing, as reducing Phosphorous going into Lake Erie will reduce the incidence and impact of Harmful Algal Blooms in the Western Lake Erie Basin.  

The proposed legislation establishes a Clean Lake 2020 plan that includes:

A significant new Clean Lake Capital Fund that may appropriate up to $100 million per year for five years for both Lake Erie algae reduction, and agricultural best practices.  Funding may include establishing facilities to improve manure application processes, projects to reduce open lake disposal of dredged materials, funds to local governments for water quality-based green infrastructure, water management projects to help reduce nutrient and sediment runoff impacting the lake and other strategies.

A new Soil and Water Support Fund, with some of the funding provided directly to soil and water conservation districts to assist farmers in soil testing, nutrient management plans, installing edge of field drainage devices, encouraging inserting of nutrients (subsurface placement), and agreed to conservation methods that may include riparian buffers, filter strips and cover crops.

To the casual observer, this all looks good.  The proposed bill has widespread support among agricultural groups, and local and state authorities. As one of the bill's sponsors notes:

“These are not brand new ideas, just a greater sense of urgency to implement them,” Arndt said.  “There appears to be widespread agreement with state officials, environmental and agriculture groups, tourism advocates and business leaders that many of these strategies will make a big difference.”

And he is right, these strategies could make a big difference. 

But as economists we are trained to ask, 'At what cost?' 

As Vice President Biden would say, "This is a BFD"

FB18-032 FISHERY BULLETIN ISSUE DATE: May 17, 2018 CONTACT: [email protected], Sustainable Fisheries, 727-824-5305

 Request for Comments: Limited Opening of Recreational and Commercial Red Snapper Fishery in South Atlantic Federal Waters

 

KEY MESSAGE:

NOAA Fisheries requests comments on a proposed rule for Amendment 43 to the Fishery Management Plan for the Snapper-Grouper Fishery of the South Atlantic Region (Amendment 43).  The proposed actions would specify recreational and commercial annual catch limits for red snapper beginning in 2018.

• Red snapper recreational and commercial seasons would open in South Atlantic federal waters for limited harvest beginning in 2018.  
• The South Atlantic Fishery Management Council approved Amendment 43 after recent scientific information indicated an increase in the red snapper population since 2014.
• NOAA Fisheries determined the proposed limited harvest beginning in 2018 is neither expected to result in overfishing, nor prevent continued rebuilding of the population.

*The comment period on the proposed rule begins on May 17, 2018, and comments are due by June 18, 2018.*

Source: http://sero.nmfs.noaa.gov/fishery_bulletins/2018/032/index.html

A benefit-cost analysis of a red drum stock enhancement program in South Carolina

R. J. Rhodes, J. C. Whitehead, T. I. J. Smith and M. R. Denson 

https://doi.org/10.1017/bca.2018.1

Published online: 11 May 2018

Abstract: Recreational saltwater anglers from the mid-Atlantic through the Gulf of Mexico commonly target red drum. Due to concerns about overharvesting within South Carolina coupled with regional management actions, South Carolina explored the technical feasibility of stocking hatchery-produced juvenile red drum as a technique to augment the abundance of South Carolina stock. In order to assess a continued program, in 2005 a mail survey was used to collect data for estimating the economic benefits with the contingent valuation method. The theoretical validity of willingness to pay was assessed by comparison to the value of a change in red drum fishing trips that would result from the program. Benefits were compared to estimated, explicit stocking costs. We illustrate how a certainty recode approach can be used in sensitivity analysis. The net present values (NPVs) for the stocking program are positive suggesting that the program would have been economically efficient relative to no program.

I like this paper for a number of reasons:

• It was first presented over 10 years ago at the Southern meetings. It sat idle for 10 years and JBCA was the first journal where it was submitted. The lesson is that ... don't let your data sit idle for 10 years. 
• The paper is a benefit-cost analysis, actually used by the agency (see Stocking South Carolina's Favorite Saltwater Fish). I've been working on benefits forever but rarely get to actually compare them to costs. In addition, I got to work with real-life agency fisheries economists and biologists who had real-world constraints on the survey questions they were able to ask. I maybe learned more from this project than any other. 
• I've taught this case study for a number of years in my benefit-cost analysis course. I haven't taught the course in years (department chair duties got int the way) but am scheduled to teach it this fall. I'll be using it again this fall to help explain sensitivity analysis, discounting, horizon values, etc. 
• We did revealed preference (travel cost method) and stated preference (contingent valuation method) analyses to estimate benefits. The revealed preference estimates were less informative than the stated preference estimates so the latter were used in the policy analysis. This illustrates my contention that stated preference data can be useful for policy analysis but (at least for recreation) you are better off if you also consider revealed preference estimates (as a validity check -- and see the next bullet point).
• The journal referees were not much impressed with our assertion that an old case study was worthy of publication. So, I went back to my all-time favorite paper for some theory and found convergent validity between single-site recreation demand and contingent valuation. The lesson here may be that if a researcher is looking for a better understanding of behavior and preferences from stated preference data then things can be discovered and learned. On the other hand, if a researcher is looked to break stated preference methods then that can be arranged too.
• Hypothetical bias is an issue that will likely never go away in contingent valuation (or choice experiments if folks doing that sort of stated preference study were targeted by industry-funded critics) regardless of assertions about consequentiality. In this paper we used a certainty follow-up and the analysis in the preceding bullet point to best match the willingness to pay estimates with a revealed preference estimate. From this, we used alternative certainty corrections for sensitivity analysis. As of today, this is how I think benefit-cost analysis with stated preference methods should be done.