Coastal erosion as a natural resource management problem: An economic perspective

Unremitting waves and occasional storms bring dynamic forces to bear on the coast. Sediment flux results in various patterns of erosion and accretion, with an overwhelming majority (80 to 90 percent) of coastline in the eastern U.S. exhibiting net erosion in recent decades. Climate change threatens to increase the intensity of storms and raise sea level 18 to 59 centimeters over the next century. Following a lengthy tradition of economic models for natural resource management, this paper provides a dynamic optimization model for managing coastal erosion and explores the types of data necessary to employ the model for normative policy analysis. The model conceptualizes benefits of beach and dune sediments as service flows accruing to nearby residential property owners, local businesses, recreational beach users, and perhaps others. Benefits can also include improvements in habitat for beach- and dune-dependent plant and animal species. The costs of maintaining beach sediment in the presence of coastal erosion include expenditures on dredging, pumping, and placing sand on the beach to maintain width and height. Other costs can include negative impacts on the nearshore environment. Employing these constructs, an optimal control model is specified that provides a framework for identifying the conditions under which beach replenishment enhances economic welfare and an optimal schedule for replenishment can be derived under a constant sea level and erosion rate (short term) as well as an increasing sea level and erosion rate (long term). Under some simplifying assumptions, the conceptual framework can examine the time horizon of management responses under sea level rise, identifying the timing of shift to passive management (shoreline retreat) and exploring factors that influence this potential shift. (PDF contains 4 pages)

The Annual Economic Survey of Federal Gulf Shrimp Permit Holders: Report on the Design, Implementation, and Descriptive Results for 2006

This technical memorandum documents the design, implementation, data preparation, and descriptive results for the 2006 Annual Economic Survey of Federal Gulf Shrimp Permit Holders. The data collection was designed by the NOAA Fisheries Southeast Fisheries Science Center Social Science Research Group to track the financial and economic status and performance by vessels holding a federal moratorium permit for harvesting shrimp in the Gulf of Mexico. A two page, self-administered mail survey collected total annual costs broken out into seven categories and auxiliary economic data. In May 2007, 580 vessels were randomly selected, stratified by state, from a preliminary population of 1,709 vessels with federal permits to shrimp in offshore waters of the Gulf of Mexico. The survey was implemented during the rest of 2007. After many reminder and verification phone calls, 509 surveys were deemed complete, for an ineligibility-adjusted response rate of 90.7%. The linking of each individual vessel’s cost data to its revenue data from a different data collection was imperfect, and hence the final number of observations used in the analyses is 484. Based on various measures and tests of validity throughout the technical memorandum, the quality of the data is high. The results are presented in a standardized table format, linking vessel characteristics and operations to simple balance sheet, cash flow, and income statements. In the text, results are discussed for the total fleet, the Gulf shrimp fleet, the active Gulf shrimp fleet, and the inactive Gulf shrimp fleet. Additional results for shrimp vessels grouped by state, by vessel characteristics, by landings volume, and by ownership structure are available in the appendices. The general conclusion of this report is that the financial and economic situation is bleak for the average vessels in most of the categories that were evaluated. With few exceptions, cash flow for the average vessel is positive while the net revenue from operations and the “profit” are negative. With negative net revenue from operations, the economic return for average shrimp vessels is less than zero. Only with the help of government payments does the average owner just about break even. In the short-term, this will discourage any new investments in the industry. The financial situation in 2006, especially if it endures over multiple years, also is economically unsustainable for the average established business. Vessels in the active and inactive Gulf shrimp fleet are, on average, 69 feet long, weigh 105 gross tons, are powered by 505 hp motor(s), and are 23 years old. Three-quarters of the vessels have steel hulls and 59% use a freezer for refrigeration. The average market value of these vessels was $175,149 in 2006, about a hundred-thousand dollars less than the average original purchase price. The outstanding loans averaged $91,955, leading to an average owner equity of $83,194. Based on the sample, 85% of the federally permitted Gulf shrimp fleet was actively shrimping in 2006. Of these 386 active Gulf shrimp vessels, just under half (46%) were owner-operated. On average, these vessels burned 52,931 gallons of fuel, landed 101,268 pounds of shrimp, and received $2.47 per pound of shrimp. Non-shrimp landings added less than 1% to cash flow, indicating that the federal Gulf shrimp fishery is very specialized. The average total cash outflow was $243,415 of which $108,775 was due to fuel expenses alone. The expenses for hired crew and captains were on average $54,866 which indicates the importance of the industry as a source of wage income. The resulting average net cash flow is $16,225 but has a large standard deviation. For the population of active Gulf shrimp vessels we can state with 95% certainty that the average net cash flow was between $9,500 and $23,000 in 2006. The median net cash flow was $11,843. Based on the income statement for active Gulf shrimp vessels, the average fixed costs accounted for just under a quarter of operating expenses (23.1%), labor costs for just over a quarter (25.3%), and the non-labor variable costs for just over half (51.6%). The fuel costs alone accounted for 42.9% of total operating expenses in 2006. It should be noted that the labor cost category in the income statement includes both the actual cash payments to hired labor and an estimate of the opportunity cost of owner-operators’ time spent as captain. The average labor contribution (as captain) of an owner-operator is estimated at about $19,800. The average net revenue from operations is negative $7,429, and is statistically different and less than zero in spite of a large standard deviation. The economic return to Gulf shrimping is negative 4%. Including non-operating activities, foremost an average government payment of $13,662, leads to an average loss before taxes of $907 for the vessel owners. The confidence interval of this value straddles zero, so we cannot reject, with 95% certainty, that the population average is zero. The average inactive Gulf shrimp vessel is generally of a smaller scale than the average active vessel. Inactive vessels are physically smaller, are valued much lower, and are less dependent on loans. Fixed costs account for nearly three quarters of the total operating expenses of $11,926, and only 6% of these vessels have hull insurance. With an average net cash flow of negative $7,537, the inactive Gulf shrimp fleet has a major liquidity problem. On average, net revenue from operations is negative $11,396, which amounts to a negative 15% economic return, and owners lose $9,381 on their vessels before taxes. To sustain such losses and especially to survive the negative cash flow, many of the owners must be subsidizing their shrimp vessels with the help of other income or wealth sources or are drawing down their equity. Active Gulf shrimp vessels in all states but Texas exhibited negative returns. The Alabama and Mississippi fleets have the highest assets (vessel values), on average, yet they generate zero cash flow and negative $32,224 net revenue from operations. Due to their high (loan) leverage ratio the negative 11% economic return is amplified into a negative 21% return on equity. In contrast, for Texas vessels, which actually have the highest leverage ratio among the states, a 1% economic return is amplified into a 13% return on equity. From a financial perspective, the average Florida and Louisiana vessels conform roughly to the overall average of the active Gulf shrimp fleet. It should be noted that these results are averages and hence hide the variation that clearly exists within all fleets and all categories. Although the financial situation for the average vessel is bleak, some vessels are profitable. (PDF contains 101 pages)

Economic valuation of natural resources: a handbook for coastal resource policymakers

Professionals who are responsible for coastal environmental and natural resource planning and management have a need to become conversant with new concepts designed to provide quantitative measures of the environmental benefits of natural resources. These amenities range from beaches to wetlands to clean water and other assets that normally are not bought and sold in everyday markets. At all levels of government — from federal agencies to townships and counties — decisionmakers are being asked to account for the costs and benefits of proposed actions. To non-specialists, the tools of professional economists are often poorly understood and sometimes inappropriate for the problem at hand. This handbook is intended to bridge this gap. The most widely used organizing tool for dealing with natural and environmental resource choices is benefit-cost analysis — it offers a convenient way to carefully identify and array, quantitatively if possible, the major costs, benefits, and consequences of a proposed policy or regulation. The major strength of benefit-cost analysis is not necessarily the predicted outcome, which depends upon assumptions and techniques, but the process itself, which forces an approach to decision-making that is based largely on rigorous and quantitative reasoning. However, a major shortfall of benefit-cost analysis has been the difficulty of quantifying both benefits and costs of actions that impact environmental assets not normally, nor even regularly, bought and sold in markets. Failure to account for these assets, to omit them from the benefit-cost equation, could seriously bias decisionmaking, often to the detriment of the environment. Economists and other social scientists have put a great deal of effort into addressing this shortcoming by developing techniques to quantify these non-market benefits. The major focus of this handbook is on introducing and illustrating concepts of environmental valuation, among them Travel Cost models and Contingent Valuation. These concepts, combined with advances in natural sciences that allow us to better understand how changes in the natural environment influence human behavior, aim to address some of the more serious shortcomings in the application of economic analysis to natural resource and environmental management and policy analysis. Because the handbook is intended for non-economists, it addresses basic concepts of economic value such as willingness-to-pay and other tools often used in decision making such as costeffectiveness analysis, economic impact analysis, and sustainable development. A number of regionally oriented case studies are included to illustrate the practical application of these concepts and techniques.

Economic losses/gains attributed to the water hyacinth

This is the report of a research study aimed at providing an understanding of the fishing communities and institutions about the water hyacinth problem and how it impacts on their activities. Its also provides strategies for sustainable control of the weed. The research reports are intended to disseminate the findings of the studies carried out under the Socio-economics Sub-component of LVEMP to a wide spectrum of users, including policy makers, stakeholders and researchers.

Socio-economic and marketing aspects of Laila and Bottom Long Line fisheries in the Kalpitiya peninsula of Sri Lanka

Surrounding Net Fishery (laila) and Bottom Long Line Fishery which operate in the coastal waters of Kalpitiya Peninsula, compete for the same fish resources, resulting in a fishery dispute between the respective fishermen. Both fisheries target demersal as well as mid pelagic fishes, such as travellys (parava), mullets (galmalu) and barracudas (ulava). As the dispute had an adverse impact on the social harmony in the fishing community of the area, a socio-economic survey was conducted to study the underlying factors and to suggest policy measures to resolve the issue. The laila fishermen were resident fishermen in the Kalpitiya Peninsula while bottom long line fishermen were migratory fishermen from Negombo and Chilaw areas in the west coast of Sri Lanka. The Kalpitiya peninsula is located in the North West coast, some 50 km away from the west coast. Although the educational level and literacy rate of the laila community was below that of the bottom long line community, the laila community was economically better off. The net economic returns from laila fishery were superior to that from bottom long line fishery. The boat owner's and crew's share per operation of laila fishery were Rs.3,736 and Rs.947 respectively. The same figures for bottom long line fishery were Rs.588 and Rs.327 respectively. The resource rent from laila fishery was Rs.5,860, however, and much higher than that for bottom long line fishery (Rs.275), showing that the laila fishery exploits the targeted fish resource at a much higher rate compared to bottom long line fishery. This situation badly affects the equitable distribution of resources between the two fishing communities and results in unequal economic gains. Based on the findings of this study, certain input/output controls are proposed to address this problem, among which is the need to increase license fee for laila fishery units to offset the higher exploitation rate of fish resources.

The water hyacinth problem and the biological control option in the highland lake region of the upper Nile basin: Uganda's experience

The rapid proliferation and extensive spread of water hyacinth Eichhornia crassipes (Mart) Solms in the highland lakes of the Nile Basin within less than 15 years of introduction into the basin in the 1980s pauses potential environmental and social economic menace if the noxious weed is not controlled soon. The water weed has spread all round Lake Victoria and, in Uganda where infes tation is mos t severe, water hyacinth estimated at 1,330,000 ton smothers over 2,000 ha of the lakeshore (August,1994). Lake Kyoga which already constantly supplies River Nile with the weed is infested with over 570 ha, while over 80% of the river course in Uganda is fringed on either side with an average width of about 5m of water hyacinth. As the impact of infestation with water hyacinth on water quality and availability, transportation by water, fishing activities, fisheries ecology, hydro-power generation etc becomes clear in Uganda, serious discussion is under way on how to control and manage the noxious weed. This paper pauses some of the questions being asked regarding the possible application of mechanical and chemical means to control the water weed.Uganda has already initiated the use of biological control of water hyacinth on Lake Kyoga with a strategy to use two weevils namely Neochetinabruchi and Neochetina eichhorniae. The strategy to build capacity and infrastructure for mass multiplication and deployment of biological control of the weevils in the field developed in Uganda by the Fisheries Research Insti tu te (FIRI) and the Namulonge Agricultural and Animal production Research Insti tute (NAARI) is proposed in outline for evaluation. Plans to deploy this strategy on lake Kyoga are under way

Socio-economic aspects of the fisheries of Nabugabo lakes and implications for management

Fisheries are very important to Uganda's economy. The sector provides a vital source of food, recreation, trade and socioeconomic well being for the people and community globally. The fisheries of small lakes are important for producing fish for local populations who are not near the large lakes. These satellite lakes support important fisheries and other economic activities like fishing, water for domestic purposes and tourism, besides socio-cultural values. A number-of fish;- species, some of which were found only in Lake Victoria have been depleted through over-exploitation, introduction of exotics especiaily Nile perch and environmental degradation. Some of these fishes have been observed to survive in satellite lakes in the Victoria and Kyoga Lake basins. The Nabugabo satellite lakes (Manywa, Kayugi and Kayanja) contain endemic Cichlid fish species acting as reservoirs and therefore very important for conservation of fish biodiversity. Despite the socio-economic importance and uniqueness of these satellite lakes little research on socio-economic studies has been carried out. The sustainability of the lake is being threatened by increasing human activities. The fish stocks and species diversity are declining and this poses a threat to the livelihood of the people who depend on fish for food and income. Arising from this need a study was carried out to establish the socio-economic aspects of Nabugabo fisheries and implications for management, on which basis resource users would be made aware of the impacts of their activities. It was hoped that this would go further to ensure wise use and management of the resources by the users. The specific objectives were identifying activities around the lake, establishing socioeconomic values attached to the lake, identifying problems of the lake and resource users and examining existing local based management institutions. Results show that the activities taking place around the lakes include fishing, farming, watering of animals, deforestation and charcoal burning, brick making, resort beach development and food and refreshment. The major problem facing the lake was found to be encroachment of Hippo grass (Vossia) on the lake, which is decreasing the size of the lake, and limiting open waters for fishing (this only applied to Lake Nabugabo). Other important problems include use of illegal fishing methods, declining fish stocks and loss of cultural identity. The resource users are most pressed by the low incomes resulting from poor fish catches, theft of gears and lack of market. On examining the resource base for the lakes, it was only Lake Nabugabo that had a Landing Management Committee. The other three lakes did not have leadership institutions in place except the local councils for the respective villages. This was probably due to observed limited fisheries activities. Majority of the respondents agreed that Government and other service providers should work jointly to supplement local beach management committees in the management of the lakes resources. This is a good gesture because with increase in fishing effort and rampant use of illegal fishing methods, there is need to strengthen management institutions present on the lake. This would require Government, local community and other service providers to work together in a participatory way to control environment-degrading activities and stop the use of illegal fishing methods. Burning of vegetation on the lake should be stopped since it enhances growth of this grass. Finally, traditional taboos; which are present on some of the Nabugabo lakes, should be enhanced, as away of preserving them.