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)

Limited resources? Let the habitat priority planner help!

In this time of scarce resources, coastal resource managers must find ways to prioritize conservation, land use, and restoration efforts. The Habitat Priority Planner (HPP) is a free geospatial tool created by the National Oceanic and Atmospheric Administration’s Coastal Services Center that has received wide praise for its ease of use and broad applicability to conservation strategic planning, restoration, climate change scenarios, and other natural resource management actions. Not a geographic information system (GIS) user? Don’t worry―this tool was designed to be used in a team setting. One intermediate-level GIS user can push the buttons to show quick results while a roomful of resource managers and stakeholders provide input criteria that determine the results. The Habitat Priority Planner is a toolbar for ESRI’s ArcGIS platform that is composed of three modules: Habitat Classification, Habitat Analysis, and Data Explorer. The tool calculates basic ecological statistics that are used to examine how habitats function within a landscape. The tool pre‐packages several common landscape metrics into a user‐friendly interface for intermediate GIS users. In addition, HPP allows the user to build queries interactively using a graphical interface for demonstrating criteria selections quickly in a visual manner that is useful in stakeholder interactions. Tool advocates and users include land trusts, conservation alliances, nonprofit organizations, and select National Estuarine Research Reserves and refuges of the U.S. Fish and Wildlife Service. Participants in this session will learn the basic requirements for HPP use and the multiple ways the HPP has been applied to geographies nationwide. (PDF contains 5 pages)

Developing effective restoration plans to tackle the widespread impairment of coastal swimming and shellfishing waters

Congress established a legal imperative to restore the quality of our surface waters when it enacted the Clean Water Act in 1972. The act requires that existing uses of coastal waters such as swimming and shellfishing be protected and restored. Enforcement of this mandate is frequently measured in terms of the ability to swim and harvest shellfish in tidal creeks, rivers, sounds, bays, and ocean beaches. Public-health agencies carry out comprehensive water-quality sampling programs to check for bacteria contamination in coastal areas where swimming and shellfishing occur. Advisories that restrict swimming and shellfishing are issued when sampling indicates that bacteria concentrations exceed federal health standards. These actions place these coastal waters on the U.S. Environmental Protection Agencies’ (EPA) list of impaired waters, an action that triggers a federal mandate to prepare a Total Maximum Daily Load (TMDL) analysis that should result in management plans that will restore degraded waters to their designated uses. When coastal waters become polluted, most people think that improper sewage treatment is to blame. Water-quality studies conducted over the past several decades have shown that improper sewage treatment is a relatively minor source of this impairment. In states like North Carolina, it is estimated that about 80 percent of the pollution flowing into coastal waters is carried there by contaminated surface runoff. Studies show this runoff is the result of significant hydrologic modifications of the natural coastal landscape. There was virtually no surface runoff occurring when the coastal landscape was natural in places such as North Carolina. Most rainfall soaked into the ground, evaporated, or was used by vegetation. Surface runoff is largely an artificial condition that is created when land uses harden and drain the landscape surfaces. Roofs, parking lots, roads, fields, and even yards all result in dramatic changes in the natural hydrology of these coastal lands, and generate huge amounts of runoff that flow over the land’s surface into nearby waterways. (PDF contains 3 pages)

Mapping the shallow-water coral ecosystems of the Freely Associated States: an implementation plan

This Freely Associated States Shallow-water Coral Ecosystem Mapping Implementation Plan (FAS MIP) presents a framework for the development of shallow-water (~0–40 m; 0–22 fm) benthic habitat and possibly bathymetric maps of critical areas of the Freely Associated States (FAS). The FAS is made up of three self-governing groups of islands and atolls—the Republic of Palau (Palau), the Federated States of Micronesia (FSM), and the Republic of the Marshall Islands (RMI)—that are affiliated with the United States through Compacts of Free Association. This MIP was developed with extensive input from colleges, national and state regulatory and management agencies, federal agencies, non-governmental organizations, and individuals involved in or supporting the conservation and management of the FAS’s coral ecosystems. A list of organizations and individuals that provided input to the development of this MIP is provided in Appendix 1. This MIP has been developed to complement the Coral Reef Mapping Implementation Plan (2nd Draft) released in 1999 by the U.S. Coral Reef Task Force’s Mapping and Information Synthesis Working Group. That plan focused on mapping United States and FAS shallow-water (then defined as <30 m) coral reefs by 2009, based on available funding and geographic priorities, using primarily visual interpretation of aerial photography and satellite imagery. This MIP focuses on mapping the shallow-water (now defined as 0–40 m, rather than 0–30 m) coral ecosystems of the FAS using a suite of technologies and map development procedures. Both this FAS MIP and the 1999 Coral Reef Mapping Implementation Plan (2nd Draft) support to goals of the National Action Plan to Conserve Coral Reefs (U.S. Coral Reef Task Force, 2000). This FAS MIP presents a framework for mapping the coral ecosystems of the FAS and should be considered an evolving document. As priorities change, funding opportunities arise, new data are collected, and new technologies become available, the information presented herein will change.