J. Kevin Craig

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

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 Carolinas 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. JEL Classification Code: Q22

Quantifying the Economic Effects of Hypoxia on a Fishery for Brown Shrimp Farfantepenaeus aztecus

Abstract Although hypoxia is a threat to coastal ecosystems, policy makers have limited information about its economic impacts on fisheries. Studies using spatially and temporally aggregated data generally fail to detect statistically significant effects of hypoxia on fisheries. Limited recent work using disaggregated fishing data (microdata) has revealed modest effects of hypoxia on the catches of recreationally harvested species. These studies did not account for important spatial and temporal aspects of the system, however. For example, the effects of hypoxia on catch may not materialize instantaneously but involve a lagged process reflecting cumulative past exposure. This paper develops a differenced bioeconomic model to account for the lagged effects of hypoxia on the North Carolina fishery for brown shrimp Farfantepenaeus aztecus. The model integrates high-resolution oxygen monitoring data with fishery-dependent microdata from North Carolinas trip ticket program to investigate the detailed spatial and temporal relationships of hypoxia to commercial fishery harvests. The main finding is that hypoxia may have resulted in a 12.9% annual decrease in the brown shrimp harvest during the period 1999–2005. The paper also develops two alternative models—a nondifferenced model and a polynomial distributed lag model—whose results are consistent with those of the main model.

Effect of Changes in Dissolved Oxygen Concentrations on the Spatial Dynamics of the Gulf Menhaden Fishery in the Northern Gulf of Mexico

Abstract Declines in dissolved oxygen (DO) concentrations in aquatic environments can lead to conditions of hypoxia (DO ≤ 2 mg/L), which can directly and indirectly affect aquatic organisms. Direct effects include changes in growth and mortality; indirect effects include changes in distribution, movement, and interactions with other species. For mobile species, such as the pelagic filter-feeding Gulf Menhaden Brevoortia patronus, indirect effects are more prevalent than direct effects. The northern Gulf of Mexico experiences one of the largest areas of seasonal hypoxia in the world; this area overlaps spatially and temporally with the Gulf Menhaden commercial purse-seine fishery, which is among the largest fisheries by weight in the United States. Harvest records from the Gulf Menhaden fishery in 2006–2009 and fine-scale spatial and temporal predictions from a physical—biogeochemical model were used with spatially varying regression models to examine the effects of bottom DO concentration, spatial location, depth, week, and year on four response variables: probability of fishing, total Gulf Menhaden catch, total fishery effort, and CPUE. We found nearshore shifts in the probability of fishing as DO concentration declined, and we detected a general westward shift in all response variables. We also found increases in CPUE as DO concentration declined in the Louisiana Bight, an area that experiences chronic, severe hypoxia. The overall effects of environmental conditions on fishing response variables appeared to be moderate. Nevertheless, movement of either Gulf Menhaden or the purse-seine fishery in response to environmental conditions could potentially affect the susceptibility of Gulf Menhaden to harvest and could therefore influence assessment of the stock and associated stock status indicators.

Seafood prices reveal impacts of a major ecological disturbance

Significance Coastal hypoxia is a growing problem worldwide, but economic consequences for fisheries are largely unknown. We provide evidence that hypoxia causes economic effects on a major fishery that was once the most valuable fishery in America. Our analysis is also a breakthrough in causal inference for coupled human-natural systems. Although establishing causality with observational data is always challenging, feedbacks across the human and natural systems amplify these challenges and explain why linking hypoxia to fishery losses has been elusive. We offer an alternative approach using a market counterfactual that is immune to contamination from feedbacks in the coupled system. Natural resource prices can thus be a means to assess the significance of an ecological disturbance. Coastal hypoxia (dissolved oxygen ≤ 2 mg/L) is a growing problem worldwide that threatens marine ecosystem services, but little is known about economic effects on fisheries. Here, we provide evidence that hypoxia causes economic impacts on a major fishery. Ecological studies of hypoxia and marine fauna suggest multiple mechanisms through which hypoxia can skew a population’s size distribution toward smaller individuals. These mechanisms produce sharp predictions about changes in seafood markets. Hypoxia is hypothesized to decrease the quantity of large shrimp relative to small shrimp and increase the price of large shrimp relative to small shrimp. We test these hypotheses using time series of size-based prices. Naive quantity-based models using treatment/control comparisons in hypoxic and nonhypoxic areas produce null results, but we find strong evidence of the hypothesized effects in the relative prices: Hypoxia increases the relative price of large shrimp compared with small shrimp. The effects of fuel prices provide supporting evidence. Empirical models of fishing effort and bioeconomic simulations explain why quantifying effects of hypoxia on fisheries using quantity data has been inconclusive. Specifically, spatial-dynamic feedbacks across the natural system (the fish stock) and human system (the mobile fishing fleet) confound “treated” and “control” areas. Consequently, analyses of price data, which rely on a market counterfactual, are able to reveal effects of the ecological disturbance that are obscured in quantity data. Our results are an important step toward quantifying the economic value of reduced upstream nutrient loading in the Mississippi Basin and are broadly applicable to other coupled human-natural systems.

Fleet behavior is responsive to a large-scale environmental disturbance: Hypoxia effects on the spatial dynamics of the northern Gulf of Mexico shrimp fishery

The northwestern Gulf of Mexico shelf experiences one of the largest seasonal hypoxic zones in the western hemisphere. Hypoxia (dissolved oxygen, DO ≤ 2.0 mg·L-1) is most severe from May to August during the height of the Gulf shrimp fishery, but its effects on the fishery are not well known. Prior studies indicate that hypoxia alters the spatial dynamics of shrimp and other species through habitat loss and aggregation in nearby oxygenated refuge habitats. We hypothesized that hypoxia-induced changes in the distribution of shrimp also alter the spatial dynamics of the Gulf shrimp fleet. We integrated data on the geographic distribution of shrimp tows and bottom DO to evaluate the effects of hypoxia on spatial patterns in shrimping effort. Our analyses indicate that shrimping effort declines in low DO waters on both the Texas and Louisiana shelf, but that considerable effort still occurs in low DO waters off Louisiana, likely because riverine nutrients fuel both benthic production and low bottom DO in the same general regions. The response of the shrimp fleet to hypoxia on the Louisiana shelf was complex with shifts in effort inshore, offshore, westward, and eastward of the hypoxic zone, as well as to an oxygenated area between two hypoxia regimes associated with the Mississippi and the Atchafalaya River outflows. In contrast, effort on the Texas shelf mostly shifted offshore in response to low DO but also shifted inshore in some years. Spatial patterns in total shrimping effort were driven primarily by the number of shrimp tows, consistent with aggregation of the fleet outside of hypoxic waters, though tow duration also declined in low DO waters. Overall, our results demonstrate that hypoxia alters the spatial dynamics of the Gulf shrimp fishery with potential consequences for harvest interactions and the economic condition of the fishery.

Space-Time Geostatistical Assessment of Hypoxia in the Northern Gulf of Mexico

Nearly every summer, a large hypoxic zone forms in the northern Gulf of Mexico. Research on the causes and consequences of hypoxia requires reliable estimates of hypoxic extent, which can vary at submonthly time scales due to hydro-meteorological variability. Here, we use an innovative space-time geostatistical model and data collected by multiple research organizations to estimate bottom-water dissolved oxygen (BWDO) concentrations and hypoxic area across summers from 1985 to 2016. We find that 27% of variability in BWDO is explained by deterministic trends with location, depth, and date, while correlated stochasticity accounts for 62% of observational variance within a range of 185 km and 28 days. Space-time modeling reduces uncertainty in estimated hypoxic area by 30% when compared to a spatial-only model, and results provide new insights into the temporal variability of hypoxia. For years with shelf-wide cruises in multiple months, hypoxia is most severe in July in 59% of years, 29% in August, and 12% in June. Also, midsummer cruise estimates of hypoxic area are only modestly correlated with summer-wide (June-August) average estimates ( r2 = 0.5), suggesting midsummer cruises are not necessarily reflective of seasonal hypoxic severity. Furthermore, summer-wide estimates are more strongly correlated with nutrient loading than midsummer estimates.