Economic Effects of the Deepwater Horizon Oil Spill Brian Richard Dept. of Economic and Workforce Development

Mississippi Gulf Coast Importance of the Gulf of Mexico to the Mississippi Gulf Coast economy  Tourism  Fisheries Impacts of the Oil Spill

Tourism Related Employment Source: EMSI Complete Employment – 4th Quarter 2010

Gulf Coast Tourism Trends Source: EMSI Complete Employment – 4th Quarter 2010

Gaming Revenue Source: Mississippi State Department of Revenue

Fishing and Seafood Source: EMSI Complete Employment – 4th Quarter 2010

Economic Impacts Economic Impact: the economy-wide effect on employment and incomes produced by a policy, event, or decision Fiscal Impact: the effect on tax revenues produced by a policy, event, or decision Source: BusinessDictionary.com

Economic Impacts We know (and will continue to track) some of what happened in the economy with the oil spill The research is estimating what would have happened without the oil spill The difference between what did happen and what would have happened is the economic impact

Economic Impact

Economic Impacts Challenges  How are the effects of the oil spill isolated from everything else going on in the economy? Katrina recovery Recession/recovery

Hospitality and Tourism Mississippi Visitors Casino Gamers are the largest market (about 40 %). ‘Soft adventurers’—bird watch, camp, fish, interest in nature/ wildlife. Comprise about 7 % of the visitors. Source: Mississippi Development Authority Tourism Division/TNS

Hospitality Employment Source: EMSI Complete Employment – 4th Quarter 2010

GC Gaming Revenue Growth Source: Mississippi State Department of Revenue

Hotel Tax Revenue Growth Source: Mississippi State Department of Revenue

Hotel Revenue Growth Source: Smith Travel Research

Restaurant Tax Revenue Growth Nonalcoholic Restaurants Source: Mississippi State Department of Revenue

Restaurant Tax Revenue Growth Alcoholic Restaurants Source: Mississippi State Department of Revenue

City Tax Collections Source: Mississippi State Department of Revenue

Fisheries Employment Source: EMSI Complete Employment – 4th Quarter 2010

Fisheries Percent of MS waters closed to fishing Source: Dr. Ben Posadas, MSU Coastal Research & Extension Center

Fisheries – Shrimp Landings Source: NOAA/Dr. Ben Posadas, MSU Coastal Research & Extension Center

Decoding the Trends

Decoding the Trends: Anecdotal Evidence Ship Island ferry down 60% over a May weekend (“Oil Spill Hurting Miss. Gulf Coast Tourism” WAPT.com, May 10) A Biloxi charter boat captain said customers booked 26 trips with him in May 2008 and 26 in May 2009, but only 11 this May. He said his numbers for June were similar. (“Geography protects Mississippi from worst of the oil spill, but tourism still hobbled”, AP June 15 th )

BP has spent $350 million on cleanup, which has barely begun, and hired 13,800 people across the Gulf states to enlist in the effort. (“Shrimpers, fishermen, hotels feel oil spill's trickledown effect.”, USA Today, May 13) Of the 5,700 people contracted to work on the Mississippi response effort, about 4,700 are natives of the state. (“Employing Mississippians makes the difference”, Mississippi Gulf Response (BP), June 21 st ) Decoding the Trends: Anecdotal Evidence

Decoding the Trends Current/future survey work  Sector specific Chain hotels vs. locally owned hotels Tourism attractions Seafood harvesters Seafood processors

Decoding the Trends Future survey work – looking forward  National attitude surveys Seafood safety/desirability Tourism  Soft adventurers (fishing, bird watching, etc.) may be less inclined to come to the Gulf Coast  Did Gulf Coast tourism customers find other regions to visit?

Decoding the Trends Fisheries – looking forward  Oysters/shrimp Mature oysters and shrimp are fairly resistant to toxic effects  But, they can accumulate toxins making them a potential health hazard Eggs and larvae are more susceptible This leaves the possibility that the current years harvest will show little effect but there will be lower populations over the next 2-3 years

Decoding the Trends Fisheries – looking forward  Finfish Mature finfish can swim away from the hazard  This may cause a geographic shift in the harvest Evidence from previous oil spills suggests that the finfish abundance will return relatively quickly

Decoding the Trends Quasi-experimental matching  Finding ‘control’ locations without oil and comparing trends Biloxi vs. Tunica gaming MS Gulf Coast vs. Myrtle Beach tourism MS Gulf Coast vs. Charleston fisheries

Modeling the Impacts Static (input-output) models  Estimate the change in economic activity resulting from the change in final demand for a product/service (or group of products/services) Inter-industry transactions Household-industry transactions  Multiplier effect  Estimates the statewide impacts of a regional event  IMPLAN, EMSI, RIMS II

Modeling the Impacts Dynamic models  Builds upon input-output model allowing for changes in price levels, labor mobility, etc.  Estimates the statewide impacts of a regional event  In addition to changes in final demand, inputs to the model might include changes in prices, wage rates, imports, exports, etc.  Projects impacts into the future  REMI

Economic Effects of the Deepwater Horizon Oil Spill Discussion/Questions