Return on Investment for Lobster (Homarus americanus) Enhancement Initiatives in Atlantic Canada By Marcel LeBreton, Economist, EcoTec Consultants Michel Comeau, Biologist, DFO Martin Mallet, Biologist, Homarus inc.

Outline  Bioeconomic Model  Lobster Populatiom Dynamics Module  Socio-Economic Module  Results Seeding  Results Artificial Reefs  Conclusions

III – Bioeconomic Model

Description of Model  Two modules: -Lobster Population Dynamics module -20 time periods per year -1 to 300 mm max size -Socio-Economic module  Provides biological (i.e., landings and egg production) and economic (i.e., revenues and employment) outputs

Flowchart of Bioeconomic Model Revenues, Fishing Enterprises Sub-Module Employment, GDP Tax Revenues Expenditures, Net Income Fishing Enterprises Landings Egg Production Management Measures Lobster Population Natural Mortality Sexual Maturity Egg Extrusion Larval Release Molt and Growth Fishery Market and Prices Sub-Module Economic Impact Sub-Module Fisheries Management Sub-Module

Lobster Population Natural Mortality Sexual Maturity Egg Extrusion Larval Release Molt and Growth Fishery Lobster Population Dynamics Module Fishery Natural Mortality FEMALE MALE Fishing Mortality 70% Growth16.2% Male 15.2% Immature Female 12.0% Mature Female Larval ReleaseJuly-August Sexual MaturityMaturity Curve-logistic & Egg Extrusion2-yr Reproductive Cycle Fecundity Curve-exponential Natural Mortality 5% * Molting-induced Mortality 5% Landings Egg Production

Socio-Economic Module Revenues, Fishing Enterprises Sub-Module Employment, GDP Tax Revenues Expenditures, Net Income Fishing Enterprises Landings Management Measures Market and Prices Sub-Module Economic Impact Sub-Module Fisheries Management Sub-Module Log-Log equations Landing Prices Mgt MeasuresMLS 70 mm CL No Berried Female Limits on Female Size 250 trap limit/harvester Profits = f(E,R)E; expenditures R; revenues from landings Input-Output Core Econometric Blocks Non-linear dynamic model Energy Consumption

Uncertainty (Monte-Carlo) Model for uncertainty in key variables Beta – Exploitation Rate – Lobster Prices Gamma – Natural Mortality

Model Use ROI of various investments Benefits of reducing number of traps per boat Bio-economic impacts of changing MLS (CL) Benefits of programs to reduce licences

IV – Results and Conclusion

STAGE IV SEEDING

Parameters Summer and spring fishery Release of 100,000 Stage IV lobsters Fishermen pay $0.25 per larvae: – Total investment is $25,000 Total of 400,000 simulations

Landings and Revenues: Spring Fishery 10-year Horizon, 75 % Probability Interval StatisticsMinimumMaximum Number Landed34,40046,700 Weight (kg)13,70018,800 Revenues$81,400$179,400

Revenues, 75 % Probability Both Fisheries, 10 and 20-year ScenarioMinimumMaximum Spring - 10$81,400$179,400 Summer - 10$85,200$187,700 Spring - 20$87,200$193,700 Summer - 20$88,000$194,700

Internal Rate of Return ScenarioMinimumMaximum Spring %22.0% Summer %26.8% Spring %22.4% Summer %26.9%

Gross Domestic Product (GDP)

Tax Revenues

ARTIFICIAL REEFS

Picture of Concrete Block

Artificial Reef Installed

 Artificial reef with 894 blocks : $25,000.  91 % occupancy rate  Both Spring and Summer fisheries.  Ten and 20-year horizons.  Total of 200,000 simulations. Parameters

Reefs, Fishermen Revenues, 75 % Both Fisheries, 10 and 20-year ScenarioMinimumMaximum Spring - 10 $14,613$29,227 Summer - 10 $17,610$35,220 Spring - 20 $43,215$86,430 Summer - 20 $47,151$94,302

Reefs, Internal Rate of Return ScenarioIRR Spring % Summer % Spring % Summer %

Reefs, Gross Domestic Product (GDP) Province N.B.10 Years20 Years Spring Fishery $50 878$ Summer Fishery $57 279$ Canada Spring Fishery $76 500$ Summer Fishery $85 967$

Reefs, Tax Revenues 10 Years20 Years Total Prov & Federal Spring Fishery $12 677$ Summer Fishery $14 331$30 664

 Each seeded larvae (at a cost of $0.25), generates revenues of between: -$ $1.95 for fishermen, -$ $2.98 for the economy (GDP) -$ $0.52 for governments (tax revenues).  Good governance, excellent rearing and seeding techniques and good survival rates result in a good return on investment for harvesters. Conclusions: Seeding

 At $27.95 per block: price too steep for lobster fishermen.  Each concrete block generates revenues of between (10y): -$ $39.40 for fishermen; -$ $64.07 for the economy (GDP); -$ $16.03 for governments (tax revenues).  Artificial reefs have a significant positive impact on:  Lobster ecosystem (91 % vs 47 % occupancy);  Economy as a whole;  Government tax revenues Conclusions: Reefs

 Complete population model  With 25 to 30 year class  Link with oceanographic model (currents)  Model for stocks assessments  First with sGSL  GSL, Other regions  Take more uncertainty into account  Huge computing requirements Bio-Economic Model: Next Steps

Marcel LeBreton, Economist EcoTec Consultants Quebec City, Quebec Michel Comeau, Biologist Department of Fisheries and Oceans Gulf Region, Moncton, New Brunswick Martin Mallet, Biologist Homarus Inc. Shediac, New Brunswick Questions