NOPP Regional Ocean Observing Systems Benefits Project: Center for Economic Forecasting and Analysis (CEFA) Economic Impact Analysis of the Gulf of Mexico Region By Dr. Tim Lynch, Director Dr. Julie Harrington, Asst. Director Presented to the NOPP Co-PI’s Meeting National Oceanic Atmospheric Administration (NOAA) April 28, 2003 Washington, D.C.

CEFA Background The Florida State University Center for Economic Forecasting and Analysis (CEFA) specializes in applying advanced, computer-based economic models and techniques to examine and help resolve pressing public policy issues across a spectrum of research areas. CEFA provides advanced research and training in the areas of high technology, commercialization of super conducting materials, health care, energy, and environmental economics, among others.

Background of Primary Investigator(s) Dr Lynch earned BS degrees in economics and political science, MS in Environmental/Transportation Planning and a Ph.D in Environmental Economics from FSU; Dr. Harrington earned a BS in Fish and Wildlife Management from Montana State University, MS in Fisheries, and Ph.D in Economics (Agricultural) from Auburn Univ. Dr Lynch worked on developing regulatory preservation plans for the Florida Keys, Big Cypress, Everglades and Green Swamp Area of Critical State Concern. He also served as Florida’s Chief Environmental Economist at DER and worked on regulatory economic evaluations of above and underground water and wetland protection, energy production, use and distribution and air pollution socio-economic impact assessments. Dr Lynch has led and cooperated on a number of extensive environmental economics research projects including El Nino economic assessments, air and water quality and impact assessment studies, Florida Everglades restoration studies, valuation of eco-tourism in Florida, energy economics evaluation and advanced transportation and emerging energy technologies environmental, energy and economic impacts.

Sample of CEFA Projects  Research and economic analysis of high tech (super conducting) materials and advanced power systems with FSU Center for Advanced Power Systems (CAPS) and the Office of Naval Research (ONR), and the future of the electricity industry through participation on the Governor’s Florida Vision 2020 Commission  Detailed study comparing Florida and US cities with the New Economy High Tech Index  Economic analysis of University Research Centers and Institutes  Study on the economic impact of Florida’s outdoor advertising industry  Non-profit work including annual economic analysis of the North Florida Birding Festival  Tax Impact Analysis for the Florida Legislature

Summary of Proposed Research To identify and quantify the expected economic benefits of COOS in the Gulf of Mexico region. The economic benefits will be separated into three categories: private sector, non-market and public sector activities. Our primary modeling software to conduct economic impact analysis will be IMPLAN, using 2000 data. Results will be in terms of direct, indirect, induced and total impacts for GRP, employment, and income.

Maritime Transportation: Shipping Costs

Maritime Transportation: Estimated Operating Costs, Assuming Average Total Transit Time of Two Days Sources: US Army Corps of Engineers Waterborne Commerce of the United States 2001and Moore Stephens OpCost 2002 Report

Commercial Fishing: Estimated Average Value Added Per Fishing Day Source: NMFS Commercial Fishing Database, 2001 *Assumes a 60 day finfish season and 120 day shellfish season.

Recreational Fishing and Boating: Daily Recreation Values for Marine Fishing in the Gulf of Mexico Region

Examples of Use Value Per Unit of Time for Recreational/Other Natural Resources in Florida (in 1998 Dollars)

Search and Rescue: Mission and Lives Saved There were 5,239 SAR missions conducted in District 8 (the Gulf of Mexico Region). There were 609 lives saved during This represents about 13.7% of the Coast Guard’s total SAR activity. There were 107 lives lost. Of those lost, 73 were lost prior to Coast Guard notification, and 34 were lost after Coast Guard notification. A 1% improvement in SAR effectiveness would result in an additional 6 lives saved per year, with an economic value of some $24 million. Sources: U.S. Coast Guard, 2001

Pollution Management and Prevention: Gulf of Mexico Number of Spills and Spill Volume ( ) Source: U.S. Coast Guard.

Pollution Management and Prevention: Gulf of Mexico Number of Spills and Spill Volume ( ) The volume of oil spilled has dropped significantly in the Gulf of Mexico over time. For Florida, Alabama, and Texas the number of spill incidents has dropped for the last decade. Although the frequency of oil spills has increased in Mississippi and Louisiana since 1973, the volume of oil spilled has dropped.

Data Problems Encountered To Date For Search and Rescue Data (SAR), the Coast Guard has data by District 7 (which includes west coast of Florida) and District 8 (which includes all the other Gulf coast states plus states up the Mississippi river). Coast Guard staff will provide us with “oceanic” data and hopefully state data in the upcoming weeks. For discussion at this meeting: what sources to use for oil spill cost data.

Conclusions to Date ApplicationNature of Benefit Annual Potential Benefits ($ million) Search and RescueLives Saved* (from 94.95% to 95.95%) 24 Pollution MitigationOil Spills**? Commercial Fisheries Improved Management*** 3.1 Recreational FisheriesAdditional recreational fishing days**** 31 Maritime Transportation Lower vessel operating costs***** 4.4 Total62.5+ * based on improved SAR effectiveness from 95%-96% success. ** based on 10 year average annual oil spill costs. *** based on 1 additional fishing day per year for finfish and shellfish. **** based on 1% increase in recreational fishing trips. *****based on 1% savings in annual operating costs.