May 26-28, ECONOMIC RECOVERY OF COMMERCIAL AND RECREATIONAL FISHING FLEETS FOLLOWING NATURAL DISASTERS Benedict C. Posadas, Ph.D. Associate E/R Professor of Economics Mississippi State University Coastal Research and Extension Center Third National Forum on SocioEconomic Research in Coastal Systems

2005 Damage Assessment Surveys Results of the damage assessment survey (DAS) showed massive devastation of the Mississippi commercial and recreational fishing fleets. Results of the damage assessment survey (DAS) showed massive devastation of the Mississippi commercial and recreational fishing fleets. Almost one-half of the 1,030 resident commercial fishing boats and vessels operating in the MS participated in the DAS. Almost one-half of the 1,030 resident commercial fishing boats and vessels operating in the MS participated in the DAS. Of the 100 charter boats-for-hire operating in MS, 42 operators participated in the DAS. Of the 100 charter boats-for-hire operating in MS, 42 operators participated in the DAS. May 26-28, 2010 Third National Forum on SocioEconomic Research in Coastal Systems22

2005 Damages to Participating Units The decision to remain or leave the industry - commercial or recreational fishing - was very crucial to these participating boats or vessels. The decision to remain or leave the industry - commercial or recreational fishing - was very crucial to these participating boats or vessels. 87% of participating commercial boats or vessels reported damages associated with Hurricane Katrina (HK). 87% of participating commercial boats or vessels reported damages associated with Hurricane Katrina (HK). 69% of the participating charter boats-for-hire reported damages associated with HK. 69% of the participating charter boats-for-hire reported damages associated with HK. May 26-28, 2010 Third National Forum on SocioEconomic Research in Coastal Systems33

Mississippi Resident Licenses Databases on licenses issued by the Mississippi Department of Marine Resources (DMR) Databases on licenses issued by the Mississippi Department of Marine Resources (DMR) –Resident commercial fishing boats and vessels –Resident recreational charter boats-for-hire Decision to remain or leave the industry made by the participating boats and vessels Decision to remain or leave the industry made by the participating boats and vessels –Decision to buy or not to buy license for the year under consideration. May 26-28, 2010 Third National Forum on SocioEconomic Research in Coastal Systems44

To Stay or Exit Decision Model Dependent variables for commercial boats and charter boats for-hire): LICENSE = 1, if bought license in yeat t; = 0, if otherwise; LICENSE = 1, if bought license in yeat t; = 0, if otherwise; –LIC2007 = 1, if bought license in 2007 (CB-38%, CBFH-49%); = 0, if otherwise; –LIC2006 = 1, if bought license in 2006 (CB-62%, CBFH-63%); = 0, if otherwise; May 26-28, 2010 Third National Forum on SocioEconomic Research in Coastal Systems55

Independent Variables for Commercial Boats Only CRAB = 1, if had crab license in 2005 (28%); =0, if otherwise; CRAB = 1, if had crab license in 2005 (28%); =0, if otherwise; OYSTER = 1, if had oyster license in 2005 (51%); =0, if otherwise; OYSTER = 1, if had oyster license in 2005 (51%); =0, if otherwise; SHRIMP = 1, if had shrimp license in 2005 (75%); =0, if otherwise; SHRIMP = 1, if had shrimp license in 2005 (75%); =0, if otherwise; MULTIPLE = 1, if had multiple licenses in 2005 (50%); =0, if otherwise; MULTIPLE = 1, if had multiple licenses in 2005 (50%); =0, if otherwise; May 26-28, 2010 Third National Forum on SocioEconomic Research in Coastal Systems66

Independent Variables from 2005 Damage Assessment Survey TOTDAM = total damages due to HK (CB-$34K, CBFH- $21K); TOTDAM = total damages due to HK (CB-$34K, CBFH- $21K); INSURE = 1, if received insurance payments due to HK (CB-3%, CBFH-27%); =0, if otherwise; INSURE = 1, if received insurance payments due to HK (CB-3%, CBFH-27%); =0, if otherwise; SBALOAN = 1, if had outstanding SBA loan when HK landed (CB-11%, CBFH-5%); =0, if otherwise; SBALOAN = 1, if had outstanding SBA loan when HK landed (CB-11%, CBFH-5%); =0, if otherwise; OTHLOAN = 1, if had other outstanding loans when HK landed (CB-22%, CBFH-49%); =0, if otherwise; OTHLOAN = 1, if had other outstanding loans when HK landed (CB-22%, CBFH-49%); =0, if otherwise; SALESLOST = percent of 2005 annual gross sales lost due to HK (CB-73%, CBFH-62%); SALESLOST = percent of 2005 annual gross sales lost due to HK (CB-73%, CBFH-62%); May 26-28, 2010 Third National Forum on SocioEconomic Research in Coastal Systems77

Independent Variables on Unit Size FEET = boat length (CB-47ft, CBFH-37ft) ; FEET = boat length (CB-47ft, CBFH-37ft) ; TOTAL1 = total initial investment (CB-$128K, CBFH-$142K); TOTAL1 = total initial investment (CB-$128K, CBFH-$142K); CREW2004 = number of crew in 2004 (CB-2, CBFH-2); CREW2004 = number of crew in 2004 (CB-2, CBFH-2); CREWNOW = number of crew after HK (CB-1, CBFH-1); CREWNOW = number of crew after HK (CB-1, CBFH-1); SALES2004 = annual gross sales in 2004 (CB- $83K, CBFH-$59K); SALES2004 = annual gross sales in 2004 (CB- $83K, CBFH-$59K); May 26-28, 2010 Third National Forum on SocioEconomic Research in Coastal Systems88

Independent Variables on Location HANCCO = 1, if located in Hancock County in 2005 (CB-21%, CBFH-0%); =0, if otherwise; HANCCO = 1, if located in Hancock County in 2005 (CB-21%, CBFH-0%); =0, if otherwise; HARRCO = 1, if located in Harrison County in 2005 (CB-55%, CBFH-93%); =0, if otherwise; and HARRCO = 1, if located in Harrison County in 2005 (CB-55%, CBFH-93%); =0, if otherwise; and JACKCO = 1, if located in Jackson County in 2005 (CB-24%, CBFH-7%); =0, if otherwise; JACKCO = 1, if located in Jackson County in 2005 (CB-24%, CBFH-7%); =0, if otherwise; May 26-28, 2010 Third National Forum on SocioEconomic Research in Coastal Systems99

Logit Results and Implications for Commercial Boats Number of crew after HK (++) Number of crew after HK (++) Previous year license (+++) Previous year license (+++) Boat length (+) Boat length (+) Type of fishing license Type of fishing license –Crab license (++) –Oyster license (--) Year (---) Year (---) May 26-28, 2010 Third National Forum on SocioEconomic Research in Coastal Systems1010

Logit Results and Implications for Charter Boats-For-Hire Loan from SBA (+++) Loan from SBA (+++) Loan from other sources (--) Loan from other sources (--) Sales lost due to HK (+) Sales lost due to HK (+) Feet (+) Feet (+) Total initial investment (+) Total initial investment (+) May 26-28, 2010 Third National Forum on SocioEconomic Research in Coastal Systems1111

Conclusions Commercial Fleet: Commercial Fleet: –Self employment would encourage renewal of licenses –Current license holders would tend to keep their licenses –Bigger boats would tend to renew their licenses –Status of fishery resource would affect renewal –Over time the total size of the fleet would tend to decline May 26-28, 2010 Third National Forum on SocioEconomic Research in Coastal Systems1212

Conclusions Charter Boats-For-Hire Fleet: Charter Boats-For-Hire Fleet: –Having loan from SBA would encourage renewal –Having loan from banks or family members would encourage exit –Perception of sales lost due to disaster would encourage renewal –Larger and more expensive boats would tend to stay May 26-28, 2010 Third National Forum on SocioEconomic Research in Coastal Systems1313