The Economic Case for Rebuilding Mid-Atlantic Fish Populations This Report Was Prepared by Dr

Investing In Our Future: The Economic Case for Rebuilding Mid-Atlantic Fish Populations This report was prepared by Dr. John M. Gates, Professor Emeritus of Economics and Environmental and Natural Resource Economics at the University of Rhode Island. He holds a Ph.D. in economics from the University of California, Berkeley. He has extensive experience in the field of fisheries economics and has written dozens of peer-reviewed journal articles over the past three decades, publishing in such journals as Marine Resource Economics, Journal of Applied Economics, Marine Policy, and American Journal of Agricultural Economics.

The author would like to thank Dr. Daniel D. Huppert, Dr. Jon G. Sutinen, Dr. Rashid Sumaila and Kathryn Semmens for comments, input and assistance. Any omissions or errors are the sole responsibility of the author.

Contact:

John M. Gates, Professor Emeritus Departments of Economics and Environmental and Natural Resource Economics University of Rhode Island 33 Thistledown Lane Kingston, RI 02881 Tel. 401.789.0518 [email protected]

Citation: Gates JM (2009), “Investing in Our Future: the Economic Case for Rebuilding Mid-Atlantic Fish Populations.” Published by the Pew Environment Group, Washington, D.C.

Photo credit: Joe Richard/seafavorites.com Executive Summary study estimates direct economic would have generated an benefits by comparing status additional $570 million per year Rebuilding depleted fish quo management scenarios with in perpetuity in direct economic populations must be a priority, scenarios where populations benefits. During a 5 year period, both for the health of our ocean would have been rebuilt by 2007. the accrued total would total ecosystems and our coastal $2.85 billion in economic benefit, communities. The Magnuson- If the four species had been a substantial contribution to the Stevens Fishery Conservation and rebuilt by 2007, commercial Mid-Atlantic economy and its Management Act, the primary law landings would increase by 48 coastal communities. that governs our ocean fisheries, supports this by mandating an end to overfishing and rebuilding In sum, for both commercial and recreational fishing depleted fish populations within sectors, rebuilding populations of black sea bass, 10 years, if biologically possible. bluefish, butterfish and summer flounder by 2007 would have generated an additional $570 million per year in Delayed rebuilding has significant costs. Failure to immediately perpetuity in direct economic benefits. During a 5 year address overfishing and allow fish period, the accrued total would total $2.85 billion in populations to rebuild as quickly economic benefit, a substantial contribution to the as possible forgoes current Mid-Atlantic economy and its coastal communities. economic benefits and may result in more costly regulations in the percent, resulting in an additional These direct economic benefits long–term. While delay imposes $33.6 million per year (in 2007 would have potential secondary considerable costs, there are also dollars) in direct economic impacts in the region through important benefits to be gained benefits in perpetuity. In the increased income, sales and jobs from rebuilding. Previous studies recreational sector, rebuilding for related businesses such as bait found that rebuilding just 17 these four fish populations would and tackle shops, lodging and depleted fish populations would increase landings by 24 percent restaurants. Thus, the estimates increase the economic value of more per year than status quo reported here are conservative these fisheries from $194 million management, with an economic and the actual benefits are likely to $567 million dollars. value of approximately $536 to be more expansive. These This report provides new analysis million per year (in 2007 dollars) results provide analytical evidence of the potential economic in perpetuity. that there is both significant value benefits of rebuilding, focusing in rebuilding fish populations and In sum, for both commercial on four depleted fish populations foregone economic benefits from and recreational fishing sectors, in the Mid-Atlantic: summer delaying rebuilding. rebuilding populations of black flounder, black sea bass, sea bass, bluefish, butterfish bluefish and butterfish. The and summer flounder by 2007

INVESTING IN OUR FUTURE: THE ECONOMIC CASE FOR REBUILDING MID-ATLANTIC FISH POPULATIONS 1 Introduction species to recover, as seen in and allow populations to rebuild New England where cod have as rapidly as possible may lead Ending overfishing is a critical failed to rebuild after reductions to severe regulations that are first step to ensuring healthy fish in fishing pressure were slowly longer in duration and thus more populations, but for depleted phased in.3 In contrast, haddock costly.5 Delays also raise the populations, it is not enough. has rebounded after fishing potential for population collapse. Rebuilding depleted populations pressure was reduced quickly. Although the costs caused by must also be a priority, not just delaying rebuilding for the sake of conserving are telling, the benefits fish populations but “The longer managers allow that can be gained from also for improving overfishing, the more depletion rebuilding are equally economic conditions in undermines subpopulations’ diversity, important. While there coastal communities. resilience, and adaptability; risks has been a dearth of The Magnuson-Stevens ecosystem structure and functioning; analysis regarding such Fishery Conservation reduces chances for eventual benefits, there have and Management Act recovery; and raises social and been a few studies that (MSA) mandates an end 4 economic costs.” estimate the substantial to overfishing and the gains from rebuilding. rebuilding within 10 While there are other factors that years of depleted populations influence a fish species’ ability Benefits of to levels able to support to rebuild, fishing pressure Rebuilding maximum amount of fish that is an important and strong Sumaila and Suatoni (2005) can sustainably be caught, if constraint. Ecologically, delayed estimated the economic benefits biologically possible.1 Congress rebuilding can have negative (potential value calculated in chose 10 years based on input impacts that reverberate 2005 dollars) of rebuilding 17 from experts on population throughout the ecosystem, valuable U.S. fish populations dynamics during the 1996 affecting prey and predator and found great potential to reauthorization of the MSA. relationships and weakening the increase net present value. While those scientists estimated ecosystem’s ability to respond They compared rebuilding that most marine species to other pressures such as scenarios to recent catch and could rebuild within five years, climate change. found rebuilding resulted in Congress chose a longer time about three times more value frame (10 years) to minimize Economically, delayed rebuilding in 2005 dollars than status social and economic costs.2 means lost opportunities quo. Specifically, rebuilding for fishermen to catch the Promptly rebuilding diminishes just 17 depleted populations maximum amount of fish that biological, ecological and resulted in an increase from can sustainably be taken from a economic costs to the fishery. $194 million to $567 million in population. It also means fewer Biologically, delayed rebuilding 2005 dollars, although this is jobs and less income. Failing may impede the ability of a likely an underestimate given to quickly address overfishing

2 PEW ENVIRONMENT GROUP that the study only analyzed then compared for an estimate Scenario 1, the status quo, direct economic benefits from of the benefits that could have followed what actually happened increased fishing opportunities.6 resulted if the rebuilding plan in the populations from the base had been followed. The indicator year to 2007. The base year An earlier study, part of the used to assess economic benefits was 1994 for black sea bass and 2003 Final Supplemental is landed value plus reductions bluefish and 1982 for butterfish Environmental Impact in trip costs in the commercial and summer flounder.10 These Statement for the Final sector and willingness-to-pay in timeframes are not analogous to Amendment 13 to the the recreational sector, measures the exact rebuilding timeframes Northeast Multispecies Fishery that will be explained in more in each species’ fishery Management Plan, the New detail in the next section. management plan; rather, the England Fishery Management time periods used were based Council estimated a potential Methodology and Results on the catch and landings data cumulative value of rebuilding 11 A retrospective analysis of each that were available. Scenario New England groundfish to be species (summer flounder, 2, the projected rebuilding roughly $300–$500 million in butterfish, black sea bass and plan, followed what would have 2003 dollars relative to status bluefish) was conducted. These happened if the population had quo.7 Outside these and a few species were chosen because been managed so that the fishing other reports and assessments, they were under rebuilding plans rate was kept at the rebuilding there has been little research on at the beginning of 2009 when level, allowing the population the benefits of rebuilding or the the analysis was done.8 Data to rebuild to its target size and costs of delaying rebuilding. on population size (biomass), able to support the maximum In order to expand on this fish killed as a result of fishing amount of fish that can be 12 previous work, this study (fishing mortality) and the rate at sustainably caught each year. analyzed the economic benefits which unwanted or illegal fish are The study estimated and of rebuilding four depleted fish discarded at sea (bycatch) for each compared the catch and landed populations according to their species was obtained from Mid- value for both recreational and fishery management plans. It Atlantic Council staff and Council commercial sectors associated modeled catch projections for documents including fishery with each of these scenarios summer flounder, butterfish, management plans. These data for each species and then black sea bass, and bluefish were used to project population aggregated across all species. under two scenarios: the actual size over time with a model that In some fisheries there are catch that occurred up until included estimates for r (intrinsic rather substantial differences 2007 (status quo–Scenario population growth rate) and K between the amount of fish 1), and the catch that would (the maximum population size or caught by fishermen and fish have resulted from following a carrying capacity).9 brought back to the dock and projected rebuilding plan based The analysis simulated and landed. This difference is the on the target fishing mortality compared two population size amount of fish discarded at sea rate (rebuilding target–Scenario projections for each species. and the number that survives 2). These two scenarios were

INVESTING IN OUR FUTURE: THE ECONOMIC CASE FOR REBUILDING MID-ATLANTIC FISH POPULATIONS 3 affects rebuilding rates and Figure 1. Summer Flounder Population Size for Status Quo and Rebuilding Scenarios: 1982–2007 biomass levels (see appendix); 140 direct economic benefits for 120 the commercial sector are only 100 derived from that portion of the 80 m catch that is landed and sold. A t 60 Rebuilding projection Status Quo management strategy that is able

Thousands 40 to reduce discards would show 20 larger economic returns from 00 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 rebuilding (likely significantly Year The blue line shows population size under actual management; the red line shows the larger), as there is an economic population size if the target fishing mortality had been realized. loss associated with discards that don’t survive. Even if no discards Figure 2. Butterfish Population Size for Status Quo and Rebuilding Scenarios: survived, it would be preferable 1982–2002

22 from an economic perspective to 21 achieve conservation by reducing Rebuilding projection 20 fishing mortality, keeping all the 19 catch, and reducing discards, so m 18 t Status Quo 17 that the maximum sustainable

Thousands 16 landed value can be obtained 15 and the population rebuilt as 14 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 soon as possible. Year The blue line shows the population size under actual management; the red line shows To measure the direct economic the population size if the target fishing mortality had been realized. benefits from rebuilding, the analysis used value of landed fish

Figure 3. Black Sea Bass Population Size for Status Quo and Rebuilding Scenarios: plus reductions in trip costs as 1994–2007 the indicator in the commercial 18 sector; for the recreational sector 16 Rebuilding projection 14 willingness-to-pay estimates 12 were used. Specifically, the m t 10 study assessed the change in

Thousands 8 landed value plus the change Status Quo 6 in trip costs to measure the 4 economic benefits.13 1994 1996 1998 2000 2002 2004 2006 2008 Year The blue line shows the population size under actual management; the red line shows the population size if the target fishing mortality had been realized.

4 PEW ENVIRONMENT GROUP assesses the change from status Figure 4. Bluefish Population Size for Status Quo and Rebuilding Scenarios: 1994–2007 quo; it is not a measure of total 250 Status Quo net benefits. Table 2 presents a 200 summary of the results. Rebuilding projection 150 Comparing intended rebuilding m t 100 paths to what actually occurred

Thousands in the four fisheries shows 50 commercial landings would 0 increase by 48 percent or 7,864 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Year mt per year under the rebuilding The blue line shows the population size under actual management; the red line shows scenario. The commercial landed the population size if the target fishing mortality had been realized. The lines are similar because bluefish remained on track during its rebuilding plan. value for all four species was $55.3 million per year under Landed values and economic are in the form of 2007 dollars the status quo scenario, while benefits are reported in the per year (equivalent annuities). under the rebuilding scenario form of equivalent annuities, projected revenues would be which is a measure of the value Direct Economic about $88 million per year in dollars per year. To calculate Benefits in 2007 dollars. Comparing these values, the analysis took To estimate direct economic the status quo scenario with the benefits foregone each year benefits (Table 1), the the rebuilding scenario in the during the rebuilding period commercial and recreational commercial sector (shown in from the base year to 2007 and sectors were assessed separately. Figure 5), the gain in annualized compounded them to 2008. The To calculate annualized values landed values is about 59 resulting value is the lump sum for catch, landed weight and percent ($32.6 million more per value of rebuilding in dollars landed value the study compared year), if one assumes that there which is then converted to the status quo scenario and the are no changes in the number of equivalent annuities or value in rebuilding target scenario. These trips taken or in costs associated dollars per year extending into values were then aggregated with fishing. 14 the future indefinitely. For the across species so that the change Direct economic benefits were conversion, the lump sum value in net benefits from the status calculated from the commercial was multiplied by a discount quo could be estimated. The sector as the additional revenues rate of 2.8 percent to obtain the analysis is comparative and from landings plus the reduction equivalent annuities in 2007 dollars. The result represents TABLE 1. Estimates of Direct Economic Benefits from Rebuilding how much is gained each year, Additional $ per year in perpetuity, as a result of Gain in Annualized Commercial Landed Value $32,600,000 15 rebuilding. All results reported Annualized Trip Cost Savings $978,000 in tables and charts in this report Annualized Recreational Willingness–To–Pay $536,000,000 Total Direct Benefits $569,600,000

INVESTING IN OUR FUTURE: THE ECONOMIC CASE FOR REBUILDING MID-ATLANTIC FISH POPULATIONS 5 TABLE 2. Combined Catch, Landings and Landed Value Total Status Quo Rebuilding Target Change % Increase Commercial Catch 21,287 mt/yr 30,765 mt/yr +9,478 mt/yr 45% Landings 16,510 mt/yr 24,374 mt/yr +7,864 mt/yr 48% Landed Value $55,315,365 $87,964,321 $32,648,956 59% Recreational Catch 37,937 mt/yr 46,734 mt/yr 8,747 23% Landings 28,655 mt/yr 35,423 mt/yr 6,731 24% The combined total catch, landings and landed value for commercial and recreational fishing for four species in the Mid-Atlantic. The gain and percent increase from rebuilding compared to status quo is presented. in trip costs associated with savings of $978,000 per year respondents their willingness- lower fishing mortalities.16 might be realized by following to-pay for a one fish increase If the rebuilding scenario the rebuilding scenarios.18 Thus in success rate per recreational had been followed and the the total benefit from revenue visit and estimated an aggregate populations rebuilt as planned, and trip cost savings is an value.20 Since rebuilding the the commercial sector would increase of $33.6 million per four mid-Atlantic species under have realized a near doubling of year in perpetuity under the study would bring an increase in ex-vessel annualized revenues. rebuilt scenario. landings of 24 percent or 6,768 However, regulations to achieve mt more per year than status For direct economic benefits reductions in fishing effort quo, the economic value of this from the recreational sector, usually result in fewer trips increase would be based on how willingness-to-pay estimates taken, meaning that trip costs willingness-to-pay changes due were used from a previous are reduced in proportion to to the increase in catch. study by Hicks et al, the most fishing mortality. Assuming a recent one available.19 The 1994 To calculate this change, the cost reduction equivalent to 3 study by Hicks et al. asked change in pounds of fish caught percent of revenues,17 a cost per recreational visit between Figure 5. Combined Annualized Commercial Landed Value (in millions) for 4 Mid-Atlantic the status quo and rebuilding Species under Status Quo and Rebuilt Scenarios Total scenarios was divided by 100 the average weight of a fish 80 (estimated from the Hicks 60 study21) for each year in the

40 rebuilding period to obtain ($ millions) the change in number of fish 20

Commercial Landed Value Commercial caught per visit. This value was 0 Status Quo Rebuilt then multiplied by the Hicks’ The blue bar represents the value ($) per year for the combined landings of summer willingness-to-pay estimate for flounder, black sea bass, bluefish, and butterfish under status quo management; the red bar represents the value ($) per year in perpetuity for landings under a scenario a one fish per visit increase in where the populations are rebuilt by 2007. success rate in 2007 dollars (this

6 PEW ENVIRONMENT GROUP value was converted from 1994 dollars to 2007 dollars using the Consumer Price Index). This calculation was done for each year of the rebuilding period and then financial formulas were applied (i.e., calculating lump sum and equivalent annuities or value in dollars per year) to the time series of willingness-to-pay estimates. These calculations determined that the economic value of rebuilding in the recreational sector, measured : Herb Segars/gotosnapshot.com Photo credit as the willingness-to-pay Summer flounder are found from North Carolina to Maine. for enhanced success rates, These fish stay in bays and estuaries during the summer, would be approximately $536 migrating offshore in autumn where they spawn; water currents 22 million per year in perpetuity. carry larvae back to the coast to develop. Sexually mature by This assumes that average age two, females live to 20, while males live until 10. willingness-to-pay has not changed over time. More detail Otter trawl is the principal fishing gear in the commercial on this methodology is provided fishery, which is allocated 60 percent of the total allowable in the technical appendix. catch, leaving 40 percent for recreational fishermen. However, the recreational rod and reel fishery has caught a large portion Species of the total catch, sometimes exceeding the commercial landings. Recreational catch peaked in 1983 at 12,700 mt and Summer flounder then declined, ranging from 3,800 mt to 7,100 mt between (Paralichthys dentatus) 1996 and 2005. Of the four species assessed, summer flounder is the highest population size by January 1, spawning biomass or amount value commercial fishery, with 2013, as required by Section of fish able to reproduce was the most to gain and the most 120(a) of the Magnuson-Stevens approximately 95.6 million to lose. Managed cooperatively Fishery Conservation and lbs., or about 72 percent of the by the Mid-Atlantic Fishery Management Act. 132.4 million lb. rebuilding Management Council and target—slightly short of being In 2007, summer flounder the Atlantic States Marine rebuilt. This is an improvement was not considered overfished Fisheries Commission, the from the late 1980s and early (population size depleted to summer flounder is currently 1990s when the population had unsustainably low levels) or under a rebuilding plan which reached record low abundance subject to overfishing and its calls for it to reach its target

INVESTING IN OUR FUTURE: THE ECONOMIC CASE FOR REBUILDING MID-ATLANTIC FISH POPULATIONS 7 levels. This decline affected the Figure 6. Trends in Summer Flounder Biomass: 1982–2007 100 age structure of the population 90 by reducing the number of older 80 Target biomass 70 fish. Under a management 60 m plan for almost 20 years and 50 t 40 with fishing regulations that Thousands Biomass (mt) 30 have gradually reduced quotas 20 10 to sustainable levels, the last 0 decade has seen an expansion in 1982 1987 1992 1997 2002 2007 Year the amount of summer flounder Summer flounder biomass from 1982 to 2007 show a general upward trend, a (biomass) and a more normal result of management measures starting with Amendment 2 to the fishery distribution of the population’s management plan implemented in 1993. age structure. The amount of fish able to reproduce has also Figure 7. Annualized Commercial Landed Value for Summer Flounder increased from a low of 7,017 mt Summer Flounder 80 in 1989 to an estimated 43,363 mt in 2007. This increasing 60 trend in biomass is shown in

40 Figure 6. ($ millions) 20 The gains of rebuilding summer flounder sooner (in 2007 as Commercial Landed Value Commercial 0 opposed to the 2013 status Status Quo Rebuilt quo deadline) and achieving The blue bar represents the value ($) per year for commercial landings under status quo management; the red bar represents the value ($) per year in perpetuity for the target rebuilding path landings from rebuilding the population by 2007. are significant, as shown in Table 3. Annualized commercial TABLE 3. Summer Flounder Catch, Landings and Landed Value landings would have been Summer Flounder Status Quo Rebuilding Target Change 6,184 mt more per year if the Commercial intended rebuilding plan had Catch 7,583 mt/yr 13,958 mt/yr +6,375 mt/yr been achieved, allowing for the Landings 7,356 mt/yr 13,540 mt/yr +6,184 mt/yr maximum amount of fish that Landed Value $43,943,165 $72,863,640 $28,920,475 could have sustainably been Recreational taken in 2007, compared to what Catch 5,055 mt/yr 9,306 mt/yr +4,250 mt/yr actually transpired (Figure 7). Landings 3,994 mt/yr 7,351 mt/yr +3,358 mt/yr This translates into a possible 66 Summer Flounder catch and landings (in mt per year) and landed value (in $ per year) for status quo and rebuilt target scenarios and the difference percent increase in commercial between the two scenarios. landed value or a $28.9 million

8 PEW ENVIRONMENT GROUP gain per year. There would also have been an 84 percent increase in recreational landings under a rebuilding scenario.

Butterfish (Peprilus triacanthus)

A 2004 stock assessment determined that the butterfish population was at an unsustainably low level in 2002 with a biomass of only 7,800 mt, well below the threshold level of 11,400 mt,23 but that overfishing was no longer occurring. Additionally, the age Photo credit : Herb Segars/gotosnapshot.com Photo credit distribution was truncated to Small and bony, butterfish grow quickly and rarely live more three years from a historical than three years. It is managed as a unit from Cape Hatteras to average of six years. Most the Gulf of Maine, migrating according to water temperature, troubling, scientists estimated moving north in summer as temperature increases. There is that discards of butterfish caught no recreational fishery and commercial landings have declined unintentionally in the Loligo since 1985, reaching a record low of 432 mt in 2005. In addition, squid fishery were twice the level butterfish are caught incidentally in other fisheries where they of annual commercial landings. suffer high levels of mortality. The Mid-Atlantic Fishery Management Council has developed a rebuilding plan as Figure 8. Trends in Butterfish Biomass: 1968–2002 part of Amendment 10 (which is 70 not yet a final rule) along with a 60 cap on the amount of butterfish 50 40 caught incidentally in the squid m Target biomass 30 fishery. The rebuilding plan t

Thousands 20 estimates that the population Biomass 10 will be rebuilt in five years, but 0 it could be rebuilt in less time 1968 1972 1977 1982 1987 1992 1997 2002 Year if reproduction rates are high Butterfish biomass from 1968 to 2002 reflects a general downward trend with the and the proposed fishing rate is population depleted to an unsustainable level in 2002. not increased. Figure 8 shows the fluctuations in butterfish

INVESTING IN OUR FUTURE: THE ECONOMIC CASE FOR REBUILDING MID-ATLANTIC FISH POPULATIONS 9 TABLE 4. Butterfish Catch, Landings and Landed Value mesh size gear used for squid Butterfish Status Quo Rebuilding Target Change and the fact that butterfish and Commercial Loligo inhabit the same areas Catch 4,918 mt/yr 6,680 mt/yr +1,762 mt/yr year round. Landings 1,672 mt/yr 2,271 mt/yr +599 mt/yr Black Sea Bass Landed Value $2,497,587 $4,974,728 $2,477,141 (Centropristis striata) Butterfish catch and landings (in mt per year) and landed value (in $ per year) for status quo and rebuilt target scenarios and the difference between the two scenarios. Black sea bass are managed by the Mid-Atlantic Fishery Figure 9. Annualized Commercial Landed Value (in millions per year) for Butterfish. Management Council and the Butterfish 6.0 Atlantic States Marine Fisheries

5.0 Commission under the Summer

4.0 Flounder, Scup and Black Sea

3.0 Bass Fishery Management Plan.

($ millions) 2.0 There is both a commercial and recreational fishery, each 1.0 Commercial Landed Value Commercial accounting for half of total 0 Status Quo Rebuilt landings by weight over the The blue bar represents the value ($) per year for commercial landings under the status past 10 years. The commercial quo scenario; the red bar represents the value ($) per year in perpetuity for landings for the rebuilt scenario. fishery mainly uses hook and line and fishing traps called pots. biomass that have resulted from catch or bycatch that occurs Commercial landings in 2005 variable reproduction, though on in the Loligo squid fishery. were 1,310 mt, up from a low of average the population size has Butterfish are typically caught 566 mt in 1971, but still well below declined since the early 1980s. unintentionally due to the small a peak of 10,000 mt in 1952.

Since there is no recreational fishery for butterfish, all direct Figure 10. Trends in Black Sea Bass Biomass: 1982–2007 16 economic benefits are found in the commercial sector. Under a 14 Target biomass rebuilt scenario, landings would 12 be 599 mt higher per year than m t Biomass 10 the status quo scenario (Figure Thousands 9), a gain of roughly $2.5 million 8 per year, or 99 percent (Table 4). 6 The large difference between 1982 1987 1992 1997 2002 2007 landings and catch reflects the Year Black sea bass biomass trends from 1982 to 2007. Coastwide quotas, allocated high amount of unintentional into quarterly periods, were put in place in 1996.

10 PEW ENVIRONMENT GROUP In early 2009, fishery scientists determined that black sea bass was subject to overfishing, but that the population size was not depleted to an unsustainably low level. The population has rebounded from its historic lows. Currently at 92 percent of the spawning biomass goal of 27.6 million pounds, it is scheduled to be rebuilt in 2010. However, information about the black sea bass population is limited, and more information is needed on the effect of sex changes

Photo © Marilyn & Maris Kazmers / SeaPics.com on the reproductive potential of the population. There is Black sea bass are found from the Gulf of Maine to Gulf of also considerable uncertainty Mexico, living near bottom structures and reef habitats. They regarding the level of natural move seasonally, migrating offshore in the winter and spawning mortality. Estimates of trends in coastal waters in the spring. They are caught in a trawl in population size, shown in fishery along with summer flounder and scup. Black sea bass Figure 10, show an average begin life as females and change into males between two decrease since the mid 1980s, and five years of age, causing the proportion of males in the but an increase within the last population to increase with size and age. few years.

The commercial sector of Figure 11. Annualized Commercial Landed Value (in millions) for Black Sea Bass Black Sea Bass the black sea bass fishery is 3.8 projected to have a landings 3.7 3.6 gain of 261 mt per year under 3.5 a rebuilt scenario (Figure 3.4 11), an increase in value of

($ millions) 3.3 3.2 $499,756 per year (roughly 3.1 15.4 percent). As with the Commercial Landed Value Commercial 3.0 analysis of the commercial Status Quo Rebuilt sector, the differences for the The blue bar represents the value ($) per year for commercial landings under status quo management; the red bar represents the value ($) per year for landings if the recreational sector between population had been rebuilt by 2007. the retrospective rebuilding

INVESTING IN OUR FUTURE: THE ECONOMIC CASE FOR REBUILDING MID-ATLANTIC FISH POPULATIONS 11 TABLE 5. Black Sea Bass Catch, Landings and Landed Value rate was controlled to allow Black Sea Bass Status Quo Rebuilding Target Change the population to rebuild. Commercial In 2004, bluefish was no Catch 2,606 mt/yr 3,127 mt/yr +521 mt/yr longer considered to be at an Landings 1,303 mt/yr 1,564 mt/yr +261 mt/yr unsustainably low level or Landed Value $3,252,852 $3,752,609 $499,757 subject to overfishing, and the Recreational amount of fish in the population Catch 2,712 mt/yr 3,255 mt/yr +543 mt/yr had risen to 104,136 mt, an Landings 2,034 mt/yr 2,441 mt/yr +407 mt/yr increase from the historic lows in Black Sea Bass catch and landings (in mt per year) and landed value (in $ per the mid-1990s (Figure 12). 26 year) for status quo and rebuilt target scenarios and the difference between the two scenarios. and status quo scenarios are significant (Table 5). Comparing the two scenarios, the gain in annualized landed values is about 20 percent or a 407 mt increase per year. The monetary value of this increase in landings was calculated later using willingness-to-pay estimates for the sum of gains from recreational landings for all four species.

Bluefish (Pomatomus saltatrix) Photo credit : Herb Segars/gotosnapshot.com Photo credit Recently declared successfully rebuilt in the 2008 Status of Bluefish is a migratory predator found in coastal waters U.S. Fisheries report issued from Florida to Maine, but it is mainly caught by recreational by National Marine Fisheries fishermen off the Mid-Atlantic States from New York to Virginia. Service, bluefish proves that It is managed jointly by the Mid-Atlantic Fishery Management rebuilding a depleted fish Council and the Atlantic States Marine Fisheries Commission population to a sustainable under a fishery management plan implemented in 1990. The level is an achievable goal.25 recreational fishery is allocated 83 percent of the annual quota, Under a nine year rebuilding while the commercial fishery has 17 percent, based on the plan implemented in 2001, historical trends of recreational landings that account for 80–90 24 bluefish’s fishing mortality percent of total catch.

12 PEW ENVIRONMENT GROUP Since the actual population size Figure 12. Trends in Bluefish Biomass: 1982–2007 trajectory is very close to the 400 intended rebuilding plan, the 350 300 difference in the two scenarios 250 is not as significant as for other m 200 profiled species (Figure 13). t Target Biomass 150 Thousands Specifically, a comparison of 100 Biomass (mt) the two scenarios, shown in 50 0 Table 6, reveals that there is an 1983 1987 1992 1997 2002 2007 annualized gain in commercial Year landings of 820 mt per year Bluefish biomass trends from 1982 to 2007 show the population steadily declining until reaching a low in 1993. Levels gradually rebuilt to the target biomass (reached under the rebuilding scenario in 2008) after a fishery management plan was implemented in 1990. which amounts to a value of $751,585 per year, or a 13.4 Figure 13. Annualized Commercial Landed Value (in millions) for Bluefish. percent increase. On the Bluefish 6.6 recreational side, estimated 6.4 annualized landings increase by 6.2 3,003 mt per year, a 13.3 percent 6.0 increase. 5.8 ($ millions) 5.6 5.4 Commercial Landed Value Commercial 5.2 Status Quo Rebuilt The blue bar represents the value ($) per year for commercial landings under status quo management; the red bar represents the value ($) per year in perpetuity for landings under the rebuilt scenario.

TABLE 6. Bluefish Catch, Landings and Landed Value Bluefish Status Quo Rebuilding Target Change Commercial Catch 6,179 mt/yr 6,999 mt/yr +820 mt/yr Landings 6,179 mt/yr 6,999 mt/yr +820 mt/yr Landed Value $5,621,760 $6,373,345 $751,585 Recreational Catch 30,170 mt/yr 34,174 mt/yr +4,004 mt/yr Landings 22,627 mt/yr 25,630 mt/yr +3,003 mt/yr Bluefish catch and landings (in mt per year) and landed value (in $ per year) for status quo and rebuilt target scenarios and the difference between the two scenarios.

INVESTING IN OUR FUTURE: THE ECONOMIC CASE FOR REBUILDING MID-ATLANTIC FISH POPULATIONS 13 Conclusion bait and tackle shops, although, fisheries management measures these cannot be meaningfully are enacted, enforced and If populations of summer added to direct benefits and sustained. If measures are flounder, butterfish, black sea are difficult to assess due to not maintained, the success bass and bluefish were rebuilt confounding variables. Still, it and benefit of rebuilding will by 2007, an additional $570 is important to note that the dissipate; providing further million per year in perpetuity in primary, direct benefits are a evidence that adopting direct economic benefits would conservative estimate and the science-based rebuilding plans have resulted. This potential benefits may expand beyond and regulations that achieve benefit is the combination of a the sums estimated here. the required reductions in $33.6 million per year increase Furthermore, this study is only fishing mortality are critical in commercial landed value a partial economic valuation of to rebuilding valuable (including trip cost savings) and rebuilding; it does not include fish populations as soon a $536 million per year increase the value to processors and as possible.28 in the value of landings to the retailers of rebuilding. A full recreational sector (estimated Importantly, this study provides economic valuation of rebuilding as increased willingness-to- analytical evidence that there would require a combination pay for visits). Put another is value in rebuilding fish of direct use value (revenues way, the foregone benefit of populations and foregone and costs), indirect use value rebuilding is $570 million per economic benefits from delaying (sales, jobs, and income, etc.) year in 2007 dollars. Over a rebuilding. In 2003, the Pew and non-use value (the value five-year period the accrued total Oceans Commission concluded of preserving the resource for would reach $2.85 billion in that “rebuilding U.S. fisheries future generations and the value economic benefit, a substantial has the potential to restore of knowing the resource exists), contribution to the mid-Atlantic and create tens of thousands an extensive undertaking that is economy and its coastal of family wage jobs and add constrained by data limitations communities. at least $1.3 billion to the U.S. and is beyond the scope of 29 27 economy.” That assertion These direct economic benefits this study. is supported by this report’s would have potential secondary In addition, these economic finding of an increase of $570 impacts in the region assuming estimates are premised on million per year estimated for increased income, sales and jobs population recoveries which, in just four species in the mid- in associated businesses such as turn, presume that appropriate Atlantic region.

14 PEW ENVIRONMENT GROUP Appendix: Technical summary of economic methodology

Biomass Growth Functions Or growth rate, since a > r for sd > 0. This effect makes sense Biomass growth functions ΔB(t) = G(B(t)) – C(t) + S(t); intuitively. describe the response of biomass Steady state is attained when to changes in parameters and to To find the “Maximum ΔB(t) → 0; catch plus surviving fishing mortality. sustainable yield” (MSY), discards equal growth: differentiate with respect to B Growth equation: G(B) where C–S = G(.) ; the time and equate the result to zero: B = biomass subscript being irrelevant in dC/dB = a-b(a/K)Bb–1= 0; Particular cases of G are: steady state. solving for B: G(B) = rB–(r/K)Bb C– S = rB-(r/K)Bb for the Bmsy = (K/b) where the Bernoulli equation Bernoulli equation.   1/(b-1). When b = 2 this equation is All points along this curve are Note that surviving discards reducible to: steady state equilibria. These have not affected the Bmsy, but equilibria may be stable or G(B) = rB(1-B/K) the rate of approach to Bmsy is unstable, depending on the accelerated. For the Schaeffer- parameterization. and is referred to as the Gordon special case in which Schaeffer or Gordon equation. Discards and survivors b = 2, this reduces to The more general case in which Bmsy = K/2. Suppose the discard rate is d. b ≠ 2 is labeled, in fisheries, is Then discards = dC. Suppose Production Function or Catch the Pella-Tomlinson equation. the survival rate of discards is s. Equation: Then survivors are: Another form is the Gompertz C = H(F,B) = B(F/Z)(1–e–Z); growth function: S = sdC Z = F + M; M = natural G(B) = rBln(K/B). mortality. so, in steady state: These are all two parameter Landings versus Catches: C(1-sd) = rB-(r/K)Bb for the curves with parameters r and K, Bernoullli equation, or L = (1–d)C = (1–d)H(F,B) where K = carrying capacity and r = “intrinsic” growth rate. C = (r/(1-sd))B(1 – B/K) maximum sustainable yield is:

Biomass Difference Equation Let a = r/(1-sd), Cmsy = H(Fmsy , Bmsy)

B(t+1) = B(t) + G(B(t)) – C(t) C = aB(1 – B/K) Lmsy = (1–d)Cmsy + S(t); C(t) = catch; S(t) = which makes it clear that the For the special Schaeffer-Gordon surviving discards. effect of surviving discards is case in which b = 2, the steady analogous to a larger intrinsic state or sustainable yield curve

INVESTING IN OUR FUTURE: THE ECONOMIC CASE FOR REBUILDING MID-ATLANTIC FISH POPULATIONS 15 is a homogeneous quadratic and fishing mortality coefficients easily understood by the as such is perfectly symmetric during the rebuilding period. general public than lump sum about a midpoint which is Scenario 2 generates the Present or Future Values in the MSY. expected outcomes if the mt or dollars.30 The lump sum target fishing mortalities had future values of outcomes Estimates of Growth been adopted. The outcomes foregone were converted to Parameters: generated included biomass, equivalent perpetual annuities Data on biomasses, fishing catch, discards, surviving by multiplying the discount rate mortalities and rates of discard discards and commercial (2.8 percent): and survival of discards were sector revenues. EA = i*FV obtained from staff at the Mid- The rebuilding periods are Atlantic Fishery Management Direct Economic Benefits discussed in the body of the Council. For each species, a report. The ending year was Direct economic benefits for growth equation was fitted to 2007 which was the latest the commercial sector were the data to estimate r (intrinsic data year available. Since past calculated as the additional rate of growth) and K (carrying values are being compounded revenues from landings plus the capacity). For most species the forward to 2007, Future estimated reduction in trip costs growth function was logistic. Value (FV) formulas were associated with lower fishing However, for butterfish it was used and then converted to mortalities. The dominant the Gompertz function. equivalent perpetual annuities. (commercial) gear type in these Table 7 below summarizes The more common situation fisheries is the bottom trawl. A the results. involves future streams that biomass–weighted reduction in are discounted back to the fishing mortality was calculated. Application of Growth present (Present Values or Trip costs for bottom trawls Functions PVs), before being annuitized. in the Mid-Atlantic area were For each species, four scenarios Equivalent annuities (EAs) obtained from the Northeast were constructed. Scenario were reported because the Fisheries Science Center, Social 1 regenerates the expected units of measurement mt/ Sciences Branch. The percent outcomes given the observed year or dollars/year are more reduction in fishing mortality

TABLE 7. Growth equation and parameters used in projecting biomass Black Sea Bass Bluefish Butterfish S. Flounder Growth Logistic Logistic Gomperz Logistic r 0.568 0.0599 0.204 0.396 K 25,074 294,102 41,169 169,881 SSQT 0 1.04E+10 1.53E+09 1.63E+08 SSQR 4.51E+07 1.51E+11 6.17E+09 3.33E+09 R^2 1 0.93 0.75 0.95 Bmsy/Target Biomass (mt) 12,537 147,051 41,169 84,940

16 PEW ENVIRONMENT GROUP was assumed to approximate the al., respondents were asked their period and then apply our percent reduction in trip costs. willingness-to-pay for a one-fish financial formulas to the series The result was equivalent to a 3 increase in their success rate. An of willingness-to-pay in each percent reduction in revenues. enhanced success rate of one fish year. Of course, in some years, The most extreme reduction in is a relatively convenient concept the change in catch rate may trip costs could be as much as 18 when administering willingness- be negative; especially in early percent, but that seems unlikely. to-pay survey instruments. At years, since catch rates must It is very difficult to determine an individual level, different initially decrease in order for the “correct” reduction in visits will experience increased population growth to exceed trip costs without a detailed catches per visit of –2,–1, 0, fishing induced mortality. modeling effort for the various +1, or +2 fish. That is to say, For the willingness-to-pay gear types and species involved. at an individual level, catches calculation we assume Often, in multispecies fisheries, and changes in catch are proportionality: in the aggregate, the composition of catches has integer values. But when we a half fish increase in success a strong separation by season, calculate an average change in rate per visit results in half the area or depth of tow. Technical catch per visit, the result is not reported willingness-to-pay substitution between species is necessarily integer. For the sake increase for one fish increase then quite easy. However, when of abstracting from discounting in success rate. Therefore, multiple species are present at procedures, consider a year (as the primary direct benefit the same time and in the same an example) in which the change (increased willingness-to-pay) of area, substitution possibilities in catch per visit is 0.8 fish per rebuilding can be estimated as are quite limited. visit. If the average fish caught the recreational willingness-to- weighs 0.8 lbs., the increased When there is no market for the pay for enhanced success rates. success rate in fish units is services of natural resources, To generate this estimate, the (0.8lbs. per visit)/(0.8 lbs. per we are forced to try to infer Consumer Price Index (CPI) was fish) which equals one fish their values by other methods. used to adjust the Hicks’ 1994 per visit. Direct economic benefits for estimate to 2007 dollars. the recreational sector were So, drawing on the Hicks’ Some caveats on the estimated using willingness- estimate of willingness-to-pay willingness-to-pay to-pay estimates by Hicks et al. for a one fish increase in success estimates: (1999). Unlike landed weight rate we can infer that in this and landed values series, particular year, for each $100 1. Limitations of the study. willingness-to-pay studies are of the Hicks’ willingness-to-pay done only infrequently. The field estimate, we would estimate We have only one observation data on which their estimates are $100 willingness-to-pay from on willingness-to-pay per based dates to 1994. Thus, while the above (one fish per visit) visit (for 1994). While there is this data is rather old, it is near increase in success rate. We more recent raw data, there the beginning of the rebuilding can apply this reasoning for is no more recent complete period. In the study by Hicks et each year in the rebuilding study of willingness-to-pay in

INVESTING IN OUR FUTURE: THE ECONOMIC CASE FOR REBUILDING MID-ATLANTIC FISH POPULATIONS 17 recreational fisheries. Thus, a necessary condition for its for all the species and states estimates could be considerably landing. The theory of utility (except North Carolina), between different using more recent maximization that underlies the 1981 and 2007. This would data. Additionally, during the estimation of willingness-to- perhaps be most important rebuilding time period assessed, pay suggests that it is expected for gamefish such as bluefish. there may have been large to be at least as responsive to There is nothing that can be changes in the mix or size of increases in landing success as done about this in the short run species caught that would affect to increases in catch success. because this size effect was not willingness-to-pay per visit. This The percentage increase in captured in the willingness-to- effect was not accounted for in landings per visit (24 percent) pay studies. This study used the present study, as willingness- is essentially equivalent to that the 1994 mean weight per fish to-pay was assumed to not have of catch per visit (23 percent). caught to calculate the change in changed over time. Rather, this It seems reasonable, therefore success rate in number of fish, study calculated the differences to expect that willingness-to- but if one uses the actual fish in catch per visit before and after pay for increased landings size in 2007 the implied increase rebuilding and related this to the would be similar to that for in number of fish caught would effect of a one fish increase in the increased catches. be larger. Thus, the estimate success rate per visit. used is conservative (ignoring 3. The declining size of the any size related willingness- 2. Catch versus landings. fish caught by the to-pay premium, meaning that recreational sector. The willingness-to-pay literature recreational fishermen may most relevant for these One would expect that declining have a higher willingness-to-pay fisheries is silent on whether fish size would diminish the for larger fish), and reasonably the increased success rate is willingness-to-pay of a trip. The comparable to the average size of in terms of catch or landings. NMFS statistics for recreational fish at the time (1994) data was There is some evidence that it catch include catch in numbers collected for the willingness-to- is the experience of catching as well as weight. From this, it is pay study estimates. the fish is the most important. possible to infer average weight However, catching a fish is per fish. This statistic declined

18 PEW ENVIRONMENT GROUP Endnotes 13 The measure used as the indicator 19 R. Hicks, et al., 1999. “Volume II: The of economic benefit is a form of eco- economic value of New England and 1 There are some exceptions: fish spe- nomic rent or quasirent which is rent Mid-Atlantic sportfishing in 1994,” cies managed under international plus fixed costs of capital. Without a NOAA Technical Memorandum agreements or where the biology of catch share type program that grants NMFS-F/SPO-38, US Department of the fish species or other environmen- fishing privileges and allows for long Commerce, National Oceanic and tal conditions dictate it be longer (16 run costs to be reduced, full rent can- Atmospheric Administration, National U.S.C. 1854, MSA § 304 (e)(4)(A)(ii), not be generated. Marine Fisheries Service. P.L. 109-479). In those cases, the re- 14 The lump sum value is analogous to 20 Willingness-to-pay studies are done building period cannot be longer than the principal on a loan or face amount infrequently, so while the field data 10 years plus one mean generation of of an asset; equivalent annuities are on which Hicks et al. (1999) base their the fish species. analogous to the loan payments or willingness-to-pay estimates is old 2 C. Safina, et al., 29 July 2005, “U.S. repayment on an asset. (1994) it is near the beginning of the Ocean Fish Recovery: Staying the 15 To be clear, the present value that rebuilding period and the most recent Course. Policy Forum,” Science, 309, is being annuitized in 2007 is the available. There is more recent raw data pp. 707–708. benefits foregone during the rebuild- available (2006) that could be used 3 Ibid. ing period. However, the differences in for more recent estimates but this was beyond the scope of the current study. 4 Ibid. benefits after 2007 are not captured. To do so, we augment the equivalent 21 These averages are based on 1994 5 K.W. Shertzer and M.H. Prager, 2007, annuities with the annual benefits in data. If actual fish size in 2007 is used, “Delay in fishery management: dimin- 2008 to capture the post–2007 ben- the implied increase in number of ished yield, longer rebuilding, and in- efit streams. The result is annualized fish per visit would be greater than creased probability of stock collapse,” values (perpetual annuities) in 2008 the one fish per visit estimated. Thus ICES Journal of Marine Science, 64, dollars. The fact that rebuilding peri- the estimate used is conservative and pp. 149–159. ods differ somewhat between species comparable to the average size of fish 6 U.R. Sumaila and E. Suatoni, October is of no consequence because landed in 1994 when the Hicks willingness–to– 2005, “Fish Economics: The benefits values are converted to an equivalent pay data was collected. of rebuilding U.S. ocean fish popula- annuity at a common point in time. 22 The economic benefits to either sector tions,” Fisheries Economics Research Further discussion of these measures is are not broken down by species be- Unit. contained in the appendix. cause it is not economically meaning- 7 Northeast Multispecies Fishery Man- 16 Since the dominant commercial gear ful to do so. agement Plan, pages I–xii and I–602 of type in the fisheries is bottom trawl, 23 1/2 Bmsy Amendment 13. a biomass–weighted reduction in 24 National Marine Fisheries Service, 8 Since that time bluefish has been fishing mortality was calculated to 2009, “Bluefish,” FishWatch—U.S. declared successfully rebuilt by the approximate the percent reduction in Seafood Facts, www.nmfs.noaa.gov/ National Marine Fisheries Service in its trip costs. Trip costs for bottom trawl fishwatch/species/bluefish.htm. 2008 Status of the Stocks report. in the Mid-Atlantic were obtained 25 National Marine Fisheries Service, 9 The growth function was logistic for all from the Northeast Fisheries Science 2008 Report to Congress: the Status species except butterfish which was Center, Social Sciences Branch. A cost of U.S. Fisheries, May 2009, www. Gompertz. reduction equivalent to a 3 percent reduction in revenues was assumed. nmfs.noaa.gov/sfa/statusoffisheries/ 10 The time period used for butterfish booklet_status_of_us_fisheries08.pdf. was actually 1982 to 2002 as this was 17 If trip costs are assumed to be 30 26 G. Shepherd, 2006, Status of Fishery the data that was available. However, percent of revenues (calculated from Resources off the Northeastern US. the results were projected to 2007 to data obtained from NEFSC on vessel Bluefish, www.nefsc.noaa.gov/sos/ allow for the species to be aggregated revenue per day and cost per day) and spsyn/op/bluefish/. and comparable. it is assumed that there is an average 27 See J. Krutilla, 1967, “Conservation 11 We chose to use 1982 and 1994 as 10 percent reduction in fishing mortal- reconsidered,” American Economic starting years as opposed to 1998 ity (calculated as a biomass–weighted Review 57, pp. 787–796; H. Goulder when the 1996 amendment require- average of fishing mortality across the and D. Kennedy, 1997, “Valuing eco- ment for rebuilding plans to start four species), then the cost savings system services: Philosophical bases would begin because we wanted the would be 3 percent. and empirical methods,” In Nature’s longest times series possible in order 18 These costs are also deflated using the services: Societal dependence on to better fit the data to the model. Producer Price Index (PPI) for finfish in natural ecosystems (ed. G.C. Daily), 12 The target fishing mortality rate was order to convert them into 2007 dollars. pp. 23–48. Washington, DC: Island 0.34 for black sea bass, 0.19 for blue- Press; U.R. Sumaila and C. Walters, fish, 0.38 for butterfish, and 0.31 for 2005, “Intergenerational discounting: summer flounder. a new intuitive approach,” Ecological Economics 52, pp. 135–142.

INVESTING IN OUR FUTURE: THE ECONOMIC CASE FOR REBUILDING MID-ATLANTIC FISH POPULATIONS 19 28 Reductions in fishing mortality are necessary but not always sufficient for sustainable rebuilding to occur due to uncertainty in management and envi- ronmental and biological stochasticity. The analyses in this report have been deterministic and do not account for uncertainty, but such an analysis would be useful for future research. 29 Pew Oceans Commission, 2003, America’s Living Oceans: Charting a course for sea change, p. 5. 30 The FV and PV are financial functions which are available within Excel. Their arguments are the interest rate, the flows to be discounted or compound- ed, and the number of years in the rebuilding period.

20 PEW ENVIRONMENT GROUP

Philadelphia, PA 19103 215-575-9050

Washington, DC 20004 202-552-2000 www.endoverfishing.org