ECONOMICS of OCEAN ~Sotjrces a Researchagenda

PNIII.II~4 I',3I'f $83klrflt tIf'.»Sitrg ECONOMICS OF OCEAN ~SOtJRCES A ResearchAgenda Proceedingsof a nationalworkshop SponsoredbyOffice of Ocean Resources Coordination and Assessment, NationalOceanic and Atmospheric Administration OrcasIsland, Washington September 13-t6, 1981 NATl0!,' " URI, [.",,' GardnerM. Brawn,Jr. and James A. Crutchfield, Editors A WashingtonSea Grant Publication DistributedbyUniversity ol Washington Press Seattleand London First published in 1982 by Washington Sea Grant Program University of Washington Distributed by University of Washington Press Seattle, Washington 98195 Copyright e'er1982 by University of Washington Printed in United States of America All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic ar mechanical, including photocopying, recording, or any information storage or retrieval system, without permission in writing from the publisher. Support for this workshopwas provided by the National Oceanic and Atmospheric Administration under grant numberNA80AA-D-00121, project R/MS-19. Publication was accomplished by the Washington Sea Grant Pragrarr under NOAAgrant numberNA81AA-D-00030, project A/PC-5, Library of Congress Cataloging in Publication Data Main entry under title: Economics of ocean resources. "Proceedings of a national workshop sponsored by Office of Dcean Resources Coordination and Assessment, National Oceanic and Atmospheric Administration, Orcas Island, Washington, September 13-16, 1981." "A Washington Sea Grant publication." Includes bibliographies. Marine resources--Congresses. I. Brown, Gardner Mallard, II. Crutchfield, James Arthur. III. United States. National Oceanic and Atmo..pheric Administration. Office of Ocean Resources Coordination and Assessment. IV. Washington Sea Grant Program GC1OO1.E27 1982 333.91'64 82-17471 ISBN 0-295-95982-.7 Contents Foreword - CharLe= N, QLer Preface - Gardner s. Brazen, Jr. and James A. CvutchfieLd A Perspective on Ocean Resources - dames A. CrutehfieLd 1 Living Resources 1 Mineral Resources 14 Energy from the Sea 26 Living Marine Rescurces - Dan Huppert 44 I. Introduction 44 II. Theory of Fisheries Management 47 III. Economic Research for Domestic Fishery Management 51 IV. Research cn International Economics 54 V. Resource <onflicts and Income DistributionlO 58 VI. Conclusions 59 Summary of Research Topics 60 Discussion - tee G. Anderson 67 Deep Ocean Mineral Resources James sebenius 74 I. Introduction 76 II. Basic Economic IIuestions 76 III. United States National Interest in Seabed Mining 78 IV. An International Ocean Resources Regime and Its Implications 81 Sunmary of Research Topics 86 Discussion Conrad G, VeLLing 90 Introduction 90 II. Exploration 91 III. Mining Development 93 IV. Economics 94 Oil and Gas Resources - Archon B. Tossing 99 I. Offshore Oil and Gas in the Energy Economy 99 II, The Burden of Justification 102 III. Politics of the Research Agenda 105 IV. The OCS Petroleum Resource Base and Its Supply Function 107 V. The Long-TermDemand for Natural Hydrocarbonsand the Optimum Rate of Depletion '112 VI. Leasing Policy 113 VII. External Costs of Offshore Petroleum Operations 115 VIII. Containing the Oil Research! Glut 115 DiSCuSSiOn - Macon Gaffney 121 Discussion - Robert J. Eal,ter 129 A Short Critique of the Tussing Agenda 130 II. The Statutory and Administrative Framework 131 III, The Current Status and Resulting Implications for Economic Research 133 IV. Conclusions 135 Discussion - Ragge Marsh 137 I. The Outer Continental Shelf Oil and Gas Lease Market 137 II, The Research Agenda 140 III. Suggested Research 143 ReCreatiOn - Gar~'ner M. Br~, Jr. 144 Introduction 144 II. Marine Oriented Recreation and Oil Spills 'l45 III. Sport Fishing 151 IV. Non-Consumptive Valuation 153 V. Researchto Guide Fishery ManagementCouncil Policies 153 VI. Shellfish Research 156 VII. Model Specification '157 Summaryof Research Topics 158 Discussion A. bryriak preerrranzI1 164 Discussion - Henry Lyman 170 EnvironmentalManagement - c7ifforri s, msse27, 175 I. Introduction 175 II. Information 178 Discussion - B7air Bauer and Dan Basta 197 Context or Setting 197 Summaryof Additional Research 203 Marine Transportation - Stephen R, Gibbs 206 I. Ports 207 II. The EconomicOrganization of Shipping 210 III. Multimodal Transportation 2925 IV. Additional Tasks 217 Summaryof Research Topics 221 Appendix 222 Capstone - Anthony D. Scott 226 I. Capstone 226 II. A Suggested Point of View 232 III. Existing Research Goals 233 IV. Three Difficulties with the Suggestion 234 V. Research 236 List of Participants 242 Foreword Before stating the broad purposeof this workshopon oceanresources economics, I would like to provide a context by describing the mission of its sponsor, the Office of Ocean Resources Coordination and Assessment ORCA! of the National Oceanicand AtmosphericAdminis- tration. Within NOAAwe are responsible for identifying and evaluating the impacts of alternative resource uses in intensely used coastal and ocean regions. Wedevelop and recomnendmanagement strategies or policies for the use of resourcesof these regions which will result in maximumbenefit to the Nation. We have the re- sponsibility for development of NOAA-widepolicy positions in two important areas: ! outer continental shelf oil and gas exploration and development; and ! marine transportation, To improve our ability to carry out this mission, ORCAsponsors pro- jects to develop and apply new methods for projecting and evaluating both the short-term and long-tenn environmental and economic impacts of coastal and ocean resource use decisions. We have initiated a series of five regional strategic assessments of the entire U.S. coastal and 200-mile fishery conservation zone to identify signifi- cant resource use conflicts before they occur. We also give techrical assistance to states and other federal agen- cies on a wide variety of coastal and ocean resource issues, ranging from special area managementto evaluating the onshore impacts of marine mineral mininq. We administer the Office of Coastal Zone Management's responsibilities for compliance with the National En- vironmental Policy Act with respect to both state coastal zone management programs and proposed marine and estuarine sanctuaries. We are one of the few--perhaps the only federal offices attempting to develop in a strategic manner the necessary data base and methods for analyzing national policy on programs for coastal and ocean resource use on a comprehensive scale and within an explicit analyti- cal framework. The purpose of this workshop is to serve as one departure point for a modest program of economic and institutional research related to the management of ocean resources that will be undertaken by ORCA later this year. The oceans represent a set of resources for which, in fact, very little management currently exists. An important ob- jectivee of this program will be the development and use of data with which to consider explicitly the benefi ts and costs to the nation and its coastal regions of alternative ocean resource uses. Since ORCAis concerned wi th the multiple use of ocean resources, the problem of identifying and evaluating the costs and benefits ot conflicts and compatibi lities among these uses 1s of greatest impor- tance to us. Our coastal and ocean waters provide a wide mix of products and services to the nation. They are the incubators and life support sys- tems of living resources which have been an important source of pro- tein for centuries. They provide a relatively inexpensive source of transportation and an attractive place for recreation . They have also long been used as a place to dump the waste materials of our economic activities. All of these uses had little effect on either each other or the natural environment when activities were widely scattered in time and space and when levels of use were low. But this is no longer the case. People and their activities continue to move to the coast in increasi ng numbers. We now expect the oceans to provide increas- ing amounts of tie energy and materials to drive the economy and to yield not only sand and gravel, but also strategic minerals. The assimi lative capacity of the oceans will continue to be used heavily as a sink for our wastes. As economic activities increase in the oceans, interact1ons among d1fferent uses are inevitable. While occasionally these interac- tionss are compatible or even mutually beneficial as when domestic sewage increases fish production in some areas, more often the interactions conflict. That is, the production of one output of the ocean has an adverse impact on the production of another. What has traditionally been a relatively s1mply decision process--oriented toward developing a single product or service from the ocean-- has now become a highly complex one of deciding what mix of products and services should be produced from any given ocean region over time to max1mize benefits to the nation. What role can economists play in sharpen1ng the issues of ocean resources management7What can economists tell us about the best mix of products and serv1ces and the proper rate of development of ocean resources and their uses7 How can the benef1ts and costs of multiple use be assessed7 Howcan economic i ncent1ves be used to minimize the extent of real conflicts among uses? What economic incentives can be used to ensure eff1cient development of resources, m1nimumdamage to the natural environment, and an equitable distri- bution of the

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