Grantee Research Project Results
2006 Progress Report: Economic Effects of HABs on Coastal Communities and Shellfish Culture in Florida
EPA Grant Number: R831707Title: Economic Effects of HABs on Coastal Communities and Shellfish Culture in Florida
Investigators: Larkin, Sherry L. , Degner, Robert L. , Adams, Charles M.
Institution: University of Florida
EPA Project Officer: Packard, Benjamin H
Project Period: November 1, 2004 through October 31, 2006 (Extended to October 31, 2007)
Project Period Covered by this Report: November 1, 2005 through October 31, 2006
Project Amount: $91,959
RFA: Ecology and Oceanography of Harmful Algal Blooms (2004) RFA Text | Recipients Lists
Research Category: Environmental Statistics , Aquatic Ecosystems , Water
Objective:
The objectives are to: (1) estimate the change in gross revenues to various business sectors of coastal communities affected by harmful algal bloom (HAB) events (e.g., red tide); (2) calculate the costs incurred by coastal communities to address the effects of HAB events including planning efforts, contingency plans, beach patrols, and cleanup, etc.; and (3) quantify the effects of HABs and HAB-related harvest regulations on commercial molluscan shellfish operations.
Empirical application will be restricted to Florida for manageability and effectiveness.
Progress Summary:
Objective (1) is intended to provide quantitative statistical evidence of red tide impacts on coastal business using data routinely collected by the Florida Department of Revenue (FDOR). At this time, we have obtained the monthly gross sales and number of reporting businesses (for 145 ZIP Codes with at least four firms reporting) in two sectors (i.e., restaurants and lodging or kind codes 08 and 39, respectively) that are located across nine coastal counties (i.e., Okaloosa, Franklin, Gulf, Pinellas, Sarasota, Manatee, Charlotte, Lee, and Collier) from February 1998 through January 2003. The data set was restricted to the two largest kind codes to reduce the size of the task at the request of FDOR. In addition, the archive tapes containing data prior to February 1998 are “unreadable” and cannot be incorporated into the analysis (Dale Snyder, FDOR, personal communication).
Last year we also obtained proprietary data on daily gross sales from three coastal restaurants (with outdoor seating) in Southwest Florida. These data allow for an additional analysis to satisfy Objective (1). The data include daily sales and notes by the manager as to whether it was a holiday or business was affected by red tide, rain, a storm, or hurricane on that day. The data cover the period of June 1995 through June 2006. These data were combined with information on average temperature and wind speed from a weather station maintained by University of South Florida. The sales data were also normalized by the monthly consumer price index (CPI) for food away from home in the Southern U.S. region. Results indicate that red tide had a statistically significant negative impact on daily gross sales in the two largest restaurants in the study (i.e., red tide did not impact sales for the smallest restaurant in the study in terms of average daily gross sales). The magnitude of the losses amounted to approximately 13% to 15% of average daily gross sales from June 2000 through June 2006 (the scope of the empirical analysis was constrained due to the limited availability of the temperature and wind speed data). Among the remaining dummy variables used to capture the notes of the manager in terms of factors affecting gross sales, all were statistically significant in each of the three models except whether there was a “storm.”
Aside from using the subjective notes of the restaurant manager with regards to the presence and effect of a red tide, the sales data were merged with cell count data from the surrounding area (e.g., six mile radius of each restaurant) as collected by the Florida Wildlife Research Institute (FWRI) and managed by the National Oceanic and Atmospheric Administration. In addition, data from the National Climatic Data Center included information on wind (speed and direction) and rain at the nearest measuring station to the restaurants. The red tide cell count data contained 352 observations for the time series, of which cell counts ranged from 0 to over 5 million. Comparison of the 352 observations with red tide information from the restaurant manager and FWRI revealed that they were only weakly correlated. This lack of consistency is to be expected given that red tide counts need to exceed approximately 50,000 cells per liter before they begin affecting humans (i.e., the base level population of Karenia brevis is approximately 1,000 cells per liter; Cindy Heil, FWRI, personal communication), and that the organisms are continuously moving. The lack of persistent monitoring at a station within approximately 3 miles, precludes the use of the detailed weather data to examine the impact of red tide on the restaurants across the 10-year time horizon.
Objective (2) is intended to determine the costs incurred by local communities caused by HAB events and red tide in particular. This will be accomplished through analysis of results of an ongoing a survey of city and county resource managers. The sampling frame of this survey, which is being conducted by telephone through the Florida Survey Research Center, includes the 9 coastal counties mentioned earlier and the 26 cities within those counties that are located directly on the coast. The questionnaire asks for the following information: identification of specific ongoing activities pertaining to red tide and likely change in those activities during the next fiscal year; funding levels for beach management and, of those, the share directed to addressing red tides; whether the agency has an official protocol for responding to red tide related issues; and what types of information and/or assistance could they use from researchers.
The fax survey of hotels that was initiated by the Lee County Chamber of Commerce resulted in 47 responses out of a total 142 hotels with valid addresses (33.1%). The complete survey protocol involved four total contacts, two by fax and two by mail. The hotel manager was asked to indicate the effect that red tide had on gross room rental sales in 2005 using an 11-point scale (-5 = extremely negative, 0 = no effect, +5 = extremely positive). While 35.6% of responding hotels (N = 45 to this question) indicated that red tide had no effect on revenue from room rentals in 2005 (a year with generally bad red tide conditions), the remaining 64.4% did report a negative effect (the majority, 45.6% of the total, selected ratings from -3 to -5). The losses associated with hotels providing negative effects on room sales averaged $26,764. A similar analysis was done for gross food service and all other service sales. Only 29 of the 45 (64.4%) responding to queries about the room rates responded, suggesting that not all hotels offer such services or that it is a more resilient sector. Of the 29 respondents, 48.3% indicated no effect on sales from food service or other services, which means that 51.7% were negatively affected. For comparison, 31.0% provided ratings of -3 to -5. Losses of sales for food and other services averaged $10,440.
Objective (3) is intended to quantify the effects of HABs and HAB-related harvest regulations (i.e., closures at 5,000 K. brevis cells per liter and higher) on commercial molluscan shellfish operations. To that end, a survey of hard clam and oyster dealers was conducted in early 2006. While the oyster industry is not primarily affected by red tide, the dealers require the same license and they are subject to supply disruptions due to environmental events and are, thus, included for comparison. A total of 91 dealers with valid Interstate Shellfish Sanitation Conference certificates, and that purchased from Florida harvesters in 2005, were surveyed by mail in June 2006. The census of dealers produced 41 responses but only 33 completed surveys (36.3%). The respondents were found to be concentrated in their activities; of those reporting majority dealings of clams, oysters, or other marine products, the share of those species that comprised total landings were 98%, 88%, and 86%, respectively. Gross revenues from marine species averaged $5.1 million in 2005. Using an 11-point scale from 0 (not important) to 10 (extremely important), red tide was found to have a more important effect on sales than other factors presented. When asked to rate how detrimental closures of increasing length would be to gross and net sales, on average, the rating increased at a decreasing rate indicating that initial losses are relatively high but begin to dissipate as dealers are able to compensate. Ratings by dealers specializing in hard clams were higher, on average, than ratings by dealers specializing in sales of oysters. For hard clam dealers, regaining markets and buyers was the most important concern following a closure, followed by the need to arrange for substitute products and the need to regain employees. On average, dealers lost $21,330 in gross revenue ($8,378 in net revenue) as a result of a one-week unanticipated supply disruption due, for example, to red tide. Clam dealers or firms with more employees would experience larger losses. Retail suppliers, dealers with more dependence on out-of-state supplies, and those with higher sales would experience smaller losses. All results were quantified and statistically estimated and tested using regression analysis.
Future Activities:
With respect to Objective (1) and the FDOR data, we are waiting to obtain information on gross sales from February 2003 to present in order to capture the relatively large red tide bloom that occurred in Southwest Florida during 2005. Once obtained, we will be able to estimate the monthly change in gross restaurant and lodging sales due to red tide across 145 ZIP Codes.
With respect to Objective (1) and the proprietary sales data, we will be calculating normalized coefficients in order to assign relative importance to each explanatory factor (i.e., temperature, wind speed, red tide, hurricane, rain, and holidays).
With respect to Objective (2) and the hotel survey, calculated weighted average of losses and correlate with the facilities provided, total gross sales, average room rate and occupancy for 2005, and location.
With respect to all objectives and associated analysis, prepare manuscripts for submission and publication.
Journal Articles:
No journal articles submitted with this report: View all 24 publications for this projectSupplemental Keywords:
EPA Region 4, FL, Florida, economic, harmful algal blooms, Karenia brevis, social science,, RFA, Scientific Discipline, Water, Ecosystem Protection/Environmental Exposure & Risk, Health Risk Assessment, Oceanography, Economics, algal blooms, Environmental Monitoring, Ecological Risk Assessment, Ecology and Ecosystems, marine ecosystem, shellfish transport, bloom dynamics, economic assessments, water quality, algal bloom detection, human health, algal toxinsProgress and Final Reports:
Original AbstractThe perspectives, information and conclusions conveyed in research project abstracts, progress reports, final reports, journal abstracts and journal publications convey the viewpoints of the principal investigator and may not represent the views and policies of ORD and EPA. Conclusions drawn by the principal investigators have not been reviewed by the Agency.