August 15, 2017 (Saving Seafood) — A July 25, 2017, article published by the Center for American Progress [“Big Oil Could Benefit Most from Review of Northeast Canyons and Seamounts Monument” by Michael Conathan and Avery Siciliano] made the accusation that “commercial fishing interests have spouted inflated numbers about what the economic impact of the [Northeast Canyons and Seamounts Marine National] monument designation would be.”
Accordingly, today, Saving Seafood begins a series on “Marine Monument Economics.” In the coming weeks, we will publish commentrom the fishing industry submitted to Interior Secretary Ryan Zinke and Commerce Secretary Wilbur Ross. We start with the Atlantic Red Crab fishery. Red crab is recommended by both the Monterrey Bay Aquarium’s Seafood Watch and the New England Aquarium.
Today’s comments were submitted to Secretary Zinke by Mr. Michael Carroll. Mr. Carroll is a fishery economist specializing in seafood markets and economic impacts. He is both a Statistical and Scientific Committee member and an Advisory Panel member to the Deep Sea Red Crab Fishery governed under the New England Fishery Management Council. Mr. Carroll is founder and CEO of BackTracker Inc. and VP of Fisheries and Aquaculture Vertex, both in Boston. From 2008-2012, he was the business development manager of the New England Aquarium. He is lead author of “An Analysis of the Impacts of the Deepwater Horizon Oil Spill on the Gulf of Mexico Seafood Industry” published in March 2016 by the Bureau of Ocean Energy Management. Mr. Carroll holds a bachelor’s degree in business and economics from Saint Michael’s College, and a master’s degree in environmental and natural resource economics from the University of Rhode Island.
Mr. Carroll observes that in the Atlantic red crab fishery, there “has never been any indication that overfishing has occurred or even that the stock has declined.” And that a review of the current academic literature indicates that the actual market economic values produced by the fishery have been understated, while the types of non-market values ascribed to elements of the ecosystem such as deep-sea corals, have not been included in calculating the value of the fishery.
In his comments he observes that, “An Economic Impact (or cost to the fishery) … if done properly this figure will represent value lost throughout the entire supply chain (vessel to consumer) as well as other associated losses incurred by shore side infrastructure, such as fuel, bait, ice, marine service, etc.” But to date, the publicly-available data from NOAA “has only presented impact figures in vessel landing dollars, which is approximately understating impacts by seven times the true economic damages to the economy.”
He urges the secretary to “consider only the facts that can be demonstrated through sound peer reviewed science and proven quantifiable economic valuation methods.”
Today is the last day to submit comments to inform NOAA’s review of the Northeast Canyons and Seamounts Marine National Monument. If you have not already submitted comments, Saving Seafood encourages you to do so here.
Mr. Carroll’s comments are below:
Dear Secretary Zinke,
My name is Mike Carroll. I am a fishery economist that specializes in seafood markets and economic impacts. I am both a Statistical and Scientific Committee member and an AP member to the Deep Sea Red Crab Fishery governed under the New England Fishery Management Council. We met in Boston on June 16 at the fishery industry meeting you had at Legal Seafood.
I have deep concerns in regards to the lack of valid economic impact evidence supporting the closure of the Northeast Canyons and Seamounts to protect deep sea coral and other sea life, in effect creating economic hardship on various fisheries in the North-East Region. Specifically, I am commenting to note that the magnitude of potential impacts associated with this action on the Deep Sea Red Crab fishery are concerning and not based on peer reviewed economic valuation science.
For anyone reading my comments that are not familiar with economic impacts and economic valuation methods I will summarize some key points to remember when making decisions. For more information on this topic you can refer to the NOAA website or for more detailed input on deep sea coral please go here.
An Economic Impact (or cost to the fishery) is basically the effect of an event, policy change, in this case closure of a fishery area, on the associated economy. This is often stated in a stagnant figure that represents a yearly impact value to the business; if done properly this figure will represent value lost throughout the entire supply chain (vessel to consumer) as well as other associated losses incurred by shore side infrastructure, such as fuel, bait, ice, marine service etc… If any, NOAA has only presented cursory impact figures in vessel landing dollars, which is approximately understating impacts by 7 times the true economic damages to the economy. These figures can vary by fishery depending on the level of value added to the product as it travels down the supply chain but 7x is a good bell weather figure for now until NOAA provides us with the real figures. The important piece to note is these are real tangible values of loss to fisherman and our shore side community that are very measurable.
Often there is confusion by fishery managers about how to interpret economic impacts. All too often they think the decision should be made based on the relative impact to the industry but in reality, the decision should be made according to the net economic value the policy change will provide. Economic value is based on a basic calculation of how much benefit does the policy decision generate vs how much does the policy decision cost or the Economic Impact to the industry, therefore simply stated:
Economic Value = Benefit (value of corals) – Cost (value lost is the fishery or Economic Impact)
If the policy change produces a net positive economic value, then it should be perceived as good for our nation as a whole, whereas if it is negative, not good for our nation as a whole.
Now let’s look at how we value the benefit of the deep-sea coral. In the literature, there is mention of market values and values to the ecosystem which could someday be measurable but as it is today neither of these values are relevant to economic value or should be referenced without peer reviewed research that shows relative quantitative figures. True market values for corals are basically irrelevant considering it is not legal to harvest and sell corals for any purpose. The ecosystem value is something we all want to understand more about but arguably no true linkages have been proven where we can estimate the economic value they represent. Current studies indicate that deep sea coral is considered “Facultative Habitat” and not “Essential Fish Habitat,” therefore the absence of this habitat does not result in extinction of the species in question.
There has been considerable mention of market values, such as the value associated with people viewing deep sea coral on the Discovery Channel, and the revenue generated from this represents a true market value for preservation of the coral. Well, I agree completely, that is a true market value but what about the market value associated with the preservation of the fisherman. How much money do you think the Deadliest Catch or other commercial fishing shows on the Discovery Channel generate? I am not sure, but it definitely generates more than deep sea coral viewing shows. If this value is being represented on one side of the value equation (coral value) why is it not represented on the other side (fishery value)?
The value or benefits associated with deep sea coral for all intents and purposes are considered non-market values which are calculated based on value derived by people’s desire for them to exist. Non-market values are soft values based on what people say they are willing to pay or prefer given a set of choices. These values are often criticized because they frequently overstate true values of what people will actually pay in a real market environment. The use of the term existence value, which you see throughout the literature presented, often refers to these non-market valuation methods which may be useful to determine people’s preference but is grossly inadequate in determining value.
Everyone you met in Boston on June 16 cares about setting up a certain level of protections for these deep-sea corals. I would even go to the extent that we may be able to come to mutual agreement on certain zones that would optimize protection of coral while causing minimal impact to the fishery. As a US regulator, I would urge you to consider only the facts that can be demonstrated through sound peer reviewed science and proven quantifiable economic valuation methods. The impacts of these offshore closures on the deep sea red crab fishery and other offshore fisheries are substantially greater than benefits generated by the coral conservation measure being carried out. Even if you were to consider down the road that there could be increased ecosystem values, a decision to close this area to the deep sea red crab fishery is not a fair and equitable decision. It makes no reasonable sense to implement measures that would create impacts that would affect such a large portion of this fishery. This is a small fishery that has been harvested responsibly and made every effort to participate in discussions and share information. It is an exceptional fishery in the United States in that it is very environmentally sound and has gone through the MSC certification process. I would argue if these National Monument protections must go into place for political or legal reasons, regardless of the unsubstantiated economic valuation equation, the deep sea red crab fishery should be exempt from this rule based on sheer economic hardship.
Best Regards,
Michael Carroll