Projects

Economic impact of working waterfronts in the Alabama coastal economies: An input-output analysis

Objectives

The goal of this research is to broaden the knowledge base about the evolving roles and economic significance of Alabama working waterfronts, water-dependent and water-related industries, and is consistent with the MASGC focus area of “Sustainable Coastal Development.” Specific objectives of the research are: 1) characterize socioeconomic trends with specific focus on the impacts by Hurricane Katrina and Deepwater Oil Spill, 2) Review past research on the economic importance of working waterfronts and policies proposed in various U.S. states to enhance their competitiveness, 3) identify potential business clusters based on their linkages to working waterfront-associated economic activities and 4) Determine the economic impact of working waterfronts and water-dependent industries on the AL coastal region.

Methodology

Built upon our preliminary results regarding significant differences among the coastal counties in terms of economic activities and structures, the proposed research will, thus, analyze the AL coastal economic region at the following geographic scales: 1) Alabama state; 2) Alabama coastal economic region (Baldwin-Mobile counties), and 3) Near shore economic region (zip codes areas of counties along the AL shore)

Descriptive analysis will be conducted to characterize and understand historical socio-economic trends in the AL coastal region, underlying driving forces, and challenges and opportunities. We will identify the common as well as unique characteristics of the coastal region, and changing functions of working waterfronts and their contribution to the coastal economy. Special attention will be paid to compare the three periods (pre-Katrina, post-Katrina but prior to Deepwater Oil spill) of the coastal economy and working waterfronts. Input-output (IO) analysis will be used to quantify inter-industry linkages, and determine the overall contributions (sum of direct, indirect and induced impacts) of water related economy and associated industries to the coastal economy.

Requisite data will be obtained from statistical information and census data and published literature. More data will come from IMPLAN database which has information on 1) revenue and expenditure flows for 440 industries (or sectors), 2) value added (employee compensation, property income, other property income, indirect business taxes), 3) 9-classes of households grouped according to income, 4) state and local government education and non-education expenditures, 5) federal government military and non-military expenditures, and 6) inventory account. 

Rationale

Working waterfronts (parcels of real properties that provide access for water-dependent and water-related commercial activities or public to the navigable waters of a state) and economic activities dependent on them are facing serious challenges to their survival across the nation. Increasingly, development interests are buying traditional working waterfronts and converting them into private and residential use. This has the effect of both decreasing the availability of waterfront property necessary to sustain traditional economic activities, and increasing the value of nearby working waterfront property. The increase in property value results in higher property taxes, which cause working waterfronts to be decreasingly profitable, thereby compounding the pressure to convert to the “highest and best” use of the property. While such conversions initially invigorate the local economy, the associated positive benefits diminish over the long term. 

Evidence regarding the economic significance of working waterfronts across the U.S. is compelling. MASGP (2006) claimed that water-dependent industries have tremendous economic impacts on the AL-MS  coastal economy.  The report estimates: 1) dockside value of commercial landings at $80.5 million; 2) value of dockside landings, processing and wholesale at $738 million; 3) economic output of recreational saltwater fishing at $561.8 million; and 4) saltwater fishing jobs at 6,480. As economic interests of different stakeholders are at stake, assessment of the opportunity costs and benefits of working waterfront conversion to other land uses is not only challenging but contentious as well.

Working waterfronts are constituent parts of water-related industries. Therefore, exogenous changes in the final demand for working waterfronts output (also known as the direct economic impact) can be expected to show up as changes in the gross output of water-related industries (e.g., Seafood processing, boat and ship building, water transportation). In this proposed study, we will use this insight to simulate changes in working waterfronts and their implications for the Alabama coastal economy. A more direct approach will involve building an input output model with working waterfront as an independent sector or industry.

Our preliminary investigation Mobile County is very water-dependent industries, these industries are extremely important for the economic sustainability of Mobile County. Likewise, the Baldwin county has above average concentration of seafood processing and packaging economic activity, and, thus, important to the regional economy. Working waterfronts in the Baldwin and Mobile counties have some unique problems (e.g., Hurricane Katrina and Deepwater Oil Spill) because of their location. While fishing is still important, water-related tourism, natural-based tourism, birding, and real estate are among the emerging important economic activities in the Gulf Coast economy. While there is some research on the inventory and economic impact of working waterfronts in the AL coastal economic region, analysis of the socio-economic evolution, and estimates of the overall economic contributions of working waterfront and the impacts of Hurricane Katrina and Deepwater Oil Spill is lacking.