Projects

Quantifying the economic value of ecosystem services of oyster farming as offsets to regulatory fees

End Date: 08/31/14

A research team made up of Bill Walton of Auburn University, John Supan of Louisiana State University, Robert Rheult of Shellfish Environmental Services, Katharine Wellman of Northern Economics Inc., Stephanie Showalter Otts and Niki Pace, both of the Mississippi-Alabama Sea Grant Legal Program, and James Wilkinson and Melissa Daigle of the LSU Louisiana Sea Grant Law and Policy Program, will work to quantify the economic value of off-bottom oyster aquaculture and its ecosystem services in the northern Gulf of Mexico. The team will also use legal research to determine costs for off-bottom oyster farm permitting and find legal precedent for using the value of ecosystem services to offset leasing fees.

Objectives

  1. To compile an inventory of a) ecosystem services provided and b) environmental impacts of off-bottom oyster farming through a review of the ecological literature, with a subsequent ranking of relevance of these to the Gulf of Mexico [Rheault];
  2. To quantify the economic value of a selected subset of top ranked ecosystem services [Wellman];
  3. To conduct a peer-review of #1 & #2 at a workshop at a nationally convened scientific conference (e.g., Coastal & Estuarine Research Federation or National Shellfisheries Association) with a selected group of external reviewers [Walton, Rheault & Wellman];
  4. To determine state-specific submerged land leasing and permitting process and associated fees & costs for off-bottom oyster farming throughout the Gulf of Mexico, supplemented by a qualitative survey of costs in other states [Showalter & Pace, Wilkins & Daigle, assisted by Walton & Supan];
  5.  To characterize the legal precedent for use of economic values of ecosystem services to offset permitting fees through a review of the legal literature [Showalter & Pace]; and
  6. To identify process for proposing and implementing the use of ecosystem services, using the Alabama submerged land leasing program as a test case [Showalter & Pace, assisted by Walton].

Methodology

A literature review will be conducted to compile an inventory of both ecosystem services (ES) and environmental impacts of off-bottom oyster farming. These will be qualitatively ranked in terms of relevance to the Gulf of Mexico and (for ES) suitability for economic valuation. A subset of ES will be selected and, using appropriate economic models, economic values will be assigned. These products will be subject to peer-review.

Parallel to this effort, state-specific permitting processes and fees will be determined for the Gulf of Mexico through legal research and interviews. Additional legal research will be conducted to characterize the legal precedent for the use of economic values of ES to offset fees. These efforts will be brought together in a case study in Alabama, to identify the process for proposing and implementing the use of economic values of ES to offset fees. Industry and regulators will be involved throughout the project, allowing continuous outreach, but a number of specific outreach efforts will be conducted. These will include industry meetings, use of social media, establishment of a regional newsletter for the stakeholder community, and traditional outreach publications and academic publications.

Rationale

Three significant regulatory hurdles to the establishment of oyster farming in the Gulf of Mexico region have been identified, through direct experience and working with numerous stakeholders. If these challenges can be addressed, significant investment and subsequent establishment of a substantial oyster farming industry within the region is anticipated. The specific goals of this project are to measurably:

  • Clarify and publicize the submerged land leasing fees for off-bottom oyster farming in each Gulf of Mexico state, increasing the transparency of the leasing process and its costs;
  • Educate Gulf of Mexico seafood industry members, including current & prospective oyster farmers about the potential value of ecosystem services provided by oyster farming;
  • Educate Gulf of Mexico state permitting and management agencies & legislators about the potential value of ecosystem services provided by oyster farming;
  • Engage in collaborative learning with the Alabama Department of Conservation and Natural Resources to determine the feasibility of and process for utilizing ecosystem services valuation to offset submerged land leasing fees;
  • Increase the awareness of the Gulf of Mexico general public about the ecosystem services provided by oyster farming. The results of this project will be valuable to a wide variety of stakeholders, both regionally and nationally. Target audiences include producers & other members of the seafood industry, regulators & legislators, scientists and the general public.

This project will contribute to the National Sea Grant Strategic Plan as follows:

Submerged land leasing fees will be identified and quantified for each Gulf state. This will remove uncertainty about start-up costs for applicants, eliminating one barrier to entry. Investment is likely to increase, creating jobs.

Documentation of the economic value of ecosystem services of off-bottom oyster farming will provide a better understanding of the public benefits of leasing public grounds and waters for private use, increasing public acceptance and allowing regulatory agencies to consider potential offsets for permit fees. With this documentation and recognition, oyster farms are expected to be permitted in a more timely fashion in the Gulf of Mexico, creating jobs and increasing income.

If documented economic benefits of ecosystem services provided by off-bottom oyster farming are recognized and accepted by Alabama DCNR (as a test case), then permitted oyster farmers may receive credits or “offsets” against current fees, increasing incomes and creating jobs. If Alabama sets a precedent in the region of using ecosystem services as offsets to fees, other states in the region may adopt similar offsets, increasing profitability of oyster farming in the region.