Getting the most bang for your oyster enhancement buck

Abstract

Given the ecological and economic importance of oysters and significant amount of investments made in restoration and reef enhancement, the proposed projects asks the question of which reef enhancement techniques deliver the largest benefits relative to investment. The ultimate goal is to provide stakeholders with recommendations regarding which techniques provide the highest potential returns on reef enhancement investment, delivering the “most bang for the buck.” Six techniques will be considered: cultch planting, remote setting/spat-on-shell, artificial reef/living shorelines, oyster gardening, sanctuary reefs and off-bottom aquaculture. For each technique, costs, market benefits and non-market ecosystem services will be quantified and monetized. For oyster aquaculture, analysis will include a tradeoff analysis from the perspective of both grower and the public of directing oysters to the market for consumption versus for reef enhancement. Cost estimates will be obtained from existing literature and through consultation with state agency representatives, Extension specialists and commercial growers. Benefit estimates will be based on a combination of quantification and monetization of ecosystem services provided by each oyster enhancement technique (Petrolia and Haner 2024; Petrolia, Walton and Cebrian 2022). Once quantified, benefits will be monetized using the benefit transfer method. Benefit transfer is the taking of existing benefit values from one or more existing studies and applying them to a new one. Petrolia and Haner (2024) found sufficient studies conducted in the Gulf region to allow for a reasonable application of benefit transfer in the proposed work. For oyster aquaculture, benefits also consist of revenue for providing oysters for enhancement. Cost and benefit estimates will be organized and maintained in a spreadsheet-based decision tool to facilitate analysis. It is anticipated that the work will extend previous work in at least the following ways:

• Estimation of scale and scope of the “market” for reef enhancement.
• Estimation of cost and benefits associated with remote setting / spat-on-shell and oyster gardening.
• To extent feasible, estimation of quantities and values associated with nutrient and carbon sequestration.
• Estimation of cost of procuring various types of cultch.
• Tradeoff analysis of directing oysters to market for consumption versus enhancement

This proposal is a direct response to two RFP priorities: Improve the return on investment for various methods of oyster enhancement, such as cultch planting, sanctuary reefs, remote setting and the use of aquaculture for reef enhancement (Healthy Coastal Ecosystems) and Determine the feasibility of farming oysters for restoration including market analysis, economic analysis, appropriate production methods, production schedules and restoration strategies (Sustainable Fisheries and
Aquaculture). The project is expected to impact ongoing and future restoration efforts in Alabama, Mississippi, and other states by providing information for alternative approaches that can benefit both oyster aquaculture and restoration. Knowledge gained from the work should increase the resiliency of commercial oyster aquaculture through identification and feasibility testing of additional revenue streams. The funded student will have direct, relevant experience in ecosystem service valuation, aquaculture economics and oyster enhancement techniques, providing knowledge, skills and abilities as they develop their career path post-project. 

Objectives

• Estimate representative range of production costs for each oyster enhancement technique.  Identify production choices/options that drive cost.
• Estimate representative range of values of ecosystem services provided by each oyster enhancement technique.
• Estimate representative range of market revenues provided by sale of oysters for reef enhancement by each applicable oyster enhancement technique.
• From the grower’s perspective, estimate cost, revenue, and profit of producing cultured oysters for reef enhancement and compare the profit of producing them for market (consumption).
• From the restoration agency’s perspective, estimate the cost per unit of achieving a given reef enhancement outcome using each enhancement technique.
• From society’s perspective, estimate the net benefits – that is, the sum of the discounted present value of all relevant ecosystem services over a relevant time frame minus the cost of project implementation – using each oyster enhancement technique.
  Estimate the scale and scope of the “market” for reef enhancement, that is, an assessment of the potential demand for oysters for reef enhancement.
• Provide hands on opportunity for a graduate student to develop knowledge, skills and abilities pertinent for a career in aquaculture economics, resource management, or related field.

Methodology

Six oyster enhancement techniques will be analyzed from an economic perspective:  cultch planting, remote setting / spat-on-shell, artificial reef / living shorelines, oyster gardening, sanctuary reefs, and off-bottom aquaculture.  Analysis will rely on existing data for oyster restoration projects, literature, and consultation with producers, hatchery staff, and resource managers. Analysis will require a combination and extension of methods used in Petrolia, Walton, and Cebrian (2022), Petrolia and Haner (2024), Petrolia and Caffey (2024), and Petrolia and Mohrman (2024). Cost estimates will be obtained from existing literature and through consultation with state agency representatives, Extension specialists, and commercial growers. Benefit estimates will be based on a combination of quantification and monetization of ecosystem services provided by each oyster enhancement technique (Petrolia and Haner 2024; Petrolia, Walton, and Cebrian 2022).

Once quantified, benefits will be monetized using the benefit transfer method. Benefit transfer is the taking of existing benefit values from one or more existing studies and applying them to a new one. Petrolia and Haner (2024) found sufficient studies conducted in the Gulf region to allow for a reasonable application of benefit transfer in the proposed work. For oyster aquaculture, benefits also consist of revenue for providing oysters for enhancement. Cost and benefit estimates will be organized and maintained in a spreadsheet-based decision tool to facilitate analysis.

It is anticipated that the work will extend previous work in at least the following ways:

• Estimation of scale and scope of the “market” for reef enhancement.
• Estimation of cost and benefits associated with remote setting / spat-on-shell and oyster gardening.
• To extent feasible, estimation of quantities and values associated with nutrient and carbon sequestration.
• Estimation of cost of procuring various types of cultch.
• Tradeoff analysis of directing oysters to market for consumption versus enhancement.

Rationale

Oysters are both a “keystone” and economically important species. In the Gulf region, both the wild oyster fishery and oyster aquaculture are important economic sectors.  Despite their importance, oyster populations have been in global decline. In the Gulf region, this decline is evident in commercial oyster landings over the past 70 years.  To address the decline in both habitat and landings, there are widespread restoration efforts. Oyster aquaculture has also been promoted as a means to supplement or even replace traditional oyster production in places facing natural recruitment and substrate challenges. Oyster aquaculture has also been touted recently as providing some of the same ecosystem services as natural reefs.  

Given the ecological and economic importance of oysters and significant amount of investments made in restoration and reef enhancement, the proposed projects asks the question of which reef enhancement techniques deliver the largest benefits relative to their investment. The ultimate goal is to provide stakeholders with recommendations regarding which techniques provide the highest potential returns on reef enhancement investment, i.e., which deliver the “most bang for the buck”.  

This proposal is a direct response to two RFP priorities:

• Improve the return on investment for various methods of oyster enhancement, such as cultch planting, sanctuary reefs, remote setting and the use of aquaculture for reef enhancement (Healthy Coastal Ecosystems).
• Determine the feasibility of farming oysters for restoration including market analysis, economic analysis, appropriate production methods, production schedules and restoration strategies (Sustainable Fisheries and Aquaculture).

The work will also respond in some way to two other priorities:  

• Identify the market potential of Alabama and Mississippi wild caught and farm-raised oysters and identify potential new markets (Sustainable Fisheries and Aquaculture).
• Identify the economic value of nutrient and carbon sequestration for oyster farming and/or maritime forests and marshes (Healthy Coastal Ecosystems).