FSU Center for Economic Forecasting and Analysis (CEFA) Economic Impact Study for the GFMC

1. FSU Center for Economic Forecasting and Analysis (CEFA) Economic Impact Study for the GFMC By Dr. Tim Lynch, Director Dr. Julie Harrington, Asst. Director Presented to the Gulf of Mexico Fishery Management Council March 11, 2003Mobile, AL

2. CEFA Background • The Florida State University Center for Economic Forecasting and Analysis (CEFA) specializes in applying advanced, computer-based economic models and techniques to examine and help resolve pressing public policy issues across a spectrum of research areas. CEFA provides advanced research and training in the areas of high technology, commercialization of super conducting materials, health care, energy, and environmental economics, among others.

3. Background of Primary Investigator(s) • Dr Lynch earned BS degrees in economics and political science, MS in Environmental/Transportation Planning and a Ph.D in Environmental Economics from FSU; Dr. Harrington earned a BS in Fish and Wildlife Management from Montana State University, MS in Fisheries, and Ph.D in Economics (Agricultural) from Auburn Univ. • Dr Lynch worked on developing regulatory preservation plans for the Florida Keys, Big Cypress, Everglades and Green Swamp Area of Critical State Concern. He also served as Florida’s Chief Environmental Economist at DER and worked on regulatory economic evaluations of above and underground water and wetland protection, energy production, use and distribution and air pollution socio-economic impact assessments. • Dr Lynch has led and cooperated on a number of extensive environmental economics research projects including El Nino economic assessments, air and water quality and impact assessment studies, Florida Everglades restoration studies, valuation of eco-tourism in Florida, energy economics evaluation and advanced transportation and emerging energy technologies environmental, energy and economic impacts.

4. Sample of CEFA Projects • Research and economic analysis of high tech (super conducting) materials and advanced power systems with FSU Center for Advanced Power Systems (CAPS) and the Office of Naval Research (ONR), and the future of the electricity industry through participation on the Governor’s Florida Vision 2020 Commission • Economic analysis of Coastal Ocean Observing Systems (COOS) with NOAA • Detailed study comparing Florida and US cities with the New Economy High Tech Index • Economic analysis of University Research Centers and Institutes • Study on the economic impact of Florida’s outdoor advertising industry • Non-profit work including annual economic analysis of the North Florida Birding Festival

5. Proposal Genesis • Late 2002, a request was made from GFMC via Office of Research/FSU to CEFA/FSU to conduct an economic impact/value study of commercial and recreational fisheries in the Gulf of Mexico Region (Florida, Alabama, Mississippi, Louisiana and Texas).

6. Summary of Proposed Research • Evaluation of the existing research studies and literature on the economic impact and value of commercial and recreational fisheries in the Gulf of Mexico region. • Conduct an economic impact study using existing data sources. Economic impacts will be estimated using IMPLAN. Results will be in terms of direct, indirect, induced and total impacts for GRP, employment, and income.

7. Economic Value • Economic value refers to the price individuals are willing to pay for a good or service. • Total value = market (spending, sales/output, income, employment, tax revenues) + non-market (direct, indirect and passive use) values.

8. Economic Analysis • Methods of economic analysis include: • Cost-Benefit Analysis • Economic Impact Analysis • Cost Effectiveness Analysis • Natural Resource Damage Assessment

9. Methods of Measuring Economic Value When Markets Don’t Exist • Travel cost method – have been used in the area of recreation. • Hedonic Pricing – involves comparing property prices (or wage rates) to assess values. • Random Utility Models – (multiple travel cost model) involves making choices among alternatives. • Contingent Valuation – involves directly surveying the user, and asking what is the resource worth? • Benefits Transfer – involves mining the technical literature and applying previous studies data and models and making necessary adjustments to current study. It is often used when time and money are not available for a full blown valuation study.

10. Non-Market Values Consumer Surplus: Section A: Economic value a consumer receives over and above what they pay for it. (additional value attributable to natural resources). Producer Surplus: Section B: Profit a business receives over the return on investment. (additional value attributable to natural resources).

11. Examples of Use Value Per Unit of Time for Recreational/Other Natural Resources in Florida (in 1998 Dollars)

12. Proposed Project Outcomes Final Report Will Include: • Compilation of existing pertinent fisheries economics literature including research summaries and results in 2003 dollars. • Economic impact analysis of recreational and commercial fisheries (IMPLAN) results for the Gulf of Mexico region.