Nutrient Reduction Goals for the Bay

1. An Evaluation of the Cost and Effectiveness of Commercial Oyster Aquaculture in the Chesapeake Bay as a Nutrient Control StrategyAlexander L. MillerKurt Stephenson, Darrell Bosch, Daniel Kauffman, Bonnie BrownMay 28, 2010

2. Nutrient Reduction Goals for the Bay Source: http://www.bayjournal.com/article.cfm?article=3691

3. Achieving Nutrient Reduction Goals • Current Focus is on Source Reductions • Point Sources (PS) and Nonpoint Sources (NPS) • 3 Es - “This particular effort is going to involve everyone doing everything everywhere,” • -EPA’s Bay Program Office.

4. What else can we do?

5. Move Beyond a Source Reduction Strategy • Increase Ecosystem Nutrient Assimilative Capacity Nutrient Assimilation is: • “The capacity of an ecosystem to reduce nutrients within the ambient water through biological processing, sequestration, and nutrient harvest”

6. Oysters • Natures Water Filters– Healthy oysters consume algae, each one filtering up to 5 liters of water per hour. • “It is the oyster's eating habits that make it so important to its environment: it is a voracious filter feeder that performs several vital functions in the Bay's ecosystem” – Chesapeake Bay Program

7. Where does the N go? (Nutrient Removal Function) 1 Air N & P removed byharvesting bivalvebiomass Water Nitrogen (N) Phosphorus (P) Phytoplankton Bivalves 2 Portion of total N converted to N2 gas thru denitrification N in bivalve biodeposits (feces & pseudofeces) Nitrification &Denitrification Processes Sediment Source: Adapted from Newell

8. Oyster Aquaculture and Nutrient Assimilation • Native oyster restoration plagued by disease, habitat loss, and predation. • Existing aquaculture operations are providing nutrient removal services for free, but currently limited in scope. • Expansion of oyster aquaculture limited by finances. Prices in shucked market will not support expansion. BottomLine: May not receive additional nutrient assimilative services from oyster aquaculture for free!

9. Questions at Hand -Is oyster aquaculture a cost effective means to remove nutrients? -How does oyster aquaculture nutrient removal compare to source reduction technologies?

10. Is Oyster Aquaculture a Cost Effective Means to Remove Nutrients?

11. What is a Nutrient Assimilation Credit and How will This Help? • Documented mass load (e.g. pounds) of nutrients removed from a water body. • Creation of demand for such credits creates incentives for additional revenue for oyster firms, past the sale of oyster ‘meat’

12. What is the cost of removing nutrients using oyster aquaculture? • Calculate what an oyster aquaculturists would need to charge for nutrient assimilation credits in order to meet a targeted rate of return on an investment. • Allows cost comparison with source reduction technologies.

13. Oyster Seed Growth RatesMortality (Disease) Predation Weather Equipment Labor Oyster Meat -Shucked -Halfshell Oyster Growing Site Permitting Insurance Oyster Aquaculture Firm Rate of Return(Revenues – Costs) Costs Revenues Oyster ProductionSystem Nutrient Assimilation Credits

14. Bio-economic Model

15. Oyster Aquaculture Production Function -Number of Oysters Stocked or Transferred into Each Stage -Mortality Rate -Number of Months in Each Stage (Growth Rate) -Number of Oysters to Market

16. Commercial Oyster Aquaculture Costs Annual Administrative and Permitting Costs Capital Investment Costs Annual Operational and Management Costs

17. 1 lbs of N & P Removed byHarvesting Oysters in t 3” Oyster (gdw) Percentage (%) of N & P in Meat and Shell (g/gdw) 2 lbs of total N converted to N2 gas thru denitrification in t Biodeposition Rate ºC and mg/l (g/gdw/t) Oyster (gdw/t) Biodeposit Deposition (g/t) N in Biodeposits (g) Denitrification Removal (%) Nutrient Removal Function

18. Oyster Seed Growth RatesMortality (Disease) Predation Weather Equipment Labor Oyster Meat -Shucked -Halfshell Oyster Growing Site Permitting Insurance Oyster Aquaculture Firm Rate of Return(Revenues – Costs) Costs Revenues Oyster ProductionSystem Nutrient Assimilation Credits

19. Illustration: Two Hypothetical, But Representative Oyster Aquaculture Enterprises • IRR: 13.4% • IRR: 12%

20. Nutrient Assimilation Credit Prices Under Different Economic Conditions

21. Similar Analysis with Different Assumptions Cage Assumptions: Denitrification: 20% % to Halfshell Market: 90%

22. How does oyster aquaculture nutrient removal compare to source reduction technologies?

23. Comparison with Point Source, Urban Stormwater, and Non-point Source Costs

24. Comparison of Nutrient Removal Potentials • 1 M oysters sent to market: 377 to 1181 lbs of N removed (0% to 30% denitrification rates) • What would be needed to achieve equivalent reductions from nutrient sources: • Pounds removed from lowering 1 mgd of WWTP effluent from 8 mg/l to 4 mg/l of N • Treating ~200 Acres of Urban Stormwater Runoff • Adding BMPs to ~300 Acres of Pasture • Adding BMPs to ~70 Acres of Cropland

25. Concluding Thoughts

26. In Summary: • Oyster aquaculture is a potentially cost competitive water quality enhancement tool under some financial and environmental conditions. • Under a range of reasonable assumptions about oyster prices, mortality/growth, and input costs, new oyster aquaculture investments would be forthcoming for between $11.75 and $16.63 dollars per pound of N. • Ability to pay for water quality enhancement is currently limited given current policies, however, some options may exist.

27. Acknowledgements • National Fish and Wildlife Foundation • Oyster Growers

28. Questions?