ECONOMIC ACTIVITY REPORT: RECREATIONAL SALTWATER FISHING IN SOUTHEAST GEORGIA

ECONOMIC ACTIVITY REPORT: RECREATIONAL SALTWATER FISHING IN SOUTHEAST GEORGIA Water Policy Working Paper #2003-010 Prepared by: Paulo Röwer, Georgia Southern University. P.O. Box 8153, Statesboro, GA 30460-8153. Telephone: (912) 681-0872. Fax: (912) 681-5581. paulorower@livingoak.org Donna Fisher, Georgia Southern University. P.O. Box 8153, Statesboro, GA 30460-8153. Telephone: (912) 681-0533. Fax: (912) 681-0710. dkfisher@groupwise.gasou.edu Anthony Barilla, Georgia Southern University. P.O. Box 8151, Statesboro, GA 30460. Telephone: (912) 681-0894. Fax: (912) 681-0710. barilla@gasou.edu October 2003 The authors acknowledge research staff at the Georgia Department of Natural Resources, Coastal Resources Division for their invaluable inputs and the U.S. Department of Agriculture (2003-38869-  02007). ECONOMIC ACTIVITY REPORT: RECREATIONAL SALTWATER FISHING IN SOUTHEAST GEORGIA Abstract Georgians represent 96 percent of the recreational saltwater fishing in the state. Using IMPLAN®, this study evaluates the economic importance associated with the activity in both the coastal region and the state as a whole. Six scenarios are examined to determine the extent of economic activity. These scenarios include a base case for the coastal region, elimination of recreational saltwater fishing from the coastal region and state’s economy, and a 25 percent increase in coastal and state recreational saltwater fishing by the year 2005. The analysis indicates the significance of recreational saltwater fishing in Georgia’s coastal and statewide economies. 2 1. Introduction The 100 miles between Savannah and St. Marys do not fully describe the richness of Georgia’s coastline. The coastal ecosystem includes coastal marine, barrier islands, estuaries and sounds, mainland upland, rivers, and swamps that enhance the biodiversity of the region (Lenz 1999). Fourteen major barrier islands contribute to make Georgia’s coast valuable to residents and visitors. Only four islands are developed; the other ten enjoy various degrees of private, state, and federal protection. Nature plays an important role in the local economy. Roughly one in every five jobs, for the 725,000 local residents, relates to Georgia’s coastal natural resources (Wallace 2001). Several scenarios highlight the importance of recreational saltwater fishing to the region and state. Foster (2001) and Gentner et al (2001) indicate that Georgia residents value recreational saltwater. In fact, Georgians account for 96 percent of recreational saltwater fishing in the state, more than half of the activity comes from non-coastal residents (Table 1). This study analyzes the economic activity related to recreational saltwater fishing in Southeast Georgia. Table 1. Participation in Georgia’s Recreational Saltwater Fishing, 2000 Coastal Residents Non-Coastal GA Residents Non-Residents Number of Trips 660,285 860,090 1,520,375 62,001 Percent of Trips 42% 54% 96% 4% Calculated from data in Foster (2001). The reminder of the document includes a methodology section which explains the IMPLAN® structure as well as the data used for the analysis. Next, the different scenarios utilized in the study are discussed. The Results and Analysis section illustrates implications from the IMPLAN® analysis of the various scenarios. The Summary section offers a synopsis of the contribution of saltwater fishing to southeastern Georgia and the entire state. 3 2. Methodology Recreational angler expenditure data from Foster (2001) and IMPLAN® software determine how recreational saltwater fishing relates to regional economic activity. IMPLAN® relies on the standard Leontief Input/Output (I/O) analysis (Leontief 1949). In addition, the version of the software used here reports in 1997 dollars. It separates production and consumption into 528 SIC (Standard Industrial Classification) codes. IMPLAN® traces the “flow of dollars” throughout the selected region, from producer to producer and consumer to producer, using both private and public sector expenditures. The 528 different industry aggregations in IMPLAN® are linked by expenditure patterns specific to the regional economy. The “flow of dollars” includes intra-regional and inter-regional producers and consumers, which allow for domestic and international trade. Investment in this model is included in capital consumption. All products purchased are considered final, in order to avoid confusion. Tracing the “flow of dollars” helps to construct a multiplier, which describes the reaction of the regional economy resulting from a change in either consumption or production. The basic multiplier aggregates the effects of demand changes into the categories of a Direct Effect, an Indirect Effect, or an Induced Effect. Direct Effects reveal the potential for increased or decreased monies in specified industries experiencing a change in demand. Indirect Effects are inter-industry purchases as a result of the directly affected industries. The Induced Effects measure changes in individual consumption resulting from income changes due to adjustments in production. For example, the demand for saltwater fishing boats increases by 10 percent. This produces a Direct Effect of increase Output in boat retail and manufacturing. The Indirect Effect is an increase in Output for boat parts and accessories. The boat retailer’s purchase of a new automobile from the extra income creates the Induced Effect. The I/O model includes a Cobb-Douglas production function with unconstrained constant returns to scale. Homogenous products and shareable information on technology are assumed in the model. The “fixed commodity input structure” assumption infers that the input prices are held constant and the input mix will not change, although the output may. As a static model, IMPLAN® assumes any demand or output that drops out of the economy is not replaced by a substitute. Therefore, when recreational saltwater fishing is “taken out” of the economy, it is not replaced by some other activity such as recreational freshwater fishing. Also, when a small business, say of 10 employees, loses most of its output, the business and the jobs go out of the regional economy. 2.1. Data The area of study, as seen in Figure 1, covers 18 coastal counties within 50 miles of the coast as defined by the National Marine Fisheries Service, Marine Recreational Fisheries Statistic Survey. Table 2 describes recreational saltwater fishing expenditures (Foster 2001, Gentner et al 2001). These 4 categories include the purchase of services and manufactured goods by individuals who participate in Georgia’s recreational saltwater fishing. Total expenditures of $355.8 million are divided across Trip Expenditures, Semi-Durable Goods and Durable Goods. Appendix A details the expenditure categories. Table 2. Georgia Recreational Saltwater Fishing Expenditures, 2000 Industry Sales (Millions $) Trip Expenditures 153 Semi-Durable Goods 98 Durable Goods 107 Total 356 Source: Foster 2001 5 Figure 1. Georgia Coastal Counties 6 2.2. Scenarios Scenarios help to explore the sensitivity of the economy to the various changes in Output relative to recreational saltwater fishing. Table 3 defines the scenarios used in this study. Scenario 1, the Georgia Coastal Region Base Case, establishes the state of the Coastal Georgia economy. Other scenarios are then reported as changes (+ or -) to the Base Case. Scenario 2 assumes recreational saltwater fishing disappears from Southeast Georgia. While not highly probable, this drastic approach shows the effects of the industry throughout the region’s economy. Scenario 3 assumes recreational saltwater fishing increases by 25 percent between now and the year 2005. The version of IMPLAN® used only covers to the year 2005. Scenarios 4 through 6 are similar to the first three scenarios but focus on the Georgia economy instead of Georgia’s coastal economy. Table 3. Economic Impact Scenarios Scenario Coastal Region State of Georgia Base Case Scenario 1 Scenario 4 Elimination Scenario 2 Scenario 5 25% Increase Scenario 3 Scenario 6 7 3. Results and Analysis This section presents the pertinent implications from various scenarios analyzed using IMPLAN®. Table 4 describes the Base Case for the Coastal Economy (Scenario 1) in terms of Output and Employment. The total Output for the coastal region is $28.8 billion, with a total Employment of 365,698. Of these totals Fishing – Durables, Fishing – Semi-durables, and Fishing – Trip expenses account for $401, $343, and $2,667 million respectively. Likewise, Employment in Fishing – Durables, Fishing - Semi – durables, and Fishing – Trip expenses amount to 7,276, 10,829, and 46,410 respectively. Table 4. Coastal Region Base Case Scenario 1, GA Recreational Saltwater Fishing Industry Output (millions)* Employment Agriculture 754 9,259 Mining 11 129 Construction 2,007 24,510 Manufacturing - Non-durables 5,858 25968 Manufacturing - Durables 2,637 14,885 Fishing - Durables 401 7,276 Fishing - Semi-durables 343 10,829 Transportation 2,188 14,101 Fishing - Trip expenses 2,667 46,410 Retail 766 26,234 Finance 2,475 15,257 Services 3,965 76,763 Government 4,674 90,636 Dummy 37 3440 Totals 28,777 365,698 *Million 1997 Dollars The recreational saltwater fishing related industries, denoted in bold, include Output and Employment related to other industries as well. This is an artifact of how IMPLAN® aggregates the SIC codes into the various categories. However, this does not affect the analysis since the authors are only altering the recreational saltwater fishing portions of the categories. The remainder of the section examines the other scenarios in terms changes in Output and Employment relative to the base case. 3.1. Scenario 2: Elimination of Recreational Saltwater Fishing from Southeast Georgia Based on Scenario 2, Table 5 enumerates the elimination of recreational saltwater fishing changes to Output. Eliminating recreational saltwater fishing causes a Direct Effect of reducing Output by $334.5 million for the coastal economy. Indirect Effects account for a reduction in Output of $81.5 million. The Induced Effects in the household economic activity are -$94.7 million. This gives a total decrease of $510.6 million as a result of eliminating recreational saltwater fishing from the coastal economy. Multipliers, calculated by dividing the total effect by the direct effect, indicate that additional output 8 produced by increasing (or decreasing) the economy in the given industry category. In this way, the multiplier effect for every $100 dollars taken away (or added) to the economy through fishing trip expenses removes (adds) an additional $18 to the overall economy. Table 5. Coastal Region Output Scenario 2, Eliminate GA Recreational Saltwater Fishing* Industry Direct Indirect Induced Total Multipliers Agriculture 0 -0.3 -0.2 -0.5 Mining 0 0 0 0 Construction 0 -2.7 -1.2 -3.9 Manufacturing - Non-durables 0 -3.2 -2.9 -6.1 Manufacturing - Durables 0 -7.8 -5.8 -13.6 Fishing - Durables -78.2 -0.2 -2.5 -80.9 1.03 Fishing - Semi-durables -74.6 -0.9 -2.6 -78 1.05 Transportation 0 -11.6 -9 -20.7 Fishing - Trip expenses -133.1 -11.3 -12.9 -157.4 1.18 Retail 0 -0.6 -6.4 -7 Finance 0 -13.4 -18.7 -32.1 Services 0 -29.3 -25.2 -54.5 Government 0 -0.1 -7.1 -7.2 Dummy 0 0 -0.2 -0.2 Foreign Trade -0.5 0 0 -0.5 Domestic Trade -48.1 0 0 -48.1 Total -334.5 -81.5 -94.7 -510.6 *Million 1997 dollars Recall from Table 4, the coastal region employs 365,698 individuals in the Base Case. Table 6 details the Employment changes resulting from the elimination of recreational saltwater fishing in Coastal Georgia. In this scenario total Employment decreases by 8,621. Aside from the fishing related industries, major decreases of more than 100 jobs lost also occur in Transportation, Retail, Finance, Services (primarily in health care), and Government. As expected the multipliers remain the same for the industry categories in both Output and Employment. Table 6. Coastal Region Employment Scenario 2, Eliminate GA Recreational Saltwater Fishing Industry Direct Indirect Induced Total Multiplier Agriculture 0 -4 -3 -6 Mining 0 0 0 0 Construction 0 -33 -14 -47 Manufacturing - Non-durable 0 -14 -13 -27 Manufacturing - Non-fishing durables 0 -44 -33 -77 Fishing - Durables -1,421 -3 -46 -1,470 1.03 Fishing - Semi-durable -2,361 -27 -81 -2,469 1.05 Transportation 0 -75 -58 -133 Fishing - Trip expenses -2,317 -197 -225 -2,739 1.18 Retail 0 -21 -218 -239 Finance 0 -83 -115 -198 Services 0 -568 -487 -1,055 Government 0 -2 -138 -140 Dummy 0 0 -21 -21 Foreign Trade 0 0 0 0 9  Domestic Trade 0 0 0 0 Total -6,098 -1,071 -1,452 -8,621 3.2. Scenario 3: 25 Percent Increase in Recreational Saltwater Fishing by 2005 Table 7 describes the changes in the coastal economy as a result of a 25 percent increase in recreational saltwater fishing activity between now and the year 2005. The total economy increases by $113.2 million: $63.4 million from fishing related activities, and nearly $50 million from inter-industry and household activity, indirect and induced effects respectively. The total for fishing related activities includes only the three industry level categories. The changes in Output related to Foreign and Domestic Trade with the coastal region are affected, but may not be directly related to recreational saltwater fishing. The multipliers for the 25 percent increase remain the same, as expected. Table 7. Coastal Region Output Scenario 3, 25 percent increase, GA Recreational Saltwater Fishing* Industry Direct Indirect Induced Total Multiplier Agriculture 0.0 0.1 0.0 0.1 Mining 0.0 0.0 0.0 0.0 Construction 0.0 0.6 0.3 0.9 Manufacturing - Non-durable 0.0 0.7 0.6 1.4 Manufacturing - Non-fishing durables 0.0 1.7 1.3 3.0 Fishing - Durables 18.2 0.0 0.6 18.8 1.03 Fishing - Semi-durable 15.6 0.2 0.6 16.4 1.05 Transportation 0.0 2.6 2.0 4.6 Fishing - Trip expenses 29.4 2.5 2.9 34.8 1.18 Retail 0.0 0.1 1.4 1.5 Finance 0.0 3.0 4.1 7.1 Services 0.0 6.5 5.6 12.1 Government 0.0 0.0 1.6 1.6 Dummy 0.0 0.0 0.0 0.0 Foreign Trade 0.1 0.0 0.0 0.1 Domestic Trade 10.7 0.0 0.0 10.7 Total 74.2 18.1 21.0 113.2 *Million 1997 dollars When the recreational saltwater fishing activity increases by 25 percent, 1,897 new jobs come to the coastal economy (Table 8). In addition, the Services sector increases by 234 jobs, most in health care related industries. 10 Table 8. Coastal Region Employment Scenario 3, 25% Increase in GA Recreational Saltwater Fishing Industry Direct Indirect Induced Total Multiplier Agriculture 0 1 1 1 Mining 0 0 0 0 Construction 0 7 3 11 Manufacturing - Non-durable 0 3 3 6 Manufacturing - Non-fishing durables 0 10 7 17 Fishing - Durables 331 1 10 342 1.03 Fishing - Semi-durable 495 6 18 519 1.05 Transportation 0 17 13 30 Fishing - Trip expenses 512 44 50 606 1.18 Retail 0 5 48 53 Finance 0 18 26 44 Services 0 126 108 234 Government 0 0 31 31 Dummy 0 0 5 5 Foreign Trade 0 0 0 0 Domestic Trade 0 0 0 0 Total 1,339 237 321 1,897 3.3. Scenario 4: State of Georgia Base Case By comparing Table 4 with Table 9, it can be seen that the coastal region provides about 7 percent of the state’s Output and 8 percent of the state’s Employment. While these 18 counties represent a small portion of the state’s economy, the effects of industries within the region can be felt statewide as demonstrated through Scenarios 5 and 6. The same caveat applies to the fishing categories, namely, recreational saltwater fishing related industries (in bold) include Output and Employment related to other industries as well. Table 9. Georgia Base Case Scenario 4, GA Recreational Saltwater Fishing Industry *Output Employment Agriculture 7,689 99,593 Mining 1,461 8,064 Construction 25,025 290,206 Manufacturing - Non-durables 75,963 409,751 Manufacturing - Non-fishing-durables 33,862 190,061 Fishing - Durables 4,705 80,696 Fishing - Semi-durables 4,556 138,355 Transportation 42,391 237,177 Fishing - Trip-expenses 43,798 587,925 Retail 11,011 311,178 Finance 52,177 279,784 Services 64,203 1,123,628 Government 31,824 703,665 Dummy 468 38,568 Totals 399,133 4,498,651 *Million 1997 dollars 11 3.4. Scenario 5: Elimination of Recreational Saltwater Fishing from the State of Georgia As mentioned previously, the likelihood of this scenario is small. However, it illustrates the extent of the industry in the state. Table 10 indicates a more than $550 million reduction in the Georgia economy when eliminating recreational saltwater fishing. One difference between Table 10 (Georgia’s economy) and Table 5 (coastal economy) lies in direct effects for Output, which account for -$338.9 and -$334.5 million, respectively. The inter-relationship between the fishing related industries in the coastal region and those in the rest of the state explains the $4.4 million difference in Output between the two scenarios. For example, boat or tackle sales fall both in and outside the region. Hence, even though the activity is located in the coastal Georgia region, its effects can be felt throughout the state. Table 10. Georgia Output Scenario 5, Eliminate GA Recreational Saltwater Fishing* Industry Direct Indirect Induced Total Multipliers Agriculture 0.0 -0.9 -1.1 -2.0 Mining 0.0 0.0 0.0 -0.1 Construction 0.0 -2.5 -1.6 -4.1 Manufacturing - Non-durables 0.0 -9.9 -13.4 -23.3 Manufacturing - Non-fishing-durables 0.0 -6.5 -6.7 -13.2 Fishing - Durables -93.1 -0.2 -3.6 -96.9 1.04 Fishing - Semi-durables -80.0 -0.8 -3.3 -84.1 1.05 Transportation 0.0 -9.3 -10.5 -19.8 Fishing - Trip-expenses -138.4 -10.2 -17.1 -165.7 1.20 Retail 0.0 -0.6 -8.2 -8.7 Finance 0.0 -13.9 -27.6 -41.5 Services 0.0 -26.0 -32.2 -58.2 Government 0.0 -0.1 -4.8 -4.9 Dummy 0.0 0.0 -0.2 -0.2 Foreign Trade -0.2 0.0 0.0 -0.2 Domestic Trade -27.2 0.0 0.0 -27.2 Total -338.9 -80.8 -130.4 -550.1 * Million 1997 dollars Total Employment effects of -8,439, as seen in Table 11, consist of slightly less for the scenario that considers Georgia as a whole. The scenario that looks at only the coastal region effects indicates a drop of -8,621. This difference can be explained by the fact that in, IMPLAN®, when recreational saltwater fishing activities are eliminated from the coastal region, jobs (employees) do not transfer to other regions. In addition, at the state level, economies of scale allow that while output may be reduced, jobs do not necessarily vanish in the short term. 12 Table 11. Georgia Employment Scenario 5, Eliminate GA Recreational Saltwater Fishing Industry Direct Indirect Induced Total Multipliers Agriculture 0 -12 -14 -26 Mining 0 0 0 0 Construction 0 -29 -19 -48 Manufacturing - Non-durables 0 -53 -73 -126 Manufacturing - Non-fishing-durables 0 -37 -38 -74 Fishing - Durables -1,596 -3 -62 -1,662 1.04 Fishing - Semi-durables -2,429 -24 -102 -2,555 1.05 Transportation 0 -52 -59 -111 Fishing - Trip-expenses -1,858 -136 -230 -2,225 1.20 Retail 0 -16 -231 -247 Finance 0 -75 -148 -222 Services 0 -455 -564 -1,019 Government 0 -2 -106 -107 Dummy 0 0 -19 -19 Foreign Trade 0 0 0 0 Domestic Trade 0 0 0 0 Total -5,883 -894 -1,663 -8,439 3.5. Scenario 6: 25 Percent Increase in Recreational Saltwater Fishing in Georgia Economy by 2005 Tables 12 and 13 report on the effects of increasing recreational saltwater fishing in the state economy by 25 percent between now and the year 2005. Total Output increases by $125 million (Table 12). Recall that Output for the coastal region increases by $113 million (Table 7). Total Employment increases by 1,909 (Table 13) in the Georgia economy case, where it increases by 1,897 in the coastal economy case (Table 8). In both cases, the state level economy demonstrates more of an increase due to inter-related industry activities (indirect) as well as the increase in household level demand (induced). Table 12. Georgia Output Scenario 6, 25 percent increase, GA Recreational Saltwater Fishing* Industry Direct Indirect Induced Total Multipliers 13  Agriculture 0.0 0.2 0.2 0.5 Mining 0.0 0.0 0.0 0.0 Construction 0.0 0.6 0.4 0.9 Manufacturing - Non-durables 0.0 2.2 3.1 5.3 Manufacturing - Non-fishing-durables 0.0 1.5 1.5 3.0 Fishing - Durables 21.9 0.0 0.8 22.7 1.04 Fishing - Semi-durables 17.4 0.2 0.8 18.3 1.05 Transportation 0.0 2.1 2.4 4.5 Fishing - Trip-expenses 31.6 2.3 3.9 37.8 1.20 Retail 0.0 0.1 1.9 2.0 Finance 0.0 3.2 6.3 9.4 Services 0.0 5.9 7.3 13.2 Government 0.0 0.0 1.1 1.1 Dummy 0.0 0.0 0.1 0.1 Foreign Trade 0.0 0.0 0.0 0.0 Domestic Trade 6.2 0.0 0.0 6.2 Total 77.1 18.4 29.7 125.1 *Million 1997 dollars Table 13. Georgia Employment Scenario 6, 25 percent Increase, GA Recreational Saltwater Fishing Industry Direct Indirect Induced Total Multipliers Agriculture 0 3 3 6 Mining 0 0 0 0 Construction 0 7 4 11 Manufacturing - Non-durables 0 12 17 29 Manufacturing - Non-fishing-durables 0 8 9 17 Fishing - Durables 375 1 14 390 1.04 Fishing - Semi-durables 528 6 23 556 1.05 Transportation 0 12 13 25 Fishing - Trip-expenses 425 31 52 508 1.20 Retail 0 4 53 56 Finance 0 17 34 51 Services 0 104 128 232 Government 0 0 24 24 Dummy 0 0 4 4 Foreign Trade 0 0 0 0 Domestic Trade 0 0 0 0 Total 1,327 203 378 1,909 14 4. Summary This study explores the economic activity for recreational saltwater fishing in the 18 coastal counties in southeast Georgia. Scenarios which eliminate recreational saltwater fishing from the economy, as well as increasing it by 25 percent, illustrate its importance to the coastal and Georgia economies. The IMPLAN® analysis results indicate the sizeable contribution of recreational saltwater fishing to the southeastern coastal region of Georgia and to the State as a whole. In the scenario that eliminates recreational saltwater fishing, Output in the region decreases by nearly $500 million (1997 dollars), with a loss of over 8,000 jobs. Likewise, if the recreational saltwater fishing industry activity increases by 25 percent over the next three years, it could bring over 1,800 jobs to the region. The Georgia Coastal Conservation Association and Saltwater Advisory Council used data from this study to promote and support studies in fisheries research, artificial reef development, and fishing access improvements. Based on findings in Fisher et al (2002), The Georgia General Assembly allocated an additional $150,000 to the Coastal Resources Division of GA DNR in fiscal year 2003. This started the Marine Sportfish Population Health Study in the Warssaw estuary. 15 5. References Fisher, D. K., P. Röwer, 2002. Economic Activity Report: Recreational Saltwater Fishing in Southeast Georgia. Bureau of Business Research & Economic Development, Georgia Southern University: Statesboro, GA. Foster, J., 2001. Preliminary Estimates of Marine Recreational Angler Expenditures in Georgia, 1999 and 2000. Georgia Department of Natural Resources: Atlanta, GA. Gentner, B., M. Price, and S. Steinback, 2001. Marine Angler Expenditures in the Southeast Region, 1999. U.S. Department of Commerce: Washington, DC. Lenz, R. J., 1999. Longstreet Highroad Guide to the Georgia Coast and Okefenokee. Sherpa Guide. Longstreet Press. Available at: http://www.sherpaguides.com/georgia/coast/index.html, Retrieved: 23 June 2003. Leontief, W., 1949. Recent Developments in the Study of Interindustrial Relationships (in Input-Output Analysis and its Use in Peace and War Economies). The American Economic Review 39 (3), 211-225. National Marine Fisheries Service, 2001. Marine Recreational Fisheries Statistic Survey. Available at: http://www.st.nmfs.gov/st1/recreational/survey/glossary.html, Retrieved: 05 March 2002. 16 6. Appendix A. CRD Expenditure Definitions Trip Expenditures Semi-Durable Goods Durable Goods Private Transportation Rods and Reels Boat Expenses Food Other Tackle Power Boat Purchase Lodging Camping Equipment Non-Power Boat Purchase Public Transportation Binoculars Electronics Boat Fuel Clothing Fishing Vehicle Charter Fees Processing/Taxidermy Vacation Home Access/Boat Launching Magazines Equipment Rental Club Dues Bait License Fees Ice Miscellaneous 17