Study quantifies the impact of coastal runoff in dollars and cents

A recent Duke University (Durham, N.C.) study makes the first, long-sought evidence linking Gulf of Mexico hypoxia to economic effects.

The study, published January in The Proceedings of the National Academy of Sciences, shows hypoxic dead zones in the gulf drive up the price of large shrimp relative to smaller sizes. This effect causes economic ripples that can affect consumers, fishermen, and seafood markets alike.

Coastal hypoxia — low or depleted oxygen levels in water — is caused by nitrogen and phosphorus-laden runoff from inland watersheds that increases algal growth in offshore waters.

“Many studies have documented the ecological impacts of hypoxia, but establishing a clear causal link to economic losses in affected fisheries has been elusive,” said Martin D. Smith, George M. Woodwell Distinguished Professor of Environmental Economics at Duke’s Nicholas School of the Environment.

To conduct the study, Smith and his colleagues examined monthly trends in the price of Gulf brown shrimp from 1990 to 2010. Their analysis revealed a recurring pattern of spikes in the price of large shrimp relative to small ones when hypoxic dead zones occurred — typically late spring and summer.

“Because fishermen are catching more small shrimp and fewer large ones during these months, the price of small shrimp goes down and the price of large ones goes up, creating a short-term disturbance in the market that we can track,” he said.

Past efforts to track this type of market effect have failed, Smith suggested, because they focused on changes in the quantity of shrimp, rather than price fluctuations.

“Looking at prices rather than quantities allows us to see the economic signal more clearly, without interference from these human and natural feedbacks that can compound or obscure the effects of hypoxia on a fishery,” he said.

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