Duration: 10/01/2019 to 09/30/2021

Administrative Advisor(s):

NIFA Reps:

Non-Technical Summary

Statement of Issues and Justification

Aquaculture and capture fisheries provide a significant source of protein and economic activity for people in the United States and other countries. U.S. commercial fisheries landings and value in 2017 were 9.9 billion pounds and $5.4 billion, up by 3.6% and 2.1 % from 2016, respectively (National Marine Fisheries Service  2018a). Aquaculture total production (freshwater and marine combined) in 2016 was valued $1.5 billion with landings of 633 million pounds, maintaining the 1% annual increase in production volume since 2010 (National Marine Fisheries Service 2017, 2018a). The most valuable aquaculture item is oysters, followed by clams, salmon, shrimp, and mussels. Aquaculture represents 21% of the U.S. seafood production by value and is expected to grow in the coming years as the consumers’ demand for seafood continues to increase (National Marine Fisheries Service  2018a).

 

Aquaculture interacts with capture fisheries in many ways. One example is the provision of hatchery-raised fish and shellfish that are released into the wild to enhance or rebuild wild stock populations, thereby providing support for both commercial and recreational fisheries. The state of wild fish stocks and associated fishery regulations could influence the demand for farm-raised fish and shellfish. It could also affect technological innovations, such as the recent introduction of genetically modified (GM) Atlantic salmon (Smith et al. 2010). Capture fisheries also interact with aquaculture products in exchange markets, regulatory environments, and economic development activities (e.g., Knapp et al. 2007). The importance of the multifaceted relationship between aquaculture and capture fisheries suggests a need for reliable economic studies of these two critical resources, especially as management, regulatory, and market demands change over time.

This proposed revision to multistate project W3004 outlines a study of the marketing, trade, and management issues found in various aquaculture and fishery resources. New tasks will be undertaken under the four interrelated areas outlined in the previous W3004 project: 1) marketing, niches, and new products; 2) production for dynamic markets; 3) regulatory influences on sector development; and 4) assessing infrastructure and industry organization. Four cross-cutting themes integrate the project objectives: 1) analysis of emerging and innovative technologies; 2) roles of property and stakeholder rights; 3) spatial organization of management, markets and infrastructure; and 4) market coordination and integration. Conducting the proposed work within a multistate framework will facilitate the examination of important stakeholder issues by bringing together experts from across the country, thus avoiding duplication of effort in the design and implementation of research studies. In doing so, the project will continue to create and maintain the human capital infrastructure of the previous W3004 project and provide a scientific resource that can respond to emerging problems in this resource sector.

 

The remainder of this section briefly describes the issues and justification for each of the main areas of research to be conducted under the project.

 

 Marketing, Niches, and New Products

 

The last three decades witnessed the globalization of trade in seafood products. World exports of fishery products equaled approximately $23 billion in 1986 and had increased to $142.5 billion by 2016 (FAO 2018). Much of the increase in seafood trade was fostered by advances in worldwide aquaculture production, which has been steadily increasing over time while capture fisheries remained stagnant worldwide (FAO 2018). U.S. imports of edible seafood products in 2017 were 5.9 billion pounds valued at $21.5 billion, an increase of 1.6% and 10.4% from 2016 respectively. (National Marine Fisheries Service 2018a).

 

Many of these imports competing directly with the U.S. capture fisheries (e.g., salmon, pollock, and shrimp) and aquaculture (e.g., catfish and crawfish) sectors. In many instances, this competition resulted in declining real dockside prices for the nations domestically-produced products and a gradual erosion of economic activity in the harvesting and supporting sectors. Many rural U.S. communities that depend on the production of captured and farmed aquatic products are at a crossroad because of this expanded globalization. Eventually, participants in this sector must respond to global competition and adopt new methods and frontier technologies with the goals of sector rejuvenation and economic security in a changing marketplace.

 

To meet the challenges ahead, these communities and the small to midsize companies that support them must innovate by developing new products favored by end-users, position products in market niches that increase market penetration, and/or communicate with end-users to maximize the perceived value of the product. Thus, information concerning product distribution and flow, end-user preferences and perception, pricing, processing methods and technology, packaging, and institutional and structural arrangements in the supply chain is needed to ensure marketing success and the sustainability of fisheries and aquaculture assets.

  

Production for Dynamic Markets

 

Rapidly changing prices and business opportunities have led to increasing economic stress and uncertainty concerning the future direction of aquaculture and fisheries production in the U.S. (National Marine Fisheries Service 2018b). If these industries are to survive, research must focus on improving efficiency and competitiveness. Many aquatic species exhibit inter- and intra-annual changes in physiological characteristics which significantly influence consumer and producer welfare. To remain competitive, U.S. aquaculture producers need to continually improve production efficiencies in order to maximize the financial benefits that can be extracted from their managed production operations, all the while doing so in an environmentally and socially responsible manner. For capture fisheries, it is essential to design regulations and management systems that both maximize the market-related economic benefits derived from the resource and reward well-managed fisheries. Research that integrates both temporal and spatial characteristics of aquaculture and capture fisheries production can be an effective way of evaluating policy options and illuminate the important mechanisms operating between fish-based resources and their respective industries and markets.

 

Another factor influencing production is the way in which sector growth and changing international markets have affected the trade of fish products. Optimized production practices and breakthroughs in biotechnology research have resulted in declining costs of production for most aquaculture species at a time when many traditional commercial fisheries face increasing resource exploitation, overcapitalization, and marketing infrastructure constraints. Given that these trends are expected to continue, an increasingly dynamic aquaculture sector is likely to erode the competitiveness of traditional fishery products, resulting in a need to devise strategies that will help the traditional fisheries sector adjust to the changing market scenarios. Only by carefully managing the quality and quantity of aquaculture and capture fishery production, both from a temporal and spatial perspective, will the U.S. achieve the national and regional objectives of economic efficiency, full utilization, and stock conservation.

  

Regulatory Influences on Sector Development

 

The collapse of many wild fish stocks in the U.S. and the world has led to significant changes in both commercial fisheries and aquaculture. In many parts of the world, capture fisheries management has gradually transitioned from council-based direct management systems to stakeholder rights-based systems that, although managed by councils, utilize market forces to allocate resources. These market-based systems, which dominate management in Iceland, New Zealand, and Australia are increasingly being used in U.S. fisheries. Meanwhile, world aquaculture production experienced dramatic expansion as it filled the gap between seafood demand and the capture fishery supply; its production has increased on average by 5.9% annually between 2011 and 2016 (FAO 2018). While the US aquaculture production has continued to grow over the past years, its rate of increase during the similar time period was just 1% and, in 2017, the production of marine aquaculture decreased to the level similar to 2011 (National Marine Fisheries Service  2017, 2018a). All of this despite that the US is the major supplier of technology, feed, and investment for the industry in other countries.

 

At least three questions arise from the changes experienced in fisheries and aquaculture over the last 20 years. First, are the rights-based systems being used in some U.S. fisheries working better than regulated open access, and how should this evaluation be measured? Various types of rights-based systems have been implemented, including individual transferable quotas, catch shares and sector allocation, and limited access privilege program, but the assessment on broader impacts of these management systems is anything but settled and will continue undergoing mandated reviews in the near future. As federal fisheries managers conduct these reviews, the role of market institutions, the value of rights, methods for exchanging fisheries assets and the impacts of rights-based systems on fish stock, product marketing and the welfare of coastal communities are all critical areas requiring analysis.

 

Secondly, what is the economic relationship between capture fisheries and aquaculture, both in the U.S. and the world? Half of US edible seafood imports come from East and South Asian countries, with shrimp (fresh and frozen) leading the pack in both volume and value and most likely to be farm-raised (National Marine Fisheries Service 2018a). US domestic fisheries, captured or farmed, thus interact with the world aquaculture industries via foreign trade. Aquaculture has clearly arisen as a mature world industry, but it is still in relative infancy in the U.S. Investigating the economic and regulatory reasons for the lack of development in the U.S. industry can potentially lead to changes that enhance industry viability. At the same time, it is important to evaluate the role aquaculture can play in the management of capture fisheries and the welfare of the coastal communities that have historically relied on the sea.

 

Lastly, how can U.S. aquaculture modernize and take advantage of new technologies, both from traditional and sustainable production perspectives, while at the same time competing in global markets? Answers to this question not only lay in understanding traditional market fundamentals and trade relationships but also in evaluating the role various national policies have on industry viability.

  

Assessing Infrastructure and Industry Organization

 

Because they are biologically-based and often located in coastal zones, the ports, working waterfronts, and communities that are dependent on fisheries and aquaculture are susceptible to various shocks. These shock range from environmental events to more persistent changes in markets and consumer preferences. For example, hurricanes have recently and severely damaged the livelihoods of commercial and recreational fishers along the northern Gulf of Mexico and the Atlantic coast. During and after these storm events, saltwater intrusion, power interruptions, and chaotic markets have also disrupted aquaculture production and marketing.

 

Although less dramatic than storms, harvest limitations, industry consolidation, depreciating infrastructure and changing economic and regulatory landscape constantly force coastal communities to evaluate the maintenance and revitalization efforts for their waterfronts. In particular, changing consumer product requirements, especially with regard to safety, quality and traceability, demand new and innovative industry practices. Coping with any of these shocks requires detailed information about the affected industries, including the location and quality of support infrastructure, the status of product quality, and viability of the communities in which industry participants work and live.

 

Related, Current and Previous Work

 

This section briefly describes the accomplishments of the previous W3004 multistate project as they relate to each of the projects four objectives. A current CRIS search revealed no evidence of potential duplication with the proposed revision.

  

(1) Marketing, Niches and New Products: Improve the development of seafood markets by focusing on analyses of new marketing themes, market niches, and alternative seafood products.

 

A recently completed project examined the overall ‘seascape’ of seafood certifications using the evolution of Theory of Change over the entire supply chain was completed. The study outlined four possible next phases of this seascape ranging from race to the bottom (certification standards converging to the least rigorous standard – least preferred outcome) to the emergence of a new entity the project called sustainable seafood aggregator (SSA). This was a collaborative work with Hiro Uchida (URI), Cathy Roheim (U of ID), Simon Bush (Wageningen Univ., The Netherlands), Jim Sanchirico (UC Davis), and Frank Asche (UF). The resulting peer-reviewed article was published as Roheim et al. (2018), and also produced a Ph.D. dissertation, that resulted in two conference presentations and two papers in preparation. The first paper that examined and compared the presence of price premiums for sustainable seafood and perceived food safety in Chinese market using online merchants data; this was presented at the NAAFE 2017 conference. The second paper is also on the consumers' demand for sustainable seafood but uses economic experimental auction method to investigate further into the details of how the demand in Chinese seafood market is formed and was presented at IIFET 2018.

 

Another project involved a survey of Connecticut residents’ interest in and demand for Connecticut aquaculture products—specifically, oysters, clams, and seaweed. The survey involves a choice experiment and participants were given various information treatments about the health/nutrition and environmental benefits of (local) aquaculture. The survey launched in November 2017. This is collaborative work with Tessa Getchis and Anoushka Concepcion from Connecticut Sea Grant and Miriah Kelly from UConn Extension. External grants cover parts of the work, including supervision of an MS student.

 

In Indiana, one study led by Kwamena Quagrainie (Purdue) sought to explore expanded market opportunities in the local food systems for the aquaculture industry to stimulate market-driven production, particularly for small- to medium-scale producers who have traditionally relied on the live ethnic markets (Quagrainie 2017). Another study compared the economics of aquaponics production of fish and vegetables versus hydroponics production of only vegetables. The study compared investment and operating costs that included the production of the vegetables under organic system of production (Quagrainie et al. 2018).

 

A project in US Virgin Islands investigated the impact of lionfish, an invasive species in the U.S. that are adversely affecting reef systems and associated food webs, and implications for commercial and local subsistence fisheries in the Southeast U.S. and U.S. Virgin Islands. This study, led by Sherry Larkin of UF and Tracey Yandle of Emory and funded by Saltonstall- Kennedy program brought together economists, anthropologists, and political scientists and in cooperation with the Experiment Station in the USVI, to address the potential for a market for lionfish from the social science perspective. Consumers and producers were interviewed for both their WTP and WTA values, respectively, for lionfish meat. Preliminary analysis, which was presented at IIFET 2018, shows that while an official commercial fishery is not likely to be established under current federal law, both the supply and demand seem sufficient to support a sustained market. Significant outreach was conducted in order to help develop the market including teaching fishermen how to catch, handle and fillet lionfish and conveying to consumers that lionfish cooks the same as other fish and may taste and handle even better.

 

Another interesting project looking at the nexus of aquaculture and recreational fishing is examining the market potential of marine baitfish aquaculture for the recreational fishing market. In part funded by Saltonstall-Kennedy grant and led by Andrew Ropicki, the project evaluated the market potential of cultured baitfish in Texas through a survey of bait stands and analyzing the economic feasibility of pigfish aquaculture based on production research at the University of Texas Marine Science Institute (UTMSI). Based on initial work there is unmet demand and profitable production is possible. The research has focused on baitfish production for the live bait market by current pond-based aquaculture producers as a secondary crop, as baitfish can be raised in cages in red drum and hybrid striped bass ponds with no disruption in primary production. This has the potential to be a high-value niche market for current producers struggling to compete with imports and could decrease pressure on wild stocks.

  

(2) Production for Dynamic Markets: Enhance fishery and aquaculture production by developing decision support tools to integrate management and marketing

 

An aquaponic research project involving aquaculture, economics, horticulture, biosystems engineering, and poultry science (pathogen detection) was funded by USDA-NIFA. The project interdisciplinary nature is filling knowledge gaps in the tilapia-vegetable-algae system. In areas away from population centers, finding markets for large-scale quantities of co-products is challenging and needs further work. Another project looked at an in-pond raceway system, which is being developed and research trials conducted to improve catfish production efficiencies, cost reduction, ease of operation and reducing bird depredation. These systems are being adopted in SE Asia but find far less acceptance in the US catfish producing regions.  Excel spreadsheets for these two projects are being developed into production decision products to help entrepreneurs in their investment decision-making.

 

There were two projects, both led by Quinn Weninger (Iowa State), that looked at improving the management, and thereby the production, of commercial multispecies fisheries by addressing the uncertainty in stock assessment, both abundance and species mix. The first project introduces an empirical methodology to consistently estimate the structural properties of a multi-species commercial fishing technology in a setting where the researcher does not observe the abundance and species mix of the fish stock. This environment is ubiquitous in commercial fisheries and, as demonstrated in the paper, leads to a biased estimation of a crucial component of effective fisheries management. The new methodology is expected to advance fisheries management practice worldwide, resulting in more informed and effective policies, and increases in economic benefits that derive from marine fisheries. The second project reconsiders the extent of uncertainty that exists in wildlife management. Methods to measure unobservable wildlife populations rely on strong assumptions that are grounded in ecological theory but empirically untestable. Current management practice often overstates what is known about the size and composition of the wildlife population that is being managed. This project exposes these assumptions and applies methods from the partial identification econometrics literature to promote a more pragmatic approach to management and policy design. This work has the potential to fundamentally change current practice (and U.S. laws) that are being used to (mis)manage natural wildlife (including aquatic) resources.

 

There was also a project led by Andrew Mount (Clemson) who hypothesized that the development of a conopeptide-based antifouling system could provide a non-toxic, stable, and effective deterrent to biofouling on aquaculture nets and gear. In collaboration with Engineered Marine Coatings Inc. of Charleston, South Carolina, he obtained Phase 1 STTR funding from NSF, and the project developed and tested a novel conopeptide based coating based on the lab’s patent-pending technology. The synthetic conopeptide antifoulant, Miata57, has shown a promising ability to deter fouling marine invertebrate larvae from settling, thus preventing biofouling when it is included as part of a coating. The project also successfully innovated an alkyne rich reactive coating that effectively conjugates Miata57 in various quantities to demonstrate its high effectiveness as an antifouling surface, which was tested by the company on glass bead substrates. The cyprid bioassay results revealed that conjugated Miata57 is highly effective in defeating cyprid biofouling at a much lower density than previously hypothesized. This discovery sharply reduces the cost of the final formulations, necessary for subsequent testing. Once perfected, the Miata57 conjugated coating can be added to any number of commercial antifouling marine products thus obviating the need for a copper-based marine antifouling paint.

 

 (3) Regulatory Influences on Sector Development: Increase the organizational and institutional efficiency of the aquaculture and fishery sectors by analyzing the regulatory environment and developing ideas to support the sectors

 

Portfolio selection is a flexible tool that can be used to support natural resource decision-making to optimize the provision of ecosystem services. The natural resource portfolio literature includes applications in fisheries, forestry, agriculture, spatial planning, invasive pest, and disease surveillance, climate change adaptation, and biodiversity conservation, among others. The project sought to contribute to this growing literature by proposing a set of essential questions to guide the development and implementation of empirical portfolios for natural resource management that deal with (1) the nature and objectives of the portfolio manager, (2) the definition of assets to be included in the portfolio, (3) the way in which returns and risk are measured and distributed, and (4) the definition of constraints in the programming problem. The case and landing data from the data-limited fishery in the Colombian Pacific was used to illustrate this approach in setting the catch limit at the ecosystem level. The project also developed a set of constraints in the programming problem to simulate potential policy options regarding resource sustainability and social equity. The resulting efficient catch portfolios can be used to optimize the flow of provisioning ecosystem services from this fishery (Alvarez, Larkin and Ropicki, 2017).

 

A few projects examined the effect of regulatory changes on commercial fishing industries. Projects led by Andrew Scheld (VIMS) and resulted in publications Scheld and Anderson (2016) and Scheld and Walden (2018), explored production in multispecies fisheries and harvesters’ ability to fish selectively using empirical multiproduct production specifications. Scheld and Walden (2018) in particular found that harvesters in the New England groundfish fishery responded to regulatory incentives, increasing fishing selectivity following a transition to a multispecies catch share program. Another project by Quinn Weninger sought to measure the rent gains over an eight-year period that were realized in the U.S. west coast groundfish fishery when it switched from a command and control (input control) regulation to individual transferable fishing quotas in January 2010.

 

In a slightly different project, Andrew Scheld and his colleague investigated decision-making of charter captains in a mixed commercial-recreational fishery using a contingent sequential stated choice survey. Charter captains were found to respond to uncertainty and trip characteristics, while also exhibiting inertia and individual heterogeneity. Results of this work will be useful in forecasting effort and harvest impacts of this sector in the fishery for Atlantic bluefin tuna, a highly migratory species under international management (Goldsmith et al. 2019, in prep).

 

(4) Assessing Infrastructure and Industry Organization: Improve the understanding of how infrastructure investment, location, and sector organization affects the stability of both the aquaculture and capture fishery industries

 

One project looked at the U.S. commercial red snapper IFQ program, which was the first catch share management system implemented in the Gulf of Mexico. The program has been successful in meeting its major goals of ending derby-style fishing and reducing overcapacity in the harvest sector, but several concerns regarding the socioeconomic impacts of the program have been raised. To address these concerns, the management agency initiated a fishery management plan amendment to develop potential modifications to the program. This analysis describes the proposed policy changes, identifies the key outcomes, and assesses the impacts on distinct participant types using historic harvest data, quota trading patterns, and existing estimates of industry concentration. There are three implied regulatory objectives, as all proposed modifications would either increase ownership of shares by harvesters, limit consolidation in the harvest sector, or increase harvest flexibility. The corresponding effects on stakeholders could vary quite substantially as each objective and the associated alternative policies would affect the size and composition of multiple markets that collectively affect socioeconomic outcomes. The approach to evaluating existing catch share programs and the associated findings in this project are important for management agencies charged with adhering to federal policies and guidance concerning distributional outcomes (Ropicki, Willard and Larkin, 2018).

 

Another project by Quinn Weninger incorporates forward-looking rational economic behavior, and market clearing conditions into ecosystem-based fisheries management (EBFM). The current implementation of EBFM is focused on building complex (computer-based) systems models of marine ecosystems. These models are used to evaluate the interaction between numerous chemical, biological and anthropogenic processes that operate in a marine ecosystem. Models are also used to simulate ecosystem dynamics under differing management scenarios with the goal of identifying policies that achieve preferred outcomes.

 

Last but not least, Thanassekos and Scheld (2019, in prep.) developed an agent-based model to study firm entry, exit, and investment in commercial fisheries under environmental and market variability. Long-term stability in fishing success and market prices were found to produce large, small-scale and moderately profitable fleets who had minimal impacts on the resource, whereas increases in environmental and market variability tended to produce smaller fleets of larger and less profitable vessels with greater impacts on the resource. This research is useful in understanding the organization and structure of commercial fishing industries and when considering strategies to reduce community risk exposure.

Objectives

Procedures and Activities

Each objective above will be addressed by project participants through specific research tasks. Issues and methods associated with each of these tasks are provided below.

 

Objective 1: Marketing, Niches, and New Products

Task 1: Expanding market opportunities for aquaculture through the local foods system

Using the case of Indiana, the goal of the project is to help expand market opportunities for the aquaculture industry in through the local foods system and stimulate market-driven production, particularly for small- to medium-scale fish farmers who have traditionally relied on live ethnic fish markets. Indiana’s aquaculture practitioners need to develop strategic alliances in the local foods system to enable forward linkages with local foods buyers to create demand for locally grown and processed seafood. A key factor in this potential development is the ability to process fish produced locally, which would help fish farmers grow their market and capture more value from the local foods system.

Given the absence of fish processing facilities in the state, the project will explore the growing local foods system to understand their operations, and how best the aquaculture industry can utilize and benefit from the system. The local foods system presents the best expansion opportunity for marketing Indiana fish products because of the competitive nature of the seafood marketplace dominated by cheap imported frozen finfish and shellfish products.

Local food systems provide farmers with a higher share of the food dollar, and the money spent at these markets circulates within the community, creating a multiplier effect and providing greater local economic benefits. For example, Brown et al (2013) examined county-level linkages between community-focused agriculture and growth in total agricultural sales and economic growth. The study found some association between community-focused agriculture and growth in total agricultural sales in some regions of the U.S., particularly in New England and Mideast counties, and concluded that their proximity to large urban populations resulted in the local food dollar spreading around more in the food supply chain. In the Great Lakes region, Brown et al (2013) reported that an additional dollar of farm sales generated $0.10 in annualized personal income. This represents opportunities that can benefit the aquaculture industry if they participate in the local food system.

To ensure that any potential investments by Indiana fish farmers in the local foods system become valuable and can lead to increased farm profitability, this project will first focus on understanding the local foods system environment in Indiana from chefs at restaurants and institutions (e.g., colleges, healthcare, etc). It will then follow with developing (a) the strategic pathways for Indiana aquaculture products to be included in the local foods system, and (b) a case study business model for aquaculture product for the local foods market in Indiana.

 

Task 2: Consumers’ preference for genetically modified seafood and the impact of labeling

The goal of this project is to investigate consumers’ acceptance of genetically modified (GM) aquaculture products and technologies, and the provision of information via food labels under the recently passed “National Bioengineered Food Disclosure Standard,” referred to as “GM Labeling Standard” (Agricultural Marketing Act of 1946, 2016). With the FDA approval of GM Atlantic salmon (but yet to be introduced to the US market), GM seafood is now the thing of reality. However, GM technology is already introduced in aquaculture via the fish feed being used. For example, one study estimated that 70-90% of globally harvested GM crops are used for animal feed, and thus it is becoming increasingly difficult for producers to obtain non-GM fish feed (Sissener et al. 2011). In the new GM labeling standard, these GM fish feed-fed aquaculture products may need to be labeled as such even though the farm-raised fish itself is not genetically modified. The influence of the new GM labeling standard could, therefore, be felt on non-salmon feed-based aquaculture products.

Previous studies exploring the impact of GM technology on foods, mostly those other than seafood, generally find that consumers are averse to the use of GM technology. However, this result does not generally extend to seafood products (Johnston and Roheim 2006). Few studies have investigated the use of GM technology in the aquaculture of salmon, whether it be direct genetic modification or fish feed containing GM ingredients. These studies have also found ambiguous consumer preferences for GM and GM-fed salmon (Chern et al. 2002; Kaneko and Chern 2005; Chern 2006), and the debate is far from being settled. This project aims to add more empirical evidence to this literature, and inform the policy debate and development by identifying how consumers respond to the expanding use of GM products in the food industry, and how additional information about the pros and cons of GM and/or GM-fed farmed seafood (e.g., salmon) might impact the effectiveness of the GM Labeling Standard.

 

Task 3: Examining the economic feasibility of oyster aquaculture in Texas

This project investigates the basic economic feasibility of oyster farming with respect to three different techniques (off-bottom, floating, and longline) that could be implemented in Texas. The first phase of the project has already begun with RESTORE grant to build a hatchery in Texas and the state is moving towards legalizing oyster aquaculture. Future research will look at (a) risk management strategies by growers, (b) small producers using co-op structures to limit capital costs associated with some equipment (tumblers, washers, etc.), and (c) on marketing and branding strategies that are specific to bay/location of where the oysters are grown.

 

Objective 2: Production Support for Dynamic Markets

Task 1: Development of aquaculture industry in Guam

This project looks at the broad spectrum of factors that will enhance the development of the aquaculture industry in Guam. Guam has unique geographic and strategic advantages because of its close proximity to Asia, the center of world aquaculture production. Guam also plays a pivotal role economically among the surrounding islands in Micronesia, which is distinguished among the Western Pacific region for leading the island sustainable development for food security. The major aquaculture species cultured on Guam remain as Tilapia, milkfish and shrimp, and their production levels have not been clearly monitored and recorded in recent years, with little public data accessible. And there is no regulatory government agency being specifically assigned to watch over and guide the aquaculture development section on Guam, even the data collection and data tracking is lacking. However, the needs and interests of aquaculture development are still present in the community, mostly due to the strong local demand for high-quality seafood products in the market. The University of Guam focuses on establishing the baseline information of local aquaculture products and their market via the survey in Guam by adopting Fishery Performance Index (FPI) or other established systemic platform to develop the questionnaire and collect the data via interview.

 

Task 2: Increasing production efficiency of the shrimp fishery

This project will work with shrimpers and other fishers to improve harvest efficiency in Texas. Of particular interest for the shrimp fishery in terms of its production efficiency is the fuel use per pound of shrimp harvested. In collaboration with Texas Sea Grant, which has the wealth of network with local fishers, the project will look for new techniques and equipment available to shrimpers to decrease fuel and/or general costs.

 

Task 3: Analyzing the decision to enter the rights-based managed fishery

Entering any fishing industry is a significant decision given the capital investment it typically involves among other things. The pressure is exacerbated when the fishery in question is managed by the rights-based system such as individual transferable/fishery quotas, because one’s maximum harvest volume is externally limited, let alone the additional cost incurred in order to increase the limit by purchasing more quotas.

One project studies the entry (i.e., capital investment) decision to quota-regulated industries when entrants are uncertain about how their own productivity ranks relative to the productivity of other producers with whom they must compete for shares an aggregate production quota. The new theory derives equilibrium entry rules in a global game of capital entry complementarity. The results may explain the slowed capital adjustments in fisheries that adopt quota-based regulations.

Another related project will aim to develop an online calculator that fishers can use to value quota by providing their beliefs regarding future lease prices, future dockside prices, and future total allowable catch values. The calculator would work similar to bond valuation – fisher data would be used to measure the future use value of quota (coupons) to calculate quota NPV. Such a calculator will be useful not only for the incumbent fishers but also for prospective entrants to simulate the likelihood of economic/business success.

 

Objective 3: Impacts of Regulations, Industry Organization, and Infrastructure

Task 1: Efficient allocation of coastal leasing for shellfish aquaculture

Many U.S. states lease coastal and nearshore areas for shellfish propagation. The structure of leasing systems varies widely, but frequently individuals are able to obtain and hold a multiyear lease demonstrating relatively minimal use for aquaculture. Recent growth in demand for shellfish aquaculture products has led to a rapid increase in leased areas, outpacing growth in aquaculture production in many instances. Rent seeking, market speculation, and conflicts between waterfront property owners and the aquaculture industry have the potential to stifle growth in coastal shellfish aquaculture while also producing sizable social inefficiencies.

This project will investigate the use of coastal areas for aquaculture of eastern oyster (Crassostrea virginica). Empirical production models will be developed to explore the impacts of local environmental conditions, characteristics of nearshore communities, and structural elements of the leasing system on aquaculture production. Project outputs will include decision support tools for industry and managers seeking to site oyster aquaculture operations.

 

Task 2: Impacts of regulatory and external shocks to small-scale coastal communities

Small-scale coastal commercial fisheries in the U.S. directly employ tens of thousands of individuals and are responsible for hundreds of millions of dollars in annual landings revenues. Factors affecting participation in these fisheries may differ from those that have been found to influence entry and exit in larger industrial fleets, given that many individuals participate on a part-time basis, frequently have family ties within the industry, and may have limited access to markets or market information.

This project will investigate temporal dynamics of licensing and landings in small-scale coastal commercial fisheries, seeking to identify the effects of regulatory interventions (e.g., effort controls) and exogenous shocks (e.g., 2007-2009 U.S. recession, large mortality event/disease) on participation within and across fisheries. Results will be useful in understanding industry structure and resource dependence of coastal communities.

 

Task 3: Rights-based system and imperfect quota market

One of the key assumptions of the model for the rights-based system to achieve the first-best outcome in fisheries is the presence of a well-functioning quota market. What happens if there exists a market power and market manipulation in vertically coordinated and quota managed fisheries? U.S. law requires stipulations to be added to quota regulations to prevent the exercise of market power, discourage market manipulation, and encourage efficiency in production. This project will develop a new theory to understand market power and market manipulation in quota-regulated fisheries and will conduct an empirical investigation of market power/ manipulation in the U.S. west coast groundfish fishery which has been managed with individual fishing quotas since January 2010.

Expected Outcomes and Impacts

Projected Participation

View Appendix E: Participation

Educational Plan

Different mechanisms will be used to communicate the results of this multistate project to all interested parties. The most important findings and recommendations will be presented in a special issue of Marine Resource Economics. In addition, special sessions will be organized in the following professional meetings: WAS (World Aquaculture Society), NAAFE (North American Association of Fisheries Economists), IIFET (International Institute of Fisheries Economics and Trade), and AAEA (American Agricultural Economics Association). Plans also include the development of a website and the publication of an edited book if the volume of generated information warrants it. Other members of the committee will help conduct workshops with industry representatives and submit research results as publications.

Organization/Governance

Once approved, the initial participants in the project will convene a meeting to elect a new chair, vice chair, and secretary for the technical committee. These three individuals will be responsible for planning the annual meeting of the project and for coordinating progress on the project. Hirotsugu Uchida will initially serve as Outreach Coordinator for the project.

Literature Cited

Agricultural Marketing Act of 1946, 7 U.S.C. §§ 291-296 (2016). https://www.congress.gov/bill/114th-congress/senate-bill/764/text?resultIndex=1

Alvarez, S., S.L. Larkin, and A. Ropicki. 2017. Optimizing Provision of Ecosystem Services Using Modern Portfolio Theory. Ecosystem Services 27: 25-37.

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Attachments

Land Grant Participating States/Institutions

AZ, FL, GU, IA, IN, RI

Non Land Grant Participating States/Institutions

Virginia Institute of Marine Science