Four hurricanes over the course of two-years has cost the Louisiana seafood industry almost a $580 million dollar loss to infrastructure, revenue and resources according to a recently released report. Coast Guard photo.
By Ed Lallo/Gulf Seafood News Editor
Four hurricanes over the course of two-years has cost the Louisiana seafood industry almost a $580 million dollar loss to infrastructure, revenue and resources. A recently released report by Louisiana Sea Grant and the Louisiana Department of Wildlife and Fisheries documents extreme damage and loss of revenue over all five sectors of the industry; commercial fishermen, recreational fishing, docks, processors and marinas.
Dr. Rex Caffey of LSU Sea Grant led the team that compiled information for the Infrastructure, Revenue and Resource Losses to Louisiana Fisheries From the Hurricanes of 2020 and 2021 report after a request by the Louisiana Fishing Community Recovery Coalition (LFCRC). The coalition is comprised of members from every aspect of the state’s seafood industry, as well as members of both state and federal lawmakers offices.
Hurricane Ida completely destoryedGulf Island Shrimp and Seafood in Dulac. Photo: Thomas Hymel/Louisiana Sea Grant
“Our final number relies on the mapping of 8503 individual business in the Louisiana coastal zone representing every aspect of the seafood industry,” said Dr. Caffey. “But it’s one thing to put them on a map, its another to try and find out a little bit more about what happened at that location. We were very fortunate to get all the data needed on all four storms from the LSU Coastal Emergency Risk Assessment Center that houses the advanced circulation model.”
These business were affected by four storms, so estimating damages based on maximum wind and maximum surge at each of the 8,503 business location required 68,024 storm observations
“Knowing where they are, knowing what happened at their location, doesn’t say anything about their value,” he went on to explain. “For that we ran detailed business appraisal estimates using trip ticket data for vessels and dealers and for processors and marinas we used secondary data. When added together, the total value of the five sectors of seafood infrastructure was $1.36 billion.”
Caffey was clear the $1.36 billion is not the damage number, but instead the total value of the infrastructure affected in the evaluations before damages. “We have to estimate this economic baseline before we can know something about what happened to that value because of the storms.”
Infrastructure damage is estimated at $305 million, equating to approximately 22% reduction in the total appraised value of infrastructure for the five sectors.
“When I ran that number I had to do a double take, that seems pretty high,” said the team lead. “This is for four storms. I don’t believe it is high, I think it is actually pretty conservative. That number is much more sensible if you think about it as not one, but four storms.”
Of that amount Laura, Delta and Zeta accounted for 30%, the rest came from Hurricane Ida. “There were two big storms, but the really big one in terms of economic size was definitely Ida.”
Wind was the story of all four storms. It accounted for 85% of damage to vessels, 80% of damage to dealers, 80% for processors, 89% for charter and 54% for marinas, where surge was more dominate in the most seaward locations. These numbers differ from earlier storms like Katrina and Rita, where surge dominated.
Committee Process
Putting together all the information for the fifty pages, without appendixes, 35 figures, 16 tables and 18 equations was a team a team effort. Members assisting Caffey included: Hua Wang and Nuizhen Niu of the LSU Agricultural Center, Department of Agricultural Economics; Jason Froeba of the Louisiana Department of Wildlife and Fisheries, Office of Fisheries; and Jack Isaac, of the Louisiana Department of Wildlife and Fisheries, Socioeconomic Research and Development.
“We have a lot of equations and this one should start with a V for value, but instead this one starts with a D for damage because it is part of the last two steps where the results really start to come in,” said the LSU Sea Grant economist.
On a recent survey request sent to all facets of the seafood industry, the committee received 516 usable responses from across the state.
“Incorporating these responses into the equation, when all data is integrated together under the different models you get a range of estimates,” Caffey explained. “Every projection our committee came up with has a range, a lower bound and an upper bound. Right now the total loss projects to be $579.9 million dollars. The range is lower and higher.”
Shrimper Eric Hebert’s boat was high and dry in Golden Meadows marina after Hurricane Ida. Photo: Eric Hebert/Facebook
The data integrated together in the equations included:
- Primary Storm
- Business Types
- Business Assets
- Insurance
- Distance From Home to Business
- Residential Displacement
- Primary Vessel Characteristics
- Evacuation Rates
Damage and loss equations came from questions about estimated business value, damage to that value from the storms and expected revenue losses from 2020-2021, if there were impacted by Laura, Delta and Zeta, and 2021-2022 impact by Ida. From this the team developed 16 damage curves with linear and non-linear functions.
Caffey went on to explain, ‘If you look at the data on loss of value, which is calculated from dividing what the reported loss in dollars for a given business value, you get a percentage gradient you can plot against things like surge, against wind.”
In the final report the committee handled infrastructure and revenue differently.
Infrastructure
All locations in the report were integrated into Geographic Information System (GIS). Information came from Wildlife and Fisheries license and permit records or the Louisiana Department of Health. Storm information came from LSU Coastal Emergency Risk Assessment Center. This evaluation was based on actual revenue, so it is primary data for vessels and dealers; the rest relied on secondary data from economic studies.
What does $8.5 million dollars in seafood infrastructure damage look like? Pearl, Inc.’s Chauvin, LA plant sustained 180mph winds for approximately six hours. The freezer was blown away and little left of the plant according owner Andrew Blanchard, a coalition member. Photos: Andrew Blanchard
A linear model defined the upper bound of asset damage, and a nonlinear model was used to estimate the lower bounds. These damage curves were developed from the survey data and was applied to the broader population. The infrastructure damage ranges were developed for two years, for the three hurricanes in 2020 and Ida in 2021.
There was 5739 seafood harvesting vessels geocoded in coastal Louisiana. To understand the value of the businesses, trip ticket records were used for income capitalization appraisal averages for 2018-2020. For cases where trip ticket information was insufficient, a market value appraisal of the length of the vessel was used as a secondary evaluation to approximate value. Docks and dealers were also valued on trip tickets.
All damage numbers were dampened by an assumed 20% evacuation rate collected from the survey, information never included in previous economic damage assessments.
“You see a trend the 2021 damage values are much larger because Ida hit an area more heavily populated; it was a bigger storm with a larger impact area,” said the economist.
Seafood processors were more difficult to value because of lack of primary information. Using business permits fees the committee was able to estimate revenues for the given years. Charter fishing losses were evaluated from cost of earning data over the years.
Marina’s business appraisal was from cost and earnings from previous sources, including a recent Covid-study done the previous year. That information was extrapolated back to the larger population based on size.
Combined infrastructure losses for each sector:
- Charter Fishing – $31.2 million
- Docks and Dealers – $77.4 million
- Marinas – $44.6 million
- Processors – $99.7 million
Louisiana Marina Association Representative Chris Moran of Port Fourchon feels the damage numbers for his sector are very low. He is currently in the process of rebuilding his five million in losses from Ida and does not expect to reopen till May of this year.
“We have been closed for five months now, and we are not the only one,” he said in a recent interview. “The $44.6 million in infrastructure damages might be accurate for larger marina’s like mine, but I feel there may be host of smaller operation’s infrastructure and revenue losses may not be accurately classified in the report.”
Revenue
Water cover the docks and plant of Dean Blanchard Seafood on Grand Isle. It lay devastated by Hurricane Ida. Blanchard’s. Photo: WXChasing
Revenue loss was done in a similar way, but also different. The baselines were the same, but wind and surge was averaged at the parish level because no direct revenue was available for all five categories. In addition losses were not done by a single year, but instead a combined loss for both years from the storms.
The combined revenue losses for the 22 coastal parishes totaled $155.3 million. Two parishes, Cameron and Calcasieu, exceeded the 35% revenue threshold. That threshold is never measured on a parish level.
“Federal disaster declaration’s are always measured on a management level for an entire species. There is little bases for a declaration for a parish,” said Caffey. “Now should there be? I know in agriculture there are county and parish level declarations.
Four hurricanes hit one state in twelve months and two days. These areas clearly had more than 35% in projected losses. Time will tell to see how these hold up.”
Resources
While examining commodities the committee found that resource losses estimated to be at $118.5 million over the two-year period. The figure was derived from field surveys of LDWF biologists and restitution values obtained from Natural Resource Damage Assessments.
The recently released report by Louisiana Sea Grant and the Louisiana Department of Wildlife and Fisheries documents extreme damage and loss of revenue over all five sectors of the seafood industry; commercial fishermen, recreational fishing, docks, processors and marinas.. Photo: LDWF
Brown shrimp was the only species under the models that close to exceeding, or right at 35% project loss level. Caffey says that he is not sure that is going to hold up, and instead is more interested in watching white shrimp.
“The reason I say that is because the model didn’t differentiate the season for when storms occurred,” he explained. “Brown shrimp was pretty much over when Ida hit, and white shrimp had yet to start. We will continue to watch these over the next year to see if these thresholds are met at the commodity level.”
In addition, a resource mortality report was done externally to the economic report. That data was brought over and added to the total score of infrastructure revenue.
LFCRC coalition member Acy Cooper, Louisiana Shrimp Association, stands beside a sunken shrimp boat at the Venice docks. Photo: Acy Cooper
Andrew Blanchard, who represents the Louisiana Shrimp Task Force on the coalition, was surprised by both the $580 million damage number, as well as the brown shrimp projected loss.
“I was figuring the total damage assessment number would come in around $750 million, but I’m no economist so I have to let the experts to their work,” he said. “In addition the brown shrimp model was a little surprising because a lot of that shrimp is harvested in Louisiana waters by out of state boats, then landed at their home ports.”
Blanchard says shrimp landings in Louisiana have dropped off sharply since Ida, the main reason being lack of boats on the water.
Conclusion
Where was the business located prior to the storm? What was the maximum surge height and maximum wind speed at the business location? What was the approximate, pre-storm value of the business? How did that business value change as result of the storm?
“There has been tremendous human tragedy from these storms, especially in the loss of homes,” he said. “This issue has to be addressed. Hopefully this report can aid in that mission.” Photo: Facebook
“What we have here is a story of two big, big storms amongst the four hurricanes that drove the majority of the damages. Going forward a list of short, medium and long-term priorities needs to be developed. Unfortunately this report does not address this issue, it speaks to economic and damage assessment,” said Caffey.
“The information provided by this report will be critical for our seafood industry as they seek recovery assistance from state and federal lawmakers,” said Patrick Banks, Assistant Secretary of Louisiana Department of Wildlife and Fisheries. “Having a thorough and scientifically-defensible damage estimate helps Louisiana not only show the impacts from hurricanes, but clearly documents the enormous value of our coastal fishing industries, both recreational and commercial.”
Louisiana Rep. Garret say, “This report verifies what we have been saying about the hurricane impacts and clearly justifies the fisheries assistance we’ve requested. We are going to get assistance to our fishing communities.” Photo: Ed Lallo/Lallo Photography
Banks feels these industries are a large part of the cultural heritage in Louisiana, and helping them recover is vitally important. “The team of scientists and economists from both LDWF and LSU worked extremely hard on this initiative, and they couldn’t have completed the task without the cooperation of the industry leaders on the LFCRC and members of the fishing industries.”
“Our fishermen have taken a pounding over the last several years. Hurricanes, floods, unfair trade practices and government over-regulation have taken their toll,” said Louisiana Rep. Garret Graves. “This report verifies what we have been saying about the hurricane impacts and clearly justifies the fisheries assistance we’ve requested. We are going to get assistance to our fishing communities.”
In a statement to Gulf Seafood News Louisiana Senator John Kennedy said, “Seafood business and recreation is economic lifeblood to many communities in Louisiana. Reliable research is key to rebuilding this industry stronger from the devastating storms that have slammed our coastline.”
Total damage to fisheries infrastructure, estimated at $304.9 million, equates to a 22% reduction to the $1.36 billion in appraised value of infrastructure for the five sectors of the analysis. Revenue losses for 22 coastal parishes totaled $155.3 million.
“Our seafood industry has supported our state with its great harvests, now it’s our turn to support them and get them the help they need to recover their losses,” said Lt. Gov. Billy Nungesser. Photo Ed Lallo/Lallo Photography
“Our fisheries estimated value is $1.36 billion is just for seafood being caught, harvested and processed. Our seafood industry has an economic impact on our state much greater than just what this report shows. It touches wholesalers, restaurants, mom-and-pop shops, grocery stores and other local markets all over the country and the word,” said Lt. Gov. Billy Nungesser, whose office overseas the Louisiana Seafood Promotion and Marketing Board. “Our seafood industry has supported our state with its great harvests, now it’s our turn to support them and get them the help they need to recover their losses.”
“There has been tremendous human tragedy from these storms, especially in the loss of homes,” he said. “This issue has to be addressed. Hopefully this report can aid in that mission.
“The LFCRC has been discussing numerous challenges that need to be addressed in the future, including: the availability and affordability of both marine insurance and traditional insurance; exploring possible novel or creative alternatives like fisheries insurance, similar to crop insurance; the ongoing challenges to vessel evacuation options; and the need for infrastructure hardening,” said the coalition chair Harlon Pearce.
“We have to have a list of priorities developed before the seafood industry asks for economic damage compensation from our legislators.”
Document Links:
Appendix A – 2020-2021 Louisiana Hurricane Damage Survey
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