Economic Benefits from (Better) Ocean Observation

Capitol Hill Oceans Week

14 June 2006

Hauke Kite-PowellMarine Policy Center

Woods Hole Oceanographic Institution

Source of Benefits

• The product is information• Information has value because it is used in

economic decisions• Better decisions lead to improved physical

and economic outcomes

• Short-term (operational) and long-term (investment, planning) decisions

Benefit = change in value added

• Changes in social surplus– Producer surplus

• What producers receive less what it costs to produce

– Consumer surplus• What consumers would be willing to pay less what they

actually pay

– Net change in economy (“welfare”)

• Often hard to measure in practice• Proxies:

– Increased goods and services– Lower cost goods and services

US Coastal Ocean Observation: User Sectors

Recreational Activities

Boating

Beach Going

Fishing

TransportationFreight

Passenger (Cruise Ships)

Health and Safety

Search and Rescue

Oil Spill & Hazard CleanupProperty Damage (from storm events)

EnergyOCS Development

Electric Generation Management

Commercial Fishing  

Potential Benefits fromImproved Coastal Ocean Obs.

Sector  Application 

Magnitude of Possible Annual Benefits ($ millions)

Regions with greatest benefits

Recreational Activities

Recreational Fishing 100sGreat Lakes, Gulf of Mexico

Recreational Boating 100s

Great Lakes, Gulf of Mexico, Atlantic

Beaches/Shore Recreation 100s Florida, California

TransportationTransportation-Freight 10s

Florida, Mid Atlantic

Transportation-Cruise Ships 10s Florida

Health and Safety

SAR 10s10s10s

All

Oil SpillsTropical Storm Prediction

AllAtlantic, GoMex

Energy Electricity Load Planning 10s to 100s

Great Lakes, California, Atlantic

Ocean Structures 10s Gulf of Mexico

Commercial Fishing Commercial Fishing 100sAlaska, New England

Tampa Bay PORTS:User Groups/Applications

• Maritime

• Recreational boating/fishing

• Spill response

• Weather & storm surge forecasting

• Environmental management/modeling

• Education

Tampa Bay PORTS: Annual Benefits

• avoided groundings, commercial vessels $1.1 to $2.8 million• increased draft/cargo loading $1.1 million• improved spill response $0.2 to $0.9 million

• reduced distress cases, recreational boats $0.2 million• improved weather forecasts $1.5 million• improved storm surge forecasts $0.5 million

• enhanced spill response, recreation $2.2 million

high degree of confidence:

moderate degree of confidence:

more speculative:

$4.4 to $7.0 million

Global Ocean Winds, Waves and Currents (Satellite Obs.)

• Benefits commercial maritime ship routing

• Potential benefits today about $80 million/year

• Additional benefits of $100 million/year possible with better coverage

Summary

• (potential) economic benefits can be documented– order of $10 million for “local” (PORTS) systems

– $100s of millions for US coastal systems

– $100s of millions for global ocean systems

• user-driven requirements and business case must be starting point for these benefits to be realized