Economic Effects of the Deepwater Horizon Oil Spill Brian Richard Dept. of Economic and Workforce Development

Economic Effects of the Deepwater Horizon Oil SpillBrian Richard

Dept. of Economic and Workforce Development

Mississippi Gulf Coast

Importance of the Gulf of Mexico to the Mississippi Gulf Coast economy TourismFisheries

Impacts of the Oil Spill

Tourism Related Employment

MS GCCasinos (except Casino Hotels) 4,601 2,508 54.5%Marinas 242 98 40.5%Hotels (ex. Casino Hotels) and Motels 8,538 1,297 15.2%Casino Hotels 20,530 9,200 44.8%Other Traveler Accommodation 353 11 3.1%RV (Recreational Vehicle) Parks 458 173 37.8%Full-Service Restaurants 27,734 4,827 17.4%Total 62,509 18,113 29.0%

Source: EMSI Complete Employment – 4th Quarter 2010

Gulf Coast Tourism Trends

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

2002 2003 2004 2005 2006 2007 2008 2009 2010

Casino Hotels Full-Service RestaurantsCasinos (except Casino Hotels) Hotels (except Casino Hotels)

Tourism related industries industries comprise 8.9% of total employment on the Gulf Coast.


Gaming Revenue

Source: Mississippi State Department of Revenue

50,000,000

70,000,000

90,000,000

110,000,000

130,000,000

150,000,000

170,000,000Ja

n-94

Jul-

94

Jan-

95

Jul-

95

Jan-

96

Jul-

96

Jan-

97

Jul-

97

Jan-

98

Jul-

98

Jan-

99

Jul-

99

Jan-

00

Jul-

00

Jan-

01

Jul-

01

Jan-

02

Jul-

02

Jan-

03

Jul-

03

Jan-

04

Jul-

04

Jan-

05

Jul-

05

Jan-

06

Jul-

06

Jan-

07

Jul-

07

Jan-

08

Jul-

08

Jan-

09

Jul-

09

Jan-

10

Jul-

10

Jan-

11

Coast River 12 per. Mov. Avg. (Coast) 12 per. Mov. Avg. (River)

Fishing and Seafood


0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

2002 2003 2004 2005 2006 2007 2008 2009 2010

MS Fishing GC FishingMS Seafood Prep. and Packaging GC Seafood Prep. and Packaging

Fisheries related industries industries comprise 0.9% of total employment on the Gulf Coast.

Economic Impacts

Economic Impact: the economy-wide effect on employment and incomes produced by a policy, event, or decision

Fiscal Impact: the effect on tax revenues produced by a policy, event, or decision

Source: BusinessDictionary.com

Economic Impacts

We know (and will continue to track) some of what happened in the economy with the oil spill

The research is estimating what would have happened without the oil spill

The difference between what did happen and what would have happened is the economic impact

Economic Impact

$30

$35

$40

$45

$50

$55

$60

$65

$70

$75

$80

Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10

Biloxi-Gulfport MSA

'negative'economic impact

Trend withoil spill

Trend withoutoil spill

Economic Impacts

ChallengesHow are the effects of the oil spill isolated

from everything else going on in the economy?

Katrina recovery Recession/recovery

Hospitality and Tourism

Mississippi Visitors Casino Gamers are the largest market (about

40 %). ‘Soft adventurers’—bird watch, camp, fish,

interest in nature/ wildlife. Comprise about 7 % of the visitors.

Source: Mississippi Development Authority Tourism Division/TNS

Hospitality Employment


Description JobsNational

LQTotal EPW Establishments

Casinos (except Casino Hotels) 2,508 25.0 $32,413 4Marinas 98 1.6 $10,391 6Hotels (except Casino Hotels) and Motels 1,297 0.7 $22,866 86Casino Hotels 9,200 30.1 $34,607 10Other Traveler Accommodation 11 0.2 $81,289 2RV (Recreational Vehicle) Parks and Recreational Camps 173 2.0 $31,910 18Full-Service Restaurants 4,827 0.9 $16,990 257Total 18,113 $28,638 383

GC Gaming Revenue Growth


-30%

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

Jan

-08

Ap

r-0

8

Jul-

08

Oct

-08

Jan

-09

Ap

r-0

9

Jul-

09

Oct

-09

Jan

-10

Ap

r-1

0

Jul-

10

Oct

-10

Jan

-11

Coast 12 per. Mov. Avg. (Coast)

Hurricane Gustav

Hotel Tax Revenue Growth


-60%

-40%

-20%

0%

20%

40%

60%

80%

100%Ju

n-08

Jul-

08

Aug

-08

Sep

-08

Oct

-08

Nov

-08

Dec

-08

Jan-

09

Feb

-09

Mar

-09

Ap

r-09

May

-09

Jun-

09

Jul-

09

Aug

-09

Sep

-09

Oct

-09

Nov

-09

Dec

-09

Jan-

10

Feb

-10

Mar

-10

Ap

r-10

May

-10

Jun-

10

Jul-

10

Aug

-10

Sep

-10

Oct

-10

Nov

-10

Harrison County Tourism City of Moss Point Tourism

Hancock County Tourism City of Pascagoula

Hotel Revenue Growth

Source: Smith Travel Research

-30.0%

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

United States Mississippi Biloxi-Gulfport MSA

MS Central/Vicksburg Jackson, MS MS South/Hattiesburg

Restaurant Tax Revenue GrowthNonalcoholic Restaurants


-20.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10

Hancock Harrison Jackson

Restaurant Tax Revenue GrowthAlcoholic Restaurants


-30.0%

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10

Hancock Harrison Jackson

City Tax Collections


-40.0%

-20.0%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10

Bay St. Louis

Total Hancock Collections

Biloxi

D'Iberville

Gulfport

Long Beach

Total Harrison Collections

Gautier

Moss Point

Ocean Springs

Pascagoula

Total Jackson County

Fisheries Employment


Description JobsNational

LQTotal EPW Establishments

Fishing 948 9.4 $29,162 2Seafood Product Prep. and Packaging 392 8.4 $27,423 12Total 1,460 $31,081 15

Fisheries

Percent of MS waters closed to fishing

Source: Dr. Ben Posadas, MSU Coastal Research & Extension Center

Fisheries – Shrimp Landings

Source: NOAA/Dr. Ben Posadas, MSU Coastal Research & Extension Center

Decoding the Trends

$30

$35

$40

$45

$50

$55

$60

$65

$70

$75

$80

Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10

Biloxi-Gulfport MSA

'negative'economic impact

Trend withoil spill

Trend withoutoil spill

Decoding the Trends:Anecdotal Evidence Ship Island ferry down 60% over a May

weekend (“Oil Spill Hurting Miss. Gulf Coast Tourism” WAPT.com, May 10)

A Biloxi charter boat captain said customers booked 26 trips with him in May 2008 and 26 in May 2009, but only 11 this May. He said his numbers for June were similar. (“Geography protects Mississippi from worst of the oil spill, but tourism still

hobbled”, AP June 15th)

BP has spent $350 million on cleanup, which has barely begun, and hired 13,800 people across the Gulf states to enlist in the effort. (“Shrimpers, fishermen, hotels feel oil spill's trickledown effect.”, USA Today, May 13)

Of the 5,700 people contracted to work on the Mississippi response effort, about 4,700 are natives of the state. (“Employing Mississippians makes the

difference”, Mississippi Gulf Response (BP), June 21st)

Decoding the Trends:Anecdotal Evidence

Decoding the Trends

Current/future survey workSector specific

Chain hotels vs. locally owned hotels Tourism attractions Seafood harvesters Seafood processors

Decoding the Trends

Future survey work – looking forwardNational attitude surveys

Seafood safety/desirability Tourism

Soft adventurers (fishing, bird watching, etc.) may be less inclined to come to the Gulf Coast

Did Gulf Coast tourism customers find other regions to visit?

Decoding the Trends

Fisheries – looking forwardOysters/shrimp

Mature oysters and shrimp are fairly resistant to toxic effects

But, they can accumulate toxins making them a potential health hazard

Eggs and larvae are more susceptible This leaves the possibility that the current years

harvest will show little effect but there will be lower populations over the next 2-3 years

Decoding the Trends

Fisheries – looking forwardFinfish

Mature finfish can swim away from the hazard This may cause a geographic shift in the harvest

Evidence from previous oil spills suggests that the finfish abundance will return relatively quickly

Decoding the Trends

Quasi-experimental matchingFinding ‘control’ locations without oil and

comparing trends Biloxi vs. Tunica gaming MS Gulf Coast vs. Myrtle Beach tourism MS Gulf Coast vs. Charleston fisheries

Modeling the Impacts

Static (input-output) modelsEstimate the change in economic activity resulting

from the change in final demand for a product/service (or group of products/services)

Inter-industry transactions Household-industry transactions

Multiplier effectEstimates the statewide impacts of a regional event IMPLAN, EMSI, RIMS II

Modeling the Impacts

Dynamic modelsBuilds upon input-output model allowing for changes

in price levels, labor mobility, etc.Estimates the statewide impacts of a regional event In addition to changes in final demand, inputs to the

model might include changes in prices, wage rates, imports, exports, etc.

Projects impacts into the futureREMI

Economic Effects of the Deepwater Horizon Oil Spill

Discussion/Questions

Documents

Economic Effects of the Deepwater Horizon Oil Spill Brian Richard Dept. of Economic and Workforce Development