MORE VIEWPOINTS ON MENHADEN ECONOMICS Menhaden Muddle #30 By Charlie Hutchinson

The VIMS economic study contains a lot of interesting information. While this study concerns itself only with the Chesapeake Bay region, the information regarding jobs and economic impacts provides a basis of comparison of relative values of different areas affected by menhaden regulatory decisions. For example, the economic value of the menhaden reduction operation to the Bay area in 2008 amounted to $88,200,000. Of this total $60,000,000 were direct ( Omega’s sales) and the balance is indirect( ie. other business created by Omegas operations). The employment totals are 519 menhaden related jobs of which Omega’s share is 300 during peak season. A competing activity for menhaden is recreational fishing. These activities had an economic impact in Virginia and Maryland alone of $332,000,000 and provided 3500 jobs in 2008. Anecdotal information indicates trouble in this area. Charter operations in particular report business is off as catches decline and costs increase. In a broad sense both activities are competing for the same depleted resource. While the study addresses the results of reduced harvests in the reduction industry it does not offer any insights on the impact of reduced availability in either the bait industry or in the recreational fishing activities. The sheer number of jobs involved would suggest that the economic penalty for a decreasing stock will fall much more heavily on activities outside of the reduction industry. Note the sharp differences in employment where Omega’s very efficient operations require far fewer people per dollar of economic impact. So, if jobs are important, one needs to consider which areas should bear what portion of the proposed reduction in catch.
One of the more challenging issues brought forth by the study is the “value” portion of this study. How does one resolve the difference in public opinion as portrayed in the VIMS report and the results of ASMFC’s public hearings and commentary? The VIMS study seeks to determine whether the value of fish left in the water is greater or less than jobs at the reduction facility. The study conclusion is that the public places a higher value on jobs and a status quo regulatory posture. In stark contrast the public hearings generated some 90,000 written comments overwhelmingly favoring curtailment of the harvest to a degree greater than the new limits provide. Obviously these two solicitations for public viewpoint are diametrically opposed. How come? My opinion is that there was a more educated response on the part of those who took the time and effort to reply to ASMFC. The study sought to eliminate bias. In order to do this (and it’s very difficult) minimal information was furnished to the VIMS study respondents. Consequently, those interviewed were likely to know very little about the menhaden situation and its potential ramifications on the ecology or the economy. The questions utilized are enumerated in the study. When one is asked to choose between jobs and abundance of a fish we don’t even eat in today’s economy and high unemployment the answer is a no brainer. Had the respondents known a lot more about the ecological and economic consequences of a declining stock the answers likely would be quite different. While economists feel these value studies are a good way to figure out what is most important to the public, my personal opinion is that they are way too subjective and it is extremely difficult to determine what the public wants. No surprise then that my preference is to follow the money. In a capitalistic economy the dollar usually determines policy and resultant regulatory action.

Charlie Hutchinson is with the Maryland Saltwater Sportsman’s Foundation (MSSA). The views here are his own and do not necessarily express those of the entire Menhaden Coalition.

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