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The Economic Benefits Associated with Florida's Artificial Reefs1
Chuck Adams, Bill Lindberg, and John Stevely2Introduction
Florida reportedly has the most permitted artificial reefs in the nation. Approximately 2,300 artificial reef deployments are located off 33 coastal counties in Florida (Table 1 ). Although permitted by the U.S. Army Corps of Engineers and the Florida Department of Environmental Protection, artificial reefs are deployed under a set of guidelines established by the Florida Fish and Wildlife Conservation Commission. These guidelines are specified within the State of Florida Artificial Reef Strategic Plan (FWC, 2003). Artificial reefs are utilized by recreational anglers, divers, and other user groups. The existence and use of artificial reefs sets in motion a variety of economic activities that result in significant economic benefit to the coastal communities in close proximity to the reefs. This paper will provide an overview of these economic benefits and briefly discuss some recent studies that have attempted to measure them.Benefits of Artificial Reefs
Artificial reefs may be constructed for a variety of purposes, each with a set of potential benefits associated with that intended purpose or goal. One purpose of artificial reefs might be to provide a source of biological replenishment to local populations of marine vertebrates and invertebrates. In that case, the benefit would be that a net biomass increase would result from deploying the reef. Artificial reefs may also be used as a means of mitigating local habitat loss. Another purpose might be to simply provide a location where anglers and divers can utilize aggregated populations of marine species, either in a take (fishing) or no-take (viewing) fashion. The benefits in that case would be the increased economic activity (i.e., expenditures, incomes, jobs) associated with these activities. Each of these purposes may also generate non-market benefits (such as existence values), particularly to non-users of reefs. Such benefits reflect how individuals who may not directly utilize artificial reefs nonetheless value reef existence as being beneficial to the biological habitat of the region.Aside from the purely biological benefits that might accrue from artificial reefs, many would argue that reefs are deployed to provide benefits to human users, whether commercial fishermen, recreational anglers, sport divers, or others. Milon, Holland, and Whitmarsh (2000) suggest that "a reef that is not useful to people is not a successful reef." If this is an acceptable tenet, then assessments of the economic benefits accruing from artificial reefs to surrounding communities are necessary. Such information provides insight into the degree to which the public benefit is being served by reef deployment and the economic consequences associated with reef use. The actual or potential economic impact of reef development to the county or state can be measured, as well as determine to what extent artificial reef deployment is an efficient public investment. In turn, this information may help justify future public expenditures on artificial reefs and assist in developing adaptive strategies associated with reef deployment as a resource management tool. Of course, there are costs associated with artificial reef program implementation. These costs must be measured as well.
How Are the Economic Costs and Benefits Measured?
The economic costs, activities, and benefits derived from artificial reef programs can be measured several ways. These are briefly reviewed below.Economic Impact Analysis
This method can provide insight into how market-related activities associated with resident and non-resident expenditures change after reef deployment. An economic impact analysis will describe changes in economic activity within a given geographic region, such as expenditures, incomes, jobs, and business taxes.Cost Effectiveness Analysis
This method can determine to what extent the estimated cost of deployment was realized in the actual reef deployment process. With limited local and state funds for reef development, ensuring that cost efficiency is maintained is vital to a sustainable county reef program. A cost effectiveness analysis will help ensure that reef programs are completed with a minimum of cost.Benefit/Cost Analysis
This method takes into consideration the costs associated with the artificial reef site selection, permitting, deployment, monitoring, and other activities, and compares those costs to the suite of benefits that would be generated by the reef program. The benefits would include the total economic values associated with the overall public demand for the reef program. In this case, those benefit/cost analysis estimates would include values reflected in the market, as well as those values associated with user and non-user demand for reefs over and above that reflected by reef-related expenditures in local markets. These benefits are often referred to as consumer surplus. Foregone benefits of utilizing reef-related funds in the next best use within the region may be included as an opportunity cost. A benefit-to-cost ratio of greater than 1.0 suggests that the benefits associated with the program exceed the costs. This would be more desirable than a ratio less than 1.0, which would suggest that the costs derived from the reef program exceed the benefits. In the former case, the program would yield positive overall (net) economic benefits.The methods listed above are the primary means of determining the net economic benefits associated with artificial reefs. Several such studies have been completed regarding Florida's artificial reefs. These studies have addressed artificial reef-related changes in boater and angler use patterns and expenditures. They have examined the community/social impacts of artificial reef placement and the cost efficiency of reef projects, including the opportunity costs of utilizing scarce public funds for reef placement. Some studies have attempted to address the overall economic values associated with artificial reefs, such as existence values and consumer surplus. And some studies have attempted to utilize the information to determine if the costs associated with artificial reef programs are exceeded by the benefits. Not all studies address each of these issues. Some of the studies are dated and the results reflect the characteristics of the local economy and community structure at the time of the study. The key findings from these studies are briefly summarized below.
Florida Artificial Reef Study Summaries
Pinellas County
In one of the first such studies in Florida, Hanni and Mathews (1977) examined the costs associated with building an artificial reef system near Clearwater Beach. The intent of the study was to measure the potential economic benefits to anglers and divers who might utilize the reef. The study focused on the benefit-to-cost ratio of the reef program. The benefit-to-cost ratio for anglers was found to be greater than 1.0, while the benefit to cost ratio for divers was found to be less than 1.0.In an attempt to examine the overall economic consequences of the artificial reef program in Pinellas County (which currently has the greatest number of permitted artificial reefs in Florida), Schug (1978) surveyed the users of the Pinellas County artificial reef system. The study found that the artificial reefs were not being utilized at the maximum use capacity. In fact, only 11 to 36% of the reef capacity was being utilized. In addition, 80% of the users were local. Thus, the majority of users were contributing little economic impact to the region but enhancing the total economic activity due to their reef-related activities. Total annual expenditures by reef users were estimated to be $181,000 to $253,000. The benefit-to-cost ratio of the artificial reef program in Pinellas County was estimated to be greater than 1.0.
Dade County
Dade County currently has the third largest complement of artificial reef deployments in Florida (Table 1 ). Milon (1988) attempted to measure the economic benefits associated with the artificial reef program by users and non-users. The technique utilized was a mail-out survey to local boaters and divers. Respondents were asked to provide their willingness to pay for an artificial reef program. Of the respondents, 29% were anglers who frequented artificial reefs and 13% were divers who frequented artificial reefs.Both users and non-users expressed positive benefits associated with the artificial reefs of Dade County. The annual benefits associated with artificial reefs in Dade County were estimated to be as high as $707,000. Interestingly, the largest component of that amount was associated with non-users. Thus, artificial reefs have high values associated with those individuals who simply value the existence of such reefs but may never directly utilize them. The present value associated with artificial reefs in Dade County ranged from $18 million to $128 million, based on estimation method.
Northwest Florida
The economic benefits associated with artificial reefs in northwest Florida were measured by Bell, Bonn, and Leeworthy (1998). The purpose of the study was to assess the economic impact, user valuation, and benefit-to-cost ratio associated with artificial reefs located in the waters adjacent to Escambia, Santa Rosa, Okaloosa, Walton, and Bay Counties, Florida. At the time, this was the most in-depth study conducted in Florida on the economic values associated with artificial reefs.A total of $414 million in expenditures were associated with artificial reef use. And those expenditures supported 8,136 jobs and $84 million in wages and salaries. Of the total expenditures, $359 million and $56 million were attributed to visitors and residents, respectively. And of the counties studied, the total expenditures were distributed as follows: Bay (36%), Okaloosa (30%), Escambia (22%), Santa Rosa (7%), and Walton (5%). The willingness to pay for an artificial reef program was also measured for the region. The annual recreational use value was estimated to be $19.7 million, with a discounted asset value of $656 million for the reef program. The benefit-to-cost ratio of the artificial reefs within the northwest Florida region was estimated to be 131, a value indicating an extremely high, positive return to the cost of developing and implementing the artificial reef programs within the five-county, northwest Florida region.
Southeast Florida
The economic values associated with artificial and natural reef systems in southeast Florida were recently measured. Johns, Leeworthy, Bell, and Bonn (2001) examined the economic impact and use values associated with both types of reef systems. The methodology utilized was similar to that used in the study of the artificial reefs of northwest Florida. In addition, values associated with both the existing and potential new reef sites were assessed. The counties included in the study were Palm Beach, Broward, Dade, and Monroe.The study found that non-residents and visitors annually spent $1.7 billion on fishing and diving activities associated with artificial reefs. Of the total expenditures, Broward, Dade, Palm Beach, and Monroe Counties contributed 53%, 25%, 11% and 11% of the total, respectively. These expenditures generated approximately 27,000 jobs in the region and created $782 million in wages and salaries. Interestingly, the expenditures associated with natural reef systems, in contrast to artificial reefs, generated $2.7 billion in annual expenditures.
The annual recreational use value associated with existing artificial reefs in the region was estimated to be $84.6 million. This annual value discounted into the future produced a discounted value of $2.8 billion. The annual use value associated with any new artificial reefs was estimated to be $27 million, with a discounted value of $888 million. The annual willingness to pay for new artificial reefs was $4 million. Interestingly, the annual recreational value associated with natural reefs was $228 million, considerably more than that for artificial reefs.
Martin County
A study similar in methodology to the Palm Beach-Monroe Counties region was conducted for Martin County, Florida. The study examined the values associated with artificial and natural reef systems. Johns (2004) examined annual expenditures, jobs, and incomes, as well as annual use values. The annual expenditures associated with artificial reef use were $7.2 million. The contribution associated with resident and non-resident expenditures were approximately equal. The incomes associated with artificial reefs were estimated to be $3.2 million, with approximately 100 jobs created within Martin County. The values associated with natural reefs were slightly smaller in magnitude.The annual use values associated with existing artificial reefs (by residents and non-residents) was estimated to be $3.6 million. This value discounted into the future was estimated to be $120 million. The annual value associated with any new artificial reefs was estimated to be $1.1 million, which when discounted into the future yielded a value of $37.5 million.
USS Spiegel Grove
The USS Spiegel Grove was a retired navy ship that was sunk off Key Largo, Florida in 2002. The primary purpose of the Spiegel Grove deployment as an artificial reef was to determine if introducing an artificial reef in close proximity to a natural reef environment would reduce usage of surrounding natural reefs. Thus, the primary objective was from a resource management perspective. However, economic implications were in question as well. A key question was whether the local economy would benefit from deploying artificial reefs whose primary purpose would be redirecting diver use away from natural reefs. A study was conducted on use patterns and local economic activity before and after the Spiegel Grove deployment (Leeworthy, Maher, and Stone, 2005). The study provided insight into how the Spiegel Grove performed as a substitute by divers and snorkelers for local natural reefs, as well as what benefits to the local economy occurred.Regarding the resource management objective, the Spiegel Grove artificial reef was deemed a success. Following the deployment, the diver and snorkeler use of natural reefs within the study area declined by 13.7%. In addition, the number of dive charters specifically for natural reefs within the region declined by 16.7%. However, the total number of dive charters and other related dive/snorkel activity increased substantially. The net change in expenditures on diving and snorkeling activities increased $2.6 million during the study period, with approximately 80% of that increase being attributed to non-residents. Incomes within the local economy increased by $960,000, and an additional 68 jobs were created. Thus, the deployment of the Spiegel Grove was considered a win-win situation for both the natural reef environment and the local economy.
Summary
Florida reportedly has the largest complement of permitted artificial reefs in the nation. These reefs have been shown to be beneficial to the local economies. The studies reviewed above show that artificial reefs do increase economic activity in surrounding communities. Artificial reefs are valued by users and non-users alike. Artificial reefs provide benefits that exceed costs. Artificial reefs may be an effective tool for redirecting use away from natural reefs if such an management objective is required. Overall, artificial reefs are a source of economic value that may justify additional deployments, even after taking into account the opportunity costs associated with scarce public funds.References
Bell, F.W., M.A. Bonn, and V.R. Leeworthy. 1998. Economic Impact and Importance of Artificial Reefs in Northwest Florida. Office of Fisheries Management and Assistance Service, Florida Department of Environmental Administration, Tallahassee, FL.Florida Fish and Wildlife Conservation Commission. 2006. Artificial Reef Deployment Data. Division of Marine Fisheries Management, Tallahassee, FL. Data found on the following website: http://myfwc.com/marine/ar/index.asp .
Florida Fish and Wildlife Conservation Commission. 2003. State of Florida Artificial Reef Strategic Plan. Division of Marine Fisheries Management, Tallahassee, FL.
Hanni, E. and H.H. Mathews. 1977. Benefit-Cost Study of Pinellas County Artificial Reefs. FLSGP-T-77-005. Florida Sea Grant College Program, University of Florida, Gainesville, FL.
Johns, G. 2004. Socioeconomic Study of Reefs in Martin County, Florida. Report prepared for Martin County, Florida by Hazen and Sawyer P.C., Hollywood, FL.
Johns, G., V.R. Leeworthy, F.W. Bell, and M.A. Bonn. 2001. Socioeconomic Study of Reefs in Southeast Florida. Report prepared for Miami-Dade County, Florida by Hazen and Sawyer P.C., Miami, FL.
Leeworthy, V.R., T. Maher, and E.A. Stone. 2005. Can Artificial Reefs Reduce or Alter User Pressure on Adjacent Natural Reefs? Coastal and Ocean Resource Economics Program, Special Projects Office, National Ocean Service, National Oceanic and Atmospheric Administration, Silver Spring, MD.
Milon, J.W. 1988. The Economic Benefits of Artificial Reefs: An Analysis of the Dade County, Florida Reef System. SGR-90. Florida Sea Grant College Program, University of Florida, Gainesville, FL.
Milon, J.W., S. Holland, and D. Whitmarsh. 2000. Social and Economic Evaluation Methods. Evaluating Artificial Reefs and Related Aquatic Habitats, edited by W. Seaman. Boca Raton, FL: CRC Press.
Schug, D. M. 1978. Political and Economic Aspects of Artificial Reefs in Pinellas County, Florida. Thesis submitted to the Department of Marine Science, University of South Florida, Tampa, FL.
Tables
Table 1. Number of artificial reef deployments, by Florida county.
County
# of Reefs
County
# of Reefs
Bay 198
Manatee 79
Brevard 62
Martin 67
Broward 108
Monroe 61
Charlotte 34
Nassau 15
Citrus 29
Okaloosa 105
Collier 73
Palm Beach
63
Dade 173
Pasco 34
Duval
96
Pinellas 351
Escambia 97
Santa Rosa 13
Flagler 9
Sarasota 126
Franklin 46
St. Johns 36
Gulf 21
St. Lucie 25
Hernando 22
Taylor 12
Hillsborough 69
Volusia 82
Indian River 8
Wakulla 35
Lee 83
Walton 4
Levy 31
TOTAL
2267
Source: Florida Fish and Wildlife Conservation Commission, 2006. http://myfwc.com/marine/ar/index.asp .
Footnotes
1. This is EDIS document FE649, a publication of the Food and Resource Economics Department, Florida Cooperative Extension Service, Institute of Food and Agricultural Sciences, University of Florida, Gainesville, FL. Published August 2006. Please visit the EDIS website at http://edis.ifas.ufl.edu.2. Chuck Adams, Professor, Food and Resource Economics Department; Bill Lindberg, Associate Professor, Fisheries and Aquatic Sciences Department; and John Stevely, Florida Sea Grant Marine Extension Agent, Florida Sea Grant Program, Florida Cooperative Extension Service, Institute of Food and Agricultural Sciences, University of Florida, Gainesville, FL.
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U.S. Department of Agriculture, Cooperative Extension Service, University of Florida, IFAS, Florida A. & M. University Cooperative Extension Program, and Boards of County Commissioners Cooperating. Larry Arrington, Dean.
Copyright Information
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