Valuing Ecosystem Services with Fishery Rents: A Lumped-Parameter Approach to Hypoxia in the Neuse River Estuary

67 Pages Posted: 26 Oct 2005

See all articles by Martin D. Smith

Martin D. Smith

Duke University - Nicholas School of the Environment

Larry B. Crowder

Duke University - Nicholas School of the Environment

Date Written: September 2005

Abstract

Valuing ecosystem services with microeconomic underpinnings presents challenges because these services typically constitute nonmarket values and contribute to human welfare indirectly through a series of ecological pathways that are dynamic, nonlinear, and difficult to quantify and link to appropriate economic spatial and temporal scales. This paper develops and demonstrates a method to value a portion of ecosystem services when a commercial fishery is dependent on the quality of estuarine habitat. Using a lumped-parameter, dynamic open access bioeconomic model that is spatially explicit and includes predator-prey interactions, this paper quantifies part of the value of improved ecosystem function in the Neuse River Estuary when nutrient pollution is reduced. Specifically, it traces the effects of nitrogen loading on the North Carolina commercial blue crab fishery by modeling the response of primary production and the subsequent impact on hypoxia (low dissolved oxygen). Hypoxia, in turn, affects blue crabs and their preferred prey. The discounted present value fishery rent increase from a 30% reduction in nitrogen loadings in the Neuse is $2.56 million, though this welfare estimate is fairly sensitive to some parameter values. Surprisingly, this number is not sensitive to initial conditions.

Keywords: Open access, Predator-prey, Hypoxia, Habitat-dependent fisheries

JEL Classification: Q22

Suggested Citation

Smith, Martin D. and Crowder, Larry B., Valuing Ecosystem Services with Fishery Rents: A Lumped-Parameter Approach to Hypoxia in the Neuse River Estuary (September 2005). FEEM Working Paper No. 115.05, Available at SSRN: https://ssrn.com/abstract=825587 or http://dx.doi.org/10.2139/ssrn.825587

Martin D. Smith (Contact Author)

Duke University - Nicholas School of the Environment ( email )

Box 90328
A122 LSRC
Durham, NC 27708-0328
United States
919-613-8028 (Phone)
919-684-8741 (Fax)

HOME PAGE: http://fds.duke.edu/db/Nicholas/esp/faculty/marsmith

Larry B. Crowder

Duke University - Nicholas School of the Environment ( email )

Box 90328
Durham, NC 27708-0328
United States

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