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Economic Impact of Regulations

The Western Regional Aquaculture Center (WRAC) is funding a 3-year study to determine the economic cost of regulations to the shellfish and trout industries in Washington Idaho, Colorado, Oregon and California. The project has received strong support from the Pacific Coast Shellfish Growers Association and the Board of Directors of the U.S. Trout Farmers Association. The study titled, “The Economic Impact of Regulations on Shellfish and Trout Aquaculture Growth in the Western United States” is being led by the Lead Economist, Dr. Carole Engle, previously of the University of Arkansas and now of Engle-Stone Aquatic$ LLC of Strasburg, VA (; and working through Virginia Tech University. To underscore the importance of this project, USDA-APHIS has provided additional funding, as has the U.S. Trout Farmers Association to extend the trout survey nationally.

The Engle economic research team will be logistically supported by Co-Principal Investigator and Project Director Mr. Gary Fornshell, University of Idaho; and Co-Principal Investigators Ms. Bobbi Hudson, Pacific Shellfish Institute (WA), Dr. William Hanshumaker, Oregon State University; and Dr. Fred Conte, University of California, Davis. The industry Advisor is Mr. Bill Dewey, Taylor Shellfish Co. (WA). Dr. Gunnar Knapp, of the University of Alaska is the Project Monitor.

A study recently completed by Engle and van Senten of the costs of regulations on the U.S. baitfish/sportfish industry showed that regulatory costs composed:
  • $150,000 per farm, on average;
  • $3,000 per acre, on average;
  • 25% of total costs of baitfish/sportfish production, on average; and
  • Farm-level costs of $12.1 million annually across the U.S. industry.
Environmental management regulations composed 61% of the total regulatory costs to U.S. baitfish/sportfish producers.  Only 1% of the regulatory costs were those associated with direct permitting costs; 99% of the costs were associated with indirect costs of changes made on the farm, manpower for monitoring and reporting, and markets lost due to regulations.  The study also found that smaller farms incurred a substantially greater cost per acre due to regulations than did larger farms.

Extensive in-kind industry support will be provided by farmers who complete the survey that will generate the entire database for the project.  Additional industry contributions will be background work conducted by the Pacific Coast Shellfish Growers Association to compile lists of regulations in 3 west coast states.  The suite of state and federal regulatory policies faced by shellfish growers on the West Coast and trout farmers in the Western Region will be analyzed in terms of redundancy, overlap, and delays imposed on the industry.

The economic analysis will examine direct and indirect costs of regulation on shellfish production on the West Coast and on trout production in the western region. It will be quantified in terms of overall cost burden (dollars/farm) and in terms of the percentage of the total cost of production due to the regulatory compliance burden. The estimated costs of regulation will be used to estimate the economic impact of the totality of regulations on west coast shellfish and western-region trout production using previously-estimated economic multipliers in two previous studies (Northern Economics, Inc. 2013; Kaliba et al. 2004).  The project should also provide a basis from which to evaluate the value of the economic activities lost due to the inhibitory effects of regulations in the industry.

Most important is how the information will be used by the industry. Engle says, “The most effective way to effect regulatory change is for industry representatives and associations to communicate directly with policy makers.” The project’s outreach plans are designed to ensure that the aquaculture industry and its support network have full access to project results. The information generated will be provided to industry representatives and associations and state and federal agencies on the total suite of state and federal regulations, effects of the regulatory compliance cost burden, and the estimated economic impacts of these regulations on West Coast shellfish and western-region trout production.

Engle will generate a major White paper that will report project methodologies, detailed results, and describes potential pathways to reduce regulatory obstacles to aquaculture growth and development. If the producer response to the survey is adequate, and unless imposed confidentiality precludes publication of pooled results, seven 1-page fact sheets will be produced covering the following: Engle will provide a summary of findings and recommendations for West Coast shellfish and trout in the western region, and recommendations for the state of Washington; Fornshell will produce a summary of recommendations for trout in the states of Idaho and Colorado; Hanshumaker for trout and shellfish the state of Oregon; and Conte for trout and shellfish the state of California.

The above materials will be posted on the web with links provided to industry associations, and project results will be presented to industry trade associations through newsletters, at annual meetings or other venues deemed most relevant by industry leadership.  These are expected to include the Longlines Newsletter of the Pacific Coast Shellfish Growers Association and Trout Talk of the United States Trout Farmers Association, in addition to presentations at appropriate state and national association meetings. Project results will also be presented at the annual Aquaculture America meetings of the U.S. Aquaculture Society and the National Aquaculture Association.  The white paper and the fact sheets will also be distributed to the membership of the National Association of State Aquaculture Coordinators.  In addition, a webinar, open to the public, will be organized and publicized by all project participants. This is an opportunity to quantify what industry is well aware of, that of the inordinate cost of the regulatory process on the aquaculture industries, including delays to aquaculture’s progression.

The initial contacts regarding the industry survey will be directed towards the shellfish industry with activities beginning in August 2016. Representatives of the shellfish industry will also be contacting shellfish producers to discuss the significance of the study and its value to the industry. For additional information, you may contact the following:

Fred S. Conte, Ph.D.
Extension Aquaculture Specialist
Department of Animal Science
University of California, Davis 95616
Skype: fsconte.ucdavis
Copyright © 2016 California Aquaculture Association, All rights reserved.

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