Economic Benefits from (Better) Ocean Observation Capitol Hill Oceans Week 14 June 2006 Hauke Kite-Powell Marine Policy Center Woods Hole Oceanographic Institution

Source of Benefits The product is information Information has value because it is used in economic decisions Better decisions lead to improved physical and economic outcomes Short-term (operational) and long-term (investment, planning) decisions

Benefit = change in value added Changes in social surplus –Producer surplus What producers receive less what it costs to produce –Consumer surplus What consumers would be willing to pay less what they actually pay –Net change in economy (“welfare”) Often hard to measure in practice Proxies: –Increased goods and services –Lower cost goods and services

US Coastal Ocean Observation: User Sectors Recreational Activities Boating Beach Going Fishing Transportation Freight Passenger (Cruise Ships) Health and Safety Search and Rescue Oil Spill & Hazard Cleanup Property Damage (from storm events) Energy OCS Development Electric Generation Management Commercial Fishing

Potential Benefits from Improved Coastal Ocean Obs. Sector Application Magnitude of Possible Annual Benefits ($ millions) Regions with greatest benefits Recreational Activities Recreational Fishing100s Great Lakes, Gulf of Mexico Recreational Boating100s Great Lakes, Gulf of Mexico, Atlantic Beaches/Shore Recreation100s Florida, California Transportation Transportation-Freight10s Florida, Mid Atlantic Transportation-Cruise Ships10s Florida Health and Safety SAR 10s All Oil Spills Tropical Storm Prediction All Atlantic, GoMex Energy Electricity Load Planning10s to 100s Great Lakes, California, Atlantic Ocean Structures10s Gulf of Mexico Commercial Fishing 100s Alaska, New England

Tampa Bay PORTS: User Groups/Applications Maritime Recreational boating/fishing Spill response Weather & storm surge forecasting Environmental management/modeling Education

Tampa Bay PORTS: Annual Benefits avoided groundings, commercial vessels$1.1 to $2.8 million increased draft/cargo loading$1.1 million improved spill response $0.2 to $0.9 million reduced distress cases, recreational boats$0.2 million improved weather forecasts$1.5 million improved storm surge forecasts$0.5 million enhanced spill response, recreation$2.2 million high degree of confidence: moderate degree of confidence: more speculative: $4.4 to $7.0 million

Global Ocean Winds, Waves and Currents (Satellite Obs.) Benefits commercial maritime ship routing Potential benefits today about $80 million/year Additional benefits of $100 million/year possible with better coverage

Summary (potential) economic benefits can be documented –order of $10 million for “local” (PORTS) systems –$100s of millions for US coastal systems –$100s of millions for global ocean systems user-driven requirements and business case must be starting point for these benefits to be realized