Abstract
The most recent red tide bloom in the summer of 2018 served as a wake up call to many in the Gulf region of Florida. The algal bloom decimated the coast, killing off scores of fish and marine life. As beaches were forced to close, tourists and residents alike were no longer producing usual economic activity on the shorelines. This, however, has happened before. We consider four major blooms from the past twenty years, two in 2005, one in 2006, and the aforementioned bloom in 2018. All lasted for over three months and had significant impacts on the economy. We examine the effects of two industries, the lodging and restaurant sectors, to determine the magnitude of losses in taxable sales caused by red tide. Using a difference-in-differences model, we compare taxable sales in counties affected by red tide to those that were unaffected. We find that affected counties produce 5-7 percent and 1.5-2.5 percent less in the lodging and restaurant sectors, respectively. If red tide blooms become more frequent and persistent, losses for coastal businesses could also continue to grow. Policy and strategy to mitigate economics losses must take into consideration the harmful effects of these algal blooms.
Highlights
Harmful algal blooms (HABs) are almost always present in the Gulf of Mexico, usually harmless and at low concentrations (Roberts, 1979; Pierce et al, 2005; Pierce and Henry, 2008)
This paper studies the losses by these firms in the presence of red tide and compares the results to unaffected or less affected firms through a difference-in-differences model
Differing trends before blooms in untreated time periods implies that something other than red tide impacted sales and our results would be invalid. This assumption must first be tested before any valid conclusions can be made about coefficients in the difference-in-differences model
Summary
Harmful algal blooms (HABs) are almost always present in the Gulf of Mexico, usually harmless and at low concentrations (Roberts, 1979; Pierce et al, 2005; Pierce and Henry, 2008). The algae responsible for the effects of HABs in southwest Florida, can cause mortalities in almost all of marine life, ranging from massive fish kills across species, to sharks, dolphins and even (c) Southern Regional Science Association 2020 ISSN 1553-0892, 0048-49X (online) www.srsa.org/rrs. BECHARD: HARMFUL ALGAL BLOOMS AND TOURISM sea birds (Flewelling et al, 2005; Pierce and Henry, 2008). The harmful effects of HABs can force beach closures, fishing restrictions, and even reduce seafood and shellfish consumption.. For a state heavily reliant on revenue from tourism such as Florida, a bloom severe enough to result in these restrictions could drive away visitors and revenue from the coast. HABs, and red tides, are increasing in frequency and both severity and persistency over time (Van Dolah, 2000; Pierce and Henry, 2008). This paper studies the losses by these firms in the presence of red tide and compares the results to unaffected or less affected firms through a difference-in-differences model
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