Valuing Ecosystem Services: Oysters, Denitrification, and Nutrient Trading Programs
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1 Valuing Ecosystem Services: Oysters, Denitrification, and Nutrient Trading Programs Geret S. DePiper, Douglas W. Lipton, and Romuald N. Lipcius May 21, 2015 The opinions expressed in this presentation are solely the authors, and do not represent those of NOAA Fisheries
2 Research Goals Analyze the role of denitrification/nitrogen sequestration and harvest in optimal management of natural oyster reefs Assess NPV of Harris Creek restoration initiative
3 Chesapeake Bay Nitrogen Phosphorus Sediment US EPA (2010)
4 Bio-economic Models Wild stock Kasperski & Wieland (2010) Mykoniatis & Ready (2015) Aquaculture Miller (2009)
5 Powell et al. (2006) Mann & Powell (2007) Powell & Klinck (2007) Shell as limiting factor
6 Biological model Jordan-Cooley et al. (2011) Three equations governing oyster population dynamics O = live oyster population B = oyster shell (reef) S = sedimentation
7 Live oyster population Oyster growth = logistic growth disease and predation smothering do dt = O r(1 ) + ε µ O[ K ε ] O 1+ exp( h( + B S) 2
8 Oyster shell Reef growth = Oyster mortality Shell degradation db dt µ ε = O[ + ε ] γb O 1+ exp( h( + B S) 2
9 Sedimentation Sediment rate = Deposition rate erosion ds dt = C exp( η ( O + B))exp( F0O y 0 exp( y 0 C exp( η ( O y 0 + B)) )) βs
10 Economic Value Value = Harvest + Denitrification + Sequestration Harvest Denitrification Sequestration O x = ( ph ch (1 ( )) x K = = p N F0O y0 C exp( η ( O + p N λ(1 exp( exp( y y O r(1 ) + ε µ αo( K ε ) O 1+ exp( h( + B S)) B)) )))
11 Numerical solution Deterministic Dynamic programming CompEcon Toolbox for Matlab 5% discount rate 3%, 7%, 11.8% sensitivity $28.9 bu -1 harvest price $18.63, $44.79 sensitivity $10 lb -1 nitrogen price $0, $4, $20 sensitivity Jordan-Cooley et al. (2011)
12 0.035 Oyster harvest 0.03 Oyster Harvest Volume (m 3 ) Year Baseline Low Carrying Capacity Low Growth Rate High Growth Rate High Predation
13 Oyster stock Oyster Volume (m 3 ) Year Baseline Low Predation High Predation Low Carrying Capacity
14 Net Present Value Total Value ($ m -2 ) Year Baseline High Nutrient Credit Low Carrying Capacity
15 Harris Creek Restoration $31.6 million restoration of 377 acre oyster reef Assumptions: 6 years until restored Value begins to be generated in year 7 50 year time horizon (ensure sustainability assessed) NPV calculation for each modeled scenario
16 Harris Creek Restoration NPV 24 simulations over 50 year time horizon 16 positive NPV (67%) 8 negative NPV (33%) Metric Mean Median STD Min Max NPV $ million Break-Even years Oyster Stock Oysters m
17 Conclusions Optimal management includes both ecosystem service provisioning and harvest Reef level heterogeneity important Dynamics more sensitive to biological vs economic parameters Harris Creek NPV positive for 67% of simulations Private funding for restoration likely not viable
18 Questions? References Jordan-Cooley, W. C., R. N. Lipcius, L. B. Shaw, J. Shen, and J. Shi Bistability in a Differential Equation Model of Oyster Reef Height and Sediment Accumulation. Journal of Theoretical Biology 289: Kasperski, S., and R. Wieland When is it Optimal to Delay Harvesting? The Role of Ecological Services in the Northern Chesapeake Bay Oyster Fishery. Marine Resource Economics 24: Mann, R., and E. N. Powell Why Oyster Restoration Goals in the Chesapeake Bay Are Not and Probably Cannot be Achieved. Journal of Shellfish Research 26(4): Miller, A. L An Economic Evaluation of the Nutrient Assimilation Potential for Commercial Oyster Aquaculture in the Chesapeake Bay. M.S. Thesis. Blacksburg: Virginia Polytechnic Institute and State University. Mykoniatis, N., and R. Ready Spatial Harvest Regimes for a Sedentary Fishery. Environmental and Resource Economics: Powell, E. N., J. N. Kraeuter & K. A. Ashton-Alcox How long does oyster shell last on an oyster reef? Estuar. Coast. Shelf Sci. 69: Powell, E. N., and J. M. Klinck Is Oyster Shell a Sustainable Estuarine Resource? Journal of Shellfish Research, 26(1):
19 Full Results Model Total $/m 2 Harvest $/m 2 Denitrification $/m 2 Sequestration $/m 2 NPV ($Million) Break-even Year Baseline % Cull mortality Shell degradation = Shell degradation = Nitrogen price/lb = $ Nitrogen price/lb = $ Nitrogen price/lb = $ Harvest cost = $ Harvest cost = $ Oyster price = $ Oyster price = $ Discount rate = Discount rate = Discount rate = Natural Mortality = Natural Mortality = Carrying Capacity = Intrinsic growth = Intrinsic growth = Sediment deposition = Sediment Decay Rate = Burial Scaling factor = Burial Scaling factor = No harvest
20 Comparison with Jordan-Cooley et al. State Variables 0.25 Live Oysters Dead Oyster Sediment 0.2 Volume (m 3 ) Year
21 Approximation Collocation Policy iteration (Newton s method) Linear spline approximation for state space Oyster population = 90 nodes Reef growth = 7 nodes Siltation = 4 nodes Tolerance set to square root of machine precision ~1.49e-8
22 Value function residual 6 4 x residual yster Stock Reef Height
23 Present value Value Reef Height Oyster Stock
24 Nutrient trading
25 Schulte et al. (2009) acres of reef restored to high relief (HRR) in 2004 (25 45 cm) Less than 2 oysters m -2 density pre-restoration Persistent 1000 oysters m -2 density on HRR after restoration (sampled in 2007 & 2009)
26 Oyster nutrient credits Shellfish Aquaculture: Ecosystem Effects, Benthic Pelagic Coupling and Potential for Nutrient Trading Roger I. E. Newell Roger Mann A Report Prepared for the Secretary of Natural Resources, Commonwealth of Virginia. June 21, 2012
27 Crassostrea virginica: Denitrification and Nitrogen Sequestration Newell et al. (2005) Kellogg et al. (2013) STAC (2013)
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