Northeast Fisheries Science Center Reference Document 07-17
Demographic and Economic Trends
in the Northeastern United States Lobster
(Homarus americanus) Fishery, 1970–2005
by Eric M. Thunberg
National Marine Fisheries Serv, Woods Hole Lab, 166 Water St, Woods Hole MA 02543-1026
Print
publication date October 2007;
web version posted October 26, 2007
Citation: Thunberg EM . 2007. Demographic and economic trends
in the Northeastern United States lobster
(Homarus americanus) fishery, 1970–2005. U.S. Dep. Commer., Northeast Fish.
Sci. Cent. Ref. Doc. 07-17; 64 p.
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Introduction
The present
condition of the American lobster (Homarus americanus) industry and its involved
communities is shaped not only by contemporary regulations or social and
economic conditions, but by the accumulation of past events, including changes
in resource conditions, coastal development, and shifts in management
responsibilities. Identifying these
changes over time and how they may have influenced today’s lobster industry
requires selecting a baseline period consistent with the temporal and
geographic scope of both the lobster resource and the human communities that
exploit it.
Acheson (1997)
describes the commercial lobster fishery as beginning in the 1840s, with the
development of the re-circulating seawater tank making it possible to ship
lobsters to urban population centers in the Northeast. Even though the lobster fishery has been
prosecuted on a commercial scale for more than 160 years, consistent landing
statistics were not generally available prior to 1950. These statistics indicate that landings in
the Northeast first reached 30 million lb in 1957 and remained relatively
stable from 1957 through 1974 averaging 30 million lb before going on a
prolonged annual increase in landings that lasted for the next 11 years (Figure
1). From 1985–2004 landings increased at
a faster rate than in prior years, peaking in 1999 at 89 million lb. Note, however, that even though landings
reached historic highs during the 1990s, the inter-annual variability in
landings has also increased particularly since 1989.
For much of
its early history the lobster fishery was managed by individual states, with
little formal attempt to coordinate either management or regulatory actions
across states. Recognizing the need and
potential benefit gained from such coordinated action, in 1972 states along the
Atlantic seaboard initiated cooperative management and research through the
auspices of the National Marine Fisheries Service (NMFS) State-Federal
Partnership Program. An outgrowth of this program was the formation of a policy
group known as the Northeast Marine Fisheries Board (NFMB). Following
implementation of the 1976 Fisheries Conservation and Management Act (FCMA),
the NMFB developed a comprehensive management plan which was submitted in
November, 1978 to the newly created New England Fishery Management Council. This
planning document (NFMB 1978) was the first comprehensive study of the
biological, economic, social, and management history of the American lobster
fishery. Of particular interest is the
documentation of the condition of the social and economic characteristics of
the lobster fishery as they existed at the time. For this reason the baseline condition
described in the NFMB American Lobster Fishery Management Plan (ALFMP) and its
related time period was selected as the temporal baseline for this report.
Although the
American lobster ranges from Labrador to North Carolina, lobster
is sparsely distributed in much of the southern extent of its range. Reported
landings from Delaware
southward are typically less than 0.1% of total landings. In fact, Delaware, Maryland, Virginia, and North Carolina have applied for, and
received, de minimus status for American lobster under auspices of the Atlantic
States Marine Fisheries Commission (ASMFC). This means that landings are not only well below that of states from Maine to New Jersey,
there would also be minimal presence of either lobster or lobster-related
activities in coastal economies. For
this reason the geographic scope of this study was confined to coastal states
of Maine
through New Jersey.
In what follows,
the past and present conditions of the social and economic factors affecting
the lobster fishery are described. The
discussion follows a format similar to that of the 1978 lobster Fishery
Management Plan (FMP) prepared by the NMFB. Each section begins with a brief synopsis of the condition of the social
and economic environment as described in 1978, followed by a discussion of
changes that have occurred to the present time. The discussion begins with an overview of changes in management
institutions affecting lobster fishing over time. The second section provides a description of
the broad-scale demographic changes that have occurred in coastal counties over
the last thirty years. The third major
section provides a description of the lobster fishery itself: as it was in 1978;
as it is today; and major changes along the way. The fourth major section
describes the economic condition of the lobster fishery and surveys the
economics literature. The final section identifies economic implications of
environmental events and regulatory actions external to the lobster fishery.
Management Context
Over the past 30
years, management of American lobster has gone through what may be thought of
as three significant phases distinguished by changes in jurisdictional
responsibility. These phases include
the years preceding 1976, the years from 1976 through 1994, and from 1995 to
the present.
Pre-1976
From its
earliest development as a commercial fishery until the passage of the FCMA in
1976, management of the lobster fishery was primarily the responsibility of
individual states. Regulatory approaches
differed from state to state resulting in a patchwork of laws governing the
taking of lobsters. Attempts to
establish some uniformity across states were undertaken with varying levels of
success but it was not until 1972 that the lobster producing states agreed to
work toward a uniform set of ten management precepts (Table
1) under the
auspices of the NMFS State/Federal Fishery Management Program.
Other than
serving as an intermediary to facilitate development of coast-wide approaches
to lobster management, the Federal Government was not actively engaged in
management activities because lobster fishing took place almost exclusively
inside state waters (the offshore lobster fishery had not yet fully developed)
and it lacked any jurisdiction over what was effectively international water.
As of 1977 most
states required a license to fish for and land lobster. Licenses were not
required in New Jersey,
Maryland, and
North Carolina, and no distinction was drawn between commercial and
recreational lobster fishing. Maine was the only state
to prohibit recreational lobster fishing. Annual reporting of catch and/or effort was required in Maine, New Hampshire, Massachusetts, Connecticut, New York, and Delaware, while daily
reporting was required in Rhode
Island and Connecticut.
Several states
prohibited certain types of gears that may be used for taking lobsters. For example, Maine did not allow and continues to
prohibit the landing of lobsters taken by mobile gear. Some states placed limits on the number of
traps that may be used by recreational fishermen, while only Delaware limited the number of traps that
may be used by commercial fishermen as well.
Massachusetts was the
only state with a moratorium on the number of commercial licenses issued. Where recreational fishing for lobster was permitted, New York and Delaware limited the daily number of lobster that could be taken and several states limited the recreational fishing season. Landing
of lobster meat and/or lobster parts was prohibited in all states except New Jersey and Maryland,
while the taking of berried females was prohibited by all states. Only Maine
had a maximum allowable size, and the majority of states had a 33/16"
minimum size. The exceptions were Rhode
Island, with a minimum size of 31/16", and New Hampshire and New Jersey, with a minimum
size of 31/8".
1976 to 1995
The FCMA
established extended jurisdiction over all fisheries to the 200-mile limit, and
in doing so established management authority over any portion of the lobster
fishery that may be prosecuted outside of a state’s territorial waters. The act
also established the fishery management council system and designated the NEFMC
as the lead council for developing a lobster fishery management plan since nearly
all landings were delivered to ports and harbors in New
England. The lobster
fishery management plan developed by the NMFB was the precursor to what became
the New England Council’s ALFMP adopted in 1983.
The initial
ALFMP established several measures intended to provide uniform regulations in federal
and state waters. These measures
included a coast-wide 33/16" minimum size as well as
prohibitions on landing lobster parts, berried females, and V-notched lobsters
in much of the Gulf of Maine. The ALFMP
also included requirements for escape vents, a permit program, and recommended
a data collection system to facilitate improved monitoring and management of
the lobster fishery. Some of these
measures had a phased implementation schedule to permit individual states to
make the necessary adjustments. For
example, the minimum size and the escape vent requirements were to become
effective on January 1, 1985, while the prohibition on taking lobster parts was
to be effective by January 1, 1986.
Amendment 1 to
the ALFMP was submitted in 1986. This amendment
implemented standardized gear marking requirements for the offshore fishery to
deal with gear conflicts with mobile gear and to avoid instances where one
lobster vessel would set gear over another’s. Additionally, Amendment 1
exempted fishermen engaged in a fish trap fishery for black sea bass from the
escape vent requirements and designated red crab gear fished at depths
exceeding 200 fathoms as gear not capable of catching lobsters.
Submitted in
1987, Amendment 2 to the ALFMP proposed a five-year implementation schedule to
increase the minimum size from 33/16" to 35/16"
in a series of 1/32" increments. This action was prompted by the adoption of
an identical schedule of gauge increases that had been enacted by the Maine
legislature and that was subject to repeal without complementary Council
action. Amendment 2 also proposed an
increase in the size of the escape vent to conform to a 35/16"
lobster, proposed a prohibition on taking V-notch lobsters throughout the range
of the EEZ, and established a uniform national minimum size standard for
American lobster.
The Amendment 2
implementation schedule called for the minimum gauge increases to start in 1988
with the vent size change taking effect in 1990. Amendment
3 (1989) to the ALFMP proposed to delay the implementation date for the escape
vent size to 1992. The rationale for this delay was based on analysis of
selection data showing that the larger escape vent would allow unacceptably
high escapement of legal lobsters. Amendment 3 also proposed to require that a
degradable panel be incorporated into each trap to reduce the impact of ghost
fishing.
By 1991 the
minimum gauge in the EEZ was 39/32". However, the state of Maine had repealed its scheduled gauge
increases, stopping at 31/4". Likewise, Massachusetts, New Hampshire, and Rhode Island had enacted a 31/4"
minimum size, and further increases were deemed unlikely. To further complicate matters, the Mitchell
Bill (Prohibition J under the Magnuson-Stevenson Fisheries Conservation and
Management Act [MSFCMA, or MSA]) had been enacted that prohibited interstate
commerce in lobsters that were smaller than the minimum federal gauge. To
alleviate the inconsistencies created by the differing gauge size between the
EEZ and the states, Amendment 4 (1991) proposed a reduction in the minimum
gauge to 31/4". The Amendment also modified the escape vent size to be consistent with
the 31/4" minimum. However, the Council stipulated that unless a new plan amendment with an
effort control program had been enacted within two years of the Amendment 4
implementation date, the Amendment 2 schedule of gauge increases would
resume.
Faced with the
prospect of defaulting to a higher gauge, a Lobster Industry Working Group (LIWG)
was formed to develop a comprehensive statement of management principles. The LIWG report was submitted to the NEFMC
Lobster Oversight Committee on January, 1993. The report reiterated support for a certain set of unified regulations
that would be coastwide, but also advocated a more flexible approach to effort
control that recognized the differing social, cultural, and economic
circumstances in each lobster-producing region. It is notable that the likelihood that differences in fishing practices
would not lend itself to a one-size-fits-all management approach was recognized
by the NFMB in 1978. In addition to
recommending a regional approach, the LIWG also recommended a moratorium on federal
permits, restrictions on mobile gear, a mandatory data reporting system, and a
revised overfishing definition. These
industry recommendations were accepted in 1994 by the Council as the basis for
Amendment 5. The Council formally appointed members to four regional Effort
Management Teams (EMTs) and imposed a six-month deadline for each of the EMTs
to report back to the Council with effort reduction plans that would meet
conservation objectives.
Amendment 5 was
partially approved in 1994. Of the
proposed measures submitted by the NEFMC, the permit moratorium was implemented
as was a revised overfishing definition and the EMT process was approved. The recommended measures limiting mobile gear
and mandatory reporting were not approved. The former was rejected since it was believed to be appropriate to
include mobile gear effort reduction within the EMT process, while mandatory
reporting was disapproved due to the administrative burden that would have been
created, since mandatory reporting had just been implemented for the groundfish
and scallop fisheries.
The EMTs were
not able to meet the required deadline and the NEFMC could not reach agreement
on required conservation measures. This
impasse set the stage for a transition to the present management context.
1995 to Present
Although the
preceding discussion focused on management action taken at the Federal level,
it is important to recognize that an Interstate Fishery Management Plan (ISFMP)
had been developed and implemented by the ASMFC as early as 1978. The original plan’s primary purpose was to
establish regulatory uniformity across state and federal jurisdictions, and
Amendments 1 and 2 to the ISFMP were developed largely as a response to
regulations implemented at the federal level. By 1995, however, it was becoming clear that maintaining separate management
authority by the ASMFC and its member states under the Atlantic Coastal
Fisheries Cooperative Management Act (ACFCMA) and the NMFS under the FCMA was
not accomplishing a unified approach to lobster management. Given the fact that the majority of the
lobster resource and fishing effort takes place in state waters, the NMFS
issued an Advance Notice of Proposed Rulemaking in September 1995
seeking public comment on options for lobster management including the option
to transfer federal management authority to the ACFCMA. This transfer of
authority was delayed until 1999, primarily due to concerns that the ISFMP be
consistent with the National Standards under the 1996 reauthorized FCMA known
as the Magnuson-Stevens Act (MSA).
In the
intervening years between 1995 and 1999, the ASMFC developed and implemented
Amendment 3 to the ISMFP which remains in effect today. Amendment 3 reaffirmed the concept that
certain management measures should be uniform across all jurisdictions, but
that some measures including effort reduction plans would be best developed on
a regional basis. The latter reaffirmed the management principles originally
espoused by the LIWG in 1992 and the EMTs by the NEFMC. The ASMFC identified seven different Lobster
Conservation Management Areas (LCMAs) (see Figure
2) and approved the formation
of Lobster Conservation Management Teams (LCMT) for each area in 1998. Each LCMT was charged with developing an
effort reduction plan to achieve a specified schedule of conservation
objectives beginning in calendar year 2000.
Under ACFCMA,
the ASMFC now has the lead responsibility for developing management measures
for the lobster fishery in both state and federal waters. Within this setting the ASMFC develops
measures to be implemented by its member states and recommends complementary
action to be taken by NMFS for federal waters. This institutional structure still retains the jurisdictional boundaries
between regulatory actions taken by individual states and actions by NMFS but
assures coordination across jurisdictions. Actions approved by the ASMFC are enforceable on member states through a
provision of the ACFCMA that requires the Secretary of Commerce to prohibit
fishing for any ASMFC-managed species in the territorial waters of any non-conforming
state upon a finding by ASMFC, and Secretarial concurrence, of non-compliance
with a required measure. Complementary
action taken by NMFS must take the ASMFC recommendations into account, but NMFS
may choose to deviate from them under certain circumstances where, for example,
a recommended action may conflict with a National Standard, may be
administratively burdensome, or may conflict with other applicable federal law.
From a contextual perspective the existing management
framework has resulted in a couple of unanticipated results. First, the public notice and comment
requirements under the Administrative Procedures Act as well as
analytical requirements under the National Environmental Policy Act, the
Regulatory Flexibility Act, various Executive Orders, and other
applicable law means that federal complementary action may take considerable
time to implement. By contrast, most
states have far fewer process requirements and ASMFC-recommended changes may be
implemented relatively quickly. The
consequence of the differences in response time is that the hoped-for
coordination between state and federal partners has been difficult to
obtain. For example, Addendum 1 was approved by ASMFC in
1999 but the recommended complementary federal actions were not implemented
until 2002, by which time ASMFC had already approved both Addendums II and
III. The inability to achieve regulatory
coordination in terms of timing between NMFS and ASMFC has been alleviated for
the most part by the requirement that all permit holders abide by the more
restrictive measures wherever they fish. This means that since all lobster operators
(including federal permits) must be permitted in at least one state, as a
practical matter, as long as all states take coordinated action, there will be
relatively few inconsistencies between the intended management effect even
though complementary EEZ regulations have yet to be implemented. In many
respects, complementary federal action has been a matter of “catching up” to
what states have already implemented.
The second unanticipated result is a
byproduct of the regional approach to management through the LCMTs. Amendment 3
to the ISFMP carried over much of the coast-wide measures that had been in
place at the time. The Amendment provided default trap caps for LCMAs 1, 2, 3, and the Outer Cape that would be
subject to change through Addendum 1 upon further consideration by each
respective LCMT. LCMTs from LCMAs
4, 5, and 6 were asked to review the need for capping or reducing effort in
their respective areas. The
recommendations of each LCMT were subsequently incorporated into Addendum 1.
In Addendum 1, LCMAs
1, 2, and the Outer
Cape adopted the
Amendment 3 trap reduction schedule while LCMAs, 3, 4, 5, and 6 recommended
historic participation programs with individual trap allocations. These differing approaches highlight two
features of the LCMT process as it has evolved over time. First, the LCMT
process has led to a tendency to construct regulatory boundaries that preserve
the core group of operators’ access to a lobster fishing area while
discouraging others from entering, and second has resulted in less uniformity,
hence greater complexity across and within jurisdictional boundaries. These differences across LCMT plans has only
increased over time as different trap reduction schedules, minimum sizes,
maximum sizes, and trap transferability have been adopted by one or more LCMTs. Viewed from the perspective of the individual
operator, the level of complexity may not be apparent since he/she need only be
concerned with where he/she fishes, but administering and enforcing size limits
or trap programs that differ regionally introduces a level of complexity that
earlier management efforts had sought to avoid.
Demographic Condition
Lobster harvesters, related businesses, and
coastal communities do not exist in isolation from one another. Lobstering
communities are affected by large-scale changes in population growth, urban
sprawl and the effects of a land market creating pressures for altered use of
shoreline property. Data from the
US Bureau of the Census were used to characterize broad scale social and
economic decadal trends affecting coastal regions in the primary lobster
producing states from Maine
to New Jersey. The Census Bureau defines coastal counties
based on watersheds, which include counties that have no shoreline directly
abutting saltwater coves, bays, or the ocean. Such counties are unlikely to include a substantial presence of lobster
fishing or fishing-related businesses and were considered a non-coastal county
for discussion purposes.
In 1978 the
lobster communities of Maine
were described as isolated with few job opportunities other than fishing (see
NMFB 1978, p. 17-19). Many fishermen
were said to be living at subsistence levels, with few marketable skills
limiting job mobility for lobstermen. Income growth in lobster villages lagged behind that of other regions
and the population tended to be older and less mobile.
In other New
England states relatively little information was documented with respect to the
lobster fishery, except to note that Massachusetts had an industrial-based
economy which offered employment opportunities not necessarily available to
Maine lobstermen. Income growth in Massachusetts coastal
economies was above the state average, and the development of a tourism-based
economy on the Cape and Islands
contributed to high levels of population and income growth. Income growth in Rhode Island was described as above average
for the region. Expansion of the University of Rhode Island and a growing service
sector were described as a contributing factor to higher population and incomes
in the Newport–Point Judith region of Rhode
Island. Fishermen in the Narragansett–South Kingston region were described as
having higher levels of remuneration than factory workers, with little
difference in either age or educational profiles. Coastal counties of both Connecticut and New York were described
as affluent, but no information relative to the lobster industry was offered.
Since 1978 the coastal county population and economy has
undergone several notable changes. Population growth has resulted in an increasingly
urbanized coastal county population. The underlying structure of the regional
economy has shifted away from manufacturing to technology-based industries.
These economic changes have been accompanied by higher levels of education,
increases in household income, and reductions in poverty rates. These changes
suggest a much less isolated condition, with more sources of alternative
employment
available to lobstermen than described
in 1978. The following provides an overview of these demographic trends in the
lobster-producing counties (defined as counties where reported lobster landings
were consistently at least 1% of state totals from 1989 to 2004) from Maine to New Jersey (Figure
3). The
majority of demographic data are reported in terms of percentage changes between
census decades and for the 30-year period represented by the 1970-2000
census years.
Demographic Trends 1970-2000
Population Growth
Total population in the Maine to New Jersey region increased by 9.4% from
1970 to 2000. Population growth from 1970 to 2000 was substantially above that
of region-wide growth in Maine and New Hampshire, with respective
increases of 28.3% and 67.5%, although the decadal change in population from
1990-2000 was lower than in previous decades. Population growth in coastal counties
was similar to that of non-coastal counties in most states except in Maine, New Hampshire and Massachusetts. Maine had the largest difference in
population growth between coastal and non-coastal counties. In 1970 less than
half (47%) of the Maine
state population lived in a coastal county, but by 2000 the proportion of the
state population living in a coastal county had increased to 54%.
In Maine’s
northernmost coastal county (Washington County) population increased by 17.1%
from 1970 to 1980, but virtually stagnated from 1980 to 1990 and declined by
almost 4% from 1990 to 2000 (Table
2). Thus, even though the Washington
county population was 13.7% higher in 2000 than it was in 1970, the county
population was declining from 1990 to 2000. No other coastal county in Maine exhibited such a
pattern of population growth over the past 30 years. Population growth from
1970 to 2000 was negative in Suffolk
County, Massachusetts,
Newport County, Rhode Island, and Nassau County, New York.
By contrast, population doubled in Rockingham
County, New Hampshire
and more then doubled in the Massachusetts
counties of Barnstable
and Dukes, and in Ocean County,
New Jersey.
Household Income
Median household
income adjusted by the New England region
urban CPI index was highest in Connecticut
in all years from 1969 to 1999, with the exception of Massachusetts median income in 1979 and New Jersey median income
in 1999. Note that each decadal census
collects data on annual household income from the year just prior to the census
year. The relative change in median
household income in each coastal state was positive indicating higher median
income in 1999 than it was in 1969 (Table
3). However, much of these gains were
made from 1979 to 1989 as these years corresponded with a particularly robust
regional and National economy. From 1989 to 1999 median household income
declined in most states.
On average,
coastal counties in all New England costal
states and New York
fared better than non-coastal counties in terms of household income. For example, even though household income
fell from 1969 to 1979 in both Maine
costal and non-coastal counties, the reduction in coastal county income was
lower than the reduction in non-coastal counties. Similarly, while household income rose from 1979
to 1989, the median household income increased by 18% in coastal Maine counties compared
to just below 7% in non-coastal Maine
counties. By contrast, median household income grew at a faster rate in New Jersey non-coastal
counties than in coastal counties.
While household
income in coastal counties generally fared better than non-coastal counties the
performance across coastal counties varied considerably. Of the coastal counties in Maine, median household income was at least
90% of the statewide median in all counties except Washington County.
Further, while median household income in Washington County
was 4.9% higher in 1989 than it was in 1969, inflation adjusted household
income declined from 1989 to 1999.
In both York and
Sagahadoc counties median household income increased by nearly 25% from 1969 to
1999, and grew by 16% in Cumberland
County. In Knox and Lincoln counties median household
income declined from 1969 to 1979 but increased over the next 20 years to
levels in 1999 that were about 25% greater than 1969 levels.
Poverty
The Bureau of
the Census measures poverty based on family income including wages, alimony,
child support, social security payments, and other forms of public assistance
weighed against predetermined poverty thresholds. Poverty thresholds are established for
different households depending on household size, age and number of adults in
the household, and number of children in differing age categories (thresholds
are adjusted in each Census year to account for changing economic conditions).
Regionwide, the proportion of the regional population living
below poverty was nearly 19% higher in 2000 than it was in 1970. The proportion
of the coastal state population from Maine to New Jersey below the poverty
threshold ranged from 9.8% in 1970 to 11.7% in 2000 (Table
4). Compared to 1970, the proportion of
population below the poverty line in 2000 declined only in Maine and New Hampshire (19.7% and
28.2%, respectively). The proportion of population living in poverty increased
in all other states.
The proportion
of population living in poverty in Maine
coastal counties was about 10% in 2000. However, there were substantial differences in poverty status among Maine coastal counties
that were masked by aggregated statistics. In particular, there was a
difference in poverty status between Maine’s
three southernmost counties and coastal counties northward of Sagadahoc County. For example, even though the proportion of
population in the 2000 census in Washington County declined 17.5% compared to
the 1970 census, still 19% of the Washington County population was living below
poverty; about two to three times that of every other Maine coastal
county. The census data suggests that
poverty rates in Maine’s
three southernmost counties of Sagahadoc, Cumberland,
and York have
been lower compared to what has been traditionally known as the Mid-Coast and
Downeast Maine
counties. Among these latter counties
poverty rates were similar in Hancock, Lincoln, and Knox counties, all of which
were just over 10% in the 2000 census.
Essex and Suffolk
counties were the only Massachusetts
coastal counties where the proportion of population living below poverty was
higher in 2000 than it was in 1970. The
poverty rate in Suffolk County was the highest in Massachusetts, but still
lower in most census years than poverty rates in Washington County, Maine.
Compared to 1970 levels, the largest change in poverty status occurred in Barnstable and Dukes
counties, where poverty rates were reduced by at least 20%. Note, however, that in Dukes County
the proportion of population below the poverty line increased from 1990 to
2000. In most census years poverty rates
in Norfolk and Plymouth counties were lower than other coastal
counties, but were largely unchanged from 1970 to 2000. Poverty rates in Bristol County
were also relatively stable and were just over 10% in 1970, 1980, and 2000.
In Rhode Island the
proportion of population below the poverty line declined from 1970 to 2000 by
43% and 46% in Washington
and Newport
counties, respectively. Note that the
change in poverty status in Newport
County was larger than
any other coastal county.
In both New York coastal
counties of Suffolk
and Nassau, the proportion of population living below poverty was among the lowest
in any other state. Poverty levels in
these two counties ranged from 3.7% to 6.6%. However, compared to 1970, the proportion of population living below the
poverty line in 2000 increased by almost 20% in Nassau County.
In each New Jersey coastal county
the proportion of population living below the poverty line in 2000 was at least
18% below that of the 1970 census. In
general the largest gains in lowering the proportion of population below the poverty
line were achieved between the 1980 and 1990 census years. However, the proportion of population living
below the poverty line did increase by about one percentage point from 1990 to
the 2000 census.
Education
Educational
attainment was measured by the proportion of population age 25 or greater that
had less than a high school diploma, a high school diploma, some college education,
an associates degree, or had completed college. In the Maine to New Jersey region as a whole and in each
coastal state there has been a significant shift in educational attainment
toward higher levels of attainment. In
1970, 46% of the region-wide adult population (age 25+) had not completed high
school and 22% of the population had attended or completed some form of
post-secondary school education (Table
5). By 2000 the proportion of the adult population that had not completed
high school had dropped to 18%, and the proportion that had attended or
completed college or an associates program had increased to 54%.
In Maine the reduction in
adults age 25 or greater with less than a high school education was similar to
that of the region as a whole, but proportionally fewer individuals (50%) had
attended or completed some form of post-secondary education. Note, however, that Maine had the lowest proportion of college
graduates in 1970, but had increased by 174% by 2000; an increase second only
to Rhode Island.
By 2000 New Hampshire
had the highest proportion of population with at least a high school education,
while Rhode Island
had the lowest, with almost 21% of the state population with less than a high
school education.
Even though
there were differences in educational attainment between coastal and
non-coastal counties, the general change toward increasing levels of educational
attainment was still the dominant trend over the past 30 years. Nevertheless, a
few differences among costal counties are worth noting. In terms of magnitude
of change, Washington
County had the largest
increase in the proportion of college graduates among Maine costal counties and the second largest
increase in the proportion of adults with some college or associates
degree. However, in 2000 Washington County still had the highest proportion
of the county population with less than a high school diploma (19.8%) and had
the lowest proportion of population that had completed college (14.7%).
Similarly, educational attainment increased considerably from 1970 to 2000 in Bristol County, Massachusetts,
yet in 2000 the county had the highest proportion of population with less than
a high school diploma and the lowest proportion of population with a college
degree than any other Massachusetts
coastal county.
Occupation
Changes in
educational attainment have been driven by a changing regional economy that has
evolved from manufacturing to one that is technology–based, demanding higher
levels of educational competency. These
changes are reflected in the relative importance and mix of occupational
categories in the economies of coastal lobster-producing states. Across all states major shifts have occurred
with substantial increases in professional/technical, managerial, sales, and
service occupations, and reductions in clerical, machine operators, and
craftsmen positions.
In 1970, machine
operators, clerical workers, and craftsmen represented 19%, 25%, and 15%,
respectively, of the coastal state workforce from Maine to New Jersey (Figure
4). By 2000 the proportion of the workforce in
these occupations had declined to 5%, 20%, and 12%, respectively. These occupations had been replaced by
professional/technical, administrative/ managerial, and sales positions. The proportion of the workforce in
professional/technical occupations increased from 5% in 1970 to 9% in
2000. Administrative/managerial
occupations increased from 10% to 17%, and sales positions increased from 8% of
the workforce in 1970 to 13% in 2000. Note that the proportion of service sector occupations also increased
from 1970 to 2000 as did the proportion of laborers. The proportion of farming, forestry, and
fisheries occupations represented less than 1% of the labor force in both 1970
and in 2000.
In a general
sense, many of the work force changes that took place over the past thirty
years in the region as a whole have also occurred in each coastal state, although
the magnitude of change has varied. Additionally, changes in the composition of workforce occupations among
different coastal counties were also similar to the workforce changes for
coastal counties as a whole. Most
counties have experienced a shift away from craftsmen, machine operators, and
unskilled labor to a workforce that contains a larger proportion of
professional/technical, executive/managerial, sales, service, and clerical
occupations. However, key differences
exist among some coastal counties in terms of the proportion of farm, forestry,
and fisheries occupations.
In Maine, the proportion of
the workforce in farm, forestry, and fishing occupations was higher in
Washington, Hancock, Knox, and Lincoln counties than in Maine’s three southernmost coastal
counties. Of these counties, the
proportion of natural resource-based occupations was highest in 1970 in Washington County (2.5%) (Table
6). This proportion increased to almost 11% in Washington County in 1980, declined to 7.6% in
1990, and increased to 8.2% in 2000. Note that the proportion of farm,
forestry, and fishing occupations in Washington County in 2000 was larger than
both machine operator and sales occupations and was equivalent to both
executive/managerial and laborer occupations. In no other coastal county in Maine
– or, for that matter, any other coastal county from Maine to New Jersey – were farm, forestry, and
fishing occupations as important to the workforce. In Sagahadoc, Cumberland, and York counties the proportion of the workforce
in a farm, forestry, or fishing occupation peaked in 1980, ranging from about
2–3%. However, the proportion of natural
resource-based occupations declined in both 1990 and in 2000 to 1.3% in Sagahadoc
and to less than 1% in both Cumberland
and York
counties.
Across Massachusetts coastal
counties the proportion of the workforce in farm, forestry, or fishing
occupations exceeded 2% in any census year in only Barnstable and Dukes
counties. In both Essex and Bristol counties, which
have the two largest ports in Massachusetts, the proportion of farm, forestry,
and fishing occupations was approximately 1% in 1980 and 1990, but below 1% in
both 1970 and 2000. In Rhode Island,
the proportion of the workforce in farm, forestry, or fisheries occupations
exceeded 2% in both Newport
and Washington
counties in 1980 and 1990. By the 2000 census, however, the proportion of these
occupations in Newport
and Washington
counties had been reduced to less than 1%. The proportion of the workforce in New York coastal
counties engaged in a farming, forestry, or fishing occupation was
almost 1.5% in 1980 and 1990 but was less than 1% by 2000.
Fishery Trends
Landings
Aggregate
landings of lobster increased in every year from 28 million lb in 1974 to 64
million lb in 1991 before declining to 57 million lb in 1992 (Figure
5). Landings rebounded to almost 70 million lb in
1994 and continued to increase to a time series high of 89 million lb in
1999. More recently, lobster landings had
been falling and rising in opposing years by nearly 15 million lb from 2000 to
2004 before stabilizing in 2005 at about the same level as that of 2004. Compared
to a much longer time series (see Figure
1) the 1970–2005 period represents a substantial
expansion of lobster landings. This
expansion has been attributed to a number of factors that range from favorable
environmental conditions to an expansion of effort.
Although Maine has always been
the leading producer of lobsters, its share of total landings fluctuated over
time. Throughout the 1970s Maine accounted for
between 52% and 61% of total lobsters landed from Maine to New Jersey (Table
7). Expansion of lobster landings during the
1980s, particularly in Massachusetts,
reduced the share of Maine
lobster supplies to less than 50% from 1983 through 1992. However, since 1993 the contribution of the Maine lobster fishery to
total landings increased steadily to more than 80% of the domestic harvest in
2004 before declining to 78% of total landings in 2005. The increasing
proportion of Maine
landings was due to a combination of increased landings in Maine and declining landings in just about
every other state.
Lobster landings
in Maine were
relatively stable throughout the 1970s and 1980s, averaging about 20 million lb
(Figure
6). Landings began climbing
throughout the 1990’s and have continued to increase, although the interannual
variability in landings has also increased. By contrast, as lobster landings remained relatively constant in Maine throughout much of
the 1980s, landings were increasing at an average annual rate of about 6% in Massachusetts and 15% in
Rhode Island
(Figure
7). By 1991, however, landings
in both states had peaked and have been declining ever since, with the
exception of a short-lived spike in landings that occurred in 1999 in both Massachusetts and Rhode Island. In 2005, Massachusetts landings continued to decline
but Rhode Island
landings increase by more than one million lb.
Lobster landings
in Connecticut, New York, and New Jersey were declining during the early 1970s
but began to increase steadily from 1980 to 1990 (Figure
8). In New
Jersey lobster landings peaked in 1990 at 2.2 million
lb but have been declining ever since to less than half a million lb in
2004. Landings of lobster in both Connecticut and New York come primarily
from the Long Island Sound fishery where landings increased substantially
beginning in 1993 and peaking in 1996 in New
York and 1998 in Connecticut at 9.4 and 3.7 million lb respectively. A die-off of lobsters occurred in 1999 in
Long Island Sound precipitating a large drop-off in lobster landings to less
than one million lb in both Connecticut
and New Jersey. Landings in New York have made small gains over the past
two years.
Seasonality
Landings follow
a seasonal pattern that is tied into the biological cycle of American lobster,
much of which is temperature dependent. This timing largely explains why the seasonal distribution of landings (Figure
9) has remained largely unchanged over the past 35 years even as landed
quantities have increased. The majority
of lobsters are landed in the 4-month period of July–October.
Throughout the year landings have been generally low from January through
April, accounting for no more than 4% of total annual landings. Landings begin
to pick up in May, June, and July. With
the exception of 2005, peak landings usually occur in August, with July and
September coming in either second or third before tapering off throughout the fall
and into December.
Water temperature affects the seasonal
pattern of landings. Compared to the Gulf of Maine, landings tend to increase
earlier in the year south of Cape Cod due to warming ocean temperatures. This
pattern is evident when comparing the average annual cumulative percentage of
landings by month in Rhode Island and Maine.[1] The
cumulative distribution of 30-year average Rhode Island landings lies leftward
of that of Maine in every month from January to October (Figure
10). The relative positioning of the two
cumulative distributions is indicative of an earlier season for lobster in
Rhode Island than in Maine. For example,
10% of Rhode Island landings have been taken by March, but Maine landings do
not reach 10% of the annual total until two months later.
Gear
The overwhelming
majority (over 90%) of lobsters are landed using baited traps. Small quantities
of lobster are landed in traps used to target black sea bass (Centropristis striata) or scup (Stenotomus chrysops). Prior to the development of
hydraulic haulers, offshore landings from deeper water came principally from
mobile gear. In 1970 mobile gear
landings represented about 14% of total landings, but reported landings
declined in subsequent years to average about 2% of total landings from 1980 to
2005.
Incidental Fisheries
In 1978 the NMFB
noted that crabs and black sea bass were the only notable species taken as
incidental catch in the lobster fishery. Both rock crab (Cancer irroratus) and Jonah crab (Cancer borealis) were
taken in the nearshore fishery, although the contribution to landings was
estimated to be small since no more than 9% of the total crabs caught were
actually landed due to low prices. Red
crab (Chaceon quinquedens) was noted as
being caught in deep water offshore; however, the NFMB noted that red crab and
lobster were thought to prefer different depths and did not co-occur in large
numbers on the same bottom. Black sea bass was
the only finfish species noted as being a meaningful contribution to lobster
fishing income principally in the Southern New England
to New Jersey
portion of the fishery. The potential
role of black sea bass fishery in lobster fishing was not known due to a lack
of available data at the time.
Available data are not adequate to characterize incidental
catch fisheries, particularly for the Southern New England
and Mid-Atlantic states prior to 1986 since
these states were not included in the NMFS dealer data. To examine the
importance of incidental species on trips targeting lobster, trip-level data
were constructed from NMFS dealer reports for records where lobster was at
least 50% of the total trip value. For
lobster trap gear the only species that were found to comprise at least 1% of
the landed catch in any year were Jonah crabs and rock crabs. Crabs represented as much as 14% of the
landed catch in some years and as little as 3% in others (Figure
11). The proportion of crabs on trips targeting
lobsters using lobster trap gear generally declined from 1987 to 1996. The proportion of crabs was constant at 5%
from 1997 to 1999 but increased somewhat, averaging about 10% from 2000 to
2003. During calendar years 2004 and 2005, the reported proportion of
crab on directed lobster trap trips was nearly zero. Substantial changes were made to dealer
reporting protocols, so the drop-off in recorded landings of crabs may be an
artifact of this change rather than an absence of crab catch in the directed
lobster trap fishery.
Although the
NFMB indicated a relationship between black sea bass and lobsters using trap
gear, black sea bass made up only a very small proportion of landed catch on
directed lobster trips. Likewise, existing data indicate the proportion of
lobster taken in all black sea bass fish traps has been on a declining trend
since 1995. Thus, available data does not suggest that there has been any
notable increase in targeting of lobsters using fish traps in the black sea
bass fishery.
From 1986 to 2005
there were 9 different species that comprised at least 1% of landed catch on
trips using otter trawl gear that targeted lobster (50% or more trip revenue
from lobster) on at least 4 different years. Of these species only monkfish (Lophius
americanus) was at least 1% of the landed catch in all years except
2005 (Figure
12). Cod (Gadus morhua), winter flounder (Pseudopleuronectes americanus), and skates were
at least 1% of the landed catch on trawl gear trips targeting lobsters on at
least 13 separate years. Of the
remaining species only scallops has comprised at least 1% of landed catch in
any year since calendar year 2000. Thus,
while squids (Illex illecebrosus and Loligo
pealeii), silver hake (Merluccius bilinearis),
yellowtail flounder (Limanda ferruginea),
and windowpane flounder (Scophthalmus aquosus) appear to have been important
incidental species to the trawl gear lobster fishery prior to 1994, their
importance has diminished in more recent years.
Value and
Prices
From 1970 to the
present, American lobster has been either the most or second most valuable
fishery in the Northeast region. Since 2000, revenues from lobster averaged 27%
of region-wide totals. In nominal terms the dockside value of American lobster
increased steadily from $33 million in 1970 to $122 million in 1984 before
declining slightly to $116 million in 1985 (Figure
13). From 1985 onward
nominal value continued to increase throughout the late 1980s and early 1990s
to $166 million before declining in to $160 million in 1993. Note that annual changes in nominal value
were quite small from 1970 through 1993. However, over the past 10 years interannual changes in dockside values
have increased even as nominal values continued to increase to an all-time high
of $417 million in 2005. During these
years much of the interannual fluctuations followed a similar pattern to that
of landings in Maine, since landings from Maine have represented an increasing share
of total regional lobster supplies.
Using the
Producer Price Index (PPI) for unprocessed finfish and shellfish (1982 = 100)
to adjust for inflationary pressures also shows a general increase in dock-side
value from $112 million in 1970 to $187 million in 2005 (Figure
13). In real terms, dockside value declined from
1970 through 1979. Over the next 13
years the PPI-adjusted dockside value fluctuated without trend between $86 and
$111 million before following an increasing trend from 1994 to 2005.
Average nominal
prices show an increasing trend starting out at just under $1.00 per pound in
1970 and reaching a high of $4.73 per pound in 2005 (Figure
14). Inflation-adjusted prices indicate a
different perspective on average lobster prices with a generally declining
trend from 1970 to 1990. Since 1990, the
PPI-adjusted price has been nearly constant, averaging $1.85 per pound.
Economic theory
predicts that the quantity demanded for lobster depends on quantities supplied
conditional on income and tastes and preferences, where the latter two are
referred to as demand shifters. Given fixed income and preferences, changes in
quantities demanded represent movements along a demand relation. A scatter plot
of prices and quantities supplied shows three apparent clusters that may
represent three different periods of changing demand for lobsters (Figure
15). From 1970 to 1975 lobster demand may have
been higher than that of the 1976–1993 period since prices tended to be higher
for similar supplied quantities. Note
also, that these higher prices are consistent with declining landings that
occurred during the early 1970s (see Figure
5). From 1976 to 1993 a pattern consistent with
a stable downward sloping demand is evident, which explains the declining
PPI-adjusted price as landed quantities of lobster were increasing throughout
the period. After 1993 lobster demand
appears to have shifted but it is difficult to determine the nature of the
demand change since this period also coincides with a general increase in the
variability of landings, which may cause some instability in observable demand
relationships.
Lobster prices vary seasonally and price premiums are paid
based on differences in quality due to the shell condition (hard or soft) and size. Consistent with market conditions of supply
and demand, average lobster prices follow a seasonal pattern that mirrors
monthly landings. Average prices are higher during the winter
months when available landings are low, while prices decline during the late
summer/early fall as landings are peaking (Figure
16). As noted previously, monthly average prices
peak during February/March, then generally decline from April through September
before beginning to increase somewhat in October and November.
Price premiums
are typically paid for larger lobsters, and while market categories are
maintained in the NMFS dealer data the majority of dealers do not report
landings and value by market category. Prices for different market categories (chicken or chix [one pound],
quarters, [pound and a quarter], halves [pound and a half] and selects [two
lb+]) are recorded by the NMFS Market News Office at the Fulton Fish Market
(Department of Commerce 1987; 1988; 1989; 1990; 1991; 1992; 1993; 1994; 1995;
1996; 1997; 1998; 1999; 2000; 2001; 2002; 2003; 2004). These data are recorded by month and by
origin (Maine,
Massachusetts,
etc.) and reported in annual summaries for 1987–2004 (the 2005 annual summary is not yet
available). The Fulton Fish Market is a wholesale market but
price premiums paid at the wholesale level are assumed to be transmitted
through dealers to vessels, although the magnitude of the price premium may
differ. For any given month lobster
sales may not be recorded, so an annual average price for each market category
was computed by omitting months with zero observations. Price premiums were then calculated as a
percentage markup from the chicken lobster market category. In this manner, the effects of inflation are
removed while retaining the relative difference in price premiums by size, and
permits comparisons of how these premiums may be changing over time.
In 1987 the
markup for quarters was about 10% more than the chicken price (Figure
17). Since 1987, the markup between the chicken
and quarters price has declined considerably and has been no more than 1% in
every year since 2000. Similarly, the markup over the chicken price for halves
and selects were about 25% and 37% respectively in 1987, but have declined over
time to a markup of 10% for selects and 6% for halves in 2004.
In addition to
size premiums, “soft” shell or “new” shell lobsters receive a lower price since
the meat yield is lower than “hard” shell lobsters. Hard shell lobsters may
also be in a better condition for longer distance shipping and may fetch a
premium price as a result. New shell lobsters are available and marketed during
the shedding season, when a mix of new shell and hard shell lobsters are
harvested. Dealer reports do not distinguish between lobsters based on shell condition,
but the NMFS Market News Office at the Fulton Fish Market has been recording
prices for new shell and hard shell lobsters by market category since 1996.
However, since the shedding season varies over time depending on interannual
water temperature regimes and since market news reports depend on whether or
not lobsters are actually traded in any given month, available data are not
adequate to calculate price differences and identify trends in hard and new
shell prices over time. Fulton Fish
Market news reports tended to be more complete for hard and new shell lobsters
from Maine
for July–October. These
data were pooled across years to obtain an estimate of the average markdown in
price for new shell lobsters by market category.
The markdown for
new shell lobsters averaged just over $0.60/pound for select lobsters (2+ lb)
in July (Figure
18). The average
markdown for select lobsters remained between $0.55–0.70/lb from August through
October, while markdowns for all other market categories tended to decline. For
example, the average markdown for new shell chicken lobsters was about $1.35/pound
in July, but by October this price differential had nearly disappeared. Similarly, new shell halves and quarters were
priced around $1.30/lb lower than hard shell lobsters, but this markdown had
shrunk to $0.53 and $0.32, respectively, by October. The declining markdown for new shell lobsters
in most market categories corresponds with the shedding season in which new
shell lobsters would be most abundant while hard shell lobsters would be less
so.
Trade
Trade in American lobster is an important component to the
marketing of lobster in the
United States.
Canada is the most important
trading partner accounting for nearly all of imported lobster products and the
majority of US exports moving through the customs districts of St. Albany,
Vermont; Portland, Maine; and Boston, Massachusetts.[2]
Canada plays a dual role in live lobster
markets in particular as a source of harvested product and as a holder of
inventory through pounding operations. The net effect of US-Canada trade in
live lobster is to reduce the seasonal variability in American
lobster supplied to the US market. For example, the standard deviation in
monthly domestic landings was 4.7 from 1985 to 2005, whereas the standard
deviation in the US supply of live lobster was 2.7.
The relative
role of US-Canada trade has changed over time. From 1985 to 1993, monthly
US-Canada trade was virtually one-directional with Canadian imports of live
lobster supplementing that of domestic landings on all but a handful of
occasions (Figure
19). Annually, Canadian imports accounted for at least
one-third and as much as one-half of US live lobster supplies during those
years.
Since 1994,
US-Canada trade has evolved into more of a bilateral relationship in which
Canadian imports supplement US supplies of live lobster from January to June
and in December when domestic landings are low, and absorbs excess domestic
landings occurring July through October. This relationship plays an even more
important role in smoothing out variability in domestic supplies (the standard
deviation of monthly
US landings increased to 5.5 while the standard deviation of monthly US supplies
increased slightly to 2.8) as well as dampening the price effects of large
seasonal changes in landings. With exports to
Canada playing a more prominent
role, the annual balance of trade in terms of volume has been reduced
substantially. However, the timing of US-Canada trade means that the bulk of US
exports correspond with seasonal lows in price while Canadian imports enter the
US
when domestic landings are low and prices are high. That is, even in years when
the US exported more live lobster to Canada than it imported (1997 and 1999),
the trade balance in terms of value was still negative (Figure
20).
While the balance of payments does favor
Canada, the
trade relationship still provides benefits to both countries. An assessment of
the US-Canada trade in lobster by Hasselbeck et al. (1981) concluded that
Canadian imports suppressed ex-vessel prices received by
US
fishermen
resulting in revenue losses to US lobstermen. This conclusion was later rebutted
by Cheng et al. (1991). These authors demonstrated that the seasonal pattern of
imports and exports was mutually beneficial and nearly optimal; that is, even
though Canadian imports had a price-reducing effect during the winter and early
spring, ex-vessel prices would have been much lower when domestic landings were
highest if the Canadian export market were unavailable. On balance, revenues in
both countries were enhanced by US-Canada trade relations.
Canada
is not
the only export market for US American lobster. Small quantities are exported
to Pacific rim counties (principally
Japan
) while
the vast majority are exported to Europe.
During 1995–2005 about
two-thirds of lobster exports were destined in equal parts to
France
and
Italy, while the remainder was sent to
Germany
, the
United Kingdom
,
Switzerland
,
and other European nations (Figure
21).
User Groups
Mobile Gear
The NEFMB
described vessels using otter trawl gear as the first to develop and exploit
lobster resources in the deepwater offshore canyons in Southern New England
during the
1950s and 1960s. However, with the
advent of hydraulic haulers, vessels using trap gear that
had been largely confined to nearshore waters began to expand into offshore
areas and eventually displaced the otter trawl fishery. According to NMFS dealer reports, mobile gear
landings of lobster valued at almost $8 million (PPI-adjusted, base year 1982 =
100; http://www.bls.gov/ppi/home.htm Series ID : WPU0223) were more than 3 million lb in 1970 but dropped
precipitously in subsequent years to just over 200 thousand lb in 1982 (Figure
22). Since 1982, total reported mobile gear landings have remained below 1 million
lb and inflation-adjusted value has fluctuated between just over $2.5 million
and $0.7 million, but has been at least $1.5 million in every year since
1996. Note that data reported throughout
the 1970–2005 time
period may underrepresent the full extent of the mobile gear fishery for two
reasons. First, there have been several
data base changes in the dealer reports which have increased coverage,
particularly since 1994. In general, these changes may not have a large
influence on estimates of mobile gear landings because the dealer data does
cover landings for the entire time series in both Massachusetts and Rhode
Island, the states where the majority of mobile gear lobster landings have
occurred.
The second
source of potential under-estimation of mobile gear lobster landings is the
practice of giving lobsters to the crew as so-called “shack.” Shack refers to any catch that is not sold to
a dealer by the vessel but is provided to crew as supplemental remuneration,
since the crew would be able to sell the lobster themselves. Since these sales are not recorded, total
mobile gear landings of lobsters would be underreported. The extent to which this practice was
prevalent in the past and whether it continues today is uncertain, making the
magnitude of underreporting difficult to assess.
The number of
vessels that landed lobster using mobile gear on at least one trip increased
from 100–150 vessels in
the early 1970s to almost 400 vessels in 1995–1998 (Figure
23). Since 1998, however, the number of vessels landing lobster using mobile
gear declined in consecutive years before increasing slightly to 276 vessels in
2005. As would be expected, the number of
mobile gear trips that landed lobster follows a similar trend to that of the number of vessels; i.e.,
trips rise and fall with the number of participating vessels.
In 1970, 20% of
all mobile gear trips landed lobster (Figure
24), of which two-thirds targeted
lobster (i.e., the value of lobster was at least 50% of total trip value). The percentage of mobile gear trips landing
lobster rose to 25% in 1972 but declined steadily over the next 10 years to 7%
in 1982. Since 1982 the percentage of
total mobile gear trips that landed lobster has trended upward reaching 21% in
2005. By contrast, the percentage of
trips targeting lobster has fluctuated without any notable trend, although the
number of targeted mobile gear lobster trips was nearly one-third of all trips
landing lobster in 2005, the highest percentage since 1975.
Available data indicate that lobster has been becoming more
important in mobile gear vessel income particularly over the past five years.
However, the importance of lobster in mobile gear fishing income varies
considerably among different vessels. For example, over the past 35 years half of the vessels earned no more than
7% of total mobile gear revenue from the sale of lobsters (Figure
25). By contrast, at least in 1970 one-quarter of
all vessels earned between 5–51%
of total revenue from lobsters, and earnings from lobster represented at least
84% of total income for 10% of mobile gear vessels. Since 1982 the median share of lobster
revenue in total earnings has ranged between 6–20% for vessels at the upper end of the 80% interval
around the median, and has remained at less than 0.1% at the lower 80%
interval. As noted above, the relative
importance of lobster sales to mobile gear vessels does appear to have
increased since calendar year 2000. For example, the median share of lobster
revenues nearly doubled from 1.4% in 2000 to 2.7% in 2005. Similarly, the lobster revenue share
increased from 11.2% to 20.4% for vessels in the upper
80% of the mobile gear fleet that landed lobster in 2000 and 2005. This increase in the importance of lobster
revenue to mobile gear vessels may be due to reductions in other fishing
opportunities, particularly in the groundfish fishery – making the sales of
species like lobster an increasing component of fishing income.
The increased importance
of lobster in the business income for some mobile gear vessels came at a time
when mobile gear possession limits were implemented. That is, beginning in calendar year 2000
mobile gear vessels were limited to a possession limit of 100 lobsters/day up
to a maximum of 500 lobsters per trip. To assess the impact of this possession limit on mobile gear trips, the
VTR data were queried to estimate how average landings of lobsters by weight on
trips of 1-, 2-, 3-, 4-, and 5-day duration have changed compared to average
landings for a baseline period of 1995–1999.
On average,
lobster landings by weight declined for 1-day, 2-day, and 3-day trips compared
to the 1995–1999 baseline average (Figure
26). By contrast, the average weight of landed lobsters on both four day and
five day trips was higher from 2000 to 2005 than in the 1995–1999
baseline. Note that the increase in
average landings indicates that the possession limit may not be constraining
mobile gear landings on longer trips.
Even though
average lobster landings on 1-, 2-, and 3-day trips have declined, average
total trip revenue in constant dollars (1982 = 100) has increased compared to
the 1995–1999 baseline (Figure
27). This
means that at least part of the reduced lobster landings has been offset by
higher earnings from species other than lobster.
Trap Gear
The NFMB (1978)
estimated that there were 10,356 vessels participating in the inshore trap
fishery and 117 vessels participating in the offshore fishery during calendar
year 1976. The inshore fishery directly
employed 12,621 people, implying that at least 78% of all vessels operated
without a sternman. By contrast, 429
people were employed in the offshore fishery, indicating that each vessel
operated with 2–3 crew members in addition to the vessel owner or hired captain. Data reported by the NFMB suggest that the
total number of people directly engaged in the lobster trap fishery in 1976 had
declined from a high of 14,455 in 1974, but was still substantially higher than
employment in prior years.
Other than the
data reported by the NFMB, information on numbers of either operating units or
numbers of people employed in the lobster trap fishery over time is not
generally available. The difficulty in
assessing participation in the lobster trap fishery is due to the inability to
link license information with reported activity, since many states have no
mandatory reporting requirement and federal lobster regulations do not require
reporting by either vessels or dealers that possess only a federal lobster
permit. In more recent years the trap tag program makes it is possible to
identify how many vessels have purchased trap tags. However, while purchasing trap tags may be
presumed to reflect the intention to fish, without the ability to link to a
record of activity it is not possible to confirm participation.
Approximately
2700 federal lobster permits were issued to vessels using trap gear in 2003,
2004, and 2005 (Table
8). In 2005, the
majority of permits were issued to Maine-based vessel owners followed by Massachusetts, Rhode Island, New Hampshire, New Jersey, New York, and Connecticut.
Just over 1700
federal permit holders that used trap gear actually purchased trap tags in each
fishing year (Table
9). Assuming vessel
owners that purchase trap tags actually participate in the lobster trap
fishery, approximately 70% of all permitted trap vessels are active. This estimate differs substantially across
states, with at least 80% of federal permit holders from Maine being active compared to less than 20%
of Rhode Island
permit holders that also purchased trap tags.
A telephone
survey was conducted to collect baseline information on lobster trap fishermen
engaged in the fishery during calendar year 2005. The survey was designed by researchers at the
Gulf of Maine Research Institute (GMRI) and was administered by a Portland, Maine
based market research firm Market Decisions. The sample frame was license holders from Maine, New Hampshire, Massachusetts, and Rhode Island yielding a total of 9701
operating units. The sample frame was
stratified by the seven lobster management zones in Maine and by LCMAs 1, 2, and 3. Note that the strata did not include the
Outer Cape LCMA or LCMAs 4, 5, and 6. The telephone survey was administered during calendar year 2005 and
achieved a sample size of 1156 for an overall response rate of 40%. The survey gathered information on
demographics, job skills, children’s education, years of involvement in the
lobster trap fishery, vessels characteristics, seasonal activity, effort, other
fishing activity, lobster business characteristics, household income, health
insurance, and retirement plans.
Given the
stratified random design, each observation was weighted to produce population
estimates from the sample data. Point
estimates as well as 95% confidence intervals were computed for variables of
interest. In this manner, comparisons
between components of the population are made possible. Specifically, the point estimates for two
variables may be said to be statistically significant at the 0.05 level of
significance if the confidence intervals do not overlap.
The primary
focus of the survey was on active participants which were defined as being
anyone that landed at least 1000 lb of lobster during calendar year 2005. Nevertheless, a subset of questions was asked
of individuals that did not land 1000 lb or that did not fish at all. The
survey found that 87% (± 3%) of lobster businesses did participate in the
lobster fishery during calendar year 2005. The percentage of participants differed across LCMAs, with 89% of
individuals in LCMA 1 reporting some level of fishing activity while 65% and
69% of individuals reported activity in LCMA 2 and LCMA 3, respectively. These survey-based participation rates are
much higher than that estimated from trap tag data. However, the trap tag
estimates were for federal permit holders only. The survey included all permit holders. If inshore participation were much higher than that of federal permit
holders then the estimated participation rate would also be higher since federal
permit holders represent less than a third of the survey population.
Survey
participants were divided into three categories: individuals that did not fish
lobster at all during calendar year 2005; individuals that did fish but less
than 1000 lb; and individuals that landed 1000 lb or more. Approximately 72% (±3.6%) of all lobster
businesses landed at least 1000 lb of lobster, while 13% (± 2.9%) of lobster
businesses did not engage in lobster fishing during calendar 2005. Of the
individuals that did not fish lobster, at all 28% were inactive due to an illness,
13% were engaged in an alternative job or career, 14% were working for another
lobsterman or in another fishery, 9% just wanted to maintain a license but did
not fish, and 7% could not earn enough money to cover expenses.
The majority of
individuals (65%) that did not fish also had not landed more than 1000 lb of
lobster in any year from calendar year 2000 to 2004. Among individuals that did
fish lobster during 2005 but did not land more than 1000 lb, 71% also had not
landed more than 1000 lb of lobster in any prior year since at least calendar
year 2000. These results indicate that
more than one-quarter of license holders had not been active at all or had
participated in the lobster trap fishery at low levels for at least the
previous 5 years.
On average,
individuals that landed more than 1000 lb of lobster had been involved in the
lobster fishery for 31 years, and had held a lobster license for 28 years (Table
10). A statistically significant difference was found between these license
holders and license holders that fished in 2005 but landed less than 1000 lb.
Specifically, on average, license holders that landed more than 1000 lb had
more experience and had held a license for longer than less active license
holders. However, no such significant
differences were found between more active license holders and license holders
that did not fish at all during calendar year 2005. All confidence intervals (denoted as +/- in Table
10) were calculated as a 95% confidence interval, and the confidence
intervals for inactive and license holders that landed less than 1000 lb are
larger than those of individuals that landed more than 1000 lb due to much
lower sample sizes.
On average,
license holders that landed at least 1000 lb were younger (50 ± 1 year) than
inactive license holders. However, no significant difference was found between
the average age of these license holders and those that landed less than 1000 lb.
There was also no significant difference between license holders landing less
than 1000 lb and inactive license holders.
The proportion of license holders that were married ranged
from 62–75% depending on 2005 fishing activity status, although no
statistically significant differences were found between license holders that
did not fish and license holders that did. Similarly, no differences were found with respect to average household
size (2.6–2.9) or the proportion of households with children age 17 or younger (31–36%). Among license holders with children, a
significantly higher proportion of license holders that landed more than 1,000 lb
(51%; ±5%) indicated that one or more of their children planned to be involved
in the lobster fishery compared to inactive license holders (28%; ±13%).
In terms of
educational background there were no statistically significant differences in
the proportion of license holders that had not completed high school (13–28%)
or that had completed or attended a vocational school (18–21%) between license
holders that did not fish in 2005 and license holders that did fish. The proportion of high school graduates was
lower (24%) for license holders that landed less than 1000 lb but was
counterbalanced with the highest estimated proportion of college graduates
(30%). Note that the proportion of
college graduates was found to be statistically significant from that of
license holders that landed more than 1000 lb (15%) but was not found to differ
from that of license holders that did not fish (19%).
Since the
primary focus of the baseline survey was on the so-called active lobstermen
(landed at least 1000 lb in 2005) the remainder of this discussion will be on
these permit holders. As noted
previously, the baseline survey collected information on the financial aspects
of active lobster businesses in addition to other characteristics of the
license holder. The financial aspects of
the lobster businesses are discussed in a subsequent section. This section provides summary statistics on
license holder characteristics as well as vessel and trap management
strategies. For purposes of analysis,
active lobstermen were divided into three categories to reflect potential
differences between individuals that may fish lobster full-time (defined herein
as fishing in at least three consecutive quarters of calendar year 2005) and
license holders that may fish seasonally. A seasonal license holder was defined as anyone that fished in only two
consecutive quarters where two types of seasonal participants were identified;
a summer seasonal participant (fished during quarters 2 and 3); and a
fall/winter seasonal participant (fished during quarters 1 and 4). Wherever possible these data were also
summarized by LCMA.
Specialized Training and Alternative Occupations
About 60% of
active LCMA 1 full-time and seasonal participants reported having some type of
specialized training or skill. About
half of all full-time LCMA 2 and LCMA 3 participants had some type of
specialized training, while 78% of part-time LCMA 2 participants had received
specialized training. Note that even
though the magnitude of these point estimates differed they were not found to
be statistically significant.
When asked about
what type of job or skills for which respondents had received training, 42%
mentioned some type of trade such as carpentry or mechanic while 22%
mentioned some form of commercial fishing, merchant marines, or boat building
and repair (Table
11). Although 42% of
active license holders had some training in the construction and building
trades, only 33% of respondents indicated that they would be likely to take a
job in the construction industry if they were unable to continue
lobstering. By contrast, 31% of active
license holders said that they would remain in some type of marine-related
industry even though fewer respondents had actually received any specialized
training. In general, the percentage of respondents that indicated that they
would take a job and had received training for that type of job was
approximately the same only for running a business and as a truck driver or
equipment operator. These findings
indicate that past skill or job training in a particular field is not
necessarily a good predictor of what jobs lobster industry participants may
prefer to take if they were unable to continue fishing for lobster.
Involvement in the Lobster Fishery and Lobster
Business Characteristics
On average,
active license holders have been involved with the lobster fishery for between
26 and 31 years (Table
12). While
average years of involvement for full-time operators tended to be higher than for
seasonal participants, these differences were not found to be statistically
significant. Similarly, the average
number of years differed across LCMA and participation status but none of these
differences were found to be significant.
In LCMA 3, vessels were larger than in either LCMA 1 or
LCMA 2, averaging 55’ with a main engine horsepower of 469 (Table
12). Full-time LCMA 1 vessels were larger (i.e.,
statistically significant) than seasonal LCMA 1 participants, averaging 33’
with an average horsepower or 238. Similarly, vessel size for full-time LCMA 2
participants was found to be statistically different from that of seasonal LCMA
2 participants. The average age of
vessels ranged from 16 to 22 years, although the only significant difference
was between full-time LCMA 1 participants and full-time LCMA 2 participants.
In LCMA 1, one quarter
of all active license holders operated without a sternman while 42% of seasonal
participants operated without a sternman; a statistically significant difference. Similarly, the difference between the
percentage of active seasonal license holders in LCMA 2 that did not hire a
sternman (75%) and full-time participants (48%) was statistically
significant. Sixty-eight percent of full-time
operators in LCMA 1 hired one sternman. This percentage was statistically significant compared to both seasonal
LCMA 1 participants (54%) and full-time LCMA 2 participants (45%). Very few active license holders in LCMA 1 or
LCMA 2 hired more than one sternman, but two thirds of LCMA 3 license holders
hired at least two sternmen or crew.
On average, full-time
LCMA 1 participants had to travel 4.6 miles to the place where their boat is
moored. This distance was found to be statistically different from that of full-time
operators in LCMA 2 (7.5 miles) but was not different from any other category
based on either LCMA or participation status. The majority (78–88%) of active license holders landed and sold their
catch in the same harbor or port where their boat was moored. This finding indicates a high degree of
fidelity to a single point of sale and suggests that impacts of changes in the
lobster fishery would be highly localized.
Quarterly Trap Management
Across all
quarters the average active license holder in LCMA 3 fished more traps and
hauled more trips on a typical trip than active participants in LCMA 1 or LCMA
2 (Table
13). The maximum number of
traps in the water for active LCMA 3 participants averaged
just over 1000 traps. Additionally, the
number of traps hauled during a typical trip did not vary much, ranging from a
high of 939 trap hauls in the first quarter 1 to 849 hauls in the fourth quarter.
Overall, several
generalizations emerge from the estimates of quarterly activity. Although not statistically significant in all
cases, fishing activity by LCMA 1 full-time vessels tended to be higher than
seasonal vessels in LCMA 1 or LCMA 2 and was higher than full-time LCMA 2
vessels. Fishing activity by full-time
vessels tended to be higher than that of seasonal vessels, and activity levels
for seasonal LCMA 1 vessels tended to be higher than that of seasonal vessels
in LCMA 2. For full-time vessels, the
number of traps and the number of trips tended to follow a seasonal pattern
that increased in the second and third quarters then decreased in the fourth quarter. However, the number of trap hauls on a
typical trip did not change very much from quarter to quarter. These data
indicate that full-time lobstermen tend to operate by keeping the number of
trap hauled on a given trip about the same while making strategic adjustments
to the number of traps fished and number of trips.
Lobster
Business Investments
The majority of active license holders had made some type of
investment in their lobster business ranging from a low of 63% of seasonal
participants in LCMA 2 to a high of 96% of LCMA 3 participants (Table
14). Of the active license holders that had made
an investment, half of LCMA 3 participants and about one third of full-time
operators in LCMA 1 and LCMA 2 had done so to comply with either a
state or federal regulation. A smaller
percentage of seasonal LCMA 2 (9%) and LCMA 1 (23%) participants had made a
business investment due to regulation. When asked about planned investments for calendar year 2006 the majority
of active participants indicated that they would invest about the same amount
in their business as they had in calendar year 2005.
With the
exception of full-time LCMA 2 participants, at least 73% of active license
holders felt that they had adequate sources for funding planned
investments. The percentage of participants
that currently had an outstanding business loan ranged from a high of 59% of
LCMA 3 participants to a low of 4% of seasonal LCMA 2 participants. In general, the percentage of LCMA 2
participants with a current business loan was lower than in either LCMA 1 or
LCMA 3.
The average loan amount was $55,097 for active for LCMA 1 license holders that had an
outstanding loan (Table
15). More than two-thirds
of these loans were obtained to finance the purchase of a new boat or major
overhaul of an existing boat. Fifteen
percent of LCMA 1 participants had loans to pay for a new or rebuilt engine
while 22% had taken a loan to purchase new gear or equipment. Note that some individuals had taken out
loans for more than one purpose so the percentages in Table
15 do not sum to
one. The average loan amount for LCMA 2
participants was $20,015; less than half that of LCMA 1 participants. Almost half of these participants had used
the loan to finance the purchase of a truck or other vehicle while 44% of
active LCMA 2 individuals had financed the purchase of a new boat or
engine. Given the different scale of
operation involved, the average outstanding loan for active LCMA 3 participants
was $145,757. In all of these cases the
purpose of taking out a loan was to finance the purchase of a new boat or
overhaul of an existing one.
Business loans
may be financed in a variety of ways and individuals may use more than one
financial instrument. The most common
source to finance a business loan was through personal savings. Fifty-seven percent of LCMA 1 participants
had used personal savings to finance a loan, while 46% and 42% of LCMA 2 and 3
participants relied on personal savings to fund business investments (Table
16). At least 15% of all active
participants with an outstanding loan had used a home equity loan, and at least
18% had use a personal credit card as a means of finance. This means that a substantial number of
individuals had linked business investments to their home and/or personal or
household income and savings
Importance
of Lobster Business, Alternative Income Sources,
and Household Income
Less than half of all active LCMA 1 participants held either
a state or federal permit for species other than lobster (Table
17). By contrast, the majority of LCMA 2 and 3
license holders
had at least one other permit
besides their lobster license. For LCMAs
1 and 3, less than 20% of individuals that were eligible to fish for something
other than lobster actually reported having done so. The opposite was the case in LCMA 2; that is,
a substantial majority of active full-time and seasonal LCMA 2 license holders
that held a permit to fish in another fishery reported income from fishing
activities in addition to lobster.
Average
household income ($101,327) was statistically significantly higher for LCMA 3
participants compared to either LCMA 1 or LCMA 2 participants. No statistically significant differences in
household income were found between active license holders in either LCMA 1 or
LCMA 2.
About two thirds
of household income for full-time LCMA 1 license holders and just over three quarters
of household income in LCMA 3 came from lobster. These values were statistically significant
compared to seasonal participants in LCMA 1 and to both full-time and seasonal
participants in LCMA 2. The contribution of lobster to household income was
approximately the same (44% and 42% respectively) for seasonal LCMA 1 and full-time
LCMA 2 participants. The average
contribution of lobster income to household income was lowest (21%) for
seasonal LCMA 2 participants. Reflecting the relatively low rate at which other
fishing permits were actually used, the contribution to household income from
other fishing activity averaged no more than 5% for all LCMA 1 and 3 participants. Among LCMA 2 participants, income from other
fish accounted for about 20% of household income.
Compared to LCMA
3 and full-time LCMA 1 and 2 participants, the average contribution of
non-fishing income to household income was at least twice as large for seasonal
participants (at least two thirds). Similarly, the contribution from other family members tended to be
higher for seasonal compared to full-time participants, although these
differences were not statistically significant.
Economic Condition of the Lobster Fishery
Financial data
are not part of any systematic data collection program either among different
states or at the federal level. There have been a small number of special
studies that have attempted to measure the level of investment and financial
performance of lobster fishing businesses; these studies include some limited
information provided in NFMB (1978), a survey of lobster businesses in
Massachusetts and Rhode Island conducted by the Atlantic Offshore Fishermen’s
Association (Liebzeit and Allen 1989), a set of focus group interviews
conducted in 1995 (University of Rhode Island [URI], Department of Environmental
and Natural Resource Economics 1995), and more recently a telephone survey of
lobster businesses from Maine to Rhode Island (Market Decisions 2006). As each
of these studies was conducted using different methods, covered different
components of the lobster fishery, and did not collect the same financial data,
it is difficult to use the studies to construct a reliable indicator of how
profitability in the lobster fishery may have changed over time. The following
provides a summary of the findings of each study, and where possible compares
financial performance over time.
NFMB (1978)
Investment in
capital equipment including vessels, gear, and fishing-related items was
estimated to be $168 million in 1976 for the inshore and offshore fishery
combined, and another $13 million in capital investment in the offshore mobile
gear fishery (NFMB 1978). Average gross
return per vessel was estimated to $4122 for the inshore trap fishery, $62,522
per vessel for the offshore trap fishery, and
$56,025 per vessel in the offshore trawl fishery. No information was provided for cost
breakdowns for either otter trawl or offshore trap businesses. Reported cost breakdowns as a percentage of
gross stock for a typical or representative inshore fishing business were noted
(Table
18); however, the data upon which these estimates were based is
uncertain. According to these estimates,
the average inshore lobster trap business spent 24% of gross stock on material
and supplies including fuel, bait, and miscellaneous other expenses. Ten percent of gross stock was allocated to
insurance, maintenance, and other services, leaving about 66% for payroll and
capital costs. The residual of value added after accounting for payroll,
interest expense, and depreciation was estimated to be a net profit of about
12%. According to the NFMB (1978), most
inshore businesses were owner-operated and tend to undervalue the owner’s
opportunity cost; that is, return to owner operator labor was below the
prevailing wage, meaning that economic returns were negative even though net
return was positive strictly from an accounting perspective.
Liebzeit and Allen (1989)
Data on fishery
participant characteristics, level of capital investment, and cost and earnings
were collected from a sample of Rhode
Island and Massachusetts
inshore and offshore lobster businesses. The survey was administered by telephone during calendar year 1988. The purpose of the survey was to identify
differences in operational aspects as well as financial differences between the
limited access Massachusetts
fishery and the open access Rhode
Island fishery.
The study did find that the open access fishery in Rhode
Island tended to have owners with fewer years in the lobster business and that
levels of equity were lower than those of Massachusetts lobstermen. This difference in owner equity was
attributed to higher levels of borrowing among Rhode Island businesses to finance the
purchase of new vessels and equipment or for expansion, compared to Massachusetts lobstermen
that used higher levels of personal resources to finance capital investment.
In addition to
capital investment, Liebzeit and Allen collected data on operating and fixed
costs, where operating costs included fuel, bait, crew wages, repairs, gear,
and other miscellaneous expenses. Fixed
costs included insurance, license fees, property taxes, depreciation, and
dockage fees. Note that the NFMB identified
many of the same expense items, but Liebzeit and Allen only reported total
variable and fixed costs so it is not possible to compare their results with
that reported by the NFMB in 1978.
Based on the
data collected by Liebzeit and Allen, net return was positive for all vessel
size classes ranging from a low of 28% of gross revenue to a high of 54% of
gross (Table
19). Note that although
data were collected for vessels 19’ and below, these data are not reported
herein because the sample size for vessels in this size class was limited to
only one observation for both Massachusetts and Rhode Island. While net returns above variable and fixed
costs were all positive, they do not account for the opportunity cost of
capital or the opportunity cost of the owner’s labor. These opportunity costs provide a measure of
whether capital would be better used in an alternative investment and whether
the vessel owner would be better off financially in an alternative occupation.
Liebzeit and Allen calculated opportunity cost of capital by multiplying the
market interest rate for 1988 by the reported capital investment by each vessel
owner; the opportunity cost of labor was based on the survey respondent’s
self-assessment of what could be earned
in an alternative occupation. After
taking these economic costs into account, net returns to vessels in the 20–29’
size range were negative, while economic profit to vessels in larger size
classes was positive, ranging from a return of 11–18% of gross revenue.
Department of Environmental and Natural Resource
Economics, URI (1995)
Researchers from the Department of Environmental and Natural Resource
Economics at URI conducted a series of focus group style interviews with
lobstermen from a series of ports ranging from Maine to Long Island. In each case, questions were asked regarding
typical lobster businesses including vessel characteristics, initial
investment/replacement costs, operating costs, fixed expenses, and seasonal
characteristics of trap management. These data were collected as part of a larger project to build
a computer simulation model of the lobster fishery. A focus group approach was adopted because it
was considered more cost-effective than a formal statistically-based survey. The researchers also reasoned that the focus
group approach would yield more reliable and complete information, since
participants would be speaking to what they believed to be average or
representative for their port rather than revealing personal financial
information about their own business. For this reason, the data cannot be used to create financial profiles of
lobster fishing businesses of different sizes because individual financial
information was not collected; rather, data were representative of all lobster
businesses in the focus group participant’s port. Note that this also means that the
information collected cannot be readily extrapolated beyond the ports where
focus groups were held. Further, it is
likely that much of the data are representative of full-time operators since
the focus group participants themselves were likely to be full-time operators.
The survey was
conducted during calendar year 1993 in a total of 29 ports representing a total
of 2704 operating units. These ports
were further broken down into regional aggregations comprising a northern inshore,
a southern inshore, and an offshore fleet.
The northern inshore
fleet included 14 different ports (2209 vessels) from downeast Maine to Gloucester, Massachusetts. Estimated initial investment for this fleet averaged $184 thousand per
vessel including boat, engines, traps and related gear, electronics, safety
equipment, vehicles, and shorefront property. Total initial investment for the northern inshore fleet was estimated to
be $406.7 million.
The southern inshore
fleet consisted of 412 vessels from 10 different ports from Boston, Massachusetts
to Long Island, New York. Initial investment for this fleet was estimated to be $166 thousand per
vessel, amounting to $68 million for the fleet as a whole. The focus group surveys for the offshore
fleet were conducted in 5 different locations representing a total of 84
operating units. Due to a much larger
scale of operation, average initial investment for the offshore fleet was $671
thousand, or $56 million for the offshore fleet as a whole.
The combined
initial investment for vessels represented in the URI focus groups was $531.4
million for 1993. Note that this
estimate of total investment is limited to the 2209 vessels from the ports
where focus groups were conducted. As
such, the investment value or replacement cost for the lobster fishing fleet as
it existed in 1993 would be considerably higher. How much higher is uncertain
since the population of lobster fishing businesses comprises a mix of full-time,
part-time, and occasional operators. As
noted previously, the survey methods were likely to result in estimates of
financial performance for predominately full-time operators. This means that
applying the estimated average investment value from the survey to the
population of operating units would likely overestimate the value of invested
capital in the lobster trap fishery as a whole.
The caveats
regarding extrapolation of the focus group estimates of capital investment to
businesses that do not operate on a full-time basis also apply to estimated
cost and returns. Operating costs,
including repair and maintenance of boat and gear, supplies, fuel, bait,
vehicles, and payments to a sternman, were estimated to be about $38 thousand
or 34% of gross stock for the northern inshore fleet (Table
20).
Operating costs
for the southern inshore fleet were estimated to be about $18 thousand higher
than the northern inshore fleet, but since estimated gross stock was also
higher, operating costs, as a percentage of gross, were similar (32%). By contrast, operating costs were estimated
to be 71% of gross for the offshore fleet due primarily to much larger payments
for fuel, bait, and crew.
Fixed costs included
permits, moorage, interest payments on short- and long-term loans, insurance
for the boat and crew, property taxes, gear loss, and shorefront property. These costs were 17% of gross stock for the northern
inshore fleet, 30% of gross for the southern inshore fleet, and 15% of gross
for the offshore fleet. Net return was
estimated to be 49%, 38%, and 14% of gross stock for the northern inshore, southern
inshore, and offshore fleets, respectively.
The focus group
survey did not collect information on potential income from alternative
occupations, so the average per capita income for 1993 in states encompassing
each region was used as a proxy for the opportunity cost of labor. Based on these values, the net return to
invested capital and owner profit was estimated to be 29%, 23%, and 9% for the northern
inshore, southern inshore, and offshore fleets, respectively. This means that, on average, vessel owners in
each fleet segment were earning at least as much as the average income for the
regional population as a whole; however, at least for the offshore fleet, the
estimated residual return to capital and owner profit may not be considered
sufficient to cover the opportunity cost of capital. This means that offshore vessels in 1993 may
have been operating at an economic loss even though net returns were positive
from an accounting perspective.
Market Decisions (2006)
As noted
previously, researchers at the GMRI designed a survey of state and federal
commercial lobster license holders that was administered during calendar year
2006. In addition to demographic information, some data were collected on fixed
and variable costs.
Collection of
operating cost data was limited to fuel, bait, and sternman payments. Fixed cost data were limited to total insurance
and principal and interest payments. These costs were collected because they comprise the majority of
operating and fixed cost expense for most lobster businesses. Fortunately, respondents were also asked to
report total net return for calendar year 2005, so it was still possible to
ascertain average net return although neither total operating nor total fixed
costs could be estimated.
All offshore
vessels reported hiring crew during calendar year 2005, but not all vessels in LCMAs
1 and 2 reported hiring a sternman for the year. Therefore, separate estimates of cost and
earnings were developed for full-time and part-time vessels that did and did
not hire a sternman. In LCMA 1, average
gross revenue during calendar year 2005 for vessels operating with a sternman was
approximately twice that of vessels operating without one, as were operating
costs (Table
21). As a percentage of gross revenue, net return for full-time
vessels with a sternman was nearly identical to that of full-time vessels
without a sternman, even though the nominal value of net return was more than
twice as high ($35,267 compared to $15,418). Net return to vessels operating during the fall/winter season that hired
a sternman averaged $20,172 (37% of gross revenue) compared to $7535 (29% of
gross) for fall/winter vessels that did not hire a sternman. Unlike other LCMA 1 lobster businesses, there
was only a modest difference in net return for vessels that operated during the
summer season between vessels that did ($12,288) and those that did not hire a
sternman ($9244).
Although the survey did collect information on alternative
occupations if any given individual was not fishing lobster, data on the
expected remuneration from these alternatives was not collected. A proxy estimate of the opportunity cost of
labor was estimated by
computing the weighted average of the calendar year 2005 per capita income by
state (http://www.bea.gov/bea/regional/spi) where the weight was based on the
proportion of license holders in each state in the sample data. For both fall/winter and summer season
businesses, this estimate was multiplied by 50% to reflect the 6-month period
of activity for these individuals.
After accounting
for the opportunity cost of labor, only full-time vessels and fall/winter
seasonal operators that hired a sternman were found to be earning at least as
much as the weighted average per capita income for the general population in LCMA
1. Note that this finding is based on
average costs and returns for full- and part-time businesses. For example, while the average economic
return to owner labor was negative for full-time operators that did not hire a
sternman, 8% of these businesses earned more than the regional average personal
income. Of course, this also means
economic returns to owner labor were negative for 92% of full-time operators
without a sternman. By contrast, net earnings in 2005 were above the regional
average per capita personal income for 36% of full-time LCMA 1 lobstermen.
While some portion of LCMA 1 lobster businesses were able to cover owner’s
opportunity cost, the residual return to capital was generally low. This means
that taking the opportunity cost of capital into account, on average, lobster
businesses in LCMA 1 were operating at an economic loss during calendar year
2005; that is, even though the average LCMA 1 vessel earned positive net return
after all expenses were paid, earnings from the lobster business were below
average earnings for the general population and return on invested capital was
less than what could have been earned in an alternative investment.
Gross revenue for full-time lobster businesses in LCMA 2
averaged $44,524 for vessels that did not carry a sternman and $112,206 for
vessels that did (Table
22). As was the
case for LCMA 1, full-time net return as a percentage of gross revenue was
virtually identical whether a sternman was hired or not, although nominal net
return to lobster businesses that hired a sternman was more double that of full-time
operators that did not hire a sternman. After accounting for the opportunity
cost of labor, full-time operators were earning less than the average income
for the regional population as a whole, indicating below-zero economic profit
even before accounting for the opportunity cost of invested capital. Note that this was the case for all but 4% of
LCMA 2 full-time lobster businesses that did not hire a sternman and 25% of full-time
businesses that did.
Due to low
sample size, a reliable estimate of profitability for seasonal lobster
businesses that hired a sternman could not be calculated. Gross revenue for LCMA
2 lobster businesses operating during the calendar year 2005 fall/winter season
averaged about $17,000 more than operators that fished during the summer.
Expenses for fuel, bait, and insurance were higher for the fall/winter
participants, but the difference in gross revenue more than offset these higher
costs as net return was $11,485, compared to $7556 for summer
participants. However, neither of these
two types of seasonal participants earned sufficient average revenue after
paying all expenses to cover the opportunity cost of labor. The proportion of LCMA
2 seasonal businesses that were able to cover the opportunity cost of labor was
13% for fall/winter and 10% for summer season lobster fishing businesses.
The offshore
fishery operates on a much larger scale from that of the inshore fishery. Average gross revenue was estimated to be
over $400 thousand, but total costs for bait, fuel, and crew payments were
about $335 thousand (Table
23). Net
return as a percentage of gross revenue was 21%, which was lower than the
return to LCMA 1 or LCMA 2 fishing businesses. However, average economic return was 12% of gross revenue, and vessel
owner earnings in calendar year 2005 were at least as much as regional average
per capita income for 60% of offshore businesses. The average return to capital may be
sufficient to earn positive economic profit.
Studies of
lobster fishery cost and earnings have consistently found that, on average,
after accounting for the opportunity cost of capital and labor, economic return
to most lobster businesses is negative. That is, data reported in 1978, 1989,
1993, and most recently in 2005 show that while net returns are positive from
an accounting perspective, most lobster businesses earn lower income than the
general population, and invested capital is earning a lower return in
lobstering than in alternative investments. The underlying factors perpetuating
these economic conditions are complex, involving social ties to lobstering as
well as economic interests creating an environment resistant to change.
Economic studies
of the lobster fishery have consistently demonstrated substantial economic
benefits from reducing lobster fishing effort (Bell 1972; Bell and Fullenbaum
1973) or through an increase in the minimum size (Acheson and Reidman 1982;
Botsford et al. 1986). In each of these studies, economic improvements are
achieved by taking advantage of the existing price structure for lobsters in
which a premium is paid for larger lobsters. Thus, while fewer lobsters are
harvested, industry revenues increase over the longer term. Other studies have
demonstrated that economic improvements could be achieved without changing the
minimum size or effort by changing the timing of harvest (Cheng and Townsend
1993) or reducing costs through trap reduction (Townsend 1986; Gates 2000). The former would increase the value of
harvested lobster by timing the harvest of lobster to market conditions and by
increasing the proportion of more valuable hard shell lobsters; the latter
would make the fishery more cost efficient by reducing redundant traps. For
example, Gates (2000) estimated that the cost of harvesting lobster may be 25%
higher due to inefficient use of inputs.
In general these
economic studies have demonstrated that economic improvements in the lobster
fishery are attainable, but they tend to ignore their allocative implications,
which to some extent explains why the recommendations have not been adopted.
Effort reductions or changing the minimum size may result in increased economic
returns over the longer term, but they would result in revenue losses at both
ex-vessel and wholesale market levels (Acheson and Reidman 1982; Wang and Kellogg
1988) in the near term. Analysis of proposed gauge increases by Richardson (1992) found
that ex-vessel revenues would eventually increase with a gauge increase, but
that wholesale revenues would actually decline even over the longer term.[3] Given
the low level of economic returns to the fishery, such revenue losses would
compromise the ability of some lobster businesses to remain in operation. Thus,
even though the financial performance of the lobster industry as a whole would
be improved, there are few volunteers willing to leave the fishery. Similarly,
changing the timing of the lobster harvest would fundamentally alter how
fishery revenues would be distributed, which would make some harvesters better
off while making others worse off.
Even though the economic
gains from more efficient use of inputs have been difficult to realize on a
region-wide basis, the institutional structure of lobster management has
enabled components of the lobster fishery to adopt measures that offer
potential economic efficiencies. These measures include limited entry based on
historical participation in LCMAs 2, 3, 4, and 5 and the Outer Cape
as well as individual trap allocations. The potential gains from limited entry
were documented by Acheson (1975, 1989), as profitability of so-called
“perimeter defended” areas was noted to be higher than “nucleated” areas due to
the greater ability to exclude other participants, as well as cost efficiencies
associated with lower input use. Although the geographic scope of each LCMA
makes it unlikely that the gains documented by Acheson in Maine’s island communities would be realized
from limited entry alone, it is an important component to gains that may be
achievable through other means. Replacing trap caps with individual allocations
creates the opportunity to preserve the relative competitive position within
LCMA participants. The added feature of making trap allocations transferable
(implemented by Massachusetts for the Outer Cape and approved for
implementation by the ASMFC for LCMA 2 and 3) creates opportunities for
efficiency gains as well as providing a mechanism to allow voluntary changes in
competitive position through exchange. Among states, Maine’s zone management policy provided
opportunities for participants in each zone to adopt measures to improve
economic conditions that would not have been possible on a state-wide basis due
to regional opposition (Acheson et al. 2000).
In some respect,
the mechanism at work within the LCMAs and Maine’s lobster zones is to break up
the decision-making units into smaller, increasingly like-minded individuals to
enable mutually beneficial agreements to be reached. Thus far, these agreements have focused on
creating opportunities to improve cost efficiencies through limiting entry and
creating transferable trap programs, but creating the incentives for increasing
the value of harvested lobster has remained elusive.
Factors Affecting the Economic Condition of the
Lobster Fishery
The lobster
fishery is directly affected by the condition of the resource itself as well as
any regulations affecting the timing or manner in which lobsters may be
harvested. The economic condition of the
lobster fishery is also shaped by general economic forces, environmental
conditions, and regulatory changes in other fisheries that have indirect
impacts on the lobster fishery. General economic forces affect the cost of
running a lobster business, and also act as the engine to drive changing land
use patterns in coastal areas. Environmental factors include specific events, such as the North Cape oil spill that occurred in 1996 or the sudden
die-off of large numbers of lobster in Long Island Sound that occurred in
1999. Environmental factors also include
more subtle changes in oceanic conditions that have resulted in increased
incidence and the spread of shell disease. Changes to the regulatory climate have resulted in introduction of
limited access in many fisheries. Heightened concern over the status of large whales in the Northeast region
has also led to the need to alter lobster fishing gear, and additional measures
to reduce ship strikes may add impacts on some larger lobster vessels. The potential impacts of these economic,
environmental, and regulatory factors are described in more detail below.
General Economic Conditions
Fuel and bait
may represent 50% or more of all trip expenses other than hired crew or
sternmen. As such, a change in the price
of either of thes
