Table of Contents Executive Summary Introduction Methodology Results Discussion Acknowledgements References Cited Appendices
Northeast Fisheries Science Center Reference Document 13-03
The Economics of the Recreational For-hire Fishing Industry in the Northeast United States, 2nd Editionby Scott Steinback1 and Ayeisha Brinson2
1NOAA National Marine Fisheries Service, Northeast Fisheries Science Center, 166 Water Street, Woods Hole, MA 02543
2NOAA National Marine Fisheries Service, Office of Science and Technology, 1315 East West Hwy, Silver Spring, MD 20910
Web version posted April 3, 2013Citation: Steinback S, Brinson A. 2013. The Economics of the Recreational For-hire Fishing Industry in the Northeast United States. US Dept Commer, Northeast Fish Sci Cent Ref Doc. 13-03; 49 p. Available from: National Marine Fisheries Service, 166 Water Street, Woods Hole, MA 02543-1026, or online at http://www.nefsc.noaa.gov/publications/
Information Quality Act Compliance: In accordance with section 515 of Public Law 106-554, the Northeast Fisheries Science Center completed both technical and policy reviews for this report. These predissemination reviews are on file at the NEFSC Editorial Office.
Please note: The 1st edition of this report, released on April 3, 2013, contained an error in the calculation of charter employment. Hired captains, crew/mates, and office staff were properly accounted for in the report, but employment attributed to charter boat owner/operators was mistakenly omitted from Table 15, 16, and 17. This omission resulted in deflated estimates of employment in the charter boat industry. Corrections were made in those tables, in the Executive Summary, the first and third paragraphs of Section 3.6.2, and the last paragraph in Section 4.2.
Nearly 1.6 million passengers fished aboard for-hire recreational fishing vessels during 2011 in the Northeast United States (ME - NC). While the National Marine Fisheries Service (NMFS) regularly collects detailed catch, effort, and expenditure information from anglers fishing aboard for-hire vessels, no data are collected about the business structure and costs of the marine for-hire fishing industry operating in the Northeast. This study is intended to fill that gap.
Voluntary mail, telephone, and in-person surveys were designed to collect information on annual costs, returns, business structure, effort, demographics, and attitudinal data from for-hire vessel owners in the Northeast from January 2011 through July 2011. Surveys were completed by 295 vessel owners who provided data on 332 distinct for-hire vessels in the Northeast.
Survey results show that the overall financial condition of marine recreational for-hire fishing businesses in the Northeast is mixed. Assets exceed liabilities by over four times for the average charter and head boat, and over 90% of charter and head boat owners carry insurance coverage. This implies that a rather strong financial for-hire fishing fleet exists in the Northeast. The results also reveal that the average charter boat produced only a little over $5.1 thousand in net income in 2010 and that over half of the charter boats in the Northeast actually incurred higher expenses than revenues in 2010. In contrast, the average head boat generated over $95.1 thousand in net income in 2010 although median net income per head boat was lower at $50.1 thousand.
In addition to providing a detailed overview of the operating structure of the "average" Northeast for-hire head boat and charter boat, we constructed an input-output model to estimate the economic activity that for-hire businesses contribute to the Northeast's economy as measured by total employment, labor income, and sales. Model results show that in 2010 the for-hire industry earned $140.3 million in revenue, generated $50.4 million in income to owners, hired captains, crew/mates, and office staff, and employed over 6,200 individuals. The multiplier effects of this activity were substantial. An additional $193.7 million in sales, $66.5 million in income, and 1,290 jobs in other businesses in the Northeast were supported by the for-hire industry through indirect and induced transactions. Service businesses (real estate, food services, marinas, repair shops, etc.), wholesale and retail trade businesses (sporting goods stores, bait shops, gas stations, etc.), and manufacturing businesses (fishing gear manufactures, fuel refineries, commercial fishermen [bait], etc.) were the enterprises most reliant on the for-hire fleet. Over 700 service sector jobs, 360 wholesale and retail trade jobs, and 63 manufacturing jobs were dependent upon the for-hire fleet in the Northeast in 2010. In total, an estimated 7,530 jobs, in the overall Northeast regional economy, were supported by the active for-hire fleet in 2010.
The for-hire recreational fishing industry along the northeastern coast of the United States (ME - NC), provides an important outdoor leisure service for many individuals and sustains economic activity in the form of sales, income, and employment throughout the region. In 2011, nearly 1.6 million passengers fished aboard for-hire boats operating in marine waters of the Northeast. While the National Marine Fisheries Service (NMFS) regularly collects detailed catch, effort, and expenditure information from anglers fishing aboard for-hire vessels, no data are collected about the business structure and costs of the marine for-hire fishing industry operating in the Northeast. This study is intended to fill that gap. In addition to providing a detailed overview of the operating structure of the "average" Northeast for-hire head boat and charter boat, we estimate the economic activity that for-hire businesses contribute to the Northeast's economy as measured by total employment, labor income, and sales.
Comprehensive economic data on the Northeast's for-hire industry are currently unavailable. We located only two published studies in the last ten years that examined the operating side of the for-hire recreational fishing industry in the Northeast. Dumas et al. (2009) provided detailed economic data on the charter and head boat fleet, but their study was limited to for-hire boats operating only out of North Carolina - the southernmost state included in our study. Holland et al. (2012) also examined the economics of for-hire businesses in North Carolina. As their study also concentrated on for-hire businesses operating in southeastern states, their findings and the findings of Dumas et al. (2009) are not likely to be representative of the entire for-hire industry operating in the Northeast.
The lack of data concerning for-hire operations in the Northeast makes it difficult to determine the importance of the for-hire industry to the Northeast's economy and to adequately address how proposed management actions might affect business operations. Numerous legislative mandates (e.g., Magnuson-Stevens Act, Regulatory Flexibility Act, National Environmental Policy Act, Executive Order 12866 and others) require that the NMFS assess the economic impacts of proposed fisheries policies. Typically, the focus of such assessments is on likely changes in angler behavior, not on how proposed policies will impact for-hire business operations. Although these assessments may contain estimates of how overall gross revenues for the for-hire fleet will be affected, widespread assumptions are generally required to derive these estimates, including the notion that operating costs remain constant. The data collected in this study provide information to alleviate these problems.
The primary goals of the study are to:
1. Provide a comprehensive overview of the economic condition of the for-hire industry in the Northeast;
2. Estimate the contribution of the for-hire industry to the overall economy in the Northeast; and,
3. Collect the data necessary for the development of economic models used to assess how for-hire businesses operations are affected by proposed management policies.
A voluntary in-person survey was designed to collect information on annual costs, returns, business structure, effort, demographics, and attitudinal data from for-hire vessel owners. NMFS contracted with QuanTech Inc., a survey research firm with recreational for-hire fishery data collection expertise, and Gentner Consulting Group (GCG), a natural resources economics and public opinion research company, to conduct the Recreational For-Hire Economic Survey (RFHES) from January 2011 through July 2011.
Outreach / Pretests
A press release about the study was prepared and forwarded to for-hire organizations in the Northeast during fall 2010 (see Table 1 for list of organizations). Many organizations published the press release on their websites or emailed it to their members. In addition, GCG attended board meetings hosted by the Rhode Island Party and Charter Association (RIPCA) and the Northeast Charter Boat Captains Association (NCBCA), to provide information about the study and to obtain feedback on draft survey instruments.
During outreach calls to the for-hire associations, board members were asked if they would be willing to have their members participate in the design process. All but three organizations were eager to assist and supplied comments on draft survey instruments via email and telephone. GCG also conducted 15 in-depth interviews with for-hire owners who owned 21 vessels. Substantial feedback was obtained during this synergistic pretesting approach, which significantly improved the final survey instrument. For example, during the pretests, it was apparent that respondents had a difficult time answering trip-level financial questions. If trip level cost information was collected and then aggregated to estimate annual financial information, there was the potential for major digit bias. Therefore, based upon this feedback, the survey was revised and only annual financial information was collected.
2.1 Population and Sampling Frame
The RFHES sampling frame was a subset of the Wave 1 2011 For-Hire Telephone Survey (FHTS) vessel directory maintained by NMFS for the Marine Recreational Information Program (MRIP). The FHTS vessel directory is a comprehensive list of for-hire vessels on the U.S. Atlantic coast from Georgia through Maine. The FHTS is updated on a regular basis and distinguishes vessels by vessel type (charter boat/head boat) and geographic area. The FHTS distinguishes charter boats from head boats by the carrying capacity of passengers. Charter boats are defined as boats that are licensed by the Coast Guard to carry up to six passengers and head boats are licensed by the U.S. Coast Guard to carry more than six passengers.
The RFHES sampling frame included charter and head boat vessels with a primary port located in the Northeast (NC, VA, MD, DE, NJ, NY, CT, RI, MA, NH, or ME); however, there were some exclusions. Only vessels with a valid address were included in the sampling frame because the survey methodology utilized a prenotification postcard. This did not disqualify many vessels since almost all of the vessels in the vessel directory had a valid mailing address (only 13 vessels lacked a mailing address in the areas sampled by the RFHES). Second, the vessel directory includes some vessels with Highly Migratory Species (HMS) charter boat/head boat permits that do not charter. These vessels were excluded from the RFHES and were identified by information in the comments field such as "HAS HMS CH/HB PERMIT BUT DOES NOT CHARTER." Third, vessels that were contacted by a North Carolina economic survey in 2010 (for Holland et al. 2012) were not included in the RFHES sampling frame. Finally, duplicate vessels were removed from the RFHES sampling frame. Duplicate vessels exist in the FHTS vessel directory because some vessels operate in more than one state. Some vessel owners move their for-hire business south in the winter to keep their operations running year round. Contact information may be different on the two duplicated vessel records; therefore, instead of just removing duplicates at random, the duplicated record assigned to a state further north was removed from the RFHES sampling frame.
All head boats contained in the Wave 1 FHTS directory frame were selected for the survey. A sample of charter boats was selected by using simple random sampling from the amended RFHES sampling frame. After the sample was drawn, addresses from the vessel records without telephone numbers were sent to a White Pages reverse address search service (http://pro.whitepages.com/). A total of 1,676 vessels with telephone numbers and addresses were selected (1,506 charter boats and 170 head boats) for the RFHES. This represented 42% of the charter boats contained in the amended Wave 1 RFHES sampling frame and 100% of the head boats. The resulting distributions of randomly selected vessels by state and vessel type are shown in Table 2.
QuanTech mailed presurvey notification packages to owners/representatives of the vessels randomly selected from the RFHES sampling frame. The notification package included a cover letter describing the survey (Appendix I), a list of frequently asked questions (FAQs) with answers about the survey (Appendix II), a copy of the survey questionnaire (Appendix III), and a small token of appreciation (a new $5 bill), to encourage participation. The packages were mailed in six "waves." In each wave, packages were mailed to potential respondents located in one or more states as follows:
- Wave 1: MD, DE, and Phase 1 VA - 249 packages mailed January 12, 2011;
- Wave 2: NC and Phase 2 VA - 235 packages mailed January 26, 2011;
- Wave 3: NJ and PA - 282 packages mailed February 9, 2011;
- Wave 4: NY, CT, and RI - 332 packages mailed February 23, 2011;
- Wave 5: MA Phase 1 - 297 packages mailed March 9, 2011; and
- Wave 6: MA Phase 2, NH, and ME - 217 packages mailed March 23, 2011.
Approximately 7-10 days after the packages were mailed, trained QuanTech telephone interviewers called the vessel owners/representatives to follow up on the package and screen for eligibility. Vessel owners were eligible to be surveyed if they were active in 2010 (i.e., took passengers fishing for a fee in 2010) and if no more than 50% of their trips targeted HMS.
The screening calls were also used to encourage survey participation by the owners and to answer any questions they might have prior to scheduling an in-person interview. When an eligible owner agreed to participate, the screening interviewer provided the vessel owner with the name of the person who would be contacting them to schedule a personal interview. Screening data were collected during the recruitment calls whereas RFHES cost and earnings data were collected during the in-person interviews.
Table 3 shows the results of RFHES screening calls. QuanTech called the 1,676 vessel records with a telephone number to completion. That is, owners of 1,676 vessels agreed to participate in the survey, refused to participate in the study, were ineligible for the survey, did not own the vessel (or any other for-hire vessel nor could they provide contact information for the current owner), or were called 10 times without being contacted, or the phone number was bad (disconnected) or incorrect. Many vessel records required additional call attempts or in some cases, QuanTech was told to call back. Additional call attempts were made when asked to call back. The percent of respondents that QuanTech attempted to contact who agreed to participate in the survey during the screening calls ranged from 12.5% in NH to 52% in ME. Refusals were highest in MD (25.7%) and DE (25.6%) and lowest in CT and ME (8.0%). Owners that could not be reached after 10 calls and owners that were ineligible to participate accounted for approximately 54% of the total screening calls. The most common reason for ineligibility was that the vessel was inactive during all of 2010 (79% of ineligibles). Approximately 2% of the owners QuanTech attempted to contact indicated that they no longer owned the for-hire vessel, and about 8% of the owners could not be reached because the telephone number was incorrect.
During the initial calls to for-hire owners to screen for eligibility to participate in the RFHES in-person survey, it became evident that, although the RFHES was designed as an in-person survey, some respondents indicated a preference to participate by mail, email, or telephone. To maximize the potential pool of respondents, the data collection procedure was modified to accommodate a respondent's preferred method for participating in the survey. QuanTech used a CAPI (Computer Assisted Personal Interviewing) system to capture electronic data in the field. When necessary, data were captured on the phone with the same system operated as a CATI (Computer Assisted Telephone Interviewing) system. Data from mailed or emailed responses, which usually required a telephone follow-up, were entered into the CAPI system by office staff.
Following a procedure modified from Dillman (2000), QuanTech sent follow-up letters explaining the importance of participating in the survey, including a stamped return envelope and a copy of the questionnaire. Follow-up mailings were sent to those who indicated that they would participate by mail but had not returned a completed questionnaire and to those who agreed to participate in person but subsequently could not be contacted to schedule an interview. A second follow-up letter was sent one month later to vessel owners who had recently indicated that they would mail-in their survey. A final round of follow-up packages was sent six weeks later by priority mail to those who had not responded and whose packages had not been returned undeliverable. The final follow-up package contained a copy of the questionnaire and a letter explaining that the survey was drawing to a close so time to participate was running out.
QuanTech finished RFHES data collection efforts on July 31, 2011. Table 4 shows the RFHES final survey results for the vessel owners that were contacted. Of the 367 vessel owners who agreed to participate in the survey during screening, 38% (141) participated in person, 7% (24) participated by phone, 35% (130) participated by mail/email, and 20% (72) never completed the survey.
The 295 vessel owners with whom interviews were conducted provided data on 332 distinct for-hire vessels in the Northeast. Some vessel owners owned more than one vessel, and owners of multiple vessels were asked about all their vessels whenever one was selected from the RFHES.
2.3 Data Cleaning
Survey responses were tested in Statistical Analysis Software (SAS) for internal consistency. To maximize the useable responses, outliers and inconsistent observations were eliminated without removing the entire record. Although it would have been preferable to use only data from respondents who completed every relevant survey question, the amount of data available did not allow for this more restrictive interpretation of a response. Thus, incomplete records were included in the financial assessments under the assumption that the sample responses reflect the true population parameters. Reasonable sample sizes exist for all reported results, so the sample responses are considered representative of the entire for-hire fleet in the Northeast. Additionally, missing income and cost values were converted to zero values when appropriate, and because of difficulty assigning financial data to a particular vessel, cost and earnings information from vessel owners who owned both charter and head boats were excluded from the financial analyses.
Our survey results are generally reported as arithmetic means (i.e., averages) for both the nonfinancial and financial data. Confidence intervals, standard deviations, and median values are provided for all of the financial data. Of the for-hire owners that were successfully contacted and eligible to complete the survey (615 owners), 295 completed the survey for an effective response rate of 48%. Overall, we were satisfied with the response rate, given the type of information being requested from for-hire owners (i.e., personal and financial information about their business activities). We report only region-wide values because of sample size constraints at the state level. In addition, the reader is reminded that there is variation in operations across head boats and charter boats in the Northeast, so "average" values may not appropriately characterize every vessel in the fleet.
3.1 Vessel Characteristics
The average charter boat vessel in the Northeast was 30ft in length, with a 360 horsepower engine and could accommodate 9 passengers. Approximately 41% of respondents purchased "new" charter boats with a mean sale price of $80,000. The average charter boat was built 16 years ago and purchased about 8 years ago. Charter boat vessels employed (on average) 0.2 full-time crew members and 0.5 part-time crew members; that is, for approximately three months of the year an average charter boat may employ one full-time crew member and one part-time crew member for six months of the year. Most (88%) charter boats were made of fiberglass, and two-thirds of respondents docked or moored their vessels (Table 5).
The average head boat in the Northeast was 63 ft in length, with an 876 horsepower engine that accommodated about 91 passengers. The typical head boat vessel was built about 32 years ago; however, on average respondents purchased their head boats 14 years ago. One-third of head boat vessels were purchased new for a price of approximately $230,000. Head boat vessels employed approximately two full-time employees and one and one-half part-time employees. One-half of head boats were made of wood, while the other half were made of fiberglass (27%) and aluminum (18%; Table 5).
3.2 Vessel Operations
Nearly all (97%) of charter boat vessels were run by owner-operators. Two-thirds of charter boat businesses were established as sole proprietorships, while 21% were Limited Liability Corporations (LLCs) and 14% were corporations. Approximately two-thirds of head boat vessels were run by owner-operators. Twenty-four percent of head boat respondents were owners who employed either a corporate captain (9%) or a private captain (2%). In contrast to charter boats, three-quarters of head boat businesses were established as corporations, while 17% were Limited Liability Corporations (LLCs) and 5% were sole proprietorships (Table 6).
Many respondents took trips without patrons. For example, forty-six percent of charter boat respondents took trips without passengers to collect bait. On average, charter boat vessels took nine trips that lasted under three hours to catch bait in 2010. Approximately two-thirds of charter boat respondents took trips to scout new locations without any passengers. On average, these scouting trips lasted under five hours, and charter boat respondents took approximately ten per year in 2010. Approximately one-half of charter boat respondents took nonfishing trips for whale watching or sightseeing; respondents took fewer than five of these types of trips in 2010. Less than 10% of head boats took trips to catch bait and, on average, these vessels took eight trips that lasted less than three hours. One-third of head boats went on scouting trips that lasted under five hours and totaled about three trips in 2010. Sixty percent of head boats took nonfishing trips, such as whale watching or sightseeing, totaling about 24 trips in 2010 (Table 6).
3.3 Owner Characteristics
On average, charter boat and head boat owners were in their 50s. Head boat owners tended to have more experience as an owner or captain (25 years) than charter boat owners (14 years). Less than one-quarter of the total 2010 income of charter boat owners was earned from their for-hire activities, while the 2010 income of head boat owners' was predominately (70%) from for-hire activities (Table 7).
3.4 Fishing Trip Types
For-hire operations offered a variety of trip types to their patrons, including half-day, full-day, or overnight trips. Most (85%) charter boat owners offered half-day trips. In 2010, charter boat owners took on average 26 trips that lasted under five hours with approximately four passengers. On average, one of the half-day trips was a charitable donation. More than half (14 trips) of the half-day trips occurred in the summer months (July - September); about seven trips were taken in the spring (April - June). The fewest half-day trips occurred during October - March. About 14% of these trips were taken in federal fishing waters. On average, charter boat owners earned about $450 for each of these trips in 2010 (Table 8).
Two-thirds of head boat owners offered half-day trips in 2010. The average head boat took 203 half-day trips with approximately 27 passengers that lasted 4.4 hours. On average, fewer than three of these half-day trips were provided as a charitable donation. More than half of the half-day trips were in the summer and one-quarter occurred in the spring. Approximately 15% of the half-day trips were taken in federal fishing waters. On average, head boat owners charged $32 per person for each of these trips in 2010.
Nearly all charter (90%) and head boat (72%) owners offered full-day fishing trips. In 2010, each charter boat offered an average of 19 full-day trips and each head boat offered 69 full-day trips. Charter boat trips accommodated fewer than five passengers, while head boat trips had 21 passengers on average. Full-day trips lasted eight and one-half hours for charter boat or eight hours for head boat trips. The majority of the full day trips occurred in the summer for charter boat vessels (10 trips). For head boat vessels the peak season was longer, including the spring (28 trips) and summer (26 trips). The average fee for full-day trips was $700 for charter boat and $91 per person for head boat trips. About one-third of these full-day trips occurred in federal waters for both types of trips in the for-hire sector.
About thirteen percent of for-hire owners offered overnight trips. Charter boat owners took two overnight trips, on average, in 2010, while head boat owners took 11 trips. Most overnight trips occurred in the summer and lasted about 24 hours. Charter boat trips accommodated five anglers, on average, while head boat trips accommodated 19 passengers. The vast majority of the overnight trips were in federal waters for charter boats (63%) and head boats (100%). Charter boat owners charged on average $1,900 for overnight trips (all passengers), while head boat owners charged $290 per person.
One-quarter of for-hire owners offered nonfishing trips on their vessels. The purpose of these trips tended to be for sightseeing, whale watching, or bird watching. In 2010, charter boat owners took approximately 10 nonfishing trips, while head boat owners took 34 nonfishing trips. Nonfishing trips on charter boats accommodated five passengers and lasted 7.5 hours, on average. Nonfishing trips on head boats accommodated 32 passengers and lasted 9.5 hours. Charter boats spent 32% of these nonfishing trips in federal waters, while head boats spent 54% of these nonfishing trips in federal waters. On average, the fee charged to rent a charter boat was $520, and the per person fee to fish aboard a head boat was $73.
3.5 Cost and Earnings
3.5.1 Balance Sheet
Information on assets and liabilities of for-hire businesses was used to generate a balance sheet for the average for-hire vessel. A balance sheet provides a financial snapshot of a vessel's activity. The balance sheet approach used here compares average assets to liabilities and was modeled after Liese and Travis (2010) and Savolainen et al. (2012). Assets are measured as the market value of the vessel at the end of 2010, whereas liabilities include the investment required to acquire those assets, and are calculated from the value of outstanding vessel and operating loans. Owner's equity is the difference between assets and liabilities.
In 2010, the average charter boat vessel's equity was $48.4 thousand (Table 9). Average assets were $65.0 thousand, the average outstanding vessel loan was $16.0 thousand, and the average outstanding short-term operating loan was $762. The average market value of the vessel (asset value) was approximately $9.0 thousand lower than the average vessel purchase price of $74.3 thousand. Thirty percent of charter boat owners had outstanding vessel loans and only six percent had short-term operating loans.
In 2010, the average head boat owner's equity was $160.8 thousand (Table 10). Average assets were $241.8 thousand, the average outstanding vessel loan was $59.4 thousand, and the average outstanding short-term operating loan was $3.6 thousand. The average asset value (market value) was approximately $24.1 thousand lower than the vessel purchase price of $265.9 thousand. Forty-five percent of head boat owners had outstanding vessel loans, and approximately 20% had short-term operating loans.
3.5.2 Cash Flow
In contrast to a balance sheet, cash flow is a financial statement of a vessel owner's flow of money over time. In this case, the cash flow is the revenue generated through charter or head boat trips. Inflows are the revenues accruing to a vessel owner through trip sales. Outflows or expenditures represent the costs of owning and operating a for-hire vessel. Outflows in the for-hire industry include the costs of fuel and oil, bait, ice, food and drink, tackle and supplies, vessel repair and maintenance, insurance, overhead, costs for captain and crew, investment payments, and loan payments (Table 11). The difference between inflows and outflows represents an owner's liquidity or solvency and is described as net cash flow. Net cash flow is a measure of short-term viability for a vessel owner (Liese and Travis 2010). Appendix IV contains a statistical summary of the individual survey questions used in the cash flow statements.
In 2010, the average charter boat owner's net cash flow was $5.2 thousand (Table 12). Inflows totaled $27.7 thousand for an average vessel. The largest expenditure for the average charter boat vessel was for overhead ($4.9 thousand), followed by fuel and oil ($4.7 thousand), vessel repair and maintenance ($3.0 thousand), loan payments ($2.9 thousand), tackle and supply expenses ($1.8 thousand), and expenses for a hired captain ($1.2 thousand). Other expenses included crew payments ($920), bait ($833), investments ($596), ice ($172), and groceries ($135).
In 2010, the average head-boat owner's net cash flow was $95.2 thousand (Table 13). Inflows totaled $213.5 thousand for an average vessel. The largest expenditure for the average head-boat vessel was fuel and oil ($24.8 thousand), followed by crew ($18.2 thousand) and hired captain ($17.0 thousand) expenses, overhead ($16.0 thousand), loan payments ($14.4 thousand), vessel repair and maintenance ($8.8 thousand), insurance ($6.7 thousand), bait ($5.5 thousand), and tackle and supply expenses ($3.9 thousand). Average investment expenditures were $1.3 thousand and other expenses included groceries ($289) and ice ($195).
3.5.3 Total Cash Flow in Northeast
Survey results and MRIP data were used to quantify the total costs and earnings of all Northeast charter and head boat businesses in 2010. First, survey data were used to calculate revenues, expenses, and net returns for the "average" charter and the "average" head boat in 2010 (Table 12 and Table 13). Average cash flow values, by type of vessel, were then multiplied separately by the total number of unique active charter (3,698) and head boats (178) estimated to have taken passengers for-hire in 2010 across all of the Northeast coastal states. The MRIP For-Hire Vessel Directory provided the data necessary to determine the number of unique charter and head boats active during some portion of 2010. The product of the average values and the number of unique charter and head boats provides an estimate of the total cash flow for the Northeast for-hire fleet in 2010 (Table 14). In 2010, the total for-hire fleet in the Northeast obtained over $140 million in gross revenue (i.e., sales receipts). Operating expenses exceeded $104 million (including wages and salaries paid to employees), and net returns to owners (i.e., net profits) were approximately $36 million.
3.6 Economic Contribution
The economic contribution of the for-hire fleet to the overall economy in the Northeast extends well beyond simply measuring the direct employment, income, and gross revenues of the for-hire businesses. For-hire businesses purchase products and services to maintain and operate their vessels, and businesses supplying products and services must pay employees and buy products and services from their suppliers. These secondary suppliers, in turn, purchase products and services from their own suppliers, triggering further indirect multiplier effects that are dependent upon the initial demands of the for-hire fleet. This cascading series of industry-to-industry multiplier effects and the cycle of consumption spending induced by all the incomes generated in these economic activities contribute to the economy's employment and income base and continues until all of the goods and services are sourced from outside the Northeast.
3.6.1 Regional Input-output Assessment
An analytical framework known as regional input-output analysis can be used to measure indirect and induced multiplier effects and thus estimate the total contribution of a particular industry sector to the overall regional economy. The input-output modeling approach provides a snapshot of the universe of linkages between the economic sectors of an economy and is generally described as a static general equilibrium approach to quantitative economic analysis. For a comprehensive description of the input-output modeling technique, see Miller and Blair (1985).
In the assessment provided here, a ready-made regional input-output system called IMPLAN (Minnesota IMPLAN Group, Inc) was used to estimate the amount that for-hire businesses contribute to the Northeast's economy as measured by total employment, labor income, and sales. Employment represents the estimated number of total wage and salary employees (both full and part-time), as well as self-employed workers in the region and is expressed as total jobs. Labor income represents all forms of employment income, including employee compensation (wages and benefits) and self-employed income earned in the region. Sales reflect the estimated annual dollar value of production in the region summed across all industries and is a measure of total economic activity.
Regionwide "indirect" multiplier effects were estimated by multiplying the value of each of the individual expense items that was spent by the for-hire fleet within the region by the corresponding IMPLAN-generated multiplier. IMPLAN multipliers measure the total sales, income, and employment in each economic sector within the region caused by $1 in sales in any particular sector. Therefore, the product of the expenditure values that are spent within the region with their matching IMPLAN-generated multiplier provides an estimate of the contribution of each particular expenditure item to the regional economy.
Income earned by vessel owners, captains, crew/mates, and office personnel contributes additional economic effects to the Northeast's economy through the mix of products and services purchased from businesses located in the region. IMPLAN multipliers were also used to calculate these "induced" contributions. The full contribution of the for-hire fleet to the overall regional economy in the Northeast was then measured by adding the fleet expenditure contributions (indirect effects) and the personal consumption expenditure contributions (induced effects) to the estimated sales, income, and employment of the for-hire fleet in 2010 (direct effects). A detailed account of the IMPLAN modeling approach is provided in Appendix V.
3.6.2 Contribution Assessment Results
The economic contribution of the charter and head boat fleet to the overall regional economy in the Northeast is summarized in Table 15. In 2010, charter and head boat activities contributed an estimated $334.0 million in total sales to Northeast businesses, $116.9 million in total income to individuals working in the Northeast and supported 7,530 Northeast jobs (full and part-time).
The economic contribution of charter boats was higher than the contribution of head boats across all three economic measures. The multiplier relationships between the operation of charter and head boat businesses and the supporting regional economy were similar but, because of the large difference in the estimated number of active vessels in the two fleets (178 head boats vs. 3,698 charter boats) overall charter boat expenditures and net returns were considerably higher.
The total contribution of the for-hire fleet by industry type is shown in Table 16. In 2010, the for-hire fleet grossed $140.3 million in sales, provided $50.4 million in income to owners, hired captains, crew/mates, and office staff, and employed over 6,200 individuals in the Northeast. The multiplier effects of this activity were substantial. The for-hire industry supported an additional $193.7 million in sales, $66.5 million in income, and 1,290 jobs in other industries in the Northeast. Service businesses (real estate, food services, marinas, repair shops, etc.), wholesale and retail trade businesses (sporting goods stores, bait shops, gas stations, etc.), and manufacturing businesses (fishing gear manufactures, fuel refineries, commercial fishermen [bait], etc.) were the enterprises most dependent on the for-hire fleet. Over 700 service sector jobs, 360 wholesale and retail trade jobs, and 63 manufacturing jobs were supported by the for-hire fleet in the Northeast in 2010.
In terms of employment, the top ten industries supported by the for-hire fleet are shown in Table 17. Following employment in the for-hire industry itself, the highest number of jobs were in wholesale trade (74), recreation services (marinas; 72), marine supply stores (69), food services (69), sporting goods (57), commercial fishing (bait; 54), real estate (46), gasoline stations (41), and private hospitals (37).
4.1 Study Design
The study design was stratified across two types of for-hire vessels: charter and head boats. However, based on comments received during the pretesting stage, the survey asked respondents to indicate whether a particular vessel was a charter boat, a head boat, or a guide boat. A guide boat was defined as a for-hire fishing boat that carries four or fewer individuals and mostly fishes in near shore and inshore waters, including bays and inlets. The operator must also have, at a minimum, a USCG operator license to carry six or fewer passengers. Because of sampling issues, we included guide boats within the charter boat category, but based on the percentage of vessels classified as guide boats from our survey, we recommend that future for-hire studies should distinguish between operations classified as "charter" and those classified as "guide." Twenty-four percent (n=67) of the vessels in our charter boat group were self-identified as guide boats.
Three methods were used to collect data from for-hire owners: personal interviews, mail surveys, and telephone surveys. Analysis of Variance (ANOVA) tests were conducted to evaluate differences in means for statistical significance across the three data collection vehicles. Tests were conducted using the GLM procedure in SAS, which can be used to perform analysis of variance tests on unbalanced data sets. There were unequal numbers of observations in each survey treatment group because the number of telephone-completed surveys was considerably lower than those completed through personal interviews or by mail. ANOVA tests were only performed on financial data collected from for-hire owners.
No significant differences in means were found across any of the financial variables except for outstanding loan payments (i.e., liabilities) by charter boat owners (Table 18). This result reflected a few relatively high liability payments by charter boat owners reporting over the phone. Removal of these records from the data set had little effect on estimated mean liability payments by charter boat owners, and therefore these records were left in the data set. Overall, no significant differences were found across the three survey approaches employed in this study.
4.2 Economic Status of the For-Hire Industry
The survey results show that the overall financial condition of marine recreational for-hire fishing businesses in the Northeast is mixed. Assets exceed liabilities by over four times for the average charter and head boat, and over 90% of charter and head boat owners carry insurance coverage. This implies that a rather strong financial for-hire fishing fleet exists in the Northeast. The results also reveal that the average charter boat produced only a little over $5.1 thousand in net income in 2010, and over half of the charter boats in the Northeast actually incurred higher expenses than revenues in 2010. However, the margin of error in our estimate of average charter boat net income is large. The confidence intervals indicate that we can only be 95% certain that the true average charter boat net income is between -$2.9 thousand to $13.6 thousand. In contrast to the average charter boat, the average head boat generated over $95.1 thousand in net income in 2010 although median net income per head boat was lower at $50.1 thousand.
The estimated low level of earnings for the average charter vessel in 2010 is likely due to a variety of reasons. First, Northeast for-hire businesses are highly seasonal, so overall earnings are somewhat limited by a short fishing season. The short fishing season probably explains why charter boat owners, on average, earned only about 17% of their total 2010 income from their charter boat business. The survey data further indicate that only 5% of charter boat owners earned 100% of their annual income in 2010 from their charter activities. Some for-hire owners indicated that passenger levels were lower in 2010 because of the economy, and many owners (particularly charter boat owners) indicated that they operated the business mainly for lifestyle benefits; that is, charter employment has more to do with lifestyle choices than financial considerations. The idea that owners operate charter boats for the lifestyle has also been noted in other studies of charter boat owners (Liese and Carter, 2011).
Second, in addition to taking passengers for-hire, some charter boat owners also use their boats for nonfinancial purposes (pleasure cruising, sightseeing, recreational fishing without paying passengers, etc.). Because the economic survey obtained expenditure information on total annual operating costs in 2010, the operating costs associated with uses of the vessel that do not produce income would have been included in the expense estimates provided by charter boat owners. As a result, estimated operating costs in 2010 are based on total vessel activity, while gross revenues are calculated from only a portion of the total vessel activity of multiple-use vessels.
Third, business tax deductions and depreciation were not considered in the calculation of net earnings. Profits earned by for-hire owners eligible for deductions, credits, and/or depreciation in 2010 would have been higher than indicated by our results. Hence, our estimate of average net returns per charter vessel ($5,175) should likely be considered a lower bound approximation.
As well, there is considerable variation in the financial characteristics of for-hire operations, even after accounting for differences between charter boats and head boats. As is apparent in the balance sheet and cash flow results, owner's equity and net cash flow have rather large ranges. Furthermore, for some cost categories (particularly for charter boats) $0 is reported as the median result. This is not unusual for cost and earnings surveys of fishing vessels and indicates that at least 50% of the respondents did not have costs in these categories, therefore the median becomes 0.
The overall cost and earnings results for the Northeast for-hire fleet are similar to other recent regional studies of for-hire fleets. Owner's equity averaged $30 - 60 thousand in 2009 for charter boats in the Gulf of Mexico, depending on the Gulf State (Savolainen et al. 2012). In 2010, the average charter boat equity in Northeast was $48 thousand. The average head boat equity in the Gulf of Mexico was $165 - 220 thousand in 2009 (Savolainen et al. 2012), while the average Northeast head boat owner's equity in 2010 was $161 thousand. Cash flow in the Gulf of Mexico charter boat fleet was $15 - 40 thousand in 2009, depending on the state, while head boat cash flow was approximately $70 thousand (Savolainen et al. 2012). In comparison, the average Northeast charter boat owner's cash flow in 2010 was slightly over $5 thousand, and the average head boat owner's cash flow in 2010 was $95 thousand. In another study of the Southeast for-hire fleet, annual net revenue was $2 thousand in 2003, not including crew costs (Liese and Carter, 2011).
Our input-output results show that a substantial number of jobs are directly and indirectly dependent upon the for-hire industry in the Northeast. An estimated 7,530 jobs in the overall Northeast regional economy were supported by the active for-hire fleet in 2010. The actual number of jobs supported by for-hire fishing activity in the Northeast is certainly higher, as the modeling results reported here are conservative in that they only measure the contribution of the for-hire industry itself to the Northeast's economy. Auxiliary expenditures by for-hire passengers, while traveling to and from the for-hire fishing site (e.g., auto fuel, lodging, food, bait, tackle, or equipment not included as part of the passenger fees) also contribute to the economy's employment and income base. The contribution of these auxiliary expenditures by passengers was not included in this assessment. A case could be made that the total contribution of the for-hire industry to the Northeast's economy should also include the multiplier effects of these auxiliary expenditures by for-hire passengers. Additionally, for-hire boats that primarily target offshore HMS (billfish, swordfish, tunas, sharks, wahoo, dolphin, and amberjack) were not included in this study. Although the number of for-hire boats operating in the Northeast that primarily target HMS is unknown, our results would certainly be larger if the multiplier effects of these boats were also measured.
This study would not have been possible without the assistance of almost three hundred charter and head boat owners who took the time to diligently complete a rather long survey about the financial operations of their businesses. The willingness of these individuals to participate in this study demonstrates the importance that the survey participants place on obtaining economic data about their profession.
Secondly, we would like to thank members of the Northeast Charter Boat Captain's Association, the Rhode Island Party and Charter Association, the Montauk Boatmen's and Captain's Association, the Upper Bay (Chesapeake) Charter Captain's Association, and the Coastal Conservation Association of Maryland for providing comments and/or suggestions on early versions of the economic survey.
We thank the Gentner Consulting Group (GCG) who assisted with the overall design of the study, attended for-hire association meetings to explain the study, and tested early versions of the survey. GCG also conducted individual pretests with many owners and captains to ensure the survey was both comprehensive and sensible.
We also thank the many individuals involved at QuanTech Inc. Their professionalism and desire to develop, administer, and collect the best data possible was clearly evident.
Finally, we thank Christopher Liese, Matthew McPherson, Fred Serchuk, and Jarita Davis for providing many insightful comments and suggestions on previous versions of this paper.
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 Personal communication from the National Marine Fisheries Service, Fisheries Statistics Division July 10, 2012.
 A wave specifies a two-month period and the RFHES sampling frame was drawn from the list of vessels considered active during January and February of 2011. The bulk of the survey methods explained here were described in the final contractor's report submitted to the National Marine Fisheries Service, and this report is available upon request.
 The training sessions for the screening calls and the telephone and in-person interviews included a description of the goals and objectives of the study, detailed explanations of all questions contained in the questionnaires, an emphasis on the "confidential and proprietary" nature of the data collected, and proper procedures for coding and editing responses.
 The operating characteristics of for-hire boats in the Northeast that mainly target offshore HMS (e.g., billfish, swordfish, tunas, sharks, wahoo, dolphin, and amberjack) are fundamentally different from for-hire boats that primarily fish inshore for bottom fish, flatfish, and small game species. Some vessels participate in both inshore and offshore fishing, but most vessels primarily specialize in one or the other. Because of sampling constraints, it was determined that it would not be possible to survey a sufficient number of vessel owners that primarily target HMS so these vessels were excluded from this study.
 Although QuanTech conducted call-backs when necessary to fill in missing data or confirm questionable responses from owners who completed the survey by mail/email, they were unable to recontact all individuals so not all missing values and questionable responses were clarified. All surveys completed during in-person interviews and by telephone were complete.
 An explanation for this seemingly low estimate of annual net earnings for the average charter vessel is provided below in Section 4.2 Economic Status of the For-Hire Industry.
 Vessels in the For-Hire Vessel Directory that mainly fished for highly migratory species in 2010 were excluded, and considerable effort was exerted to remove duplicate vessels that operated in more than one Northeast coastal state.