An Evaluation of the Cost and Effectiveness of
Commercial Oyster Aquaculture in the Chesapeake
Bay as a Nutrient Control Strategy
Alexander L. Miller
Kurt Stephenson, Darrell Bosch, Daniel Kauffman, Bonnie Brown
May 28, 2010
Nutrient Reduction Goals for the Bay
Source: http://www.bayjournal.com/article.cfm?article=3691
Achieving Nutrient Reduction Goals
• Current Focus is on Source Reductions
– Point Sources (PS) and Nonpoint Sources (NPS)
• 3 Es - “This particular effort is going to involve
everyone doing everything everywhere,”
» -EPA’s Bay Program Office.
What else can we do?
Move Beyond a Source
Reduction Strategy
• Increase Ecosystem Nutrient Assimilative
Capacity
Nutrient Assimilation is:
- “The capacity of an ecosystem to reduce nutrients
within the ambient water through biological
processing, sequestration, and nutrient harvest”
Oysters
• Natures Water Filters – Healthy oysters consume
algae, each one filtering up to 5 liters of water per hour.
• “It is the oyster's eating habits that make it so
important to its environment: it is a voracious filter
feeder that performs several vital functions in the Bay's
ecosystem” – Chesapeake Bay Program
Where does the N go?
Air
(Nutrient Removal Function)
N&P
removed by
harvesting bivalve
biomass
Water
Nitrogen (N)
Phosphorus (P)
1
Bivalves
Phytoplankton
2
N in bivalve biodeposits
(feces & pseudofeces)
Sediment
Source: Adapted from Newell
Nitrification &
Denitrification
Processes
Portion of
total N converted
to N2 gas thru
denitrification
Oyster Aquaculture and Nutrient Assimilation
• Native oyster restoration plagued by disease, habitat
loss, and predation.
• Existing aquaculture operations are providing
nutrient removal services for free, but currently
limited in scope.
• Expansion of oyster aquaculture limited by
finances. Prices in shucked market will not
support expansion.
Bottom Line: May not receive additional
nutrient assimilative services from oyster
aquaculture for free!
Questions at Hand
-Is oyster aquaculture a cost effective
means to remove nutrients?
-How does oyster aquaculture nutrient
removal compare to source reduction
technologies?
Is Oyster Aquaculture a Cost Effective
Means to Remove Nutrients?
What is a Nutrient Assimilation Credit and
How will This Help?
• Documented mass load (e.g. pounds) of
nutrients removed from a water body.
• Creation of demand for such credits creates
incentives for additional revenue for oyster
firms, past the sale of oyster ‘meat’
What is the cost of removing nutrients using
oyster aquaculture?
• Calculate what an oyster aquaculturists would need to
charge for nutrient assimilation credits in order to meet
a targeted rate of return on an investment.
• Allows cost comparison with source reduction
technologies.
Oyster Aquaculture Firm
Costs
Oyster Seed
Equipment
Labor
Oyster
Growing Site
Permitting
Insurance
Rate of Return
(Revenues – Costs)
Revenues
Growth Rates
Mortality (Disease)
Predation
Weather
Oyster Production
System
Oyster Meat
-Shucked
-Halfshell
Nutrient
Assimilation
Credits
Bio-economic Model
Oyster
Production
Function
Revenue
Input/Output
Control Deck
(N Credit $)
Nutrient
Removal
Function
Costs
Oyster Aquaculture Production Function
-Number of Oysters Stocked or Transferred into
Each Stage
-Mortality Rate
-Number of Months in Each Stage (Growth Rate)
-Number of Oysters to Market
Commercial Oyster Aquaculture Costs
Capital Investment Costs
Annual Administrative
and Permitting Costs
Annual Operational and Management Costs
Nutrient Removal Function
1
3” Oyster
(gdw)
Percentage (%) of
N & P in Meat and Shell (g/gdw)
lbs of N & P
Removed by
Harvesting Oysters
in t
2
Biodeposition Rate
ºC and mg/l
(g/gdw/t)
Oyster
(gdw/t)
Biodeposit
Deposition
(g/t)
N in
Biodeposits
(g)
Denitrification
Removal
(%)
lbs of
total N converted
to N2 gas thru
denitrification
in t
Oyster Aquaculture Firm
Costs
Oyster Seed
Equipment
Labor
Oyster
Growing Site
Permitting
Insurance
Rate of Return
(Revenues – Costs)
Revenues
Growth Rates
Mortality (Disease)
Predation
Weather
Oyster Production
System
Oyster Meat
-Shucked
-Halfshell
Nutrient
Assimilation
Credits
Illustration: Two Hypothetical, But Representative
Oyster Aquaculture Enterprises
Cage
Float
Cumulative Growout Mortality (%)
30%
25%
Denitrification (%)
20%
30%
Halfshell Price ($)
$0.28
$.0.38
Percent (%) to Halfshell Market
90%
90%
•IRR: 13.4%
•IRR: 12%
Nutrient Assimilation Credit Prices Under
Different Economic Conditions
Item
Cage
Float
lbs of N removed Per Year
913
332
lbs of P removed Per Year
60
18
N Credit Price ($) to Achieve 15% Return
(70% oyster sold in half-shell market)
$48.33
$79.64
N Credit Price ($) to Achieve 15% Return
(80% oyster sold in half-shell market)
$30.04
$48.14
N Credit Price ($) to Achieve 15% Return
(90% oyster sold in half-shell market)
$11.75
$16.63
Similar Analysis with Different Assumptions
$225.00
Nutrient Credit Price ($) Per lbs of N
$200.00
$175.00
Price ($) Per Oyster
$150.00
$0.24
$125.00
$0.26
$0.28
$100.00
$0.30
$75.00
$50.00
$25.00
$0.00
10%
15%
20%
25%
30%
35%
40%
45%
50%
55%
Cumulative Growout Mortality (%)
Cage Assumptions: Denitrification: 20%
% to Halfshell Market: 90%
60%
How does oyster aquaculture
nutrient removal compare to
source reduction technologies?
Comparison with Point Source, Urban
Stormwater, and Non-point Source Costs
Reduction Measure
$ Per lbs of N Removed
Point Source
(WWTP)
$9.60 - $15.60
Urban Stormwater
(Sand Filter)
$195 - $3,300
Agricultural Non-Point
Source (BMP)
$0.45 - $30.30
Comparison of Nutrient Removal Potentials
• 1 M oysters sent to market: 377 to 1181 lbs of N
removed (0% to 30% denitrification rates)
• What would be needed to achieve equivalent
reductions from nutrient sources:
– Pounds removed from lowering 1 mgd of WWTP
effluent from 8 mg/l to 4 mg/l of N
– Treating ~200 Acres of Urban Stormwater Runoff
– Adding BMPs to ~300 Acres of Pasture
– Adding BMPs to ~70 Acres of Cropland
Concluding Thoughts
In Summary:
• Oyster aquaculture is a potentially cost competitive
water quality enhancement tool under some financial
and environmental conditions.
• Under a range of reasonable assumptions about
oyster prices, mortality/growth, and input costs, new
oyster aquaculture investments would be
forthcoming for between $11.75 and $16.63 dollars
per pound of N.
• Ability to pay for water quality enhancement is
currently limited given current policies, however,
some options may exist.
Acknowledgements
• National Fish and Wildlife Foundation
• Oyster Growers
Questions?