Economic Effects of
the Deepwater
Horizon Oil Spill
Brian Richard
Dept. of Economic and
Workforce Development
Mississippi Gulf Coast

Importance of the Gulf of Mexico to the
Mississippi Gulf Coast economy
 Tourism
 Fisheries

Impacts of the Oil Spill
Tourism Related Employment
Casinos (except Casino Hotels)
Marinas
Hotels (ex. Casino Hotels) and Motels
Casino Hotels
Other Traveler Accommodation
RV (Recreational Vehicle) Parks
Full-Service Restaurants
Total
MS
GC
4,601
2,508
242
98
8,538
1,297
20,530
9,200
353
11
458
173
27,734
4,827
62,509 18,113
Source: EMSI Complete Employment – 4th Quarter 2010
54.5%
40.5%
15.2%
44.8%
3.1%
37.8%
17.4%
29.0%
Gulf Coast Tourism Trends
16,000
Tourism related industries industries
comprise 8.9% of total employment
on the Gulf Coast.
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
2002
2003
2004
2005
Casino Hotels
Casinos (except Casino Hotels)
2006
2007
2008
2009
Full-Service Restaurants
Hotels (except Casino Hotels)
Source: EMSI Complete Employment – 4th Quarter 2010
2010
Coast
River
Source: Mississippi State Department of Revenue
12 per. Mov. Avg. (Coast)
12 per. Mov. Avg. (River)
Jan-11
Jul-10
Jan-10
Jul-09
Jan-09
Jul-08
Jan-08
Jul-07
Jan-07
Jul-06
Jan-06
Jul-05
Jan-05
Jul-04
Jan-04
Jul-03
Jan-03
Jul-02
Jan-02
Jul-01
Jan-01
Jul-00
Jan-00
Jul-99
Jan-99
Jul-98
Jan-98
Jul-97
Jan-97
Jul-96
Jan-96
Jul-95
Jan-95
Jul-94
Jan-94
Gaming Revenue
170,000,000
150,000,000
130,000,000
110,000,000
90,000,000
70,000,000
50,000,000
Fishing and Seafood
5,000
4,500
Fisheries related industries industries
comprise 0.9% of total employment
on the Gulf Coast.
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
2002
2003
2004
2005
MS Fishing
MS Seafood Prep. and Packaging
2006
2007
2008
2009
2010
GC Fishing
GC Seafood Prep. and Packaging
Source: EMSI Complete Employment – 4th Quarter 2010
Economic Impacts
Economic Impact: the economy-wide
effect on employment and incomes
produced by a policy, event, or decision
 Fiscal Impact: the effect on tax revenues
produced by a policy, event, or decision

Source: BusinessDictionary.com
Economic Impacts
We know (and will continue to track) some
of what happened in the economy with the
oil spill
 The research is estimating what would
have happened without the oil spill
 The difference between what did happen
and what would have happened is the
economic impact

Economic Impact
$80
$75
$70
Trend with
oil spill
$65
'negative'
economic impact
$60
$55
$50
Trend without
oil spill
$45
$40
$35
$30
Jan-10
Feb-10
Mar-10
Apr-10
May-10
Biloxi-Gulfport MSA
Jun-10
Jul-10
Aug-10
Sep-10
Economic Impacts

Challenges
 How
are the effects of the oil spill isolated
from everything else going on in the
economy?
Katrina recovery
 Recession/recovery

Hospitality and Tourism

Mississippi Visitors
 Casino Gamers are the largest market (about
40 %).
 ‘Soft adventurers’—bird watch, camp, fish,
interest in nature/ wildlife. Comprise about 7
% of the visitors.
Source: Mississippi Development Authority Tourism Division/TNS
Hospitality Employment
Description
Casinos (except Casino Hotels)
Marinas
Hotels (except Casino Hotels) and Motels
Casino Hotels
Other Traveler Accommodation
RV (Recreational Vehicle) Parks and Recreational Camps
Full-Service Restaurants
Total
Jobs
2,508
98
1,297
9,200
11
173
4,827
18,113
National
LQ
25.0
1.6
0.7
30.1
0.2
2.0
0.9
Source: EMSI Complete Employment – 4th Quarter 2010
Total
EPW
Establishments
$32,413
4
$10,391
6
$22,866
86
$34,607
10
$81,289
2
$31,910
18
$16,990
257
$28,638
383
GC Gaming Revenue Growth
10%
5%
0%
-5%
-10%
-15%
-20%
Hurricane
Gustav
-25%
Coast
12 per. Mov. Avg. (Coast)
Source: Mississippi State Department of Revenue
Jan-11
Oct-10
Jul-10
Apr-10
Jan-10
Oct-09
Jul-09
Apr-09
Jan-09
Oct-08
Jul-08
Apr-08
Jan-08
-30%
Hotel Tax Revenue Growth
100%
80%
60%
40%
20%
0%
-20%
-40%
Jun-08
Jul-08
Aug-08
Sep-08
Oct-08
Nov-08
Dec-08
Jan-09
Feb-09
Mar-09
Apr-09
May-09
Jun-09
Jul-09
Aug-09
Sep-09
Oct-09
Nov-09
Dec-09
Jan-10
Feb-10
Mar-10
Apr-10
May-10
Jun-10
Jul-10
Aug-10
Sep-10
Oct-10
Nov-10
-60%
Harrison County Tourism
Hancock County Tourism
City of Moss Point Tourism
City of Pascagoula
Source: Mississippi State Department of Revenue
Hotel Revenue Growth
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
-10.0%
-20.0%
-30.0%
United States
Mississippi
Biloxi-Gulfport MSA
MS Central/Vicksburg
Jackson, MS
MS South/Hattiesburg
Source: Smith Travel Research
Restaurant Tax Revenue Growth
Nonalcoholic Restaurants
30.0%
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
-5.0%
-10.0%
-15.0%
-20.0%
Dec-09
Jan-10
Feb-10
Mar-10
Hancock
Apr-10
May-10
Harrison
Jun-10
Jackson
Source: Mississippi State Department of Revenue
Jul-10
Aug-10
Sep-10
Restaurant Tax Revenue Growth
Alcoholic Restaurants
40.0%
30.0%
20.0%
10.0%
0.0%
-10.0%
-20.0%
-30.0%
Dec-09
Jan-10
Feb-10
Mar-10
Hancock
Apr-10
May-10
Harrison
Jun-10
Jackson
Source: Mississippi State Department of Revenue
Jul-10
Aug-10
Sep-10
City Tax Collections
100.0%
80.0%
60.0%
Bay St. Louis
Total Hancock Collections
Biloxi
D'Iberville
40.0%
Gulfport
Long Beach
Total Harrison Collections
20.0%
Gautier
Moss Point
Ocean Springs
Pascagoula
0.0%
Total Jackson County
-20.0%
-40.0%
Jan-10
Feb-10
Mar-10
Apr-10
May-10
Jun-10
Jul-10
Aug-10
Sep-10
Oct-10
Source: Mississippi State Department of Revenue
Nov-10
Fisheries Employment
Description
Fishing
Seafood Product Prep. and Packaging
Total
National Total
Jobs
LQ
EPW Establishments
948
9.4 $29,162
2
392
8.4 $27,423
12
1,460
$31,081
15
Source: EMSI Complete Employment – 4th Quarter 2010
Fisheries

Percent of MS waters closed to fishing
Source: Dr. Ben Posadas, MSU Coastal Research & Extension Center
Fisheries – Shrimp Landings
Source: NOAA/Dr. Ben Posadas, MSU Coastal Research & Extension Center
Decoding the Trends
$80
$75
$70
Trend with
oil spill
$65
'negative'
economic impact
$60
$55
$50
Trend without
oil spill
$45
$40
$35
$30
Jan-10
Feb-10
Mar-10
Apr-10
May-10
Biloxi-Gulfport MSA
Jun-10
Jul-10
Aug-10
Sep-10
Decoding the Trends:
Anecdotal Evidence
Ship Island ferry down 60% over a May
weekend
 A Biloxi charter boat captain said
customers booked 26 trips with him in May
2008 and 26 in May 2009, but only 11 this
May. He said his numbers for June were
similar. (“Geography protects Mississippi from worst of the oil spill, but tourism still

(“Oil Spill Hurting Miss. Gulf Coast Tourism” WAPT.com, May 10)
hobbled”, AP June 15th)
Decoding the Trends:
Anecdotal Evidence

BP has spent $350 million on cleanup,
which has barely begun, and hired 13,800
people across the Gulf states to enlist in
the effort. (“Shrimpers, fishermen, hotels feel oil spill's
trickledown effect.”, USA Today, May 13)

Of the 5,700 people contracted to work on
the Mississippi response effort, about 4,700
are natives of the state. (“Employing Mississippians makes the
difference”, Mississippi Gulf Response (BP), June 21st)
Decoding the Trends

Current/future survey work
 Sector
specific
Chain hotels vs. locally owned hotels
 Tourism attractions
 Seafood harvesters
 Seafood processors

Decoding the Trends

Future survey work – looking forward
 National
attitude surveys
Seafood safety/desirability
 Tourism

Soft adventurers (fishing, bird watching, etc.) may be less
inclined to come to the Gulf Coast
 Did Gulf Coast tourism customers find other regions to
visit?

Decoding the Trends

Fisheries – looking forward
 Oysters/shrimp

Mature oysters and shrimp are fairly resistant to
toxic effects

But, they can accumulate toxins making them a potential
health hazard
Eggs and larvae are more susceptible
 This leaves the possibility that the current years
harvest will show little effect but there will be lower
populations over the next 2-3 years

Decoding the Trends

Fisheries – looking forward
 Finfish

Mature finfish can swim away from the hazard


This may cause a geographic shift in the harvest
Evidence from previous oil spills suggests that the
finfish abundance will return relatively quickly
Decoding the Trends

Quasi-experimental matching
 Finding
‘control’ locations without oil and
comparing trends
Biloxi vs. Tunica gaming
 MS Gulf Coast vs. Myrtle Beach tourism
 MS Gulf Coast vs. Charleston fisheries

Modeling the Impacts

Static (input-output) models
 Estimate
the change in economic activity
resulting from the change in final demand for a
product/service (or group of products/services)
Inter-industry transactions
 Household-industry transactions

 Multiplier
effect
 Estimates the statewide impacts of a regional
event
 IMPLAN, EMSI, RIMS II
Modeling the Impacts

Dynamic models
 Builds
upon input-output model allowing for
changes in price levels, labor mobility, etc.
 Estimates the statewide impacts of a regional
event
 In addition to changes in final demand, inputs
to the model might include changes in prices,
wage rates, imports, exports, etc.
 Projects impacts into the future
 REMI
Economic Effects of
the Deepwater
Horizon Oil Spill
Discussion/Questions