Economics & Social Sciences Research Program
Analyzing the Economic Contribution of the Alaska Head and Gut Fleet Sector
First wholesale revenues of the Alaska groundfish fishery plunged by more than 25% in 2009 to $1.7 billion, down from $2.3 billion in 2008.
While fish stock levels played a role (e.g., reductions in the pollock TAC), the change in total production was less than 6% (from 699.6 thousand metric tons (t) in 2008 down to 656.3 thousand t in 2009). Therefore, a sharp drop in market prices was the primary factor for the significant reduction of Alaska groundfish revenues in 2009. In fact, negative price effects were seen in a decomposition of the 2008-09 change in wholesale revenues across market categories (pollock, cod, flatfish, rockfish) and product groups (fillets, roe, surimi, and whole head & gut).
Because Alaska groundfish products are mainly exported, it was global market conditions that caused the negative price effects that dominated in 2009. The Alaska Head and Gut (H&G) fleet was rationalized recently, and it relies on global markets as a primary source of revenue. Thus, an economic assessment of rationalization should consider the effects of global market conditions on benefits and costs.
In this project, we will develop a social accounting matrix (SAM) model that can be used to measure the contribution of the Alaska H&G fleet to the Alaska economy and calculate the economic impacts from a change in the global market conditions for the product (Alaska H&G) produced in this fleet.
Because the currently available single-region Alaska regional economic models specify only one single rest of world (ROW) account, the project will need to disaggregate ROW into the rest of U.S. and foreign countries in order to examine the contribution and impacts of change in global market conditions.
The SAM model can be used to quantify the contribution of an industry to a regional economy or to evaluate impacts of year-to-year changes in prices and quantities (e.g., total allowable catch) on regional employment and income. Regional economic models do not usually explicitly distinguish between domestic and foreign markets that are outside the regional economic zone, but that distinction is important for analyzing the regional impacts of price changes that are driven by global market conditions.
The Alaska SAM model needs to distinguish between rest of U.S. and foreign countries. We will start from an existing Alaska SAM model and revise the model using U.S. trade statistics, the State of Alaska's Commercial Operators Annual Report (COAR), and H&G Fleet Economic Data Reports (which collect cost and earnings data from the H&G fleet). We will cooperate with industry in order to groundtruth the data for the fleet.
By Chang Seung and Michael Dalton