Report shows $11M direct loss to VA oyster industry from Gulf spill

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A new report from the Virginia Institute of Marine Science estimates the Deep Horizon Gulf oil spill will cost Virginia's oyster industry $11.6 million annually in direct economic losses, and total, "water-to-table" losses of $30.1 million.

Report co-author Tom Murray, of the Sea Grant Advisory Service Program at VIMS, says the Gulf spill has "disrupted Virginia's seafood marketplace by virtue of the extensive trade and interdependence in fishery and seafood products between the regions."

Virginia's oyster industry—hampered by long-term declines in local oyster stocks due to disease, habitat loss, and overharvesting—has for decades depended on imports of Gulf oysters to meet demand for local sales and national distribution.

Murray says the income and cash flow that local oyster processors derive from processing and distribution of Gulf oysters has "virtually disappeared" in light of the shutdown of the Gulf oyster fishery during the three-month Deep Horizon spill. Large areas of the Gulf of Mexico shoreline in Louisiana, Mississippi, Alabama, and Florida still remain closed to fishing.

Murray and co-author Jim Kirkley, an economics professor at VIMS, calculated that Virginia's processors, wholesalers, grocers, and restaurants have suffered three types of economic losses to related to the Gulf spill:

Direct losses

Direct losses refer to decreases in "revenues, value-added income, or jobs" related to the sale of Gulf oysters within Virginia. Murray and Kirkley estimate these losses at $11.6M.

Indirect losses

Indirect losses occur when the decline in out-of-state revenue among local oyster businesses forces them to cut back on the purchase of goods and services from in-state suppliers. Murray and Kirkley estimate these losses at $1.7M.

Induced losses

Induced losses refer to a slowdown in the flow of new dollars into the Virginia economy as the households of business owners and employees reduce their in-state purchases of consumer goods and services. Murray and Kirkley estimate these losses at $16.7M

Murray and Kirkley note that the spill-related losses come at a critical time for Virginia's oyster industry, which is in the midst of a promising but capital-intensive effort to re-establish local oyster stocks through raising of farmed oysters within Chesapeake Bay and its tributaries.

"Since the Gulf spill," the authors write, "Virginia's industry has found itself unable to continue to process and distribute products critical to its established customer base while expending considerable capital to develop self-sufficiency through emerging aquaculture techniques and productivity."

Murray and Kirkely warn that unless shipments of Gulf oysters to Virginia resume quickly, the local oyster industry "may not be able to financially sustain itself while attempting to recover the full potential of oyster aquaculture in the Commonwealth."