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An Economic Analysis of Shipping Costs Related to Potential Measures to Manage the Co-Occurrence of Maritime Vessel Traffic and Whales in the Channel Islands Region

This project began in March 2015 and was completed in September 2016

Through an analysis of shipping costs, we provided scientific guidance to the Channel Islands National Marine Sanctuary (CINMS) and other agencies, regarding the economic effects of potential management measures that balance commerce, conservation, and recreational uses within the Sanctuary.

Why We Care
The Channel Islands National Marine Sanctuary (CINMS) encompasses 1,110 square nautical miles and is one of fourteen federally designated marine protected areas. Located in a unique area where warm southern currents meet cold waters from the north, the CINMS boasts high biodiversity and supports many unique habitats. The channel and the surrounding waters are ideal for various recreational and commercial activities that are important to the local economy, such as recreational fishing and kayaking, whale watching tours, and transit of shipping vessels carrying goods to and from the Los Angeles/Long Beach port complex. It is the mission of the CINMS to conserve the water, habitats, organisms, and cultural history for present and future generations, while facilitating public, private, and commercial uses.

The Santa Barbara Channel region serves as a nautical highway to some of the busiest ports in the United States. Over 3,000 vessels pass through the area every year and are responsible for transporting approximately twenty-three percent of all domestic vessel imports and exports. It is predicted that in the coming years vessel traffic in the area will increase, underscoring the importance of the region to global maritime commerce. However, with this increased traffic also comes the associated impact of shipping on the marine environment. En route to their destinations, vessels may have a lethal collision with blue, fin, humpback, or gray whales. In addition, greater vessel traffic is expected to increase local air pollution and greenhouse gas emissions that may be harmful to local communities. Use patterns of the waters in and around the CINMS are ever changing and in order to attain long term conservation goals and maintain healthy human interactions, up-to-date research is needed to assess the implications of new management approaches and their associated costs and benefits to all that have a connection to the CINMS.

This project provided information to effectively evaluate management options that aim to maximize whale conservation efforts and improve navigational safety and efficiency of maritime commerce, while minimizing air pollution and greenhouse gas emissions, conflicts with naval operations, and costs to the shipping industry.

What We Did
The research goals for this project were to:

  1. Estimate the economic effects on the shipping industry from proposed management measures to reduce impacts on whales.
  2. Collect economic information on commercial whale watching operations to determine the sector’s impact on the local economy.
  3. Develop maps showing the spatial and temporal patterns of commercial vessel traffic in the region.
  4. Collaborate with the Bren School of Environmental Science and Management to collect economic information on commercial whale watching operations to determine the sector's impacts on the local economy.

To estimate the economic effects of seasonal vessel speed reductions (VSRs) and vessel re-routing options advanced by the Marine Shipping Working Group (MSWG), the project team identified key economic variables, such as vessel transportation and inventory carrying costs. Models were used to estimate probable economic outcomes of alternative options and maximize efficiency of management measures balancing policy, conservation and economic objectives. This economic analysis sought to maximize win-win solutions and is expected to serve as a framework for future assessments in other regions including other National Marine Sanctuaries.

The shipping models allowed the estimation of costs to the shipping industry of alternative management options. These two pieces of information enabled performance of a cost-benefit analysis of potential shipping management options in the Channel Islands region. The models developed to estimate the non-market value for whales and the costs to the shipping industry can be incorporated into a framework for economic assessment of other designated marine areas that face similar or related issues.

In partnership with the University of California-Santa Barbara’s Bren School of Environmental Science & Management, spatial and economic data from whale watching operations were analyzed to provide an understanding of how dependent this sector and the local economy are on whale populations. Coupled with the non-market values for whales, student researchers estimated social and economic benefits of potential ship management options. Partnering with the Santa Barbara County Air Pollution Control Board, additional modeling efforts conducted by Bren graduate students addressed potential human health and climate benefits of reduced emissions from shipping under management alternatives, broadening the scope for creative solutions involving economic as well as conservation and human social benefits. Their thesis findings are provided in the report "Vessel Speed Reduction, Air Pollution, and Whale Strike Tradeoffs in the Santa Barbara Channel Region' (2016).

Project partners included National Centers for Coastal Ocean Science, the Channel Islands National Marine Sanctuary, the CINMS Sanctuary Advisory Council and their Marine Shipping Working Group, the Bren School of Environmental Science & Management, the Office of National Marine Sanctuaries Headquarters, National Marine Fisheries Service Office of Protected Resources and the NOS Office of the Assistant Administrator.

What We Found
A key finding of this evaluation is that the costs to the shipping industry, defined as vessel transportation and inventory carrying costs, are predicted to decrease under the three potential management measures with vessel re-routing components:

1. 12-knot seasonal VSR with vessel re-routing (-2.2%);
2. 10-knot seasonal VSR with vessel re-routing (-1.6%); and
3. Vessel re-routing only (-3.4%).

The costs to the shipping industry are predicted to increase under the two seasonal VSR-only potential management measures:

1. 12-knot seasonal VSR only (+1.3%); and
2. 10-knot seasonal VSR only (+2.0%).

To put these results into context, consider an individual vessel transit between Hong Kong and the Los Angeles/Long BeachA/LB (LA/LB) Port Complex (6,300 nm). The total cost of vessel operation including fuel, crew, capital, insurance, and related administrative overhead costs on an individual vessel transit can easily range from approximately $0.6 million to over $1.1 million depending on the type of vessel, fuel, and the degree to which the vessel was loaded. The estimated changes in costs from implementation of these potential management measures would therefore represent a 0.1% to 0.6% change in total vessel operating costs on this hypothetical transit. Additionally, the estimated changes in costs would represent 0.0003% to 0.001% of LA/LB Port Complex’s total cargo value.

Benefits/Impact of Our Work 
This work will inform the CINMS Sanctuary Advisory Council (SAC) on the feasibility of the proposed management measures to reduce impacts on whales. Additionally, this report provides a well-detailed basis for conducting future analyses in other regions.

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