Economic Resilience and Well-being of Gulf Communities: Environmental Disaster Events and Changes in Economic Diversity

1. Economic Resilience and Well-being of Gulf Communities: Environmental Disaster Events and Changes in Economic Diversity Jason Chun Yu Wong University of Maryland Environmental Science and Policy – Environmental Economics Resilient Coastal Communities and Economies National Centers for Coastal Ocean Science - Hollings Marine Laboratory, Charleston, SC Dr. Susan Lovelace, Maria Dillard

3. Outline • Motivation • Questions • Methodology • Results & Analysis • Future Research • My Next Step • Acknowledgement • Sources

4. Motivation

5. Gulf of Mexico Timeline Hurricane Rita- $108,755 decrease in Revenue at Sea Rim State Park (Jefferson, TX) Hurricane Dennis- $3.4b in property damages 2010 DeepwaterHorizon Oil Spill approx. 205.8 million gallons 2003 2004 2005 2006 2007 Hurricane Katrina- Total Resident Population declined from 455,188 on July 1, 2005 to 208,548 on July 1, 2006 in Orleans, LA Hurricane Ivan- $6.6b in property damages (AL, FL, LA, MS)

7. Why do we care about economic diversity? • Conventional wisdom: portfolio and risk diversification – shock resistance • Don’t put all your eggs in one basket!

8. Research Questions • Was there a significant differencein economic diversity over time, from 2003-2007, in Gulf States counties? • What socioeconomic factors could help explain economic diversity? Does the number of environmental disaster events affect economic diversity? • How could we interpret economic resilience from diversity indicators?

9. MeasuringEconomicDiversity By Employment, or Earnings Secondary Data Needs: U.S. Census, Bureau of Economic Analysis

10. Measuring Economic Diversity National Average • This study uses four static measures: Ogive, National Average, Herfindahl, and Entropy/Log Share • T-Tests, Wilcoxon Rank Sum, Correlation and Regression Analysis Ogive

13. Results: Difference in Diversity? Distribution of by employment

14. Wilcoxon Signed-Rank Results Coastal, n=139 • Coastal counties experienced less significant changes in industrial composition compared to non-coastal counties from 2003-2007 Non-Coastal, n=441 * Pr > |S| < 0.05

15. Results: What can help explain economic diversity? • Correlation: using existing socioeconomic dataset on coastal counties, selected variables based on literature and data availability • Count of Environmental Disaster Events in 2005 included • Ran multiple regressions (standard, Max R, Stepwise); checked for multicollinearity with Variance Inflation Factor

16. * Pr > |r| < 0.05

17. * Pr > |t| < 0.05

18. Limitations • Time frame & boundary problem • Population may have a threshold effect • Factors requiring population-adjusted measures: Education, Resource availability • Specialization may be stable • Diversity measures sensitive to number of industries

19. Economic Resilience • Employment diversity = resilience? • How to measure the ability of communities “bounce back” • Simulation-based modeling • Using Computable General Equilibrium (CGE) • Hypothetical, constructed measure • Retrospective data analysis • Adapted the resilience method for ex post facto resilience analysis

20. Conclusion • Framework for economic well-being assessment • Industrial composition in coastal communities is “mature” and established • Environmental disasters were not a strong explanatory variable for economic diversity • Time frame may be a significant factor that is industry-dependent • Future research – finance and input-output methods

21. My Next Step… • Honors Thesis – Contingent Valuation Survey – Rain Gardens • Germany Study Abroad – International Environmental Law • Interdisciplinary PhD in Environment and Resources: Environmental Economics, Sociology, Law, Policy • Economics of Climate Change and Valuation of the Environment; Non-Market Valuation Techniques; Survey Methodology • A teacher, a researcher, and a scholar in environmental economics and policy

22. Acknowledgements • Susan Lovelace • Maria Dillard • Lauren Brown, C of C MES ‘12 • Mark Plummer, NMFS, NWFSC • Peter Edwards, NMFS, Habitat • Jeffery Adkins, NOS, CSC • Linwood Pendleton, Acting Chief Economist • HML Human Dimensions Lab Members • HML admin and IT staff; OEd Scholarship Team

23. Sources • US Census, Bureau of Economic Analysis • Wagner, J. E. (2000). "Regional Economic Diversity: Action, Concept, or State of Confusion." Journal of Regional Analysis & Policy 30(2): 1-22. • Rose, A. L., Shu-Yi (2005). "Modeling Regional Economic Resilience to Disasters: A Computable General Equilibrium Analysis of Water Service Disruptions." Journal of Regional Science 45(1): 75-112. • Rose, A. (2004). "Defining and measuring economic resilience to disasters." Disaster Prevention and Management 13(4): 307-314. • State of Hawaii (2008). Measuring Economic Diversification In Hawaii, Research and Economic Analysis Division, Department of Business, Economic Development and Tourism, State of Hawaii. • Manyena, S. B. (2006). "The concept of resilience revisited." Disasters 30(4): 435-450. • Quigley, Thomas M.; Haynes, Richard W; Graham, Russell T., tech. eds. 1996. Integrated scientific assessment for ecosystem management in the interior Columbia basin and portions of the Klamath and Great Basins. Gen. Tech. Rep. PNW-GTR-382. Portland, OR: U.S. Department of Agriculture, Forest Service, Pacific Northwest Research Station

24. Thank you!

25. ex post facto resilience indicator • Where psi= actual performance of industry s in region i • And E(psi)= expected performance of industry s in regioni. • For , • , the event had no effect on the ability of the economy to meet its expected performance; • , the event reducedthe ability for the economy to meet its expected performance; • , the event in fact increased the ability for the economy to meet its expected performance.