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Working Paper: Welfare Impacts of Ocean Acidification: An Integrated Assessment Model of the US Mollusk Fishery

Paper Number: 2011-06

Document Date: 12/2011

Author(s): Christopher C. Moore

Subject Area(s): Economic Impacts; Renewable Resources and Conservation

JEL Classification: Multiple or Simultaneous Equation Models and Multiple Variables: Panel Data Models; Spatiotemporal Models; Renewable Resources and Conservation: Fishery; Aquaculture; Environmental Economics: Climate; Natural Disasters and Their Management; Global Warming; Ecological Economics: Ecosystem Services; Biodiversity Conservation; Bioeconomics; Industrial Ecology

Keywords: ocean acidification; integrated assessment model; demand system estimation

Abstract: As atmospheric carbon dioxide (CO2) concentrations increase, the world’s oceans are absorbing CO2 at a faster rate than at any time in the past 800,000 years. While this reduces the amount of the most prevalent greenhouse gas in the atmosphere it also causes changes in seawater chemistry, collectively known as ocean acidification. One of the known ecological impacts of ocean acidification is a reduced ability of some marine calcifiers to form shells and skeletons. Mollusks and reef building corals are particularly vulnerable. Understanding how these biophysical impacts affect social welfare is a critical step in crafting and evaluating policies that reduce CO2 emissions. There is an extensive body of literature estimating the economic impacts of climate change but very little research has been done on how ocean acidification could affect social welfare. This paper proposes an integrated biogeochemical-economic model to estimate the social welfare impacts of ocean acidification in the US mollusk fishery. To demonstrate the model two pathways for global greenhouse gas emissions are compared: a baseline path and a policy path in which CO2 and other greenhouse gas emissions are reduced. These pathways provide input for integrated earth systems models, generating forecasts of changes to sea water chemistry and mollusk production. A two-stage demand system estimates the utility function parameters needed to calculate compensating variation for avoided increases in the prices of oysters, scallops, clams and mussels. The model estimates annual compensating variation for the mitigation path relative to baseline conditions.

Published: Moore, Christopher C. 2015. "Welfare Estimates of Avoided Ocean Acidification in the U.S. Mollusk Market," Journal of Agricultural and Resource Economics 40(1):50-62.

This paper is part of the Environmental Economics Working Paper Series.

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