Prepared under contract for the:

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Table of Contents

Forward/Acknowledgments....................................................................................... iii

List of Tables.............................................................................................................. iv

Executive Summary.................................................................................................... vi

Introduction and Purpose............................................................................................ 1

The Importance of Economic Information.................................................................. 2

Section I: Diving and Fishing Trips to Coastal Mississippi........................................ 3

Characteristics of Diving Trips and Trip Related Expenditures...................... 3

Characteristics of Saltwater Fishing Trips and Trip Related Expenditures..... 12

characteristics of Charter Boat Firms............................................................... 21

Section II: Economic Impacts of Expenditures Associated with Diving and Fishing

Trips to Artificial Reefs

Descriptions of Economic Impacts.................................................................. 24

Data Sources and Methodologies.................................................................... 25

Results............................................................................................................. 29

Appendix A: Survey Forms........................................................................................ 32

Appendix B: Dive Survey Standard Deviations…………………………………….. 42

This project was conducted under contract to the Mississippi Gulf Fishing Banks and the Mississippi Department of Marine Resources by Southwick Associates, a fish and wildlife economics research firm based in Fernandina Beach, Florida and Alexandria, Virginia (904-277-9765). The authors and primary researchers were Rob Southwick, John Bergstrom, Ph.D., and Jeff Teasley.

Table 1: Characteristics of Trips to Coastal Mississippi for Scuba Diving 5

Table 2: Expenses Incurred on Most Recent Trip to Coastal Mississippi

During Which Scuba Diving Took Place 6

Table 3: Proportion of Scuba Dives Taken to Artificial Reefs in

Coastal Mississippi 7

Table 4: Proportion of Coastal Mississippi Diving Trip in Past 12 Months

Taken Aboard a Charter Boat 7

Table 5: Expenditures on Scuba Diving Equipment During the Past 12

Months by Coastal Mississippi Divers 8

Table 6: Expenditures on Auxiliary Scuba Diving Equipment During the

Past 12 Months by Coastal Mississippi Divers 9

Table 7: Demographic Characteristics of Coastal Mississippi Divers 10

Table 8: Rankings of Preferred Gamefish for Spearfishing by Coastal

Mississippi Divers 11

Table 9: Characteristics of Trips to Coastal Mississippi for Saltwater Fishing 13

Table 10: Expenses Incurred on Most Recent Trip to Coastal Mississippi

During Which Saltwater Fishing Took Place 14

Table 11: Proportion of Saltwater Fishing Trips to Coastal Mississippi in

Past 12 Months Taken Aboard a Charter or Private Boat 14

Table 12: Proportion of Saltwater Fishing Trips to Coastal Mississippi

During Past 12 Months Taken to Artificial Reefs 15

Table 13: Expenditures on Fishing Equipment During the Past 12 Months

by Coastal Mississippi Saltwater Anglers 16

Table 14: Demographic Characteristics of Coastal Mississippi Saltwater Anglers 18

Table 15: Rankings of Preferred Gamefish by Coastal Mississippi

Saltwater Anglers 19

Table 16: Frequency of Charter Boat Firms in Different Categories by Percentage

Split of Charters Between Fishing and Diving 21

Table 17: Charter Boat Fees for Whole and Half Day Trips Charged by Coastal

Mississippi Charter Boat Firms 22

Table 18: Rankings of Preferred Gamefish by Coastal Mississippi

Charter Boat Firms 23

Table 19: Retail Sales Generated by Scuba diving on MS Artificial Reefs 29

Table 20: Retail Sales Generated by Recreational Fishing on MS Artificial Reefs 30

Table 21: The Economic Impacts of Mississippi Artificial Reefs 31

Recreational fishing and diving trips to artificial reefs in coastal Mississippi produce valuable benefits to the state economy. In 1997, it is estimated that the expenditures made by recreational anglers and divers during the course of their reef-related activities generated the following economic benefits for the Mississippi economy:

According to a recent study by the American Sportfishing Association, all saltwater fishing in Mississippi generates $155 million in annual retail sales and supports 3,988 jobs. This study indicates that about 25 percent of all expenditures and jobs supported by marine fishing in Mississippi could be associated with artificial reefs. Previous studies on scuba diving could not be identified. Therefore comparisons cannot be provided. Detailed information on trip expenditures and total trips to artificial reefs, as well as demographic data on Mississippi’s divers and anglers who use artificial reefs, are provided in this report. Please review the text for greater details.

This study had two basic components. One component was estimation of total expenditures associated with fishing and diving trips to artificial reefs in coastal Mississippi. This component required the design and conduct of three surveys: saltwater angler survey, scuba diver survey, and charter boat survey. These surveys were designed to collect information necessary for estimating total trip related expenditures and the proportion of total expenditures that can be attributed to artificial reef fishing and diving. The second major component of the study was estimating the economic impacts of expenditures attributable to artificial reef fishing or diving on the Mississippi economy. This component required combining the trip expenditure information with an economic model of the Mississippi economy to estimate the impacts of trip related expenditures on specific business sectors and the state economy as a whole. All components of this project and their results are presented within this text.

Many of the driving influences in resource management and utilization originate within state and federal legislatures, government agencies, courtrooms, corporate boardrooms, and media offices. These factors collectively decide not only the financial resources available to manage resources, but also help shape public attitudes that ultimately decide the course and fate of all resource actions and programs. Efforts to initiate positive change and build constructive relationships can be greatly enhanced with sound economic data. Specifically, economics can assist in six general areas:

Legislative Actions: economic information can help gain political support for conservation programs by demonstrating the importance of resource-related activities to constituents and commerce.

Funding Initiatives: greater legislative and/or private funding can be secured by demonstrating the importance of resource related-activities to state residents and commerce.

Establish Management Priorities: used with biological and other sources of data, economics can help government resource managers develop conservation and management priorities and understand the impacts of their actions on local, state and national economies.

Public Communication: economics can help win greater public support for resource-related activities by demonstrating the dependence of many people and communities on local resources such as artificial reefs. Also, economics can help gain the attention of people and organizations who may otherwise not be interested in resources, but who are motivated by commerce and economic issues.

User Management: economics provide insights into people’s actions and motivations thereby helping resource officials effectively manage human use of resources such as artificial reefs.

Habitat Conservation: by demonstrating the values and benefits produced by resource-based harvests and recreation, pressure to develop and alter habitat will be minimized.

Table 1. - Characteristics of Trips to Coastal Mississippi for Scuba Diving, 1997.

Expenditures per respondent on the most recent trip taken to coastal Mississippi during which at least a portion of the trip was spent diving are reported in Table 2. Average total reported trip expenditures were about $353 per respondent spread over such items as lodging, food, commercial transportation, package trips, air tank fills, boat fuel, boat ramp and marina fees, boat rental, dive equipment rental, charter fees, ice, and film.

Table 2. - Expenses Incurred on Most Recent Trip to Mississippi Coast During which Diving Took Place (whether the main purpose of the trip was to dive or not), 1997.

Table 3 summarizes the proportion of total dives taken by respondents in coastal Mississippi during the past 12 months that occurred at artificial reefs. On average, respondents reported that about 50% of their total dives in coastal Mississippi during the past 12 months were to an artificial reef. Table 4 summarizes the proportion of dives taken in coastal Mississippi using a charter boat during the past 12 months. Respondents reported that about 19% of their total diving trips during the past 12 months were taken by charter boat.

Table 3. - Proportion of Scuba Dives Taken to Artificial Reefs in Coastal Mississippi, 1997.

Table 4. - Proportion of Coastal Mississippi Scuba Diving Trips in Past 12 Months Taken Aboard a Charter Boat, 1997.

Expenditures on diving equipment made by Mississippi coast scuba divers during the past 12 months are shown in Table 5. Mean expenditures in 1997 were about $1,672 per respondent spread over common diving equipment including air tanks, regulators, masks, fins, weights, watches, wet suits, knives and other tools. Expenditures made on auxiliary equipment and housing during the past 12 months used primarily to support diving in coastal Mississippi are reported in Table 6. Mean auxiliary equipment and housing expenditures were estimated at about $4,900 per respondent spread over such items as boats, cars, coolers, cameras, boat gear, clothes, and maintenance of boat and dive equipment.

Vehicles, boats and maintenance were the three single largest expenses per diver. It is recognized that probably a minority of divers actually purchased a boat and a vehicle. These expenditures, often ranging from $12,000 to $40,000 each, are large enough to significantly affect the average expenditure for all divers. Also considering that 1996 was an outstanding year in economic terms, expenditures for big ticket items such as boats and vehicles were up considerably. For example, the U.S. Fish and Wildlife Service’s 1996 National Survey of Fishing, Hunting and Wildlife-Associated Recreation reports that 1996 fishing-related expenditures in Mississippi (for fresh and saltwater) were 159 percent higher than in 1991, which was a poor economic year. Also, the same survey shows that anglers’ expenditures in Mississippi for big-ticket items such as vehicles, boats, and trailers increased approximately nine times from 1991 to 1996. This is not unexpected as people tend to forego big-ticket and luxury item purchases in periods of economic uncertainty (1991) and make up for those years they went without those items during periods of extended economic prosperity (1996).

Table 5. - Expenditures on Scuba Diving Equipment During the Past 12 Months by Coastal Mississippi Divers, 1997.

Table 6. - Expenditures on Auxiliary Scuba Diving Equipment During the Past 12 Months by Coastal Mississippi Divers, 1997.

Several expenditures were adjusted. Recognizing that most boats and nearly all vehicles (cars, trucks, etc.) that were purchased to aid individuals’ diving activities are logically used for other non-diving activities, these expenditures were adjusted downward so as not to over estimate the true economic contributions of artificial reef diving. Without better data to deflate these expenditures, the authors deflated boat and vehicle purchases by two-thirds. This estimate was based on the author’s 16 years of experience as a certified diver and that of close diving associates. The survey item for houses and condos purchased near the coast to bring the diver closer to their dive sites was eliminated completely due to the difficulty in estimating a proper deflation factor.

Demographic characteristics of Mississippi coast scuba divers are reported in Table 7. Respondent rankings of preferred gamefish for spearfishing are shown in Table 8. Over 75% of respondents ranked snapper as their first choice for a spearfishing gamefish. Grouper was ranked as the second choice for a spearfishing gamefish by over 45% of respondents, and cobia was ranked as the third choice by 60% of respondents.

Table 7. - Demographic Characteristics of Coastal Mississippi Divers, 1997.

Table 8. - Rankings of Preferred Gamefish for Spearfishing by Coastal Mississippi Divers, 1997.

A survey questionnaire was designed to collect basic information from saltwater anglers describing their trips to coastal Mississippi for fishing, focusing on trip expenditures and fishing at artificial reefs. A copy of the questionnaire is provided in Appendix A. Questionnaires were mailed to a sample of anglers holding Mississippi saltwater fishing licenses in 1996. A cover letter from the Mississippi Department of Marine Resources was included with the questionnaire asking anglers to fill out and return the questionnaire to the department by mail in an enclosed postage-paid return envelope. Approximately 1,500 non-residents were mailed surveys (representing nearly every non-resident license holder – 1,876 were sold, but nearly 350 had incomplete addresses) and a sample of 2,000 residents (out of a license buyer population of 52,000) during the summer and fall of 1997. A second round was mailed after 3 weeks to non-respondents. From both mailings, 653 addresses were undeliverable and 643 were returned by the cut-off date for a response rate of 22 percent. A trade-off existed regarding the length of the questionnaire and the return rate. However, recognizing the large number of returned surveys, the overall effect is considered minimized.

This survey typically only reached people who fished by means other than charter boats. Customers of charter boats do not need a license and therefore may not have purchased one. To account for the expenditures of this group, a separate charter boat survey was conducted. A discussion on the methods and results of the charter survey are presented later in the section.

The results of the saltwater angler survey are summarized in Tables 9-15. Table 9 shows:

1) mean number of trips per respondent for the main purpose of saltwater fishing in coastal Mississippi; 2) mean number of trips per respondent which were not for the main purpose of fishing in coastal Mississippi but during which a respondent spent some of the trip saltwater fishing in coastal Mississippi; and 3) mean number of trips per respondents to coastal Mississippi during which saltwater fishing took place whether or not the trip was for the main purpose of saltwater fishing (totals and averages for the first two trip types). For these three types of trips, Table 9 also provides the mean length of the most recent trip, the total number of different days on the most recent trip on which the respondent went fishing, and the total number of different times on the most recent trip the respondent went fishing (for example, a respondent may fished twice on the same day, once in the morning and once in the afternoon).

Table 9. - Characteristics of Trips to Coastal Mississippi for Saltwater Fishing, 1997.

Expenditures per respondent on the most recent trip taken to coastal Mississippi during which at least a portion of the trip was spent saltwater fishing are reported in Table 10. Average total reported trip expenditures were about $180.91 per respondent spread over such items as lodging, food, commercial transportation, package trips, bait, boat fuel, boat ramp and marina fees, boat rental, ice, and film.

Table 10. - Expenses Incurred on Most Recent Trip to Mississippi Coast During Which Saltwater Fishing Took Place (whether the main purpose of the trip was to fish or not), 1997

Table 11 shows the proportion of saltwater fishing trips in coastal Mississippi in the past 12 months taken by license holders aboard a charter or private boat . The figures in Table 11 indicate that for saltwater fishing license holders, most saltwater fishing trips in coastal Mississippi in the past 12 months were taken aboard a private boat. This information should be used cautiously as the sample was drawn from a list of saltwater fishing license holders. People who only fished via charters do not need a license and may not have received a license. This issue probably reduces the reported percentage of charter boat anglers below the actual percentage. Better charter-specific data is provided in Tables 16-18. Table 12 summarizes the proportion of total saltwater fishing trips taken in coastal Mississippi by anglers during the past 12 months to artificial reefs. Respondents reported that about 28% of their total saltwater fishing trips in the past 12 months to coastal Mississippi were to an artificial reef.

Table 12. - Proportion of Saltwater Fishing Trips to Coastal Mississippi During Past 12 Months Taken to Artificial Reefs, 1997.

Expenditures on fishing and fishing-related equipment made by Mississippi coast saltwater anglers during the past 12 months are shown in Table 13. Mean expenditures in 1997 were about $2,735.32 per respondent. Fishing equipment included rods, reels, line, tackle, nets, electronic fish finders, knives and other tackle and tools. Fishing-related equipment included boats, boat trailers, boat gear, vehicles, and clothes purchased to support fishing activities. Vehicles, boats and maintenance were the three single largest expenses per angler. It is recognized that probably a minority of anglers actually purchased a boat and a vehicle. These expenditures, often ranging up to $40,000 each, are large enough to significantly affect the average expenditure for all anglers. Also considering that 1996 was an outstanding year in economic terms, expenditures for big ticket items such as boats and vehicles were up considerably. For example, the U.S. Fish and Wildlife Service’s 1996 National Survey of Fishing, Hunting and Wildlife-Associated Recreation reports that 1996 fishing-related expenditures in Mississippi (for fresh and saltwater) were 159 percent higher than in 1991, which was a poor economic year. Also, the same survey shows that anglers’ expenditures in Mississippi for big-ticket items such as vehicles, boats, and trailers increased approximately nine times from 1991 to 1996. This is not unexpected as people tend to forego big-ticket and luxury item purchases in periods of economic uncertainty (1991) and make up for those years they went without during periods of extended economic prosperity (1996).

Table 13. - Expenditures on Fishing Equipment During the Past 12 Months by Mississippi Coast Saltwater Anglers, 1997.

Several expenditures were adjusted. Recognizing that most boats and nearly all vehicles (cars, trucks, etc.) that were purchased to aid individuals’ fishing activities are logically used for other non-fishing activities, these expenditures were adjusted downward so as not to over estimate the true economic value of artificial reef angling. Without better data to deflate these expenditures, the authors deflated boat and vehicle purchases conservatively by two-thirds. This estimate was based on the author’s lifetime experience as an avid saltwater angler and that of close fishing associates. The survey item for houses and condos purchased near the coast to bring the angler closer to their fishing locations was eliminated completely due to the difficulty in estimating a proper deflation factor.

Demographic characteristics of coastal Mississippi saltwater anglers are reported in Table 14. Respondent rankings of preferred gamefish are shown in Table 15. Twenty-nine percent of the respondents ranked snapper as their first choice for a saltwater gamefish. Trout was ranked first by 26% of respondents. About 29 percent of respondents ranked redfish as their second choice for a saltwater gamefish. About 28 percent of respondents ranked flounder as their third choice for a saltwater gamefish.

Table 14. - Demographic Characteristics of Coastal Mississippi Saltwater Anglers, 1997.

Table 15. - Rankings of Preferred Gamefish by Coastal Mississippi Saltwater Anglers, 1997.

A questionnaire was designed to collect information from charter boat firms including use of artificial reefs in coastal Mississippi (Appendix A). Questionnaires were sent to a total of 88 licensed operators (duplicate names were excluded) along with a cover letter from the Mississippi Department of Marine Resources and a postage-paid return envelope. Two rounds were sent. Every charter license holder was sent a survey regardless if they engaged in charter operations in the last year or not. A total of 23 questionnaires were returned for a response rate of 26 percent.

Results of the charter boat survey are summarized in Tables 16-18. Table 16 presents the proportion of charter boat trips that are for fishing or diving across various categories. About two-thirds of the firms in the sample reported that 100% of their charters in 1997 were for fishing. Only about 5% of firms in the sample reported more of their charters in 1997 were for diving than fishing (the reported split was 80% diving charters and 20% fishing charters). The average split between fishing and diving charters in the sample was 95% fishing trips and 5% diving trips. Table 16 reports that the mean number of charter trips operated by charter boat firms during the past 12 months was approximately 60 trips. It was reported that almost 40% of these trips were taken to artificial reefs in coastal Mississippi.

Table 16. - Frequency of Charter Boat Firms in Different Categories by Percentage Split of Charters Between Fishing and Diving, 1997.

Table 17 reports mean charter boat fees per person and per boat for whole day and half day trips. Table 17 shows that about 72% of charter boat trips in 1997 were for the whole day. As also shown in Table 17, 86% of charter boat firms in the sample stated that artificial reefs have been a benefit to their business.

Table 17. Charter Boat Fees for Whole and Half Day Trips Charged by Coastal Mississippi Charter Boat Firms, 1997.

Table 18 shows rankings of preferred gamefish by charter boat firms. Over 50% of charter boat firms ranked snapper as their first choice for gamefish. About 26% of respondents ranked king mackerel as their second choice for gamefish. Cobia was ranked as the third choice by approximately 35% of charter boat firms.

Table 18. - Rankings of Preferred Gamefish by Coastal Mississippi Charter Boat Firms, 1997.

- Numbers in bold represent the most often listed gamefish species, within rank, by Mississippi coastal Charter firms.

This section explains and illustrates various economic concepts and terms used within this report. The explanations are relatively standard and it is suggested that individuals comfortable with basic economic concepts skip to the next section.

Economic impacts measure the business and financial activity resulting from transactions in a particular industry. Economic impacts can be separated into three components: direct, indirect and induced:

Direct Impacts

A direct impact is defined as the initial purchase made by the user group or industry under study. For example, when a consumer buys a rod and reel combo from a retailer for $100, there is a direct impact for the retailer, and the economy, of $100.

Indirect Impacts

Indirect impacts imply that sales in one industry affect not only the directly impacted industry, but also the industries that provide supplies and services. For example, the retailer must purchase additional inventory plus pay other costs such as wages, electricity, rent, etc.; the wholesaler must purchase additional goods; the manufacturer must produce rods and reels; the graphite, cork and accessories suppliers must arrange for additional product, and so on. Therefore, the original purchase of a $100 rod and reel, in turn, may benefit a range of other industries and their suppliers.

Induced Impacts

An induced impact results from the wages and salaries paid by the directly and indirectly impacted industries. The employees of these industries, in turn, spend their income on various goods and services such as groceries or a night at the movies. These expenditures are induced impacts. They, in turn, create a continual cycle of indirect and induced effects.

The sum of the direct, indirect and induced impact effects is the total economic impact of the industry or activity under study. As the original retail purchase (direct impact) goes through round after round of indirect and induced effects, the economic impact of the original purchase is multiplied, benefiting many industries and individuals. Likewise, the reverse is true. If a particular item or industry is removed from the economy, the economic loss is greater than the lost retail sales. Once the original purchase is made, each successive round of spending is smaller than the previous round down to the point where the economic benefits are no longer measurable. This is the point where the economic examination ends.

The methods used to generate the economic impact estimates of recreational fishing and diving associated with Mississippi’s artificial reefs are separated into four stages: 1) Compile the expenditure data for divers and anglers,

2) disaggregate the expenditures into retail, wholesale, and manufacturer portions,

1. generate the economic impact estimates by applying the multipliers from the RIMS model to the adjusted expenditures (develop the economic model), and

4) calculate state sales tax, state income tax, and federal income tax revenues.

The data for the economic analyses were obtained from the diver, angler and charter boat surveys described in the previous section. Besides participation information, these surveys collected data on detailed travel, equipment and ancillary purchases made for the primary purpose of either diving or fishing. Travel expenditures were collected for the most recent trip as studies have shown people have a hard time recalling the total value of numerous small purchases over the course of a year (Fish and Wildlife Service, 1989). Travel related items include:

Food Lodging Public Transportation Private Transportation

Boat Fuel Boat Launching Ice Airfills (diving only)

As this study needed to quantify the total expenditures made for artificial reef-related activities over the course of a year, the per-trip expenditures were multiplied by the total number of trips taken over the last 12 months – also collected as part of the angling and dive surveys. All costs were adjusted to reflect the proportion of trips made to artificial reefs. Example, if an angler spent $100 on rods and reels, and reported 20 percent of his trips were to artificial reefs, then only $20 of his annual rod and reel purchases would be applied to this study. Survey respondents were provided a map presenting the locations of all Mississippi artificial reefs. They were asked to report the percentage of all fishing trips made to any of these locations over the past year.

One adjustment was made. Since all artificial reef trips and expenditures made by charter boats are addressed separately, total private boat expenditures were adjusted downward by 18.8 percent for divers and 21 percent for anglers. These percentages reflected the proportion of all trips made by survey respondents via charter boats. Since all charter boat related expenditures are calculated separately from private boat trips, these expenditures had to be eliminated to prevent double counting.

Once the per-trip expenditures for travel-related goods were tabulated, they were multiplied by the total number of trips estimated to have occurred on the coast. The result was the total annual expenditures for travel related items in Mississippi. The number of trips were 2,497 for diving and 850,419 for fishing. The trip estimates for diving were calculated by multiplying the estimated number of divers (113) by the average number of annual trips per diver as estimated by the dive survey. Angler trips were estimated by multiplying the total number of resident and non-resident angler licenses sold (53,824) by the average annual number of trips reported by the returned surveys. After the total travel-related expenses were calculated, they were added to the total annual equipment expenditures for anglers and divers respectively to determine the total reef-related expenditures. Total equipment expenditures were calculated by multiplying the number of divers and anglers by the respective annual expenditures per equipment category as reported by the surveys.

Two alternatives existed to calculate total angler expenditures. The first method, which we used, was to multiply the per-angler expenditures reported in the survey by the number of angler licenses sold. The second method was to multiply the per-angler expenditures by the total number of anglers reported in the U.S. Fish and Wildlife Service’s 1996 National Survey of Fishing, Hunting and Wildlife-Associated Recreation (Survey). The Survey reports approximately 121,000 saltwater anglers fished in Mississippi in 1996. This is slightly more than twice the number of licenses sold. We elected to use the lower number (licenses sold) for several reasons:

1. the survey we conducted asked respondents to report the total amount spent, and then asked how many people did their expenditures pay for. The average survey respondent paid for two people. The Fish and Wildlife Service’s Survey only reported the amount that was spent for that individual’s share of the expenses. Therefore, both surveys balance out.
2. The sample size of the U.S. Fish and Wildlife Service’s Survey is fairly small. The sample size is determined by the responses needed to collect big game hunting data, not fishing data. Big game hunting is typically the toughest data to collect in most states, so it drives the sample sizes. However, in Mississippi where deer hunting is very popular and the coast line for fishing limited, the fact may or may not affect the reliability of the saltwater angler sample. Without knowing for sure, we preferred to use the actual number of licenses sold as this is a certain number.
3. The U.S. Fish and Wildlife Service’s Survey present a slightly larger estimate of the number of Mississippi saltwater anglers. To remain on the conservative side, we selected the lower of the two options.

Expenditures made for charter boat trips were quantified using a different method. To avoid the significant time and cost of surveying charter boat customers, we determined the total number of dive and fishing charter customers through the charter operator survey. Then, the total number of dive and fishing charter trips were each multiplied by the per-trip travel expenses from the angler and diver surveys described in the paragraph above to derive the annual travel-related expenditures spent by charter customers to artificial reefs. Expenses for equipment and other non-travel related items were not included in this analysis as charter boats cover all other costs for each trip such as tackle, boat, etc., as part of their fee. An exception was made for masks, fins, snorkels, weight belts, watches, computers and regulators which are typically personal gear and would be provided by the customer. Boat fuel was also eliminated as this cost is built into the charter fee. Total charter/guide fees were estimated by multiplying the weighted average of full and half day charter fees (as reported by the survey) by the total number of trips (also derived from the survey).

Retail sales were separated into manufacturer, wholesale and retail sub-categories because economic impact analyses treats each segment as separate industries. The amount of each retail sale attributed to each segment is known as a margin.

A margin is the percentage, or mark-up, of a sale attributable to either the retail, wholesale or manufacturing sector. For example, 70 percent of the final retail dollar value of a binoculars sale may be attributed to the manufacturer, 5 percent to the wholesaler and 25 percent to the retailer. This means that the manufacturing industry has earned 70 percent of the final retail price, the wholesaler accrued 5 percent of the sale, and the retailer received 25 percent. Since there are no wholesale or manufacturing activities in the service sector, services are not subjected to the above process.

Data used to calculate trade margins are from the Census of Retail Trade: Measures of Values Produced (1987) and the Census of Wholesale Trade: Measures of Values Produced (1987). These two Department of Commerce documents contain national sales figures for most retail and wholesale industry sectors as well as gross margins. A gross margin is the revenue remaining after the cost of the goods sold is subtracted. To derive margins, each wholesale and retail industry's gross margin was divided by its total sales. This produces the typical price mark-up for that industry. Next, two formulas are applied to estimate the value added (price mark-up) for each sector:

R/(1+R) = retail margin, where R = retail mark-up, and

W/{(1+W)(1+R)} = wholesale margin, where W = wholesale mark-up.

These formulas estimate the percentage of a product's final selling price that accrues to each sector. The manufacturing margin is derived by summing the retail and wholesale margins and subtracting the total from 100 percent.

To estimate the economic impacts of diving and fishing on the state economy, the data were analyzed with the Regional Input-Output model (RIMS-II). RIMS-II was developed by the U.S. Dept. of Commerce, Bureau of Economic Analysis for primary use by the Federal government.

Input-output models, such as RIMS-II, describe how sales in one industry impacts other industries. For example, once an angler makes a purchase, the retailer buys more merchandise from wholesalers, who buy more from manufacturers, who, in turn, purchase new inputs and supplies. In addition, the wages and salaries paid by these businesses stimulate more benefits. Simply, the first purchase creates numerous rounds of purchasing. Input-output analysis tracks how these rounds of purchasing benefits other industries and generates economic benefits.

The relationships between industries are explained through multipliers. For example, an income multiplier of .09 for industry X would indicate that for every dollar received by the industry under study, nine cents would be paid to industry X for its products or services. The RIMS-II model provides multipliers for all major industries in the U.S. The multipliers include direct, indirect and induced effects.

The RIMS-II model includes output, earnings and employment multipliers. The output multiplier measures the total economic effect from economic activity created by the original retail sale. The earnings multiplier measures the total salaries and wages generated from the economic activity created by the original retail sale. The employment multiplier estimates the number of jobs supported by the economic activity resulting from the original retail sale.

To apply the RIMS-II model, diver and angler expenditures are each matched to the appropriate output, earnings and employment multipliers. For example, dollars attributed to gasoline refining are multiplied separately by the earnings, output and employment multipliers specific to gasoline refinement. The resulting estimates describe the salaries and wages, total economic effects, and jobs supported by the refining industry as a result of fuel purchases made during recreational activities. This same process is repeated for all reported expenditures. After all expenditures and multipliers have been applied together, the retail, wholesale and manufacturing results for each category are summed together.

This scope of this study was to estimate the economic impacts of artificial reef-related diving and fishing on the state economy versus the economy of the coast or specific counties. Therefore, statewide RIMS-II multipliers were used instead of county or regional multipliers.

State sales tax estimates are based on state general and fuel sales tax rates. Sales tax revenues are calculated by multiplying all retail purchases, except fuel and categories such as food and many services, by the 1996 state tax rate (excluding local and city taxes). This was added to fuel tax revenue which was determined by multiplying total fuel purchases first by the manufacturing margin (described above) to determine the total percentage of gasoline sales attributed to the manufacturing/distribution sector (where most fuel taxes are charged), then divided by the average manufacturer price per gallon to determine the total gallons sold, and then multiplied by the 1996 state fuel tax rate per gallon.

State income tax revenues were calculated by dividing the total income generated by recreationists’ expenditures by the total number of jobs supported by recreationists’ expenditures. The result was the average income per job. Next, the state standard deduction was subtracted and the remaining amount was multiplied by the appropriate 1996 state income tax rate. The results were then multiplied by the total jobs to derive the final income tax estimate.

Federal income tax revenues were calculated by dividing the total income generated by sportsmens’ expenditures by the total number of jobs supported by sportsmen. The result was the average income per job. From this, a standard deduction of $3,980 was subtracted. The applicable tax rate was then applied according to the 1996 IRS tax schedule for single filers to determine the average tax paid per job. Finally, the average tax paid per job was multiplied by the total number of jobs to determine the total Federal income tax revenue generated by recreationists during 1996.

The economic impacts of diving and recreational fishing activities on artificial reefs is substantial. Table 19 presents the total retail sales for all reef-related diving activities. Table 20 presents the total retail sales resulting from recreational fishing activities over Mississippi artificial reefs. Table 21 presents the economic impacts these retail sales create for the state of Mississippi, both for diving and fishing.

Table 19: Retail Sales Generated by Scuba diving on MS Artificial Reefs:

Table 20: Retail Sales Generated by Recreational Fishing on MS Artificial Reefs:

Table 21: The Economic Impacts of Mississippi Artificial Reefs

The overwhelming portion of economic impacts generated from users of Mississippi’s artificial reefs is derived from recreational fishing. The average job supported from artificial reef related activities pays $18,000 annually. Please note that these jobs, and the pay for each job, is an average of all full time and part time positions. The job and pay estimates reported here are not full time equivalent. The state tax revenues are those earned by the state only and do not include any local sales tax levies or other special taxes that may be earned by local coastal communities. These impacts could be compared to the annual government investment in state artificial reefs to determine the net return to the state economy.

Age 31 31.613 10.763 14 59

Miles from Coast 31 4.171 3.617 0 12.5

Trip Cost 31 352.863 502.293 12 2350

Equip. Cost 31 1672.64 1737.4 0 6370

Auxiliary Cost 31 4900.62 7790.67 0 33725

Annual Cost 31 6573.26 8971.33 0 37509