ACCESS NUMBER: 30949 

STUDY TITLE: Boating Uses, Economic Significance, and Information Inventory for 

North Carolina’s Offshore Area, “The Point” 

REPORT TITLE: Boating Uses, Economic Significance, and Information for North 

Carolina’s Offshore Area “The Point.” Volume II: Economic Analysis of “The Point” and 

Adjacent Counties: Baseline Information, Valuation, and Potential Impacts 

CONTRACT NUMBER: 1435-01-98-CA-30949 

SPONSORING OCS REGION: Gulf of Mexico 

APPLICABLE PLANNING AREA(S): Mid and South Atlantic 

FISCAL YEAR(S) OF PROJECT FUNDING: 1999-2000 

COMPLETION DATE OF REPORT: August 2002 

COST(S); FY 1999 $62,350; FY 2000 $1,945.25; CUMULATIVE PROJECT COST 

$64,295.25 

PROJECT MANAGERS: Steve Ross 

AFFILIATION: North Carolina National Estuarine Research Reserve 

ADDRESS: National Estuarine Research Reserve, 7205 Wrightsville Avenue, 

Wilmington, NC 28403 

PRINCIPAL INVESTIGATOR(S): R.B. Palmquist, P.W. Schuhmann, and J.A. Michael 

KEY WORDS: The Point, commercial fishing, tourism, oil spill 

BACKGROUND: The drilling of one or more exploratory wells in the Atlantic Ocean 

northeast of Cape Hatteras near an area known as “The Point” had been planned, but 

due to a moratorium, the all leases were relinquished in 2000. The State of North 

Carolina and particularly many coastal North Carolina residents were concerned about 

negative environmental effects and the increased possibility of oil spills in the area due 

to both production and increased tanker traffic in the area. Tourism and commercial 

fishing are key industries in the local economy that could potentially be damaged by 

offshore oil and gas production. There might also be significant impacts on recreational 

fishing. 

OBJECTIVES: The purpose of this study is to generate baseline economic information 

for the counties that might be affected, explore the potential economic impacts of an oil 

spill off the Outer Banks, provide information on the value of recreational fishing at “The 

Point,” and estimate the potential losses to recreational fishing at “The Point” if there 

were an oil spill. 
ACCESS NUMBER: 30949 

DESCRIPTION: This study also presents information on the effects of coastal oil 

releases elsewhere to guide the scenarios used here. First, the report describes the 

economies of affected coastal counties and the role of tourism and commercial fishing 

in these areas. Next, the report describes the impact of several significant oil spill cases 

in the U.S. that will be used to develop possible spill scenarios for North Carolina. 

Following that, the appropriateness of economic base and input-output analysis to this 

case is discussed, and the techniques are used to describe the baseline economies and 

to analyze the potential impacts on the coastal economy of an oil spill. With caveats, the 

results in this report have generated baseline information about the economies of the 

coastal counties and the value of recreational fishing. By examining the experiences 

elsewhere with offshore releases, we have generated a range of scenarios and 

estimated the effects on the coastal counties and recreational fishing should there be a 

release off “The Point.” 

The other major area studied in this research is recreational fishing. Using data on 

individual's fishing, we model how decisions are made about where to fish. Such 

decisions are affected by the expected catch of the various species and by the cost of 

getting to the fishing site. Using statistical models, we are able to estimate the role that 

these and other factors play in the decisions. Using the results, we are able to run 

scenarios about the losses to recreational fishermen if fishing at “The Point” is closed 

for various periods. These scenarios are again based on experiences elsewhere 

around the country. 

SIGNIFICANT CONCLUSIONS: In the unlikely event of an oil spill from oil and gas 

activities near “The Point,” both tourism and commercial fishing would be impacted. 

The time of year is critical, with July and August being the months when the greatest 

impact would occur. However, both tourists and fishermen would likely adjust their 

activities by moving to nearby areas. 

STUDY RESULTS: The potential economic impacts of an oil spill resulting from 

proposed oil exploration about forty miles off shore from Cape Hatteras was examined. 

Tourism dominates the local economy and the impacts to this sector are potentially 

large. As a comparison, the tourism losses from a hurricane are much greater. 

Hurricane Fran in September 1996 was estimated to reduce direct tourism expenditures 

in coastal North Carolina by $211 million, much more than the estimated tourism losses 

from a large, summer oil spill (Brothers, 1998). However, the effects of the oil spill 

would be more concentrated than the effects of a major hurricane. 

Although it has a smaller role in the economy, the impacts to the commercial fishing 

sector may be just as important for two reasons. First, the northeast flowing gulfstream 

currents and the distance from shore make it very likely that an oil spill would not reach 

the shore before being contained. In this case, the tourism impacts would be minimal 

while the commercial fishing impacts could still be substantial. Second, the multiplier 

effects of a dollar loss in fishing sales are higher than those in the tourism sector. The 

larger multipliers are because most fishing sales are retained as personal income, and 
ACCESS NUMBER: 30949 

relatively few inputs are imported from outside the region. While this study has 

concentrated on Dare County, the potential fishing impacts are particularly important to 

tiny Hyde County, where the local economy is equally based in fishing and tourism. 

Tourists who avoid the Outer Banks because of an oil spill are likely to choose alternate 

locations rather than forgo their vacations altogether. An oil spill near Cape Hatteras 

would probably be good for the tourism business in Wrightsville Beach or Myrtle Beach. 

Thus, as one broadens the region of analysis, the economic impact of tourism losses 

diminishes although there may be substantial redistribution between areas. In addition 

to generating baseline data, this study has presented the results for various scenarios in 

the unlikely event of the release of oil from the drilling operation. The various scenarios 

used for the impacts on Dare County and the impacts on recreational fishermen are 

almost identical. However, the nature of the numbers generated from the input-output 

model is quite different from the values estimated for the recreational fishing model. It is 

important to interpret them carefully. 

STUDY PRODUCTS(S): Palmquist, R.B., P.W. Schuhmann, and J.A. Michael. 2002. 

Boating Uses, Economic Significance, and Information for North Carolina’s Offshore 

Area “The Point.” Volume II: Economic Analysis of “The Point” and Adjacent Counties: 

Baseline Information, Valuation, and Potential Impacts. U.S. Dept. of the Interior, 

Minerals Management Service, Gulf of Mexico OCS Region, New Orleans, LA. OCS 

Study MMS 2002-045. 32 pp