ACCESS NUMBER: 12489

STUDY TITLE: Assessing Impacts of OCS Activities on Public Infrastructure, Services, 

and Population in Coastal Communities Following Hurricanes Katrina and Rita

REPORT TITLE: Assessing Impacts of OCS Activities on Public Infrastructure Services, 

and Population in Coastal Communities Following Hurricanes Katrina and Rita

CONTRACT NUMBER: M07AC12489

SPONSORING OCS REGION: Gulf of Mexico

APPLICABLE PLANNING AREA(S): Central and Western

FISCAL YEAR(S) OF PROJECT FUNDING: 2008-2014

COMPLETION DATE OF REPORT: January 2015

COSTS: $422,634

PROJECT MANAGER(S): Walter Keithly, J. Matthew Fannin, and Mark Schafer

AFFILIATION: Louisiana State University, Department of Agricultural Economics and 

Agribusiness

ADDRESS: 101 Martin D. Woodin Hall, 110 Union Square, Baton Rouge, LA 70803-

0106

PRINCIPAL INVESTIGATOR(S)

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: Walter Keithly, J. Matthew Fannin, and Mark Schafer

KEY WORDS: spatial shift share, shift-share, fiscal impact, labor markets, coastal 

economies

BACKGROUND: One of the present challenges to BOEM in managing OCS-related 

activities is the impact that hurricanes Katrina and Rita have had and will continue to 

have on the coastal communities that service OCS-related enterprises. Many recent 

studies have investigated economic impacts of OCS-related activities on the larger U.S. 

Gulf Coast economy, long-run socioeconomic change on macro-economic variables for 

coastal parishes, and parish-level fiscal and public service impacts related to OCS 

activities. Each of these studies assesses the economic, fiscal, and public service 

impacts from a continuous annual evolution of OCS-related activities. Unfortunately, 

due to Katrina’s and Rita’s massive destruction of public infrastructure and private 

capital investment in these coastal communities, economies have struggled to rebound 

to pre-storm conditions and made historical modeling approaches to address future 

impacts more challenging.

OBJECTIVES:
ACCESS NUMBER: 12489

1) Develop a socio-economic baseline and assessment of public sector infrastructure 

and services of coastal communities in Louisiana.

2) Develop a Coastal Community Impact Model (CCIM) for assessing public sector 

revenue and expenditure impacts from OCS-related activities.

3) Construct and apply OCS-related or post-storm development (or both) (or policy) 

scenarios to assess short run economic impacts and long run impacts on public service 

revenue and expenditure in coastal Louisiana communities after hurricanes Katrina and 

Rita.

DESCRIPTION: Research evaluated several techniques to understand socio-economic 

change brought about by hurricanes Katrina and Rita. A spatial shift-share analysis 

technique was applied to tease out spatial economic change driven by these natural 

disasters. Further, panel and quantile regression approaches were used to measure the 

Louisiana coastal labor markets and local government changes.

SIGNIFICANT CONCLUSIONS: After hurricanes Katrina and Rita, parishes with 

deepwater ports, and parishes along the Interstate 10 corridor, in Louisiana showed 

measurable employment gains in Mining employment gains in these regions showed a 

positive spillover effect to neighboring parishes. Parishes tended to use their most 

recent year’s public sector expenditures when budgeting future public sector 

expenditures rather than use demographic or economic change. Parish governments in 

coastal Louisiana tended to reduce spending proportionally less as fiscal conditions 

worsened, compared to their proportional growth when fiscal conditions improved.

STUDY RESULTS: A statistically significant regional spatial shift share effect of 

employment change was found separate from the localized employment effects before 

and after hurricanes Katrina and Rita for the Mining sector. Louisiana coastal parishes 

tend to follow the Bureaucratic model for local public sector spending over the median 

voter model. Lafayette Parish showed much resilience in employment to short-term 

reductions in outer continental shelf oil and gas drilling as compared to projections 

suggested by the fiscal module estimates.

STUDY PRODUCT(S): Fannin, J.M., M. Schafer, and W. Keithly. 2015. Assessing 

Impacts of OCS Activities on Public Infrastructure, Services, and Population in Coastal 

Communities Following Hurricanes Katrina and Rita. U.S. Dept. of the Interior, Bureau 

of Ocean Energy Management, Gulf of Mexico OCS Region, New Orleans, LA. OCS 

Study 2015-003. 267 pp.

Adhikari, Arun, J. Matthew Fannin, and Ashok K. Mishra. (Forthcoming). “Decomposing 

Changes in Employment Rate after Natural Disasters.” Journal of Policy Modeling.

Adhikari, Arun, and J. Matthew Fannin. 2013. “Modeling the Louisiana Local 

Government Fiscal Module in a Disequilibrium Environment: A Modified COMPAS 

Model Approach.” Journal of Regional Analysis and Policy. 43(2): 138-156. Available 
ACCESS NUMBER: 12489

online at http://www.jrapjournal.org/pastvolumes/2010/v43/v43_n2_a4_adhikari_fannin.pdf.

Adhikari, Arun. 2012. “Three Essays on Modeling Economic and Fiscal Change for 

communities Under Disequilibrium Following Natural Disasters.” Unpublished Ph.D. 

Dissertation. Dept. of Agricultural Economics and Agribusiness. Louisiana State 

University. May.

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P.I.s affiliation may be different than that listed for Project Manager(s).