THE PORT OF HOUSTON AUTHORITY

March 2007 

Estimating Economic Benefits from NOAA PORTS® Information: 

A Case Study of Houston / Galveston 

Estimating Economic Benefits from NOAA PORTS® Information: 

A Case Study of Houston / Galveston 

Report prepared for the Houston Ship Channel users and the Ports of Houston and 

Galveston by Dr. Hauke Kite-Powell of the Woods Hole Oceanographic Institute 

Marine Policy Center through the facilitation of the Houston Galveston Navigation 

Safety Advisory Committee (HOGANSAC). Funding for the report was provided by 

the National Oceanic and Atmospheric Administration (NOAA). The report utilizes a 

PORTS® economic assessment Methodology developed by Dr. Kite-Powell for NOAA 

and published under separate cover as a tool to estimate the economic benefits provided 

by an existing or proposed PORTS®. 

Hauke Kite-Powell 

March 2007 

THE PORT OF HOUSTON AUTHORITY 
 

ii

NOTICE 

Mention of a commercial company or product does not constitute an endorsement by 

NOAA. Use for publicity or advertising purposes of information from this publication 

concerning proprietary products or the tests of such products is not authorized. 
 

iii

Table of Contents 

Summary............................................................................................................................ iv 

Introduction......................................................................................................................... 1 

Economics of Information .................................................................................................. 3 

Quantifying Economic Value ......................................................................................... 3 

Sources of Economic Benefit from PORTS® ..................................................................... 5 

Economic Benefits from Houston/Galveston PORTS®...................................................... 7 

Background: Houston/Galveston PORTS® .................................................................... 7 

General Notes on Value of Houston/Galveston PORTS® .............................................. 9 

Safety ............................................................................................................................ 10 

Avoided Groundings, Commercial Vessels.............................................................. 10 

Reduced distress cases, recreational vessels............................................................. 14 

Efficiency...................................................................................................................... 14 

Increased cargo carried per transit ............................................................................ 14 

Reduced delays ......................................................................................................... 14 

Improved SAR performance..................................................................................... 15 

Environmental Protection: improved spill response..................................................... 15 

Enhanced Value of Recreation Activities..................................................................... 16 

Boating...................................................................................................................... 16

Fishing....................................................................................................................... 16 

Beach Visits .............................................................................................................. 17 

Enhanced Weather Forecasts ........................................................................................ 17 

General Weather and Coastal Marine Forecasts....................................................... 17 

Storm Surge Forecasts .............................................................................................. 18 

Qualitative Effects and Values...................................................................................... 18 

Scientific Research/Water quality management ....................................................... 18 

Civil Engineering Projects ........................................................................................ 18 

Acknowledgements........................................................................................................... 21 

Bibliography ..................................................................................................................... 23 
 

iv

Summary 

This report estimates the economic benefits derived from the Physical Oceanographic 

Real-Time System (PORTS®) installation at Houston/Galveston. We estimate benefits in 

dollar terms to the extent possible, and also describe non-quantifiable benefits. 

Sources of economic benefit from Houston/Galveston PORTS® information include: 

• Greater draft allowance/increased cargo capacity and reduced transit delays for 

commercial maritime transportation (water level information) 

• Reduced risk of groundings/allisions for maritime traffic (currents and wind 

information) 

• Enhanced recreational use of Galveston Bay by boaters and fishermen (winds, 

weather forecasts, and other information) 

• Improved environmental/ecological planning and analysis, including hazardous 

material spill response 

In Table 1 on the following page, we summarize estimates of the annual economic 

benefit to a range of activities. We divide these estimates into three categories: those 

estimates for which there is direct evidence and in which we can have a high degree of 

confidence; those that are likely to be realized at present but for which direct evidence is 

lacking and/or significant assumptions are required; and those that are more speculative 

or potential, and could be realized with the full utilization of Houston/Galveston PORTS®

data by all potential users. 

Our estimates suggest that some $11.9 million in direct annual economic benefits can be 

attributed to PORTS® data in the Houston/Galveston area with a reasonable degree of 

confidence. Another $2.2 to $3.7 million in annual benefits are less easily traced but may 

be linked to PORTS®; and an additional $1.8 to $2.8 million could potentially be realized 

with the full utilization of PORTS® data. Thus, our best estimate of the presently realized 

quantifiable benefit from Houston/Galveston PORTS® data is $14.1 to $15.6 million. 

This estimate is best interpreted as a lower bound on total benefits flowing from PORTS®

data, since not all uses of PORTS® data can be quantified. 

Most of these benefits are in the nature of avoided costs (increased producer surplus, or 

profit) for commercial operations in the Houston Ship Channel and adjacent waterways 

and approaches, and avoided costs or increased consumer surplus, including non-market 

benefits, for recreational users of Galveston Bay. 
 

v

confidence level source of benefit nature of 

benefit 

approx. annual value 

(2006 $) 

avoided groundings, 

commercial vessels: 

PORTS® contributes to 

60% reduction in 

grounding risk 

avoided costs 

(surplus) 

10,500,000 

increased draft/reduced 

lightering, inbound cargo 

efficiency 

(surplus) 

250,000 

reduced delays, 

commercial vessels 

avoided costs 

(surplus) 

125,000 

High confidence 

reasonably good 

confidence and/or direct 

evidence for benefits 

improved spill response 

(present practice) 

avoided costs 

(surplus) 

1,000,000 

 Subtotal – high confidence benefits $11.9 million 

reduced distress cases, 

recreational boats 

avoided costs 

(surplus, 

value of life) 

200,000 

improved weather forecasts non-market 

consumer 

surplus 

1,500,000 – 

3,000,000 

Lower confidence 

more significant 

assumptions required to 

estimate benefits; less 

direct evidence 

improved storm surge 

forecasts 

avoided costs 

(surplus) 

500,000 

 Subtotal – lower confidence benefits $2.2 -- 3.7 million 

improved spill response 

(with add’l models & 

infrastructure) 

avoided costs 

(potential; not 

realized at 

present) 

1 – 2,000,000 

enhanced recreational 

boating 

non-market 

consumer 

surplus 

620,000 

enhanced recreational 

fishing 

non-market 

consumer 

surplus 

30,000 

Potential or speculative

these benefits could be 

realized with additional 

investment or a higher 

level of utilization of 

PORTS® data 

enhanced beach recreation non-market 

consumer 

suplus 

120,000 

 Subtotal – potential or speculative benefits $1.8 – 2.8 million 

Non-quantified benefits Educational use non-market N/A 

Scientific research non-market N/A 

Table 1: Summary of Estimated Annual Benefits from Houston/Galveston PORTS®
 

0
 

1

Introduction 

NOAA Physical Oceanographic Real-Time Systems (PORTS®) are near-shore ocean 

observing systems now operating in thirteen locations around the United States 

(www.tidesandcurrents.noaa.gov/ports.html). PORTS® installations provide near-real 

time information and, in some cases, forecasts about water levels and currents at specific 

points in a coastal water body. In some instances, they also provide information on wind 

speed and direction, barometric pressure, salinity, air gaps on bridges, and air and water 

temperature. In addition, co-located sensors (i.e., possibly operated by other parties and 

not part of the official NOAA PORTS® installation) may provide information on wave 

height, visibility, and other parameters, as well as digital still or video images of portions 

of the waterbody. 

The information made available by PORTS® results in economic benefits because it is 

used by decision makers to make choices that affect economic well-being. To estimate 

the benefits that may accrue from a PORTS® installation, it is necessary to compare the 

outcome of these choices under two scenarios: the PORTS® scenario, in which the 

PORTS® data are available to decision makers; and a non-PORTS® scenario, in which 

these data are not available. The data and products enabled or affected by the PORTS®

installation influence decisions made in industry, recreation, the research community, and 

public administration, changing the economic outcome from these activities, and thereby 

affecting economic well-being. The difference in outcome under the two scenarios is the 

benefit derived from the investment in PORTS®. 

The most accurate measure of this benefit is the marginal increase in what economists 

call consumer and producer surplus. Consumer surplus is the difference between what 

consumers are willing to pay and what they actually pay. Producer surplus is the 

difference between the price received for a good or service sold and the costs of 

producing that good or service. Because this surplus is often difficult to estimate, 

economists also use other measures of benefit, such as the change in value added 

(contribution to Gross Domestic Product (GDP)), or reduction in cost to achieve the same 

level of output. These measures typically are less precise estimates of true social surplus. 

Usually, these measures are estimated as annual values at the level of a firm or other 

economic unit, and then aggregated over geographic regions and industries to estimate 

total annual benefits. 

Benefits represent only one side of the investment decision. To estimate net benefits, or 

rates of return, it is necessary to have information on costs as well. In the case of 

PORTS®, there are two main categories of costs: the cost of data collection, quality 

control, processing, and archiving; and the cost of generating from these data the 

products that decision makers ultimately use. In the case of PORTS®, the first 

component (the direct capital and operating cost of the PORTS® installation) is usually 

well understood. The second component generally includes activities carried out by both 

public and private sector organizations, and these costs are likely to be more difficult to 

specify. The analysis of costs associated with the generation and use of PORTS® data is 

outside the scope of this report. 
 

2
 

3

Economics of Information 

A product, such as a real-time water level report for a harbor, represents information 

about the ocean environment. This information has value when it can be used by an 

individual or an organization to make a better decision – that is, a decision that results in 

an outcome that is economically superior. The standard economic approach to valuing 

information requires: 

• A description of the information being valued and of the state of knowledge about 

the phenomena or conditions it describes. Typically, information is useful 

because it reduces uncertainty about the present or future state of nature in a 

particular context – for example, the location of a particular depth contour, or the 

exact water level in a dredged channel. 

• A model of how this information is used to make decisions. Most decisions are 

made in the face of imperfect information, or uncertainty about how conditions 

will in fact develop and what the exact outcome will be. For example, PORTS®

data may be used in decisions involving the navigation of commercial or 

recreational vessels. Here, the critical information concerns water depth, current 

speed and direction, wind speed and direction, or other information needed for the 

safe and efficient operation of a vessel. 

• A model of how these decisions affect physical outcomes. Modeling the 

difference in outcome with and without the product in question usually requires 

making assumptions about how the decision makers will respond to the lack of 

the product in question. 

• A model of how physical outcomes can be translated into economic outcomes. 

The value of a product is the difference between the expected value of the 

outcome of decisions using that product, and the expected value of the outcome 

without the product. 

Quantifying Economic Value 

The most appropriate measure of economic value of information resulting from a change 

in user decisions or behavior is the change in what economists refer to as “social 

surplus.” Social surplus has two components: producer surplus and consumer surplus. 

Producer surplus in this case is generally a reduction in costs to businesses. Consumer 

surplus, as in the case of the surfer, is the difference between what one would be willing 

to pay and what one actually pays for, for example, a recreational experience. “Social 

surplus” is the sum of producer and consumer surplus. It is the appropriate measurement 

because it assures that only the value in excess of costs is counted, making it a unique 

measure that avoid the artificial inflation of values by double counting. 

The problem with social surplus and both of its elements is that they can only be 

measured using exacting, time-consuming, and costly techniques. Other measures of 

economic activity (broadly termed “economic impacts”) such as the value of sales at the 
 

4

wholesale or retail level, or value added (the most common example of which is GDP), 

are widely available, but measure social surplus in a rather imperfect manner. 

In other situations, estimates of social surplus may be available but data to support an 

explicit model of how PORTS® information is used in economic decisions are lacking. 

In such cases, an order-of-magnitude estimate of potential value of PORTS® data may be 

obtained by applying a rule of thumb developed by Nordhaus (1996) and others: the 

value of weather and climate forecasts to economic activities that are sensitive to 

weather/climate tends to be on the order of one percent of the economic activity in 

question. 

Studies of economic values from investments such as PORTS® thus often face a dilemma 

due to data constraints. The most appropriate measure is the least available, while the 

most available measures are the least appropriate. This is a major reason why these 

estimates of economic benefits often must be considered approximate. 
 

5

Sources of Economic Benefit from PORTS®

PORTS® data, and products derived from PORTS® data, are used by a wide range of 

industrial, recreational, and public sector organizations and individuals. They include 

maritime shipping interests, recreational boaters and fishers, and marine resource and 

environmental managers. 

For the purpose of this analysis, we use the following classification of benefits from 

PORTS® installations: 

• Improved Safety of Shipping and Boating 

o Avoided groundings, commercial vessels 

o Avoided distress cases, recreational vessels 

• Improved Efficiency of Marine Operations 

o Increased cargo carried per ship call (greater loaded draft) 

o Reduced delays (less allowance for error/margin in piloting decisions) 

o Improved Search and Rescue (SAR) performance (surface currents) 

• Improved Environmental Protection and Planning 

o Improved hazardous material spill response 

o Improved environmental restoration/conservation activities 

• Improved Recreational Experiences 

o Enhanced value from boating decisions (power, sail, windsurfing, 

kayaking, etc.) 

o Enhanced value from fishing decisions 

o Enhanced value from beach visit decisions 

• Improved Weather and Coastal Marine Conditions Products 

o Improved general weather forecasts 

o Improved coastal marine weather forecasts 

o Improved storm surge forecasts 

• Science and Education 

o Use of PORTS® data in scientific research 

o Use of PORTS® data in secondary education 

While this list is not exhaustive, it captures to the best of our knowledge all of the major 

benefits generated by PORTS® data. 

In each of the benefit categories discussed above, it is possible to estimate the potential 

value of PORTS® data by assuming that all potential users of the information in fact 

make use of it as described. This potential value is an upper bound of sorts on what is 

likely to be the value actually realized during a given year, since the number of actual 

users is likely to be less than 100% of potential users, 100% of the time. Potential value 
 

6

is often easier to estimate than actual value because estimating potential value does not 

require data on how many users actually use the PORTS® data, and how often. 

In situations where data or model limitations do not permit the application of the benefit 

frameworks described above, it may be possible to estimate at least the general scale of 

potential benefit by applying a “one percent proxy rule.” Formulated by Nordhaus 

(1986) and other economists on the basis of experience with a number of 

forecast/nowcast value of information studies of industries and activities sensitive to 

weather, this rule suggest that the value of weather nowcast/forecast information to 

economic activity sensitive to weather conditions is generally on the order of one percent 

of the economic value generated by the economic activity. There is, of course, no 

guarantee that this rule will hold in all cases; but where no better estimate can be 

constructed, it provides an order of magnitude estimate of value that is likely to be 

reasonable. 
 

7

Economic Benefits from Houston/Galveston PORTS®

Background: Houston/Galveston PORTS®

The Houston/Galveston Physical Oceanographic Real-Time System (PORTS®) is a 

public information acquisition and dissemination technology developed by the NOAA 

National Ocean Service (NOS) and operated in partnership with the Houston/Galveston 

Navigation Safety Advisory Committee (HOGANSAC). PORTS® was first deployed in 

the waters around Houston and Galveston in 1996-97. Communication links between 

sensor stations and the data acquisition system were upgrade in 2001 to improve 

reliability of transmission; and additional equipment upgrades were carried out in late 

2006 and early 2007. The Houston/Galveston PORTS® infrastructure is operated and 

maintained under a contract between NOS and the Conrad Blucher Institute for 

Surveying and Science at Texas A&M University-Corpus Christi, which operates the 

Texas Coastal Ocean Observation Network (TCOON). 

Houston/Galveston PORTS® provides information in near-real-time on currents, water 

levels, winds, air and water temperatures, barometric pressure, and conductivity/salinity 

at multiple locations with a data dissemination system that includes telephone voice 

response and World Wide Web/Internet sites 

(www.tidesandcurrents.noaa.gov/hgports/hgports.shtml?port=hg ; 

1-866-447-6787 (1-866-HGPORTS)). Measurements are taken at six-minute intervals at 

six locations in Galveston Bay and surrounding waters, as shown in Table 2. The 

geographic locations of the sensors are illustrated in Figure 1. 

 water 

level current wind 

air and water 

temperature 

barometric 

pressure 

conductivity/ 

salinity 

Morgans Point X X X X X X 

Eagle Point X X X X X 

Bolivar Roads X 

North Jetty X X X X X 

Pier 21 X X X 

Pleasure Pier X X X X 

Table 2: Houston/Galveston PORTS® sensor stations 
 

8

Figure 1: Houston/Galveston PORTS® sensor locations. 

Source: www.tidesandcurrents.noaa.gov/hgports/hgports.shtml?port=hg 

In 2004, NOS made available to the public a forecast guidance product that predicts 

water levels, currents, and winds for Galveston Bay, incorporating PORTS®

measurements and meteorological forcing, on one-hour increments for a forecast horizon 

of 30 hours. The Galveston Bay Operational Forecast System (GBOFS) forecast product 

is available on the internet (www.tidesandcurrents.noaa.gov/ofs/gbofs/gbofs.html) 

together with PORTS®-based nowcasts. The GBOFS water level forecast is illustrated in 

Figure 2. 
 

9

Figure 2: Galveston Bay Operational Forecast System (GBOFS) water level forecast guidance. 

Source: www.tidesandcurrents.noaa.gov/ofs/gbofs/gbofs.html

Houston/Galveston PORTS® stations operate in parallel with a wider network of sensors 

that make up the Texas Coastal Ocean Observation Network (TCOON). The network of 

water level sensors that became TCOON was first established by the National Ocean 

Service and the Texas General Land Office in 1988, and today consists of more than 40 

stations along the coast of Texas (www.tidesandcurrents.noaa.gov/tcoon.shtml) that are 

managed by the Division of Nearshore Research at Texas A&M University, Corpus 

Christi. TCOON sensors monitor water level, wind speed, barometric pressure, salinity, 

water quality, and other environmental data at three hour intervals. 

General Notes on Value of Houston/Galveston PORTS®

One set of measures of the overall utilization of the Houston/Galveston PORTS® data are 

the number of “hits” or visits to the Houston/Galveston PORTS® web pages, and the 

number of phone calls to retrieve Houston/Galveston PORTS® data via voice recordings. 

Historical data on both measures are shown in Figure 3. 
 

10

0

100

200

300

400

500

600

700

Jan00Jul00Jan01Jul01Jan02Jul02Jan03Jul03Jan04Jul04Jan05Jul05Jan06Jul06Jan07

web site hits (1,000s)

0

500

1,000

1,500

2,000

2,500

3,000

3,500

voice system calls

Figure 3: Monthly number of web site hits (left axis, red) and telephone/voice requests (right axis, blue) for 

Houston/Galveston PORTS® data, 2000-2006. Horizontal lines indicate mean values for both series. 

Source: NOAA CO-OPS. 

There is no significant overall trend in the data over the seven-year period from 2000 to 

2006, although use of PORTS® data seems to be higher during the hurricane season. 

Web site visits average 340,000 per month, or 4.1 million per year; voice system requests 

average just over 2,200 per month, or about 27,000 per year. 

These use statistics do not distinguish between user types, and there is little hard data on 

the utilization of PORTS® data by specific user categories. No systematic survey has 

been undertaken to determine how many users from each user group utilize 

Houston/Galveston PORTS® information, how often they do so, and how they utilize the 

information. Nonetheless, the web and voice use measures illustrated in Figure 3 are 

compatible with potential use estimates developed in the sections that follow, including 

annual waterways usage by some 200,000 commercial vessel transits and 3.1 million 

recreational boat trips. Anecdotal data gathered in the course of research for this report 

suggests that PORTS® data are used extensively by the maritime operations and safety 

communities, and by the National Weather Service in generating both marine and general 

weather forecasts and warnings. Awareness and utilization of PORTS® among 

recreational users is relatively strong in the Houston/Galveston area, but remains below 

the full potential. This leads to our classification (see Executive Summary) of many 

recreational benefit estimates as more speculative or potential. To achieve a higher 

degree of confidence in these estimates, it will be necessary to carry out specific surveys 

of these users. 

Safety 

Avoided Groundings, Commercial Vessels 

PORTS® data have been available to maritime operations in the Houston/Galveston area 

since 1996/97, when the system was first installed. Major upgrades were performed to 

improve the reliability of the system, particularly the communication links with sensor 

stations, in 2000/01. Although they do not prove causality, historical data on grounding 
 

11

rates for commercial transits in the Houston/Galveston area suggest that a reduction in 

grounding risk accompanied the introduction of PORTS® in the late 1990s. 

Data on commercial vessels grounding are available from the US Coast Guard’s accident 

databases known as CASMAIN (1981-90) and MSIS (1992-present). Transit data are 

based on ACE Waterborne Commerce Statistics annual summaries (see USACE, various 

years). For our purposes, a “transit” is a vessel movement, so that a port call usually 

consists of two transits: one into and one out of the port. Depending on which waterways 

are included, the Houston/Galveston area hosts about 25,000 ship transits and 150,000 

tug/tow transits annually at present. 

0

0.5

1

1.5

2

2.5

1990 1992 1994 1996 1998 2000 2002 2004

groundings per 1,000 transits

ships

tug/tows

Figure 4: Grounding rates (5-point moving average) for commercial transits in the Houston/Galveston VTS 

region, based on data from US Coast Guard and US Army Corps of Engineers. 

Figures 4 shows time series of grounding rates in the Houston/Galveston area for selfpropelled ships and tug/tows. Grounding rates for all vessels decreased significantly 

from the 1980s to the early 1990s, possibly due to operational changes motivated by the 

aftermath of the Exxon Valdez accident and the Oil Pollution Act of 1990. The data also 

show a second distinct decline in grounding rates in the late 1990s, during the time when 

PORTS® data first became available. This correlation does not establish causality; other 

factors may well have contributed to this apparent decline in grounding risk. However, it 

is plausible that the availability of PORTS® data materially contributed to this 

development. Grounding rates for self-propelled ships appear to have decreased from 0.5 

groundings/1,000 transits during 1993-1997 to about 0.25 groundings/1,000 transits 

during 2002-2005; grounding rates for tug/tows decreased from 1.0 to 0.4 during the 

same intervals. This is a decrease in grounding rates of 50% for ships and 60% for 

tug/tows – at present traffic levels, a reduction of 6 ship groundings and 90 tug/tow 

groundings per year from what would take place if pre-PORTS® rates had prevailed. 
 

12

The availability of PORTS® data was perhaps the most significant change in the maritime 

operating environment of the Houston/Galveston region during the late 1990s. Given 

these developments, a plausible range for the decrease in grounding risk for in the region 

attributable to PORTS® data is half of the risk reduction seen in the data during the late 

1990s. This implies that PORTS® data prevent about three ship (deep-draft) groundings 

and 45 tug/tow groundings per year in the Houston/Galveston area. 

The economic loss associated with a grounding is the sum of all costs associated with the 

accident. Costs are classified as either internal or external. Internal costs are those 

arising from the vessel involved in the accident and other parts of the marine 

transportation system; they include damage to the vessel, loss of cargo, injury or death of 

crew members, cleanup costs, and delays due to blockage of the route, among others. 

External costs are those incurred outside the transportation system, including 

environmental degradation, human health risks, lost fishery revenues, and lost 

recreational benefits, among others. Both external and internal costs will vary with the 

severity of the accident; the size of the vessel(s) involved, their construction, and their 

cargo; and other factors. External costs will also vary greatly with the environmental and 

human health sensitivity of the location. 

We use here an estimate of the cost of groundings that is based on the approach taken in 

the Coast Guard’s Port Needs Study (PNS) (USCG 1991), taking into account relevant 

parameters such as vessel size, nature of cargo, and nature of the transit area. The PNS 

study included in its loss estimation each of the following categories of losses (see 

Schwenk 1991): 

 - loss of human life and personal injuries, 

 - vessel hull damage, 

 - cargo loss and damage, 

 - economic cost of the vessel being out of service, 

 - spill clean up costs, 

 - losses in tourism and recreation, 

 - losses in commercial fish species, 

 - impacts on marine birds and mammals, 

 - losses due to LPG/LNG fires and explosions, and 

 - bridge and navigational aids damage. 

Not included in the estimation procedure are damages to on-shore facilities and water 

supplies, legal fees for litigation over vessel casualties, cumulative effects of consecutive 

spills, effects of chemical releases into the air, and non-use values. 

A summary of the PNS loss estimation procedure is provided by Schwenk (1991). In 

addition to its own procedures, PNS draws on several sources for damage estimation 

models. These include the Natural Resource Damage Assessment Model (see below); 

several models developed by A.T. Kearney (1990) for losses in tourism, property values, 

and subsistence households; and models by ERG (1990) for losses due to cleanup costs 

and to vessel damage and repair. The PNS data, which reflect inputs from all of these 
 

13

models, are used to estimate the losses associated with one accident involving various 

vessel types (tanker, dry cargo, tug/barge) and sizes in each study area. 

Perhaps the most volatile element in the PNS loss estimation procedure is the model used 

to calculate natural resource damages. These damages -- loss of fish, birds, marine 

plants, and other species -- account for between 10 and 40 percent of total damages, 

depending on the location and nature of the accident. The PNS results are based on a 

version of the Department of the Interior's Natural Resource Damage Assessment Model 

for Coastal and Marine Environments (NRDAM/CME) which has since been replaced by 

a new version of NRDAM/CME (see Federal Register 59(5):1062-1189). The new 

version includes a new model of restoration costs and makes use of updated biological, 

chemical, and economic data. Preliminary analysis of the new model's parameters 

suggests that there is no consistent way to scale results from the previous version to 

reflect the likely new model results. The cost estimation algorithm we have used here 

therefore includes natural resource damage estimates based on an "old" version of the 

NRDAM/CME. 

Based on the PNS data, the average economic loss associated with self-propelled ship 

grounding in the Houston/Galveston region is $3 million for tankers and $1 million for 

dry cargo vessels, and the average economic loss associated with tug/tow groundings is 

$100,000 (in current 2006 dollars). These averages take into account the distribution of 

vessel size and cargo for each port, and also reflect seasonal averages for environmental 

losses. Tankers account for over half of the Houston/Galveston ship transits. Using the 

assumptions described above, the reduction in grounding risk due to PORTS® translates 

into a conservative estimate of $10.5 million in avoided costs per year. 

Anecdotal evidence derived from interviews with vessel operators and pilots supports the 

conclusion that PORTS® data have significantly improved the safety of maritime transits 

in the Houston/Galveston area. Tug/tow operations are strongly affected by winds and 

currents. Winds above 20-25 knots make if difficult to safely maneuver many tows due 

to horsepower limitations, and associated chop on open sections of waterways can 

generate excessive stress on couplings between barges. There are a limited number of 

safe “hold” points for tows as they approach exposed sections of their routes in the 

Galveston Bay area. Having advance notice of wind conditions in the Bay is therefore of 

great importance to tow operators. Strong channel currents, particularly at the 

intersection of the Intracoastal Waterway and the Houston Ship Channel at Bolivar Roads 

(Area 25/26), can complicate turning maneuvers for tows; and knowledge of real-time 

current speed and direction can help operators plan and execute these maneuvers safely, 

particularly in high-traffic areas. Houston VTS watchstanders routinely field requests by 

radio from tow operators for PORTS® wind and current information. For self-propelled 

ships and for tows, the current at Morgan’s Point is often cited as a critical factor in safe 

execution of maneuvers between the Ship Channel and nearby docks. Both Houston and 

Galveston-Texas Pilots report an improvement in safety and a reduced risk of grounding 

and collision with PORTS® information. 
 

14

Reduced distress cases, recreational vessels 

Nationally, hazardous water and weather are a causal factor in about 10% of recreational 

boating accidents. About 130,000 recreational boats are registered in the counties 

adjacent to Galveston Bay1 as of 2005-06 (State of Texas). If we assume that recreational 

boating activity and accident rates in the Houston/Galveston area are similar to those in 

other parts of the US Gulf Coast, this suggests about seven significant weather-related 

accidents per year in the Houston/Galveston region, with 0.5 fatalities, 5 injuries, and 

$100,000 in property damage. These numbers are consistent with search and rescue 

statistics provided by the US Coast Guard in Houston (see below). 

If we assume a value of life of $4 million, the direct cost associated with weather-related 

recreational boating accidents on Galveston Bay is on the order of $2 million/year. All of 

these could potentially be avoided by scrupulous use of PORTS® and other weather 

information. Observers knowledgeable about the Galveston Bay recreational boating 

community suggest that between 25 and 50 percent of boaters are aware of, and make use 

of PORTS® data today. A conservative estimate of benefits from PORTS® in this 

instance may be 10% of expected losses, or $200,000/year. 

Efficiency 

Increased cargo carried per transit 

The majority of draft-constrained transits in the Houston/Galveston area are crude oil 

imports carried in VLCCs or Suezmax tankers, many of which are lightered by use of 

shuttle tankers (also generally draft constrained) prior to entering the port. (There are 

also some dry bulk export transits that are draft constrained in channel segments north of 

the main Houston Ship Channel.) Approximately 400 VLCCs or Suezmax arrivals take 

place over the course of the year; and an estimated 8% of these tanker arrivals take place 

on days when weather events (strong winds from the north associated with cold fronts, or 

strong easterly winds) produce water levels in Houston/Galveston that differ significantly 

(often by 2 to 3 feet) from predictions based on lunar cycles. These are situations where 

operational decisions – to what draft to load the shuttle tanker – can make use of 

PORTS® water level data and forecasts. 

If 10 percent of the tank ship arrivals taking place during such weather events can use 

PORTS® data to optimize loading of shuttle tankers and the entry of the delivering vessel 

to maximize draft carried into the terminals and thereby eliminate one shuttle tanker 

loading, this translates to 3.2 eliminated shuttle tanker movements per year. At a cost of 

$80,000 per shuttle tanker movement (US Army Corps of Engineers), this is equivalent to 

a cost savings of about $250,000/year. 

Reduced delays 

Pilots for both Houston and Galveston indicate that certain vessel movements – primarily 

tankers and cruise ships – are sometimes delayed by water level, wind, or current speed 

 

1

 Brazoria, Chambers, Fort Bend, Galveston, Hardin, Harris, Jefferson, Liberty, Matagorda, and 

Mongomery. 
 

15

considerations. Hard data on these delays are not available. If we assume, 

conservatively, that PORTS® data reduces delays in one percent of ship transits (250 

transits/year) by 60 minutes, and an average operating cost of $500/hr, this translates to 

$125,000/year in operating cost savings. 

Improved SAR performance 

According to search and rescue officials (K. Luttrell p.c., 2006), PORTS® data (primarily 

wind and current information) were used in six search and rescue (SAR) cases in the 

Houston-Galveston area in a recent 12-month period. The corresponding case duration 

(time during which SAR assets were actively engaged) ranged from 10 to 17 hours. If 

PORTS® data can improve the effectiveness of the SAR response in such a way as to 

reduce the average case duration, this can potentially result in both direct cost savings 

and reduced loss of life. The former effect is small, possibly on the order of 

$10,000/year; the latter is captured by the estimate of benefits from “Reduced distress 

cases, recreational vessels” above. 

Environmental Protection: improved spill response 

There has not been a major vessel-related spill in Houston/Galveston since 2001. On 

September 22, 2001, the Liberian tank ship New Amity collided with the tank barge NMS 

1486 (UTV Carson) in the Houston Ship Channel. As a result, some 50,000 gallons (120 

tons) of intermediate fuel oil spilled into the waterways from the New Amity’s fuel tank. 

In part because of warm water temperatures, the oil spread quickly to near-shore areas 

beyond the reach of skimmers (O’Brien 2002), highlighting the importance of real-time 

surface current information to effective spill response. The Ship Channel was 

temporarily closed and about 20% of the spilled oil was eventually recovered. 

Damage assessment model exercises suggest that damages associated with a major spill 

in the Houston/Galveston area would likely range from $500 million to $1 billion. It is 

not known precisely how the availability of PORTS® data would influence spill response 

efforts in the event of such a spill, or how that change in response would affect (reduce) 

environmental damages. If we assume, conservatively, a 1% to 5% reduction in damages 

due to the use of PORTS® data in spill response activities, and that such spills will 

happen in the Houston/Galveston region once every 25 years, the expected annual benefit 

is between about $200,000 and $2 million. 

This estimate is in line with anecdotal evidence about the use of current information and 

models in spill response activities. Martin et al. (2005; p.c. 2007) list 21 spills along the 

Texas coast between 1996 and 2006 for which surface current data from the Texas 

Automated Buoy System (TABS) were used in planning spill response measures. They 

estimate that near-real-time current information saved at least $225,000 in avoided costs 

during the response to the 1996 Buffalo Marine Barge 292 spill in the Houston Ship 

Channel. 

According to spill response officials, present technology and practice typically allows for 

the recovery of about 10 percent of spilled oil (Watabayashi, p.c. 2005). Some oil spill 

modelers suggest that greater improvements in cleanup effectiveness will be possible 
 

16

once PORTS®-like data are integrated directly with more sophisticated hydrodynamic 

current models and models of hydrocarbon transport and fate. Such models exist today 

and are used in risk assessment exercises, but only to a limited extent in guiding “live” 

spill response activities. If these models are combined with appropriate spill response, 

modelers suggest that it may be possible to increase recovery to 20% and target recovery 

efforts more effectively to minimize environmental damage (French McCay p.c. 2005). 

If this can be achieved, environmental damages may be reduced by an additional 5% or 

so. In Houston/Galveston, using the above assumptions, that means another $1 million to 

$2 million/year in expected avoided losses. 

Enhanced Value of Recreation Activities 

It is estimated that between 25 and 50 percent of the recreational boating community 

around Galveston Bay is aware of and (at least occasionally) making use of PORTS® (L. 

Wise, p.c. 2006). In a similar setting (Tampa Bay), about 9% of boaters surveyed in 

2003-2004 indicated that they would like to have more or better information about 

weather (tide, wind, lightning, seas); and one third of these mentioned the internet as the 

preferred medium for obtaining this information (Sidman et al. 2004). 

Boating 

About 130,000 recreational boats are registered in the counties adjacent to Galveston 

Bay2 as of 2005-06 (Texas Parks and Wildlife Department, p.c. 2006). The typical boater 

makes about 2 trips per month, averaged over the year – or 24 trips/year. In addition to 

making direct use of PORTS® data, boaters benefit from NOAA’s marine forecasts, 

which incorporate PORTS® information. Forecasters at the Houston/Galveston NWS 

office report that inclusion of PORTS® data results in “substantially better marine 

forecasts” (B. Kyle, p.c. 2006). 

Assuming that a boating day generates economic surplus equal to about 10 percent of 

actual expenditures (Hushak 1999), we estimate the per day surplus from recreational 

boating at $20/day. If PORTS® data leads to a one percent increase in positive boating day 

experiences in Houston/Galveston, this suggests in annual non-market benefit from PORTS®

of $624,000. 

Fishing 

Using data collected by the Texas Parks and Wildlife Department (Lee Green, p.c. 2006), 

we estimate some 300,000 to 350,000 person-days of recreational fishing activity on 

Galveston Bay each year. Recreational fishers and guides/charter operators are interested 

in water temperature and in details of current speed and direction (fish are usually not 

caught during slack water). Estimates of willingness to pay for increased fishing success 

on the Gulf coast range from $3 to $23 per fishing trip (Haab et al. 2000). 

Using a value of $10 per fishing trip, and assuming that PORTS® data leads to improved 

fishing success on one percent of fishing trips, we estimate the value of PORTS® data to 

 

2

 Brazoria, Chambers, Fort Bend, Galveston, Hardin, Harris, Jefferson, Liberty, Matagorda, and 

Mongomery counties. 
 

17

fishers in Houston/Galveston at about $30,000/year. We consider this a potential benefit 

because although there is anecdotal data suggesting that between 25 and 50% of Galveston 

Bay recreational boaters use PORTS® data, we do not know how many recreational 

fishermen routinely utilize PORTS® data at this time. 

Beach Visits 

An estimated 800,000 annual beach visits take place along the Gulf Coast shores of 

Galveston (Galveston Parks and Recreation Dept.). Typical expenditures directly 

associated with beach recreation are $25 per beach day, and generate an estimated $15 of 

consumer surplus per beach day (Pendleton 2003). Assuming that PORTS® can lead to a 

one percent improvement in economic surplus generated by beach use, this suggests an 

annual benefit of $120,000. We consider this to be a potential or speculative benefit 

because there is no solid evidence that beach visitors regularly make use of PORTS® data 

at this time. 

Enhanced Weather Forecasts 

General Weather and Coastal Marine Forecasts 

PORTS® data are used in the local analysis and prediction system operated by NOAA’s 

National Weather Service office for Houston/Galveston. As such, these data help 

improve both general weather forecasts for the Galveston Bay area and coastal marine 

weather forecasts. The value of improved coastal marine forecasts is reflected in the 

improved recreational boating experience of local boaters, as discussed above. The 

improved general weather forecasts benefit all users of weather forecasts in the 

Houston/Galveston area. 

Data used include water level information (for coastal flooding), wind speed and 

direction, and temperature. The weather service uses PORTS® data to verify marine 

warnings generally, and as a basis for marine warnings issued for Galveston Bay and 

nearby coastal waters. The Houston/Galveston office of the National Weather Service 

typically issues about 20 severe weather warnings/year, as well as several coastal flood 

warnings (see below). Some of these warnings are based directly on PORTS® data (B. 

Kyle, NOAA NWS, p.c. 2006). 

The exact contribution of PORTS® data to improved weather forecasts for the Galveston 

Bay area is not known. Using Lazo and Chestnut’s (2002) estimate of about 

$15/household/year for the value of significant improvements to general weather 

forecasts, assuming that PORTS® data contribute 10 percent of such an improvement, for 

an estimated one to two million affected households in the greater Houston metropolitan 

area, results in an annual benefit from improved weather forecasting of $1.5 to $3.0 

million. We consider this a lower confidence estimate because although the mechanism 

is clear and the use of PORTS® data in this context is well established, the magnitude of 

the contribution of PORTS® to the weather forecast is difficult to quantify. 
 

18

Storm Surge Forecasts 

Storm surges in the Houston/Galveston area are associated with large storm events, such 

as hurricanes; and significant increases in coastal water levels are also associated with 

prolonged moderate to strong easterly winds. These surges can produce tide levels 2 to 3 

feet above normal, and can cause extensive damage. Much of this damage cannot be 

avoided by an improved forecast, but marginal improvements in response activities 

(securing boats and structures, evacuating areas) may be possible or less costly with a 

more accurate and timely forecast. 

The Galveston Bay area is considered among the most endangered in the country from 

storm surge because of its large population and because the geography of the generally 

flat and low-lying waterfront offers little defense against rising water levels. Nearshore 

areas along tidal bays and rivers are particularly vulnerable. A large storm surge can 

submerge much of downtown Galveston and Houston. 

Major storm surge events hitting urban areas can cause billions of dollars in damages 

(models of damage from a major hurricane striking the Houston area suggest damage as 

high as $40 to $50 billion). Conservatively assuming a $1 billion storm surge damage 

from a major storm once every 20 years in the Galveston Bay area, we estimate an 

annualized risk from storm surge of $50 million. The precise contribution of PORTS®

data to storm surge forecast quality and risk reduction is not known. Applying the one 

percent rule, we estimate an annualized value of $500,000 from improved storm surge 

prediction. 

Qualitative Effects and Values 

PORTS® data are used in educational and scientific activities that are valuable but do not 

lend themselves readily to economic quantification. Examples of these are highlighted 

below. Although we do not attempt to quantify benefits from these activities, they are 

important uses of PORTS® data and suggest that the quantified benefits should be treated 

as a lower bound estimate of total benefits from PORTS®. 

Scientific Research/Water quality management 

Water temperature and other water quality parameters are monitored by agencies such as 

the Texas Department of State Health Services (Heideman, p.c. 2007) to determine the 

risk of vibrio (a shellfish disease) in oysters harvested from Galveston Bay) and to 

establish guidelines for the safe handling of these oysters following harvest. The Texas 

Parks and Wildlife Department (Robinson, p.c. 2007) monitors water temperature to 

anticipate cold-water fish kills, which can occur when water temperatures drop below 45 

degrees F, and to decide when to close “thermal refuge” areas to fishing. Some of these 

water temperature data come from PORTS® sensors. 

Civil Engineering Projects 

PORTS® data are used on some civil engineering projects, including channel 

improvement work and eel grass restoration efforts, in the Houston/Galveston area. The 

extent to which this use of PORTS® data reduces the overall cost of these civil 
 

19

engineering projects – by reducing the need for deployment of project-specific water 

level and current sensors – is not known, but could be a source of benefit from PORTS®. 
 

20
 

21

Acknowledgements 

Funding for this work was provided by NOAA CO-OPS under the guidance of Richard 

Edwing and Darren Wright. Rodney Weiher (NOAA) assisted in the administration of 

the project. 

Many people were helpful in giving me insights into the use of the bays and waterways, 

and the utilization of PORTS® data, in the Houston/Galveston area. In particular, Alan 

Bunn (NOAA) provided valuable assistance in identifying and arranging interviews with 

many of the people in the following list. Among those who provided information to 

support this study were Niels Aalund (West Gulf Maritime Association), Ruben 

Arredondo (Port of Houston Authority), Ed Barsingerhorn (Shell Oil), James Brenek 

(Moran-Gulf Shipping Agencies), Matt Bunn (CCA), Raymond Butler (Gulf Intracoastal 

Canal Association), Paul Carusell (Sea River), Tricia Clark (Skaugen), Robert Goolsby 

(Kirby Inland Marine), Lee Green (Texas Parks and Wildlife Department), Capt. Chris 

Gutierrez (Galveston-Texas Pilots), Gary Heideman (Texas Department of State Health 

Services), Charlie Henry (NOAA), Dewayne Hollin (Texas A&M University), Charles 

Jenkins (Port of Houston Authority), David Jones (NOAA), Brian Kyle (NOAA NWS), 

John Lorren (Houston Fuel Oil), Carlos Lozano (Teekay Shipping), Kristi Luttrell (US 

Coast Guard), Capt. Alistair MacNab (Greater Houston Port Bureau), Buzz Martin 

(Texas General Lands Office), Capt. Paulino Moran (TMM/Naviera del Pacifico), Pat 

Murray (CCA), Adib Nasir (Oil Tanking), Capt. Panos Pippos (Odfjell), James Prazak 

(Dow Chemical), Bill Read (NOAA NWS), J.L. Reavis, Jr. (Chevron Phillips Chemical 

Company), Lance Robinson (Texas Parks and Wildlife Department), Amelia Salazar 

(Texas Parks and Wildlife Department), Jurgen Schroder (Schroder Marine Services), 

Devon Stuart (US Coast Guard), Hans Sunder (Biehl & Co.), Cathy Terry (Texas Parks 

and Wildlife Department), Capt. Robert Thompson (Houston Pilots), CDR Jerry Torok 

(US Coast Guard), Capt. David Warwick (Promar Agency), Richard Welch (US Coast 

Guard), Larry Wise (Moffatt & Nichol), and Robert Zajicek (Inchcape Shipping 

Services); as well as the Houston/Galveston Navigation Safety Advisory Committee. 

Final responsibility for the estimates presented in this report rest with the author. 
 

22
 

23

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