76 Monthly Labor Review Augustl 2006

Hurricane Damage to the Ocean Economy Hurricane Damage to the Ocean Economy

Charles S. Colgan is a

professor in the

National Ocean

Economics Program,

Muskie School of

Public Service,

University of Southern

Maine, Portland,

Maine, and chief

economist for Market

Data for the National

Ocean Edonomics

Program; Jefferey

Adkins is an

economist and

program manager

with the National

Oceanic and

Atmospheric

Administration’s

Coastal Services,

Charleston, SC.

Counties and parishes of the gulf coast ocean economy affected

by Hurricanes Katrina and Rita saw the greatest insured dollar losses

in 1 year from suchlike catastrophes in U.S. history; the region

has yet to recover fully a year after the maelstrom

Charles S. Colgan

and

Jefferey Adkins

Hurricane damage to the ocean

economy in the U.S. gulf region in 2005

I

n 2005, insured losses from hurricanes and

other catastrophes were greater than in any

other year in U.S. history. NOAA’s National

Hurricane Center estimates that $85 billion of

total damages resulted from Hurricanes Katrina

and Rita alone. One year later, the region affected

by these two hurricanes still struggles to recover,

both as a place to live and as a viable economy.

Using data from the BLS Quarterly Census of

Employment and Wages, the National Ocean

Economics Program has developed a data series

that allows the economic damage to coastal

regions to be seen in a new light: what happens

to the economic value derived from the ocean

when the ocean turns from resource and respite

to a massive engine of destruction?1

According to Federal disaster declarations,

Hurricane Katrina affected the entire States of

Mississippi and Louisiana, plus 22 counties in

Alabama and 9 in Florida. Rita affected all of

Louisiana, plus 26 counties in Texas. The greatest

effects were in the counties (parishes in

Louisiana) closest to the coast, where the storm’s

effects were at their maximum intensity. Coastal

counties and parishes include those designated

as such by each State under the Federal Coastal

Zone Management Program, as well as those

designated as coastal watershed counties or

parishes by the U.S. Geological Survey.

Virtually all of the coastal zone and watershed

counties2

 or parishes of Alabama, Mississippi,

and Louisiana, plus the coastal counties in Texas

from Houston eastward, were affected by the two

hurricanes. The coastal zone counties or

parishes of the four States account for nearly a

quarter of employment and wages in those

States. In Louisiana, the coastal parishes are

more than half of the State’s economy. The

combined coastal zone and watershed counties

and parishes on the Gulf of Mexico constituted

14 percent of employment in Alabama, 4 percent

in Mississippi, 6 percent in Florida, a considerably greater 33 percent in Texas, and fully

80 percent in Louisiana.

The ocean economy is defined as industries in

marine construction, living resources (seafood

processing and marketing, plus aquaculture),

shipbuilding and boatbuilding, minerals (primarily oil and gas exploration and production),

marine transportation and related goods and

services, and, finally, tourism and recreation

industries whose establishments are located close

to the shore of the ocean or the Great Lakes.

In 2004, the ocean economy of the region

encompassing Florida, Alabama, Mississippi,

Louisiana, and Texas, stretching from Franklin

County, Florida, to Brazoria County, Texas, employed 291,830 people in wage and salary jobs

paying nearly $7.7 billion in wages. (See table

1.) The affected States accounted for 13 percent

of employment and wages in the U.S. ocean

economy.

However, these gross figures mask a key fact

about the region: it is the industrial heartland of

the U.S. ocean economy. As the following

tabulation shows, the region accounts for more

than a third of U.S. employment in marine

construction, more than a fifth of employment in

fisheries (living resources), shipbuilding, and

boatbuilding, and more than half of employment
Monthly Labor Review August 2006 77

Table 1. Employment and wages in ocean economy industries in the Gulf of Mexico region, 2004

 2004

 Sector and industry

 Ocean economy, total ............... 291,830 $7,694.8

Construction ........................................... 12,094 548.1

Living resources .................................... 12,552 251.9

Fish hatcheries and aquaculture ........ 1,653 37.7

Fishing ................................................ 571 10.8

Seafood markets ................................ 1,686 32.0

Seafood processing ............................ 8,642 171.4

Minerals .................................................. 15,105 1,077.0

Shipbuilding and boatbuilding ................ l35,839 1,443.2

Boatbuilding and repair ...................... 3,567 125.5

Shipbuilding and repair ....................... 32,272 1,317.7

Tourism and recreation ............................ 178,404 2,716.7

Amusement and recreation services .. 4,150 74.9

Boat dealers ........................................ 2,078 73.5

Eating and drinking places ..................... 131,985 1,718.6

Hotels and lodging places ...................... 34,870 725.5

Marinas ................................................... 1,447 38.2

Recreational vehicles in parks

 and campsites ...................................... 470 8.9

Scenic water tours .................................. 1,676 43.0

Sporting goods ........................................ 106 2.9

 Zoos and aquariums .............................. 1,622 31.1

Transportation ......................................... 37,836 1,657.9

Deep-sea freight transportation .......... 3,109 226.0

Marine passenger transportation ........ 375 20.6

Marine transportation services ........... 28,485 1,163.8

Search and navigation equipment ...... 2,251 107.1

Warehousing ........................................ 3,616 140.4

Employment Employment

Sector and industry Wages

(millions of

dollars)

Wages

(millions of

dollars)

2004

Chart 1. Loss of employment in the ocean economy industries as a result of Hurricanes Katrina

 and Rita in 2005

10–27

5–9

3–4

2

0–1

Percent of

 employment lost
78 Monthly Labor Review Augustl 2006

Hurricane Damage to the Ocean Economy

in the ocean-related component of oil and gas exploration

and production:

 Percent of U.S. ocean economy

 Employment Wages

Construction ............................. 38.8 34.8

Living resources........................ 20.2 13.7

Offshore oil and gas ................. 51.1 49.3

Shipbuilding and boatbuilding .. 22.0 19.1

Tourism and recreation ............. 10.6 8.9

Transportation ......................... 13.3 9.1

The region also accounts for a disproportionate share of

marine transportation-related employment.

Chart 1 shows the counties and parishes bordering the

Gulf of Mexico that were declared disaster areas as a result of

Hurricanes Katrina and Rita in 2005. The shading represents

the portion of employment in each county that was accounted

for by construction, living resources, minerals, shipbuilding

and boatbuilding, and transportation. The heaviest concentration of these industries extends from Jackson County,

Mississippi, to Cameron Parish, Louisiana. In these counties,

the portions of the ocean industry other than tourism and

recreation range from 3 percent to 27 percent of county

employment.

The economic effects of these hurricanes have focused

on discussions of the losses in New Orleans, perhaps the

largest disaster effects on a major American city since the

San Francisco earthquake a century ago. But the economy

affected was significant to the nation not only because of the

loss of the unique charms of the Crescent City. The affected

region was the heart of the industrial sectors of the American

ocean economy, and the recovery of these industries will be

critical to both the region and the Nation. 

Note

1

 For information on the definitions of the ocean economy, visit

www.oceaneconomics.org, the Web site of the National Ocean Economics

Program.

2

 Coastal zone counties are those within a State’s defined coastal

zone management program. Watershed counties are defined by the

U.S. Geological Survey.

 LABSTAT available via World Wide Web

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