Firm-level economic effects of HABS: A tool for business loss assessment

While the economic consequences of HABs may seem obvious, there is little empirical evidence to support the assertion or its magnitude relative to other environmental effects. As scientists learn more about the effectiveness of alternative HAB prevention, mitigation, and control strategies and agencies prepare for a suite of environmental events, information on potential economic losses are needed at the firm level to evaluate and justify continued HAB-related expenditures. To determine the extent of monetary losses that some firms may have incurred due to blooms of Karenia brevis (red tides) in Southwest Florida, 7 years of daily proprietary data were obtained from three beachfront restaurants and supplemented with environmental data from nearby weather stations. The statistical models revealed that reductions in daily sales ranged from $868 to $3734 (13.7%–15.3% on average) when red tide conditions were present. Estimated losses are compared to other environmental events and were found to coincide with those from other studies. The incidence of red tide events (as noted by each restaurant manager) corresponded with cell counts that averaged 180,853 cells/l as measured within 6 miles. Collectively this information supports the hypothesis of localized economic losses and provides a threshold cell count for future loss projections.