Economic benefits of a restored oyster fishery in Chesapeake Bay

A simple reduced form inverse demand model is used to determine the price flexibility of Chesapeake Bay oyster production when other producing regions of the United States have their oyster production held at average levels for 2002 to 2006. With the current reduced state of oyster demand compared with earlier periods, a restored Chesapeake oyster fishery that could sustain annual harvests of 4.9 million bushels would result in a predicted price that is significantly lower than the minimum observed from 1950 to 2006 and presumed to be unprofitable. A survey of oyster industry participants suggests that an equilibrium price is more likely to be around $20.06 per bushel. Using the inverse demand model, the predicted level of production is about 3.2 million bushels. Industry members believe that a restored industry, based on Crassostrea ariakensis, would have a greater percentage of oysters going to the shucked market compared with Crassostrea virginica.