Non-linear impacts of harmful algae blooms on the coastal tourism economy

Harmful algae blooms (HABs) occur in water bodies throughout the globe and can have multi-faceted impacts on tourism. However, little is known of the magnitude of economic losses to the tourism sector as a result of HABs. There is limited understanding of the empirical relationships between HAB intensity and duration, and the effects of this phenomenon on the tourism sector. This study is based in the state of Florida, USA, a notable sun, sand, and sea destination in the western hemisphere, where blooms of a marine harmful algae are a recurrent threat to coastal tourism. The empirical framework is based on a month and county-level panel database that combines sales by tourism-related businesses with observations from the official HAB surveillance system of the state of Florida. We use time and space fixed-effects regressions to estimate the loss in tourism revenue associated with one additional day of red tide. Results indicate that impacts of HABs on tourism do not follow a linear pattern with increasing HAB concentrations, but rather appear to follow an inverted-U pattern. In other words, higher concentrations of the HAB organism do not necessarily imply higher economic losses, suggesting that the impacts of HABs on tourism are not driven solely by the biophysical element of cell density. Rather, these impacts appear to be mediated and amplified by human dimensions. The loss to tourism-related businesses due to the 2018 Florida red tide bloom was estimated to be $2.7 billion USD, which implies that HABs and their impact on tourism can be considered as a potential 'billion-dollar' disaster.