Impact of the 2012 Gulf of Maine Heatwave: Market Integration of US-Canada Lobster Economy

In 2012, abnormally warm water temperatures, referred to as a Gulf of Maine Heatwave (GOMH), pushed the start date of the lobster fishing season 22 days earlier to create a high landings scenario during a compressed time period, an average of 109% increase over prior year, and coinciding with the peak of the Canadian lobster supply. The market responded with an average 40% decrease in price and fisherman’s profitability decreased significantly.

This study analyzes the market integration and price transmission of U.S. and Canadian lobsters. We considered the timing of Maine lobster landings and the seasonality of the Canadian lobster supply to show to what extent these impact the lobster ex-vessel price and how prices respond to landings anomalies. The monthly ex-vessel prices, trade of live and processed lobster between US and Canada are compiled to specify the inverse demand system. This is used to evaluate the welfare loss associated with the supply shocks caused by the 2012 GOMH. This study provides an example of how the timing of the U.S. and Canadian landings can have unintended consequences for people and fisheries, thereby calling for specific management objectives to smooth out the landings of soft-shell lobsters in the summer.