OH SHUCK!  WHAT HAPPENS IF EVERYTHING IS DEAD?  EFFECTS OF CATASTROPHIC INVENTORY LOSS ON MARYLAND OYSTER-AQUACULTURE OPERATION NET PRESENT VALUE AND INTERNAL RATE OF RETURN

in the state of Maryland has expanded at a rapid pace since leasing laws were revised in 2009.  Until 2017, there had been very few catastrophic losses of oysters in aquaculture operations in Maryland.  However, due to abnormally high rainfall since spring 2018, and the associated reduction of aquaculture oyster harvests, many growers have questioned how a catastrophic loss would influence the success of their oyster operations.  Based on previous work, the authors modified oyster farm financial models to include a 100% inventory loss once during a 10-year period, then evaluated uncertainty in the estimates of net present value (NPV) and internal rate of return (IRR)  of cash flows by using Monte Carlo analysis.  Probability distributions were developed by interviewing oyster culture experts on key performance variables for bottom culture and water-column culture farms of different sizes.  Model results suggest if a farm were to suffer a 100% catastrophic inventory loss, it would be better to occur during year 1 of the operation or in years 9 or 10 of the operation for a 2 million oyster per year water-column production operation.  For a 100-acre bottom-culture operation, the lowest NPV occurred when the catastrophic loss occurred in year 3 while the lowest IRR occurred when catastrophic losses happened in year 2.