Economic Impact Studies: Practical Tips & Examples - Jen Read
-
Upload
healthy-lakes-healthy-lives -
Category
News & Politics
-
view
453 -
download
0
description
Transcript of Economic Impact Studies: Practical Tips & Examples - Jen Read
Estimating the Benefits of Great Estimating the Benefits of Great Lakes RestorationLakes Restoration
Jennifer ReadAssistant Director and Research Coordinator
Lynn VaccaroCoastal Research Specialist
• Invasive species control• Habitat restoration• Nearshore water quality – sewer upgrades• Areas of Concern cleanup• Toxic pollution reduction• Non-point source pollution – ag and urban BMPs• Sustainable development• Indicators and information
Great Lakes Regional Collaboration Great Lakes Regional Collaboration Strategy (December 2005)Strategy (December 2005)
Expected costs: $26 billionExpected costs: $26 billion
Estimating the Benefits of RestorationEstimating the Benefits of Restoration
Great Lakes Regional Collaboration Restoration Strategy
Team of Natural Scientists Predict Likely Ecosystem Changes
Team of Economists Predict Economic Benefits
• Short-run multiplier effects for federal spending• Improvements in environment• Health improvements• Attraction and retention of skilled people• Additional construction and other economic
activities over the long run• Development of new technologies
Many Types of BenefitsMany Types of Benefits
• Reduced runoff, erosion and sedimentation• Less damage due to flooding• Enhanced groundwater supplies• Protection of waterfront properties• Healthier fish and wildlife communities
o Protection of endangered species and biodiversityo Improved fishingo Preservation of sport fishing related employmento Improved waterfowl huntingo Improved bird watching
Riparian, Wetland and Coastal Restoration
Benefits of Sport Fish AbundanceBenefits of Sport Fish Abundance
Avoiding expected 25% - 50% decline = $0.9 – 3.5 billion over 20 yearsImproving by 5 - 25% = $0.2 – 2.3 billion over 10 years
1% improvement in 1 species = 2 – 10 cents per angling day1% improvement in all species = 15 – 30 cents per angling day
– Based on real fishing expenses or surveys of hypothetical situations– 37 studies about value of fish abundance in GL region (list in report)
23.1 million GL fishing days a year (National FWS Survey)
Value of benefits declines over time (6% discount)
• Less sediment in rivers and nearshore waters– Reduced costs for dredging– Reduced costs for municipal water treatment– Benefits to commercial and industrial users of water
• Reduced pathogens– Lower health care expenses and fewer sick days– Fewer beach closures, more swimming
• Fewer nutrients and algae blooms– Higher waterfront property values
Sewer upgrades, Non-point source controls
Water Quality BenefitsWater Quality Benefits
Restoration Plan Reduce sedimentation by 10-25%
Savings for municipal water treatment = $50 – 125 million over the long run
1% increase in sediment leads to a 0.05% increase in water treatment costs- conservative estimate from 400 U.S. utilities
Operating costs for plants that use GL water = $600 millionAnnual savings of $3 -7 millionValue of savings declines over time (6% discount)
• Less toxins in fisho More people would eat fish rather than McDonaldso Improved health for families that currently eat GL fish
• Lifting of fish advisorieso Improved recreational opportunities
• Healthier populations of fish and wildlife• Improved survival of endangered species, biodiversity• Higher property values around AOCs
AOC Clean-up, Toxic pollution controls
Benefits of Remediating Areas of ConcernBenefits of Remediating Areas of ConcernBenefits for homes near AOC = $6 - 7 billion
Within 5 miles of AOC = 5% suppression in property value- Based on 6 studies comparing property values at different distances from AOCs
1.2 million homes within 2 miles of AOC, each $150K - Based on 2000 census, ignores rentals and commercial property
Value to basin residents = $12 - 19 billion11 million homes in Great Lakes basin
Surveys indicate willingness to pay $150 per year for cleanup
Clean up phased in over 10-20 years, 6% discount rate
Summary of Specific Economic BenefitsSummary of Specific Economic Benefits
Affected Value Present Value BenefitImproved catch rates for anglers $1.1 – 5.8 billion
Maintenance of sport fishery wages and profits $100 – 200 million
Lower water treatment costs $50 – 125 million
More swimming $2 – 3 billion
More swimming and improved enjoyment $2.5 billion
Improved birding $100 – 200 million
Improved waterfowl hunting $7 – 100 million
Benefits for basin residents $12 – 19 billion
Total Quantified Specific Benefits $18 – 31 billion
Aggregate Long-run Benefits $29 – 41 billion
Short Term Multiplier Effects $30 – 50 billion
GLRC Strategy Return on InvestmentGLRC Strategy Return on Investment
= $80 – 100 Billion in Benefits+
Many existing studies of ecosystem valuation can help Many existing studies of ecosystem valuation can help predict benefits of restoration projects.predict benefits of restoration projects.
Important Considerations:Important Considerations:• Be specific about expected environmental changesBe specific about expected environmental changes• Identify a change that can be quantified and valued in $$Identify a change that can be quantified and valued in $$• Find a study from a comparable systemFind a study from a comparable system• Identify time period for expected improvements, consider Identify time period for expected improvements, consider
discounting future benefits, consider inflationdiscounting future benefits, consider inflation• Even rough, back-of-the-envelope calculations are useful to Even rough, back-of-the-envelope calculations are useful to
funders, media and partners!funders, media and partners!
Take Home Lessons – DIY Economic AnalysesTake Home Lessons – DIY Economic Analyses
Jennifer ReadJennifer Read
[email protected]@umich.eduwww.miseagrant.umich.edu/economywww.miseagrant.umich.edu/economy
America’s North Coast:America’s North Coast:
A Benefit-Cost Analysis of a Program to A Benefit-Cost Analysis of a Program to Protect and Restore the Great LakesProtect and Restore the Great Lakes
John C. Austin, Non-resident Senior Fellow, Brookings
Soren Anderson, Assistant Professor, MSU
Paul N. Courant, Dean of Libraries, U-M
Robert E. Litan, Senior Fellow, Brookings