Valuing Water Quality in Valuing Water Quality in Midwestern Lake Midwestern Lake
EcosystemsEcosystems
Kevin Egan, Joseph Herriges, and Catherine KlingKevin Egan, Joseph Herriges, and Catherine KlingDepartment of EconomicsDepartment of Economics
Center for Agricultural and Rural DevelopmentCenter for Agricultural and Rural Development
John DowningJohn Downing Department of Ecology, Evolution and Organisimal BiologyDepartment of Ecology, Evolution and Organisimal Biology
Iowa State UniversityIowa State University
Iowa Lakes Valuation ProjectIowa Lakes Valuation Project Collaborative project involving economists and Collaborative project involving economists and
ecologists studying Iowa lakesecologists studying Iowa lakes Builds off of existing 5 year study of the ecological Builds off of existing 5 year study of the ecological
conditions of 132 lakes in Iowa (2000-2004)conditions of 132 lakes in Iowa (2000-2004) Some lake conditions changing rapidly during this Some lake conditions changing rapidly during this
periodperiod
Downing’s team measures water clarity, chlorophyll, Downing’s team measures water clarity, chlorophyll, nitrogen and phosphorus, pH, suspended solids, nitrogen and phosphorus, pH, suspended solids, dissolved organic carbon, etc.dissolved organic carbon, etc.
EPA Star grant augments work begun with Iowa DNR EPA Star grant augments work begun with Iowa DNR funding and CARD support – 4 year projectfunding and CARD support – 4 year project
Project OverviewProject Overview A four-year panel data set of survey responses will be A four-year panel data set of survey responses will be
collected involving collected involving Actual trip behavior and future expected trips, years 2001-2006Actual trip behavior and future expected trips, years 2001-2006 22ndnd through 4 through 4thth year survey will contain water quality scenarios year survey will contain water quality scenarios
measuring WTP for quality improvementsmeasuring WTP for quality improvements Knowledge and perceptions regarding lake qualityKnowledge and perceptions regarding lake quality
Estimate demand for and value of improved water quality Estimate demand for and value of improved water quality in Iowa’s lakes in Iowa’s lakes
Measuring Benefits of Iowa LakesMeasuring Benefits of Iowa Lakes Maximum Willingness to PayMaximum Willingness to Pay
Represents maximum amount an individual will pay for a certain Represents maximum amount an individual will pay for a certain level of water quality improvement, representing the value of level of water quality improvement, representing the value of goods willing to forgo for more of this “commodity”goods willing to forgo for more of this “commodity”
We want to quantify the tradeoffs people are willing to We want to quantify the tradeoffs people are willing to make to get improved water quality and compare these to make to get improved water quality and compare these to the tradeoffs requiredthe tradeoffs required
Don’t observe market transactions to measure value (as Don’t observe market transactions to measure value (as with farmland), rather gather non-market data to value with farmland), rather gather non-market data to value public goodpublic good
Revealed Preference data (observed use of the lakes and Revealed Preference data (observed use of the lakes and substitute sites) - estimate demand for lake and infer WTP valuessubstitute sites) - estimate demand for lake and infer WTP values
Stated Preference data - directly elicit WTP for water quality gainsStated Preference data - directly elicit WTP for water quality gains Local economic impact does not measure these tradeoffs, Local economic impact does not measure these tradeoffs,
useful for other purposes, but not cost-benefit useful for other purposes, but not cost-benefit assessmentsassessments
Baseline SurveyBaseline Survey
First of four mail surveys First of four mail surveys 8000 Iowa residents 8000 Iowa residents
selected at randomselected at random Survey collected Survey collected
trip data for 132 lakestrip data for 132 lakes• 2001 and 2002 actual trips2001 and 2002 actual trips
• 2003 anticipated trips2003 anticipated trips attitudes regarding lake attitudes regarding lake
qualityquality Socio-demographic dataSocio-demographic data
62.1% response rate62.1% response rate
0
10
20
30
40
50
60
70
Perc
enta
ge o
f Hou
seho
lds
2001 2002 2003
Iowa Lakes Mississippi/Missouri River Lakes outside of Iowa
Figure 1: Percentage of respondents who took at least one tripFigure 1: Percentage of respondents who took at least one trip
0
1
2
3
4
5
6
7
8
9
Ave
rage
Num
ber
of T
rips
2001 2002 2003
Iowa Lakes Mississippi/Missouri River Lakes outside of Iowa
Figure 2: Average number of day tripsFigure 2: Average number of day trips
0 10 20 30 40 50 60
Other
Swimming and beach use
Snowmobiling and other winter recreation
Picnicking
Canoeing
Sailing
Jet skiing
Nature appreciation/wildlife viewing
Hunting
Fishing
Camping
Boating
Figure 3: Activities engaged in by respondentsFigure 3: Activities engaged in by respondents
22
3211
18
9
5 3
Proximity
Water Quality
Location of Friends/Relatives
Park Facilities
Activities at the Lake
Activities in the Town
Other
Figure 4: Average allocation of importance points to factors important in Figure 4: Average allocation of importance points to factors important in choosing a lake for recreation choosing a lake for recreation
Figure 5: Average allocation of importance points to lake characteristicsFigure 5: Average allocation of importance points to lake characteristics
19%
12%
14%
8%9%
1%
10%
27%
Water clarity
Hard, clean, sandy bottom in swimming area
Lack of water odor
Diversity of wildlife
Diversity of fish species /habitat
Quantity of fish caught
Safety from Bacteria contamination/healthadvisoriesOther
17%
29%
31%
10%
13%
Very Important
Somewhat Important
Neutral
Somewhat Unimportant
Very Unimportant
22%
26%
7%
10%
35%
Very Important
Somewhat Important
Neutral
Somewhat Unimportant
Very Unimportant
Current Conditions
If Significantly Improved
Figure 6: How important is the presence of the lake nearest your Figure 6: How important is the presence of the lake nearest your permanent residence to the economic vitality of your community?permanent residence to the economic vitality of your community?
Figure 8: How important is the presence of the lake nearest your permanent Figure 8: How important is the presence of the lake nearest your permanent residence to retaining the interest of young people to remain in your residence to retaining the interest of young people to remain in your
community or in attracting prospective residents to your area? community or in attracting prospective residents to your area?
20%
34%
26%
9%
11%
Ve ry Im portan t
S om e wh at Im portan t
Ne u tral
S om e wh at Un im portan t
Ve ry Un im portan t
25%
35%
25%
6%9%
Ve ry Im portan t
S om e wh at Im portan t
Ne u tral
S om e wh at Un im portan t
Ve ry Un im portan t
Current Conditions If Significantly Improved
Figure 10: Lake zonesFigure 10: Lake zones
Mississippi River: 4.4
Mississippi River: 4.7
Mississippi River: 5.0
15.38.2
2.7
8.95.9
5.2
3.5 13.75.5
Relationship between Recreation Trips and Relationship between Recreation Trips and Physical Water Quality Measures: 2002 Physical Water Quality Measures: 2002
DataData
Zone 3Zone 3
LakesLakes
AverageAverage
Trips withinTrips within
Zone 3Zone 3
SecchiSecchi
Depth Depth
(m)(m)
Chlorophyll Chlorophyll (ug/l)(ug/l)
TotalTotal
Phosphorous Phosphorous (ug/l)(ug/l)
TotalTotal
SuspendedSuspended
Solids Solids
(mg/l)(mg/l)
George WythGeorge Wyth
LakeLake1.281.28 1.11.1 1717 5050 7.27.2
Silver LakeSilver Lake 0.020.02 0.20.2 177177 246246 27.927.9
Table 3. Physical Water Quality Summary StatisticsTable 3. Physical Water Quality Summary Statistics
VariableVariable MeanMean Std. Dev.Std. Dev. MinimumMinimum MaximumMaximum
Secchi Depth (m)Secchi Depth (m) 1.171.17 0.920.92 0.090.09 5.675.67
Chlorophyll (ug/l)Chlorophyll (ug/l) 40.9340.93 38.0238.02 2.452.45 182.92182.92
NHNH33+NH+NH4 4 (ug/l)(ug/l) 292.15292.15 158.57158.57 7272 955.34955.34
NONO33+NO+NO2 2 (mg/l)(mg/l) 1.201.20 2.542.54 0.070.07 14.1314.13
Total Nitrogen (mg/l)Total Nitrogen (mg/l) 2.202.20 2.522.52 0.550.55 13.3713.37
Total Phosphorus (ug/l)Total Phosphorus (ug/l) 105.65105.65 80.6180.61 17.1017.10 452.55452.55
Silicon (mg/l)Silicon (mg/l) 4.564.56 3.243.24 0.950.95 16.3116.31
pH pH 8.508.50 0.330.33 7.767.76 10.0310.03
Alkalinity (mg/l)Alkalinity (mg/l) 141.80141.80 40.9840.98 73.8373.83 286.17286.17
Inorganic SS (mg/l)Inorganic SS (mg/l) 9.439.43 17.8717.87 0.570.57 177.60177.60
Volatile SS (mg/l)Volatile SS (mg/l) 9.359.35 7.937.93 1.641.64 49.8749.87
Summary StatisticsSummary Statistics
Coefficient ResultsCoefficient Results
VariableVariableQualitative Qualitative
SignSign
Price Price (Travel Cost)(Travel Cost) --
Log(Acres)Log(Acres) ++RampRamp ++
State ParkState Park ++FacilitiesFacilities ++
WakeWake ++
VariableVariableQualitative Qualitative
SignSign
Secchi DepthSecchi Depth ++ChlorophyllChlorophyll ++
Total NitrogenTotal Nitrogen ++Total Total
PhosphorusPhosphorus --Inorganic SSInorganic SS --Volatile SSVolatile SS --
Comparing Water Quality across LakesComparing Water Quality across Lakes
West West Okoboji Okoboji
LakeLake
Averages of Averages of the other the other
128 Lakes128 Lakes
Averages of Averages of the Nine the Nine Focus LakesFocus Lakes
Secchi Secchi Depth (m)Depth (m) 5.675.67 1.131.13 1.231.23
ChlorophyllChlorophyll 2.632.63 41.2941.29 40.1340.13
Total Total NitrogenNitrogen 0.860.86 2.222.22 3.643.64
Total Total PhosphorusPhosphorus 21.2821.28 106.03106.03 91.1191.11
Inorganic Inorganic Suspended Suspended
SolidsSolids1.001.00 9.499.49 9.529.52
Volatile Volatile Suspended Suspended
SolidsSolids1.791.79 9.439.43 8.428.42
Rathbun Rathbun LakeLake
Averages of the Averages of the 31 Impaired 31 Impaired
LakesLakes
0.900.90 0.700.70
6.556.55 56.7656.76
1.101.10 2.772.77
43.8743.87 153.70153.70
5.425.42 20.4220.42
3.623.62 15.4915.49
Willingness to Pay EstimatesWillingness to Pay Estimates
19.0% of WTP value is achieved from improving 7.0% of the lakes An average focus lake improved to the physical water quality of West
Okoboji Lake is valued about equally to the 31 impaired lakes improved to Lake Rathbun
Annual WTPAnnual WTP
All 129 LakesAll 129 Lakes
Improved to Improved to
West OkbobojiWest Okboboji
Nine Focus Lakes Nine Focus Lakes Improved to Improved to
West OkbobojiWest Okboboji
31 Impaired 31 Impaired Lakes Improved Lakes Improved
to Rathbunto Rathbun
Avg WTP per Avg WTP per Iowa householdIowa household
Avg WTP for all Avg WTP for all IowansIowans
Predicted TripsPredicted Tripsper householdper household
(9.80 currently)(9.80 currently)
$39.71$39.71
$45,788,092$45,788,092
10.0610.06
$4.87$4.87
$5,612,219$5,612,219
9.839.83
$208.68$208.68
$240,649,000$240,649,000
11.1811.18
ConclusionsConclusions Recreator’s trip behavior is responsive to Recreator’s trip behavior is responsive to
physical measures of Water Qualityphysical measures of Water Quality Better water clarity increases recreational tripsBetter water clarity increases recreational trips Nutrients decrease recreational tripsNutrients decrease recreational trips
Allows consumer surplus measures to directly be Allows consumer surplus measures to directly be linked to physical water quality improvementslinked to physical water quality improvements Iowans value more highly a few lakes with superior Iowans value more highly a few lakes with superior
water quality over all recreational lakes at an adequate water quality over all recreational lakes at an adequate levellevel
Findings allow prioritization for clean-up activities Findings allow prioritization for clean-up activities to generate the greatest recreation benefits for a to generate the greatest recreation benefits for a given expendituregiven expenditure Rank which lakes and in what order and most efficient Rank which lakes and in what order and most efficient
levels of improvementlevels of improvement
Next Stage of Project: Year 2Next Stage of Project: Year 2
Collect Visitation Data from all 132 lakesCollect Visitation Data from all 132 lakes
Augment with Water Quality Perceptions via Water Augment with Water Quality Perceptions via Water Quality LadderQuality Ladder
Collect Willingness to pay for Water Quality Collect Willingness to pay for Water Quality Improvements at Eight Focus LakesImprovements at Eight Focus Lakes
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