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 --

Focus Lakes

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

Silver LakeSilver Lake

Rathbun LakeRathbun Lake

West Okoboji LakeWest Okoboji Lake

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