The value of clean water in dollars
Commentary by David Deen: The value of clean water in dollars.
September 3, 2017
Editor’s note: This commentary is by David Deen, who is an honorary trustee and former river steward of the Connecticut River Conservancy, formerly the Connecticut River Watershed Council. He is a Democratic state representative from Westminster and the chair of the House Natural Resources, Fish and Wildlife Committee.
Measuring the economic impact of clean water is a newly evolving science. Here are some findings. Healthy water is worth big dollars
We place a genuine personal value on clean water but that has not easily computed to a dollar value, and that is unfortunate because in the wider world economic values drive decisions about our waters more so than do personal values. In our recent history, our operating theory about our waste was “the solution to pollution is dilution” meaning piping human wastes directly into our rivers made good economic sense.
Our uses of rivers in that historic framework never considered the cost of the ecological values lost nor the loss of our sense of place. Historically, if it made money, it was good regardless of its impacts on ecosystems! So people would place a dollar value on cheap waste disposal, maximum hydropower and easy transport but no one calculated the loss that occurred when our rivers ran in assorted colors, smelled, threatened aquatic life, or the water itself was unsafe for human contact.
What is the intrinsic value of clean water? Something to consider comes from Outdoor Industries Inc., a national industry association. Their figures show that 70 percent of Vermonters and 69 percent of New Hampshire’s participate in outdoor activities. With participation rates at those levels, you can understand how a healthy outdoors is how we identify our sense of place. The outdoors is what we do.
Recent economic studies of both the Connecticut River and Lake Champlain now shine a light on the real dollar value of clean water. In the Lake Champlain basin, the Lake Champlain Basin Program commissioned the Gund Institute of Ecological Economics at UVM to look at the value of a clean Lake Champlain.
According to the Gund study, “Proximity to the Lake contributes significantly to property valuation. Single family and seasonal residences within 100 meters of Lake Champlain are expected to sell for nearly 30% to 49% more than similar residences that are located outside this area.”
But they found that home prices were especially sensitive to loss of water quality. When increasing phosphorus levels lead to increased algae blooms and decreased water clarity, home prices in their estimate lost $7,000 in average price, while on the flip side, reduced loading of phosphorous due to implementation of the EPA-approved cleanup plan would result in a $15,200 average price increase for single family dwellings.
Cleaner water affects recreation income too, because when they looked at the impact on tourism, when water clarity increased they estimated a $2,303 income increase per average lodging unit per meter of increase in clarity.
For the Connecticut River, there is a new study that clearly shows the monetary impact of clean water in the Connecticut River. This new analysis is from a study from the Nelson Rockefeller Center at Dartmouth, “The Valuation of the Connecticut River,” shows aquatic recreational activities of the Connecticut River generate revenue for both states.
River recreation in Vermont is a $109 million business, producing $5.5 million in tax revenues (measured in 2004 dollars). Across the river, New Hampshire’s statewide water-based recreation amounts to $1.2 billion per year (in 2003 dollars). On average, visitors to the Connecticut River tend to spend more per person per day ($102/day) than people who traveled to the New England region ($96/day) or to the state of New Hampshire ($89/day).
In terms of real estate values, the study holds that the increase in value for proximity to the river is worth over $3.2 billion. The added personal income for proximity to the river is $2.4 billion per year and the recreational resource including fishing for the river is $166 million per year. Those are some significant numbers both in the absolute and as an indicator of increased economic activity based on clean water.
Things have come a long way from the dilution-is-the-solution days but not that far. We have made significant investments to reduce direct discharges into our rivers, but we have given short shrift to overland storm water runoff. We are just beginning to invest in reducing this more disperse and insidious form of pollution.
Our earlier attempts at reducing overland runoff, instead of addressing the problem as a shared societal responsibility and designing a response fueled by our tax dollars as when we underwrote the cost of wastewater treatment facilities for direct pipe pollution; we have made cleaning up stormwater an individual property owner responsibility. This approach to addressing discharges has meant that the cleanup of stormwater impaired waters has taken too long and risks losing the gains made with our earlier public investments.
For decades economists have tried to place a dollar value on healthy ecosystems. The examples given above show the clear economic advantage of clean water. The Connecticut River, Lake Champlain and all our watersheds need policy makers to think critically about protecting clean, healthy ecosystems, not only in environmental terms but economic terms as well.