Estimating the Benefits of Great Lakes Restoration Jennifer Read Assistant Director and Research Coordinator Lynn Vaccaro ...
 
<ul><li>Invasive species control </li></ul><ul><li>Habitat restoration </li></ul><ul><li>Nearshore water quality – sewer u...
<ul><li>Estimating the Benefits of Restoration </li></ul>Great Lakes Regional Collaboration Restoration Strategy Team of N...
<ul><li>Short-run multiplier effects for federal spending </li></ul><ul><li>Improvements in environment </li></ul><ul><li>...
<ul><li>Reduced runoff, erosion and sedimentation </li></ul><ul><li>Less damage due to flooding </li></ul><ul><li>Enhanced...
<ul><li>Avoiding expected 25% - 50% decline = $0.9 – 3.5 billion over 20 years </li></ul><ul><li>Improving by 5 - 25% = $0...
<ul><li>Less sediment in rivers and nearshore waters </li></ul><ul><ul><li>Reduced costs for dredging </li></ul></ul><ul><...
<ul><li>Restoration Plan    Reduce sedimentation by 10-25% </li></ul><ul><li>Savings for municipal water treatment  </li>...
<ul><li>Less toxins in fish </li></ul><ul><ul><li>More people would eat fish rather than McDonalds </li></ul></ul><ul><ul>...
<ul><li>Benefits for homes near AOC = $6 - 7 billion </li></ul><ul><ul><li>Within 5 miles of AOC = 5% suppression in prope...
Summary of Specific Economic Benefits Affected Value Present Value Benefit Improved catch rates for anglers $1.1  – 5.8 bi...
GLRC Strategy Return on Investment = $80 – 100 Billion in Benefits +
<ul><li>Many existing studies of ecosystem valuation can help predict benefits of restoration projects. </li></ul><ul><li>...
Jennifer Read [email_address] www.miseagrant.umich.edu/economy America’s North Coast: A Benefit-Cost Analysis of a Program...
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Economic Impact Studies: Practical Tips & Examples - Jen Read

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  • Cooperative program between um, msu, and noaa Extension through msu Communication and education through um Research through competitive grants program to all michigan universities
  • Michigan Sea Grant Program Review, April 15, 2010
  • Short-run multiplier effects for federal spending Applies to all federal spending in region $1 of spending results in $1.5 to 2.5 of additional spending Labor intensive activities, such as sewer repair, will generate more local employment benefits. Michigan Sea Grant Program Review, April 15, 2010
  • Michigan Sea Grant Program Review, April 15, 2010
  • Restoration of coastal wetlands  More Fish Avoid Expected declines due to invasive species and habitat loss. Assumptions make a big difference Time period used – benefits over 20 years? Discount used Conservative or upper estimates used for ecological and economic outcomes. Michigan Sea Grant Program Review, April 15, 2010
  • Michigan Sea Grant Program Review, April 15, 2010
  • Management strategies in GLRC were intended to reduce sedimentation by 40% Strategies include Ag, urban and stormwater BMPs, wetland and riparian restoration Michigan Sea Grant Program Review, April 15, 2010
  • Michigan Sea Grant Program Review, April 15, 2010
  • Removing and remediating contaminated sediments will reduce real and perceived health risks associated with living near an Area of Concern. Michigan Sea Grant Program Review, April 15, 2010
  • Long term gains = specific quantified benefits (fishing, water treatment) + unquantified benefits Short term gains = multiplier effect associated with any federal investment in the region Michigan Sea Grant Program Review, April 15, 2010
  • Economic Impact Studies: Practical Tips & Examples - Jen Read

    1. 1. Estimating the Benefits of Great Lakes Restoration Jennifer Read Assistant Director and Research Coordinator Lynn Vaccaro Coastal Research Specialist
    2. 3. <ul><li>Invasive species control </li></ul><ul><li>Habitat restoration </li></ul><ul><li>Nearshore water quality – sewer upgrades </li></ul><ul><li>Areas of Concern cleanup </li></ul><ul><li>Toxic pollution reduction </li></ul><ul><li>Non-point source pollution – ag and urban BMPs </li></ul><ul><li>Sustainable development </li></ul><ul><li>Indicators and information </li></ul>Great Lakes Regional Collaboration Strategy (December 2005) Expected costs: $26 billion
    3. 4. <ul><li>Estimating the Benefits of Restoration </li></ul>Great Lakes Regional Collaboration Restoration Strategy Team of Natural Scientists Predict Likely Ecosystem Changes Team of Economists Predict Economic Benefits
    4. 5. <ul><li>Short-run multiplier effects for federal spending </li></ul><ul><li>Improvements in environment </li></ul><ul><li>Health improvements </li></ul><ul><li>Attraction and retention of skilled people </li></ul><ul><li>Additional construction and other economic activities over the long run </li></ul><ul><li>Development of new technologies </li></ul>Many Types of Benefits
    5. 6. <ul><li>Reduced runoff, erosion and sedimentation </li></ul><ul><li>Less damage due to flooding </li></ul><ul><li>Enhanced groundwater supplies </li></ul><ul><li>Protection of waterfront properties </li></ul><ul><li>Healthier fish and wildlife communities </li></ul><ul><ul><li>Protection of endangered species and biodiversity </li></ul></ul><ul><ul><li>Improved fishing </li></ul></ul><ul><ul><li>Preservation of sport fishing related employment </li></ul></ul><ul><ul><li>Improved waterfowl hunting </li></ul></ul><ul><ul><li>Improved bird watching </li></ul></ul>Riparian, Wetland and Coastal Restoration 
    6. 7. <ul><li>Avoiding expected 25% - 50% decline = $0.9 – 3.5 billion over 20 years </li></ul><ul><li>Improving by 5 - 25% = $0.2 – 2.3 billion over 10 years </li></ul><ul><li>1% improvement in 1 species = 2 – 10 cents per angling day </li></ul><ul><li>1% improvement in all species = 15 – 30 cents per angling day </li></ul><ul><ul><li>Based on real fishing expenses or surveys of hypothetical situations </li></ul></ul><ul><ul><li>37 studies about value of fish abundance in GL region (list in report) </li></ul></ul><ul><li>23.1 million GL fishing days a year (National FWS Survey) </li></ul><ul><li>Value of benefits declines over time (6% discount) </li></ul>Benefits of Sport Fish Abundance
    7. 8. <ul><li>Less sediment in rivers and nearshore waters </li></ul><ul><ul><li>Reduced costs for dredging </li></ul></ul><ul><ul><li>Reduced costs for municipal water treatment </li></ul></ul><ul><ul><li>Benefits to commercial and industrial users of water </li></ul></ul><ul><li>Reduced pathogens </li></ul><ul><ul><li>Lower health care expenses and fewer sick days </li></ul></ul><ul><ul><li>Fewer beach closures, more swimming </li></ul></ul><ul><li>Fewer nutrients and algae blooms </li></ul><ul><ul><li>Higher waterfront property values </li></ul></ul>Sewer upgrades, Non-point source controls 
    8. 9. <ul><li>Restoration Plan  Reduce sedimentation by 10-25% </li></ul><ul><li>Savings for municipal water treatment </li></ul><ul><li>= $50 – 125 million over the long run </li></ul><ul><li>1% increase in sediment leads to a 0.05% increase in water treatment costs </li></ul><ul><ul><li>- conservative estimate from 400 U.S. utilities </li></ul></ul><ul><li>Operating costs for plants that use GL water = $600 million </li></ul><ul><li>Annual savings of $3 -7 million </li></ul><ul><li>Value of savings declines over time (6% discount) </li></ul>Water Quality Benefits
    9. 10. <ul><li>Less toxins in fish </li></ul><ul><ul><li>More people would eat fish rather than McDonalds </li></ul></ul><ul><ul><li>Improved health for families that currently eat GL fish </li></ul></ul><ul><li>Lifting of fish advisories </li></ul><ul><ul><ul><li>Improved recreational opportunities </li></ul></ul></ul><ul><li>Healthier populations of fish and wildlife </li></ul><ul><li>Improved survival of endangered species, biodiversity </li></ul><ul><li>Higher property values around AOCs </li></ul>AOC Clean-up, Toxic pollution controls 
    10. 11. <ul><li>Benefits for homes near AOC = $6 - 7 billion </li></ul><ul><ul><li>Within 5 miles of AOC = 5% suppression in property value </li></ul></ul><ul><ul><ul><li>Based on 6 studies comparing property values at different distances from AOCs </li></ul></ul></ul><ul><ul><li>1.2 million homes within 2 miles of AOC, each $150K </li></ul></ul><ul><ul><ul><li>Based on 2000 census, ignores rentals and commercial property </li></ul></ul></ul><ul><li>Value to basin residents = $12 - 19 billion </li></ul><ul><ul><li>11 million homes in Great Lakes basin </li></ul></ul><ul><ul><li>Surveys indicate willingness to pay $150 per year for cleanup </li></ul></ul><ul><li>Clean up phased in over 10-20 years, 6% discount rate </li></ul>Benefits of Remediating Areas of Concern
    11. 12. Summary of Specific Economic Benefits Affected Value Present Value Benefit Improved 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
    12. 13. GLRC Strategy Return on Investment = $80 – 100 Billion in Benefits +
    13. 14. <ul><li>Many existing studies of ecosystem valuation can help predict benefits of restoration projects. </li></ul><ul><li>Important Considerations: </li></ul><ul><li>Be specific about expected environmental changes </li></ul><ul><li>Identify a change that can be quantified and valued in $$ </li></ul><ul><li>Find a study from a comparable system </li></ul><ul><li>Identify time period for expected improvements, consider discounting future benefits, consider inflation </li></ul><ul><li>Even rough, back-of-the-envelope calculations are useful to funders, media and partners! </li></ul>Take Home Lessons – DIY Economic Analyses
    14. 15. Jennifer Read [email_address] www.miseagrant.umich.edu/economy America’s North Coast: A Benefit-Cost Analysis of a Program to Protect 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

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