Economic Valuation of River Systems

Economic Valuation of River Systems

New Horizons in Environmental Economics series

Edited by Fred J. Hitzhusen

The book applies benefit–cost analysis and a wide array of non-market and distribution economic valuation methods in ecologic context to determine the pay-off and distribution impacts of various infrastructure and water quality improvements to eight river systems in the Great Lakes region of the US. The generally positive results have important implications for public policy and future research.

Chapter 2: Codification, Case Studies, and Methods for Economic Analysis of River Systems

Fred J. Hitzhusen

Subjects: economics and finance, environmental economics, valuation, environment, environmental economics, valuation, water


2. Codification, case studies, and methods for economic analysis of river systems Fred J. Hitzhusen CODIFICATION IN A SUPPLY-DEMAND CONTEXT The preceding chapter by Granata and Zika reviews the role of biology and the evolution of various classification systems for rivers and streams over time and develops ecological engineering concepts for the restoration of riverine ecosystems. Fluvial systems are very complex and vary based on local climate, flow (velocity and depth), geology, hydrology, morphology, productivity, and so on. Comparison of different stream or river systems for restoration or conservation typically involves a classification system that integrates physical and biological aspects, such as classifying running waters with similar physiographic conditions, classification based on indicator fish or invertebrate species occurring in different zones of the river system, the river continuum concept or viewing streams in a watershed content. Economic analysis of a river system requires classification or codification based on the principles of supply and demand. The supply side includes cost of production of various river system attributes and the demand side includes human preferences or willingness to pay (WTP) for attributes. Determining supply side factors includes identifying the hydrological, biological, and human-made infrastructure characteristics (for example, access points, parking, picnic facilities) of the river in question. On the other hand, demand-side factors require the identification of individual characteristics and demographic traits (for example, income, education, values, recreation levels) that influence the WTP of individuals for river-based amenities, that is, recreation, water...

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