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 7: Economic Analysis of Water Quality and Recreational Benefits of the Hocking River Valley

Allan Sommer and Brent Sohngen

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

Extract

7. Economic analysis of water quality and recreational benefits of the Hocking River Valley Allan Sommer and Brent Sohngen INTRODUCTION Outdoor recreation is a highly valued resource to a large number of consumers in the US. Bergstrom and Cordell (1991) suggest that outdoor recreation in the United States is worth $172 billion per year (1997 US dollars). Water-based recreation in particular is an important activity, however, long-term degradation to water quality can reduce its social value. While many watershed groups and grass-roots organizations work locally to try to improve water quality conditions in rivers and streams, these groups unfortunately, do not have access to economic information that can help them make better decisions. Local groups increasingly are searching for information on the benefits of recreational and other uses of river water resources in their regions. When information is not available, as is often the case in small, rural watersheds, groups can choose to go without data or they can work to develop estimates. To develop estimates relevant for their local region, economists suggest that groups have two choices. They can rely on benefit transfer (Smith et al., 2002; Walsh et al., 1992), a method that adopts results from studies in other regions, or they can collect and analyze data on their own. While benefit transfer holds promise as a low-cost method to provide data for local groups, this study presents an example where primary data were collected locally, and used to estimate benefits of water...

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