Cost-Effectiveness Analysis of Methods to Rehabilitate Shallow Lakes

Transcription

1 Cost-Effectiveness Analysis of Methods to Rehabilitate Shallow Lakes Patrick G. Welle, Ph.D.* Bemidji State University Paper Submitted for the Fifth Annual Conference of the Society for Benefit-Cost Analysis February 21-22, 2013 * Research funded by the Legislative-Citizens Commission on Minnesota Resources and Ducks Unlimited through a grant from the McKnight Foundation.

2 INTRODUCTION AND PURPOSE OF STUDY Degradation of Minnesota s shallow lakes over decades Minnesota Department of Natural Resources (DNR) devoted substantial research efforts to understanding shallow lakes implemented various management strategies to reverse the environmental degradation that has occurred

3 about 4,000 in MN classified as shallow lakes defined as being at least 50 acres in size and no more than 15 feet deep. 300 currently managed for wildlife benefits, prairie lakes or lakes dominated by extensive shallow littoral zones, critical habitat for plant and waterfowl species Over 20 species that use shallow lakes are conservation priorities. crucial to Long Range Recovery Duck Plan over 50 years. To meet the recovery goals for duck populations, 1,800 lakes need to be protected.

4 REGIME CHANGE growing recognition of the vulnerability of these ecosystems to degradation undergo dramatic switches in quality referred to by aquatic ecologists as regime change surpassing a threshold or tipping point for water clarity can change the entire character of a lake commonly used Water Quality Index for deeper lakes often ill-suited as an indicator for shallow lakes

5 ECOLOGICAL AND HUMAN TIPPING POINTS Episodic bounces in water levels are part of the natural cycle for many shallow lakes. Low water that fish cannot survive can enhance quality of shallow lakes. Both ecological and human tipping points are important Abrupt decreases in ecological services can lead to dramatic change in human behavior

6 PURPOSE OF STUDY provide economic information to formulate the most cost-effective policy to maintain and restore the integrity of these aquatic ecosystems conceptual framework to understand the cost implications of available methods to restore shallow lakes and empirical evidence comparing costs of methods across lakes and regions of the state.

7 COST-EFFECTIVENESS AS A FRAMEWORK FOR QUANTIFYING ENVIRONMENTAL IMPROVEMENTS Attaching dollar values to the private and public benefits provided by shallow lakes in Minnesota would be extremely challenging. study focuses on physical measures of lake quality rather than monetizing those benefits CEA provides structure for understanding efforts to rehabilitate shallow lakes by requiring the identification and quantification of the physical improvements in lake quality that are desired

8 CEA: MARGINAL PRODUCT AND COSTS First stage shaped the evidence on ecological improvement in terms of marginal product of the methods implemented second stage compares various methods in terms of dollars spent units of improvement are divided by the costs of the methods to put improvement in terms of costs per dollar

9 CONCEPTUAL MODEL MODEL: (Y= reduction in chla/cost) = f (IL, WB, PA, CLI, NL, BIO, PHYS, LF, LU, MORPH) In Lake (IL) Methods, Watershed-Based Approaches (WB), Public Awareness (PA), Climate (CLI), Ambient Nutrient Levels (NL), Biological Sampling (BIO) Physical Characteristics of Sampled Lakes (PHYS) Landscape Features (LF), Land Uses (LU) Morphometric Features of Individual Lakes (size and shape) (MORPH)

10 If MP = Q/ X > 0 but declining, marginal costs per unit of improvement are increasing where MP = Marginal Product, Q = Change in quantity of output produced (Chla reduced) X = Change in the input (one unit change in X variable is one more unit of the method) Or MC = C/ Q increases as MP decreases Where MC = Marginal Cost of one unit of improvement and C = cost of the method In extreme, as MP approaches 0, MC approaches infinity.

11 ECOLOGICAL EVIDENCE OF ECONOMICALLY PROHIBITIVE METHODS Conditions that would push MP toward 0 and MC toward infinity High internal nutrient cycling Unfavorable surrounding land uses and watershed characteristics that make it ineffective to reduce nutrients (determined by % agriculture/%urban) Geomorphology and hydrology that make reductions in fish biomass difficult to sustain for more than a few years (i.e. lakes connected to large river systems or downstream in large watersheds)

12 METHODS OF EMPIRICAL ANALYSIS eight intensive study lakes - best evidence on the improvement (or lack thereof) and the closest monitoring of the costs involved. more expansive group of lakes involves 14 casestudy lakes bringing to 22 the group of lakes with good data on improvements and/or costs of methods. third group of 64 lakes was defined based on data provided by Ducks Unlimited on the costs of projects in which they partnered.

13 Three Alternative Measures of Shallow Lake Enhancements Each method on each lake evaluated for amount of algae removed (µg/l chla). Chlorophyll a is used as a proxy for phytoplankton biomass. Due to non-convexities in the influence of chla on light penetration and ecosystem function (Threshold Effects) two other measures also used: 2) increase in submerged aquatic vegetation (macrophytes), and 3) increase in the probability of the lake being in a stable, clear-water state rather than a turbid state.

14 Three Alternative Measures of Cost-Effectiveness 1) units of algae reduced [µg/l chla] per dollar spent on enhancement method 2) increase in submerged aquatic vegetation (macrophytes) per dollar spent on enhancement method 3) increase in the probability of the lake being in a clear state per dollar spent on enhancement method.

15 RESULTS Some concepts and variables framed in the conceptual model could not be operationalized in the empirical analysis given limitations of available data points to ways data collection and empirical analysis could be strengthened in the future Shallow Lakes Program has surveyed conditions on hundreds of lakes, but no management strategies implemented so far

16 Good Timing for CEA Ex Post CEA on lakes where results are observed to date puts these lakes in the role of demonstration projects for future efforts Patterns of cost-effectiveness will be better understood in the future as more evidence on improvements unfolds from future projects

17 Utility of CEA at This Stage is Twofold 1) showing cost-effectiveness of efforts thus far 2) indicating the need for more resources for monitoring ecological changes and tracking costs of methods and details on cost components (between and within capital, operating and maintenance categories.) Much of the categorization of costs in the conceptual model cannot be tracked with the cost data available to date.

18 Results on Chlorophyll a

19 Results on Chlorophyll a lakes in areas of northern Minnesota (top two in figure 1) have low chla levels that explain their clear water conditions, while most of the lakes in the southern areas (especially Windom) would require huge decreases to see a change toward better quality, if achievable at all

20 Program Lakes Gain in % Plant Coverage Gain in Feet of Secchi Transparency Augusta Bear Buffalo East Twin Geneva Hjermstad Slough Little Towner Maria Mott Nora WMA Pickerel Golden Sunset Sedan Pond South Spellman South Twin Swan Teal Towner Lake Wilts

21 Probability of Stable Clear-Water States huge differences in water clarity and its importance in shallow lakes compared to deep lakes Hedonic pricing one meter improvement in clarity in deep lakes can have substantial value driven by aesthetics shallow lakes regime change would likely occur dramatic change from lack of clarity near the surface to being able to see the bottom. Light penetration to bottom promotes growth of submerged native aquatic plants wild rice - and from turbid to clear (two measures are consistent)

22 Costs of Methods Table 3: Descriptive Statistics on Total Costs and Costs per Acre Foot sum costs lake Costs per acre foot N Valid Missing Mean Median Std. Deviation Variance 7.804E Minimum Maximum Sum Percentiles

23 Factor in Lake Size and Water Volume: Improvement in Acre Feet conceptually correct measure of gain or marginal product is the improvement times the number of acre feet = surface acres X average depth MP x acre feet / costs = MP/cost per acre feet.

24 Method N Mean Minimum Maximum sum costs lake rotenone structure fish barrier Table A-3. Sum of Costs per Lake and Costs per Acre Foot by Method Structure and Fish Barrier Rotenone and Drawdown Total Costs per acre foot structure fish barrier Structure and Fish Barrier Rotenone and Drawdown Total

25 WRP Crop rate Mean N Laurentian Mixed Forest NE Tallgrass Aspen NW Eastern Broadleaf Forest Prairie Parkland SW Total ANOVA WRP Crop rate Sum of Squares df Mean Square F Sig. Between Groups 2.795E E Within Groups 2.840E Total 5.635E9 2640

26 % Plant Gain per $ Lake %Plant Diff. Costs Per Acre Foot spent on an acre foot Augusta Bear Buffalo East Twin Geneva Hjermstad Sl Little Towner 67 Maria Mott Nora WMA 6 Pickerel Golden Sunset Sedan Pond South Spellman South Twin Swan Teal Towner Lake Wilts

27 CONCLUSIONS total costs of projects implemented over the last decade or so are approximately $20 million. Project costs vary a great deal across lakes. where responses have been monitored, some lakes had high existing water quality and treatment efforts succeeded in protecting it. other lakes where high-quality conditions have been achieved and maintained. A few lakes have stayed in a low-quality condition despite rehabilitation efforts.

28 More Conclusions metric, costs of methods per acre feet, is the most informative comparison across lakes years likely to be in a clear state per $ spent on an acre foot and percentage of submerged plant coverage gained per $ spent on an acre foot yield useful estimates These two measures consistent in identifying lakes with the most and least cost-effective treatments In comparing ecoregions, factors converge (fertility of soil and watershed) to make improvement in the south more difficult to achieve ecologically and more expensive to implement

29 Hanson, et al. Assessment of Shallow Lake Management, Report to the LCCMR, pp _05g.pdf