The Non Market Value of Water in Oklahoma

Transcription

1 The Non Market Value of Water in Oklahoma Tracy Boyer, Assistant Professor Department of Agricultural Economics Presentation to NRCS October 20, 2009 Research Funded by a combination of funding sources including: OKLAHOMA WATER RESOURCES RESEARCH INSTITUTE, Ok. Agricultural Experiment Station, and Okl h D t t f Wildlif (USFWS C U it)

2 Total Value of Water aka Total Willingness to Pay TWP= Use Value + Option Value+ Nonuse Value 1) Use value gained by physically using the water or environmental resource supported by it. 2) Option value premium to assure potential benefit received from water in the future 3) Non use or existence value gained from the knowledge that t water resources exist tdespite there being no chance of using it personally (vicarious value or stewardship or bequest) Non market use values like recreation & ecosystem Values are often overlooked and treated as zero!

3 Recreational Values can be large The Value of Trout Fishing on Lower Illinois River was $2 million per year (ODWC Report) Oklahoma Lake Survey travel cost estimates the value of one trip to Tenkiller at $194/day. Willingness to pay for Recreation on Tenkiller Lake declined with the water level and increased with probability of algal bloom (Roberts et al, 2008)

4 The image cannot be displayed. Your computer may not have enough memory to open the image, or the image may have been corrupted. Restart your computer, and then open the file again. If the red x still appears, you may have to delete the image and then insert it again. Value of Water Quantity and Quality at Tenkiller (2006): A Conjoint Choice Example (from an earlier study funded by ODWC and OK Ag. Experiment Station)

5 Results: Water Quality at Tenkiller Willingness to pay Choices over Choices over Choices over per visit for certain outcomes uncertain outcomes (Assuming linear uncertain outcomes (with weighting) probability) Removal of Algal Bloom $3.87 $13.08 $12.37 The results show that individuals are willing to pay more for the option to remove uncertainty about outcomes. The third result had a better model fit and also showed that individuals were willing pay $12.40 to reduce the probability to reduce the likelihood of a bloom from 100% to 30-0%, 0% meaning that low probabilities are treated as zero. High probabilities are treated as one.

6 Oklahoma Lakes Survey 2,000 surveys were mailed to respondents in every county of Oklahoma (September 2007) Recreational (non-market) Demand Travel Cost Model and Discrete Choice Models for All OK lakes 1. Travel cost models estimates recreational use value for a site. 2. Travel Cost provides a lower bound for nonmarket values (does not include option, existence, or bequest value). 3. Conjoint Choice model provides values for clarity improvements (BUMP data and EPA did not span all lakes)

7 Central Study objective OWRRI 2007 Decision i Support tmodel lfor Tenkiller (Boyer, Stoecker, Sanders) To develop a water pricing model based on the opportunity cost of water in alternative and complementary uses for Lk Lake Tenkiller. To illustrate how non market Recreational uses can be valued and considered in a management scheme. To show potential conflicts between consumptive uses (flood control, hd hydropower, M&I) and non consumptive uses (recreation).

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9 Chart 5. Total number of respondents who took single and multiple day trips in 2007 Total number of respondents taking single day trip Total number of respondents taking multiple day trip Total number of repondents who have never visited lakes 21% 51% 28% Recreational (non-market) Demand

10 Top Most Popular Lakes Day Trips Multiple Day Trips 1) Fort Gibson 1) Carl Blackwell 2) Hefner 2) Texoma 3) Grand 3) Tenkiller 4) Eufaula 4) Eufaula

11 Chart 9. Top activities of respondents Number of respondents Recreational (non-market) Demand

12 Figure 9: Average Score of Factors Affecting Choice to Visit Lakes Scale of 1 10 (1 =not important and 10=very important, 5= neutral) Sandy Biodiversity Qty of Fish Crowding Distance Park Activities in Activities in Water Location of Other Bottom facilities lake town quality friends

13 Figure 7: Percentage of All Respondents Who Believe Lake Condition Information Should Be Provided by the State by Subject 85.12% 87.05% 87.88% 79.34% 77.13% Safety Fish contamination Bacterial contamination Algal blooms Lake water level

14 Figure 10: Average Rank of Water Quality Factors: Ranked 1st, 2nd, 3rd in Importance to Choice of Lake to Visit Lack of water odor Bacteria contamination level Water clarity No algal boom

15 Figure II. 1. An Example of Conjoint Question Valuing Oklahoma Lake Clarity Compared to the lake you most visit, would you choose a lake such as A or B? Or would you choose to stay with the one you currently visit, C? Please choose one. Attribute Option A Option B Option C Increase in public boat ramps 2 Boat ramp 1 Boat ramp Campsites Available lbl with electric Available lbl with electric service service Public restrooms Restroom with flush Restroom with flush toilets and showers toilets and showers Lodges None Available 1 foot increase of Water clarity water visibility dept No improvement from surface Increase in distance from home (one way) 20 miles increase 40 miles increase NO CHANGE: I would rather keep the management of this lake the way it is today I would choose (Please check only one) A B C (I would not want either A or B) Given your choice above, how many trips per year would you take? Number of single day trips same number or #less or # more

16 Oklahoma Lakes Clarity

17 OWRRI Study: Pulling Data into a complete economic modeling system for Reservoir modeling Lake Model : USGS Bathtub model Daily Dil inflow, releases, elevation, storage Demands M & I Recreation Flood Downstream Water Supply Water Demands To Maximize the NPV of NET BENEFITS from the Allocation of Water between Power, Municipal, and Recreational Uses Subject to constraints on ending monthly volume, max power capacity, maximum lake level, andminimum troutrelease. Water Supply and Modeling NPV Optimally Given Supply & Demand 17

18 Projected Monthly Municipal and Rural Water Use Acre Fee et Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec * Projections by Author, Derived from USACE 2001 Tenkiller wholesale Water Study

19 Projected Visitor Days in 2010 and Visitor Day ys Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec * Derived from USACE Projection

20 Projected Releases for Power Generation Recreation $194/ visitor day Recreation $50/ visitor day Feet Acre et Acre Fe Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec *Projections by Author, Derived from USACE 2001 Tenkiller Wholesale water Study *Projections by Author, Derived from USACE 2001 Tenkiller Wholesale Water Study

21 Average* and Projected Lake Levels Average for 2010 and 2060 Recreation $194/visitorday Recreation $50/visitorday a Level Feet above Se Average Average 2010 Average 2060 Feet above Sea Level Average Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 600 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec * Average USACE *Average Level

22 Change in Net Present Value of Services from Lk Lake Tenkiller when Recreation Values are Explicitly Included in the Optimization Max Max w/ Rec w/o Rec Change Power $10.3 $12.7 ($2.4) Municipal $1,004.8 $900.2 $104.7 Recreation $2,698.8 $2,510.1 $188.7 Total $3,713.9 $3,423.0 $290.9 llions of Dolla ars Mi $4,000 $3,500 Power $3,000 $2,500 Municipal $2,000 Recreation $1,500 $1,000 $500 $0 Opt. w Recreation Recreation as Residual * Discounted of 4.875% from 2010 to 2060

23 Trade of in Net Present Value* Between Power and Recreation From Directly Including Recreation in The Optimization $200 $180 $160 $188.7 increase In recreation llion Dollars Mi $140 $120 $100 $80 $60 $40 $20 $0 $2.4 decline in 1:78.6!!! power Dec in Power Gain in Rec * Discounted of 4.875% from 2010 to 2060

24 Conclusions When non market values such as recreation are ignored in management of reservoir systems, potential societal benefits areforegone ($188millionmoredollarsinrecreation more in recreation, $290 million more total when optimizing over all water uses). Improvements in Clarity affect visitation and bring in new users. Discounting potential users will downward bias results. Other non market effects such as existence and ecosystem values mayalsoalso affect reservoir management, but were not included here. These values have potentially large impacts in the local economy in terms of ripple effects and sales tax revenue depending on if recreators come from outside these counties.