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VALUING ACID MINE DRAINAGE REMEDIATION OF IMPAIRED WATERWAYS IN WEST VIRGINIA: A HEDONIC MODELING APPROACH
Citation:
WILLIAMSON, J. M., H. W. THURSTON, AND G. BENNETT. VALUING ACID MINE DRAINAGE REMEDIATION OF IMPAIRED WATERWAYS IN WEST VIRGINIA: A HEDONIC MODELING APPROACH. Presented at EPA GIS Workgroup Conference, Cincinnati, OH, September 19 - 22, 2006.
Impact/Purpose:
To inform the public
Description:
States with active and abandoned mines face large private and public costs to remediate damage to streams and rivers from acid mine drainage (AMD), the metal rich runoff flowing primarily from abandoned mines and surface deposits of mine waste. AMD can lower stream and river pH to levels that cannot sustain life. Calculating the cost of damage to streams and rivers due to AMD is not straightforward, and encompasses a wide spectrum of factors. There is the dollar loss of recreational activity associated with the streams and rivers such as sport fishing and river rafting. And non-use values must be considered, though they are more difficult to quantify. Deriving the non-use value of remediating an environmentally damaged body of water is fraught with design and measurement issues that have confounded water quality research. Non-use values are usually embodied in the price of other goods or services, and therefore must be derived. In this article we use a spatial-econometrics approach to estimate the willingness-to-pay (WTP) for the cleanup of AMD impaired waterways in the Cheat River Watershed of West Virginia. Appalachian states have an especially large number of contaminated streams and rivers, and the USGS places AMD as the primary source of water-quality degradation in the region. More than 5,000 miles of streams and rivers there are impacted by AMD. We derive non-use values for AMD using 21 years of housing sales data, spanning 1985 - 2005, and use geographic information systems (GIS) to link housing market sales data with stream water quality. The richness the data allow us to control for housing attributes such as the number of rooms of the house, bathrooms, stories, size of the house in square footage, as well as amenities of the house such as air conditioning, all of which contribute to the value of the house. Using the variation in sales prices and water quality, we develop WTP estimates of the price impact of water quality. The results indicate being located near an AMD impaired stream reduces the house value by 13.5% or $5,299.