Grantee Research Project Results

Final Report: Measuring Societal Perceptions, Attitudes, and Economic Benefits of Ecological Integrity and Biodiversity by Extending Contingent Valuation Method Surveys

EPA Grant Number: R824886
Title: Measuring Societal Perceptions, Attitudes, and Economic Benefits of Ecological Integrity and Biodiversity by Extending Contingent Valuation Method Surveys
Investigators: Loomis, John , Covich, Alan , Fausch, Kurt , Strange, Liz , Kent, Paula
Institution: Colorado State University
EPA Project Officer: Chung, Serena
Project Period: July 1, 1996 through April 1, 1999
Project Amount: $114,998
RFA: Valuation and Environmental Policy (1995) RFA Text |  Recipients Lists
Research Category: Environmental Justice

Objective:

Measure attitudes toward and willingness to pay to protect more diverse, self-regulating ecosystems along the South Platte River.

Summary/Accomplishments (Outputs/Outcomes):

During the first year, three biologists worked with two economists to define what the ecosystem services were being provided by the Platte River and how these could be conveyed in words and figures. Background data from USGS and USFWS as well as a site visit were conducted. Three of the biologists have summarized their analysis of the South Platte in a forthcoming paper in the journal Environmental Management (see citation below). The study section of the South Platte River was also selected based on an actual policy proposal (e.g., the Centennial Land Trust). The first key accomplishment, was definition of ecosystem services that could be provided by the Platte River. Those services are: dilution of wastewater, natural purification of water, erosion control and habitat for fish and wildlife.

Once the key ecosystem services were identified, next we developed management actions necessary to realize increased level of ecosystem services. These management actions included: a five mile wide conservation easement along 45 miles of the South Platte River, downstream of Greeley. This area is 300,000 acres in size. Next, restoring native vegetation along the river in the form of buffer strips and eliminating cropland and cattle grazing in the buffer strip area. Livestock grazing would be allowed in the remainder of the conservation easement. The payment mechanism was an increase in household water bill. The interdisciplinary team's worked jointly to develop drawings and narrative that conveyed the concept of increased ecosystem services. An initial set of drawings illustrating a natural level of ecosystem services as compared to the current condition of degraded ecosystem service were prepared.

FOCUS GROUPS
To test the validity of these drawings and narrative to convey the desired concepts, we presented them at two focus groups in Denver and one in Greeley. The individuals attending the focus groups were asked to write down their description of what each diagram indicated. We asked them to point out any elements that were not clear. After each focus group, we made modifications to the diagrams and the narrative wording. We found that including a summary diagram that was a composite of all of the ecosystem services presented individually helped to improve comprehension.

PRETESTING OF IN-PERSON SURVEYS
After further revisions after the focus group, an entire survey script and revised diagrams were prepared. The team reviewed this and additional changes made. We pre-tested the entire script and drawings on five individuals, two of which served as interviewer training. Further changes were made and we believe we have a fairly effective script and diagrams to elicit household willingness to pay for increasing ecosystem services in the Platte River.
At the time we received the grant, EPA removed the third year of funding where we had proposed full scale implementation of the survey. However, we had sufficient funds and CSU provided graduate student support to allow us to conduct 96 in-person interviews during the spring and summer of 1998. The overall response rate to initial contacts through final interviews was 41%.

SYNOPSIS OF ECOSYSTEM SERVICES BEING VALUED IN SURVEY
(1) Restoring native vegetation buffer strips along streams to increase ecosystem services.
(2) Leaving more water in the South Platte River.
Additional waterflows in the river can be obtained by: --Purchasing water rights from agricultural users; --paying farmers to grow crops that use less water; --convert cropland away from the river into fenced pastureland. Farmers would make at least as much income, if not more, from selling the water and growing less water intensive crops or switching to livestock.

The second change needed to increase ecosystem services is to make changes land management. Land Management actions necessary to restore Ecosystem Services were illustrated on the map. Along 45 river miles of the South Platte River shown on the map, the government would purchase development rights and conservation easements on both sides of the river over a 10 year period from willing farmers (5 miles on either side for a total of 300,000 acres shown on the map). Conservation easements keep the land in private ownership but would pay farmers to manage this land to improve wildlife habitat and water quality. For example, cows would be fenced out of the area along the riverbanks so native vegetation could regrow and the stream banks could be stabilized. This area will be restored to natural vegetation such as grasslands, wetlands and streamside forests. The revegetated streamside would: reduce erosion; increase natural water purification by plants; improve water quality and river habitat ; increase native fish populations so they will not go extinct; provide public access to restored natural areas for wildlife viewing including 5 miles of hiking trails.

SUMMARY OF SURVEY RESULTS
Using the dichotomous contingent valuation method, the respondents were randomly asked if they would be willing to pay one of 12 different monthly dollar amounts ranging from $1 per month to $100 per month. A logit statistical model was estimated on this data and attitudes of the respondents toward water management. The resulting mean monthly willingness to pay equals $21/month per household with a 95% confidence interval of $20.49--$21.65, for the increase in ecosystem services on this 45 mile stretch of the South Platte River. The table below calculates the total benefits to residents within the five counties along the South Platte River. The annual benefits are between a high of $71.1 million and $29.1 million annually. The high range is based on generalizing the sample to the entire population. The low range is based on assuming that non-responding households have a zero willingness to pay.

Per Household and Total Willingness to Pay (WTP) with Two Different Sample Expansions

WTP/month	Number of households	Total Benefits/month (Millions)	Total Annual Benefits (Millions)
$21.06	281,531	$5.9	$71.1
$21.06	115,427	$2.43	$29.1

COMPARISON OF BENEFITS AND COSTS OF RESTORING ECOSYSTEM SERVICES
The annual WTP can be compared to the cost of the conservation easements and water rental necessary to deliver the ecosystem management practices in the study area. The U.S. Department of Agriculture?s Conservation Reserve Program (CRP) pays farmers to idle their farmland to reduce erosion and improve water quality. Rental rates in northeastern Colorado average $41 per acre. Given the 300,000 acres of easements in our ecosystem management scenario, $12.3 million would be required.

The mean annual stream flow at Kersey (river area of focus for this study) is calculated at 814 cfs daily. To convert cubic feet per second to acre feet, we used the figure, 1.964 cfs for 24 hours equals 1 acre foot, which calculates to 414 acre feet daily. Multiplying this number by 365 days, and multiplying that number by 17 percent and by 42 percent (increase in instream flows) and subtracting the difference results in an extra 37,820 acre feet of water needed annually to increase instream flows. Since even the conservative estimate of the amount responding households would pay is $29.17 million, households could pay the CRP rental rate to farmers and have $16.87 million remaining annually to rent the 37,820 acre feet of water needed to increase instream flow, dilution of pollution and aquatic habitat as well as pay any one-time on-site restoration costs such as fencing and replanting native vegetation. Landry (1998) summarized annual lease prices of water for instream flow in the west at $30. Using the more recent higher cost of $30 per acre foot, the annual water leasing cost would be $1.13 million per year. Total costs would be $13.43 million, less than half the conservative estimate of WTP. Thus, nearly $16 million per year could be spent for on-site restoration with native vegetation, riparian improvements and fencing. Therefore, it is clear, that willingness to pay of responding households along the South Platte River far exceeds the typical costs of the conservation easement and leasing the water rights. If one were to include all the households living in the entire South Platte River watershed, WTP would exceed the costs by an order of magnitude.

Conclusions:

The field of economics endures misrepresentation because it is often confused with financial accounting and the cash flow. Economics is not a monetary discipline that looks at the ?bottom line? for profits; it factors in human utility in its quest for optimality. The Contingent Valuation Method is such a tool used to factor in human utility by putting a monetary value on benefits. In the case of the South Platte River CVM study, the benefits greatly exceed the costs of rehabilitating the South Platte River. These concrete figures can be shown to decision-makers to aid them in future choices of the management of the South Platte River.

Journal Articles on this Report : 1 Displayed | Download in RIS Format

Publications Views

Other project views:	All 4 publications	1 publications in selected types	All 1 journal articles

Publications

Type	Citation	Project	Document Sources
Journal Article	Strange EM, Fausch KD, Covich AP. Sustaining ecosystem services in human-dominated watersheds: biohydrology and ecosystem processes in the South Platte River Basin. Environmental Management 1999;24(1):39-54.	R824886 (Final)	Abstract from PubMed

Supplemental Keywords:

RFA, Scientific Discipline, Economic, Social, & Behavioral Science Research Program, Ecosystem Protection/Environmental Exposure & Risk, Economics, Monitoring/Modeling, decision-making, Social Science, Economics & Decision Making, contingent valuation, ecosystem valuation, policy analysis, social psychology, surveys, biodiversity, community involvement, social impact analysis, valuation, decision analysis, economic benefits, environmental assets, incentives, property values, valuing environmental quality, societal perceptions, cost benefit, economic incentives, environmental values, preference formation, environmental policy, community-based, models, psychological attitudes, public values, aquatic ecosystems, interviews, public policy, willingness to pay

Progress and Final Reports:

Original Abstract

1997 Progress Report

1998