Grantee Research Project Results
Final Report: Valuing Water Quality Improvements in Midwestern Ecosystems: SpatialVariability, Validity and Extent of the Market for Total Value
EPA Grant Number: R836166Title: Valuing Water Quality Improvements in Midwestern Ecosystems: SpatialVariability, Validity and Extent of the Market for Total Value
Investigators: Keiser, David A , Kling, Catherine L. , Phaneuf, Daniel J. , Zhao, Jinhua , Vossler, Christian , Finlay, Jacques C
Institution: University of Massachusetts Amherst , Iowa State University , Michigan State University , University of Tennessee , University of Wisconsin - Madison , University of Minnesota
EPA Project Officer: Packard, Benjamin H
Project Period: April 1, 2016 through March 31, 2021 (Extended to March 31, 2023)
Project Amount: $800,000
RFA: Water Quality Benefits (2015) RFA Text | Recipients Lists
Research Category: Water
Objective:
The goal of the research was to generate total economic value estimates for surface water quality improvements within the Upper Mississippi, Ohio, and Tennessee river basins. The estimates needed to be spatially explicit, based on sound ecological concepts, comparable across the broad landscape of our study area, and derived from best practice methods in nonmarket valuation. To achieve this goal, we pursued a number of activities. First, we adopted the Biological Condition Gradient (BCG) as our organizing principle to represent water quality conditions across the landscape. The BCG is grounded in ecological principles and generalizable across space. It aggregates available data on the biological condition of waterbodies into a 6-point ordinal scale that reflects increasing degrees of degradation. Second, we worked with subject matter experts and a graphic artist to design materials that translated the ecological concepts imbedded in the BCG into lay-accessible descriptions of the six different water quality conditions. These materials formed the basis for defining and explaining the water quality commodity in our survey. Third, we fielded two stated preference (SP) surveys that solicited economic values for changes in BCG levels presented at different spatial scales. The first survey (stage I) provided our primary results. The second survey (stage II) was designed to specifically investigate spatial elements of water quality valuation. As part of these three steps and the policy objectives of the project, we also conducted survey and real payment experiments to assess SP validity and took steps to merge the valuation information from the project into ongoing efforts to build an Integrated Assessment Model (IAM) for water quality valuation.
Summary/Accomplishments (Outputs/Outcomes):
We assembled biological data on fish and macroinvertebrates from over 19,000 sites across the study region. The data are an output from the project and are being used to understand ecological interactions and human impacts on streams across a wide geographic area (e.g., Terui et al. 2021; Kim et al. 2022). As an input to our surveys, these data were used to assign BCG scores at the 8-digit hydrologic unit code (HUC8) across the three river basins. We found that 42 and 49 percent of the land area in our study region are at level 3 (“Some Changes Noticeable”) and level 4 (Many Changes Noticeable”), respectively. Four percent are at level 2 (“Close to Natural State”) and 5 percent are at level 5 (“Major Degradation”). At the HUC8 level of aggregation, none of the areas are level 1 (“Natural State”) or level 6 (“Extremely Degraded”).
In stage I data collection, we surveyed 2000 households living in the Upper Mississippi-Ohio-Tennessee river basins and assigned each respondent their baseline BCG score based on zip code. The sample was drawn from a high-quality, randomly recruited panel. Diagnostic analyses showed that respondents understood our water quality metric, viewed the survey as consequential, and in general provided high quality data. Each respondent participated in several simulated referendums that offered improved water quality (in different amounts and at different spatial scales) in their local and distant watersheds, in exchange for a tax increase. We found that households would pay approximately $150 per year for five years to secure a one-level improvement in the BCG in their home HUC8 and that this more than doubles to over $315 if the improvement is at the larger scale HUC4 level. Aggregating to the population level we predict that a BCG of level 2 across the three river basin study area would generate over $10 billion in economic value annually for five years. These results are published in PNAS (see reference below). The importance of understanding spatial scale and extent of the market for water quality improvements motivated additional data collection, which is ongoing as stage II of this research.
Our methodological experiments provided findings that advance the science of stated preference. First, we find that an information script can substantially mitigate tendencies for respondents to answer non-truthfully to valuation questions in the context of a repeated discrete choice experiment (DCE). This information script potentially has considerable importance to the researchers and users of stated preference research as most recent stated preference studies use some form of DCE. We show evidence that this information treatment can enhance construct validity in estimates of value. In our context, we find that the information treatment generates plausible spatial scale effects in economic values but that spatial scale effects are absent among those who did not receive the treatment. A manuscript describing these findings is under review.
Second, we completed a real payment/SP validity study that involved voting on tree planting projects to help improve water quality in the Mississippi River Basin. It established that different value elicitation approaches, when implemented in a way that gives rise to incentive compatible mechanisms, lead to statistically equivalent willingness to pay (WTP) measures. This evidence suggests that designing SP surveys that more closely align with mechanism design theory can serve to reduce the oft-observed empirical differences between different value elicitation formats. The completed real payment experiment was published in JAERE – a top environmental economics field journal.
Third, two of the approaches studied in the real payment experiment above involved asking people multiple valuation questions (but in a limited way), which motivated a follow-on real payment experiment that more closely aligns with our grant proposal in that it varies as treatments the number of options in a choice set, and the number of choice sets. There are two main findings. One is that a single binary choice (often seen as the “gold standard” given it mimics a public referendum and has desirable incentive properties) yields equivalent WTP distributions to that of a binary DCE, where each value question involves a choice between a policy option and the status quo. Further, even under ideal conditions (in terms of incentive compatibility), a three-option DCE leads to considerable WTP differences when compared to the other two formats. Evidence suggests that this is due to increased complexity and the fact that the WTP of a policy is highly dependent on the other policy option in the same choice set (a framing effect). These results suggest researchers should use caution when employing a three-option DCE, which according to a survey of the literature is used in half of recently published stated preference studies (and two-thirds of DCEs). The results were presented at a recent conference and a paper is currently under development.
Conclusions:
Our work to incorporate findings from this project into policy tools generated two current/ongoing outputs. First, we organized a special issue of PNAS to feature papers funded by EPA under this grant initiative. See Moore et al. (2023) for an introduction to the special issue and discussion of the agency/researcher partnerships. Second, through this project and our larger agenda focused on building an IAM for water quality valuation, we have hosted annual workshops that bring together policy makers, agency researchers, and academics to generate research that supports policy analysis at the federal and local levels. The project has also seeded ongoing policy work and engagement. For example, work related to the BCG and our IAM involves investigating data environments and analysis methods for linking changes in nutrient concentrations to incremental changes in BCG scores, for ultimate use in valuing changes in nitrogen and phosphorus loading.
Journal Articles on this Report : 2 Displayed | Download in RIS Format
Other project views: | All 26 publications | 7 publications in selected types | All 7 journal articles |
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Vossler CA, Dolph CL, Finlay JC, Keiser DA, Kling CL, Phaneuf DJ. The Clean Water Act After 50 Years:Innovations in Measuring the Social Benefits of Water Quality for Research and Policy:Valuing improvements in the ecological integrity of local and regional waters using the biological condition gradient. Proceedings of the National Academy of Sciences.2023;120(18). |
R836166 (Final) |
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Moore CC, Corona J, Griffiths C, Heberling MT, Hewitt JA, Keiser DA, Kling CL, Massey DM, Papenfus M, Phaneuf DJ, Smith DJ. Measuring the social benefits of water quality improvements to support regulatory objectives:Progress and future directions. Proceedings of the National Academy of Sciences 2023;120(18):e2120247120. |
R836166 (Final) |
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Supplemental Keywords:
Nonmarket valuation, water quality, stated preference, Biological Condition Gradient (BCG), nutrient pollutionRelevant Websites:
Replication materials for: 'Valuing Improvements in the Ecological Integrity of Local and Regional Waters using the biological condition gradient' Exit
Progress and Final Reports:
Original AbstractThe perspectives, information and conclusions conveyed in research project abstracts, progress reports, final reports, journal abstracts and journal publications convey the viewpoints of the principal investigator and may not represent the views and policies of ORD and EPA. Conclusions drawn by the principal investigators have not been reviewed by the Agency.
Project Research Results
- 2021 Progress Report
- 2020 Progress Report
- 2019 Progress Report
- 2018 Progress Report
- 2017 Progress Report
- 2016 Progress Report
- Original Abstract
7 journal articles for this project