Summer 2008

UW Sea Grant Outreach

The Value of Clear Water

By Carolyn Rumery Betz

Prospective home buyers with school-aged children often are willing to pay more for a house that is located in a school district with an excellent reputation. Others are willing to pay more for a second bathroom or a remodeled kitchen, but how much more are landowners willing to pay for a house located by a body of water that has high-quality water than one that does not?

UW–Madison researchers Bill Provencher and Rich Bishop and PhD student Rebecca Moore tackled this question by conducting a mail survey of 610 landowners who lived on or near Green Bay. They were interested in knowing what the benefit of improving water clarity would be to inland and shoreline property owners in 14 townships adjacent to the Bay in Brown, Oconto, Kewaunee, and Door Counties.

Green Bay has long suffered from water-quality problems ranging from PCB contamination to over-enrichment from nutrients and sediment causing excessive weed and algae growth. Water-quality managers in the region are looking to improve water clarity in the bay by controlling polluted runoff from agricultural and urban sources. The costs of clean-up measures, such as fencing cattle out of a stream or pretreating urban stormwater, can be fairly straightforward, but the value of the resulting water-quality improvements to property owners is less obvious.

The researchers wanted to know how much landowners would be willing to pay to improve the water quality in their region by four feet. (See the sidebar on measuring water quality, p. 7.) Landowners were asked, “If you were voting in a referendum on steps to reduce nutrients and runoff to Green Bay and the cost to your household in increased state and local taxes would be $35 per year (or another randomly assigned dollar amount) for the foreseeable future, how would you vote?”

The researchers used responses to the question to determine the average price that property owners in the area were willing to pay for better water quality.

Not surprisingly, the willingness to pay for the benefit of improved water quality varied according to two things: existing conditions and how close the property owner was to the water. Water clarity improves as you travel north from Green Bay to Door County. Shore-front property owners with the worst existing water clarity were willing to pay more for improvements than those who lived near better existing water clarity and those who lived further inland. The estimated annual value residents were willing to pay ranged from near zero for inland residents of Oconto County to $513 for shorefront residents of Brown County. Overall, for landowners in the 14 townships of the study area, the value of the water-quality improvements is about $10 million per year.

Resource economist Provencher explained that the benefit is really intrinsic rather than monetary. “If improving water quality will result in improving their life satisfaction by so much, then that is worth something. We know how much the cost is to make the improvements, but we also need to assign a value to the benefits. That’s why we use the dollar value.”

The estimated value of the water-quality improvement does not include the value to those who make Green Bay a tourist destination but do not own property in the area. Knowing the value of both the costs and benefits of improved water clarity will allow policy makers to decide whether or not to implement water quality improvement practices in the land areas that drain to Green Bay.

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