The Economic Impacts of Restoring Wisconsin's Sheboygan River

The Sheboygan River Area of Concern (AOC)

In 1987, the Sheboygan River downstream of the Sheboygan Falls Dam was classified a Great Lakes AOC due to poor water quality, habitat degradation and the negative impacts of the river entering Lake Michigan. AOCs refer to severely degraded geographic areas that fail to support aquatic life beneficial for human use (e.g. fish and wildlife that are safe to eat). There are 43 AOCs in the Great Lakes Basin, which are shown in Figure 1. The Sheboygan River AOC is circled in red on the bottom, left-hand side of the map.



The Sheboygan River serves as a sink for pollutants carried from three watersheds: Sheboygan River, Mullet River and Onion River. Pollutants of concern include suspended solids, fecal coliform bacteria, phosphorus, nitrogen, polychlorinated biphenyls (PCBs), polynuclear aromatic hydrocarbons (PAHs) and heavy metals. PCBs are synthetic toxic waste generated in the manufacturing process of electrical equipment, paper and other industrial processes. PCBs were emptied into the Sheboygan River by area businesses for decades before their negative impact on humans and wildlife lead to restrictions on their use and disposal. Long after restrictive action was taken, PCBs remained in the river’s sediment and fish. The two worst sections of the Sheboygan River are designated Superfund sites -- abandoned hazardous waste sites identified by the Environmental Protection Agency (EPA) due to their adverse impacts on human health.

Of the EPA’s possible 14 beneficial use impairments, the Sheboygan River has nine impairments including:

  • Restrictions on fish and wildlife consumption
  • Eutrophication or undesirable algae
  • Degradation of fish and wildlife populations
  • Fish tumors or other deformities
  • Bird or animal deformities or reproduction problems
  • Degradation of benthos
  • Degradation of phytoplankton and zooplankton populations
  • Restrictions on dredging activities
  • Loss of fish and wildlife habitat
Sheboygan River AOC remediation efforts began in earnest in August 2012 at a cost of $80 million. Funding came from the EPA’s Great Lakes Restoration Initiative and Superfund program as well as the State of Wisconsin, the City of Sheboygan and Sheboygan County. Clean-up efforts included the dredging of 400,000 cubic yards of contaminated sediments from the river. Habitat and shoreline restoration was also undertaken in three locations, as well as bank stabilization and in-stream habitat projects. Work was completed in June 2013.

Economic Impact Studies of AOC Restoration and Remediation
Following completion of Sheboygan AOC clean-up efforts in June 2013, a project was developed by the Wisconsin DNR and the University of Wisconsin Sea Grant Institute to assess the economic impacts of the clean-up. The aim of the study was to estimate the economic impacts of the Sheboygan River recreational fishery, as well as the economic impacts of the clean-up to waterfront and water-dependent businesses. The study is considered a scoping or draft study, which provides direction for future, more detailed efforts.

A number of studies have estimated the economic benefits of proposed restoration and remediation of AOCs throughout the Great Lakes (Austin et al. 2007; Braden et al. 2008a; Braden et al. 2008b; Braden et al. 2004; Lichtkoppler and Blaine 1999; McMillan 2003). Braden et al. (2008a) conducted a hedonic analysis of property sales to analyze the relationship between distance to the Sheboygan AOC and housing sale prices. For owner-occupied homes within a 5-mile radius of the Sheboygan AOC, the estimated loss of value is $158 million, or 8% of market value. Only $49 million in losses for homes closest to the upper river segment had strong statistical support. A second part of Braden et al.’s (2008a) study estimated the willingness to pay for full cleanup of the Sheboygan AOC. The authors’ contingent valuation survey used conjoint choice questions to elicit consumer trade-offs between home size, the environmental condition of the river, distance to the river and home price. They found that Sheboygan home buyers were willing to pay $218 million, or 10% of their property value for clean-up of the river.

McCoy and Morgan (2013) studied community perceptions of sediment remediation in the Sheboygan AOC. Sheboygan community leaders cited increased river depth and improved water quality as the primary impacts of the clean-up. They did not report observing major economic impacts, but expect those to occur over time. The leaders described possible economic impacts arising from increases in boat traffic, paddling recreation, adjacent property values and development opportunities.

No studies have assessed the economic impacts of AOC beneficial use impairments or remediation on sport fishing. Instead, economic studies have focused on the value of recreational fisheries more broadly and the impact of increases in fish catch. In the U.S., walleye, trout and bass fishing have been estimated to have a surplus value of $50/angler day using contingent valuation methods (Aiken and LaRouche 2003). Talhelm (1988) estimated the Great Lakes recreational fishery to be worth $45/angler day in 2006 dollars.

Other economic studies assess the impact of increases in angler fish catch. For example, Austin et al. (2007) found that Great Lakes anglers value each 1% increase in cold water species (such as trout and salmon) and warm water species (e.g., walleye, perch, bass and pike) catch rates at roughly $0.02-$0.10/fishing day with a central value of about $0.05 per fishing day. Alternatively, Great Lakes anglers value each 1% decline in fish contamination levels at $0.05-$1.20/fishing day with a central value of $0.35/fishing day. According to one study, Green Bay anglers value each 1% increase in all species at roughly $0.15-$0.30 per fishing day (Breffle et al. 1999). So, a 100 % decrease in Green Bay catch rates implies a total surplus value loss of roughly $15-$30 per angler day.

Angler & Charter Captain Surveys
Fishing on the Sheboygan River and Lake Michigan plays a significant role in the City of Sheboygan’s economy. There are dozens of sport fishing-based businesses in Sheboygan, including 16 registered charter fishing companies and 42 charter fishing captains. Sediment remediation is likely to result in lower contaminant concentrations in desirable sport fishes, which will result in the removal of fish consumption advisories. Habitat restoration may benefit resident river fish that depend on the Sheboygan River for spawning, nursery habitat and habitat for prey.

In fall 2013 and spring 2014, 140 anglers were surveyed while fishing within the bounds of the Sheboygan River clean-up. The survey employed the single-site travel cost method to estimate the economic use values associated with recreation sites along the Sheboygan River. 

Click the following link to learn about the economic impacts of angling on the Sheboygan River:


In winter 2015, 24 Sheboygan charter fishing captains were surveyed to understand how toxic sediment remediation and habitat restoration in the Sheboygan River have affected their fishing experiences. They were also asked about economic changes they have perceived due to the cleanup.

Click the following link to learn about the economic impacts of charter fishing on the Sheboygan River:


 References
Aiken, Richard and Genevieve LaRouche. 2003. Net economic values for wildlife-related recreation in 2001. U.S. Fish and Wildlife Service Report 2001-3.

Austin, John C., Anderson, Soren, Courant, Paul N., and Robert E. Litan. 2007. America’s North Coast: A benefit-cost analysis of a program to protect and restore the Great Lakes. Washington, D.C.: The Brookings Institution.

Braden, John B., Won, DooHwan, Taylor, Laura O., Mays, Nicole, Cangelosi, Allegra, and Arianto A. Patunru. 2008a. Economic benefits of remediating the Sheboygan River, Wisconsin Area of Concern. Journal of Great Lakes Restoration 34: 649-660.

Braden, John B., Taylor, Laura O., Won, DooHwan, Mays, Nicole, Cangelosi, Allegra, and Arianto A. Patunru. 2008b. Economic benefits of remediating the Buffalo River, New York Area of Concern. Journal of Great Lakes Restoration 34: 631-648.

Breffle, William S., Morey, Edward R., Rowe, Robert D., Waldman, Donald M., and Sonya M. Wytinck. 1999. Recreational fishing damages from fish consumption advisories in the waters of Green Bay. Report for U.S. Fish and Wildlife Services, U.S. Department of Interior, and U.S. Department of Justice.

Environmental Protection Agency. 2013. Sheboygan River Area of Concern.
http://www.epa.gov/greatlakes/aoc/sheboygan 

Lichtkoppler, Frank R. and Thomas W. Blaine. 1999. Environmental awareness and attitudes of Ashtabula County voters concerning the Ashtabula River Area of Concern: 1996-1997. Journal of Great Lakes Restoration 25: 500-514.

McCoy, Caitie and Ada Morgan. 2013. A scoping exercise to understand community perceptions of contaminated sediment remediation in the Sheboygan River Area of Concern. Illinois-Indiana Sea Grant.
http://iisgcp.org/catalog/coastres/sheboygan.html

McMillan, Daniel P. 2003. Report on the economic benefits of the Grand Calumet River remediation project: Evidence from the Gary housing market. Chicago: Delta Institute.

Parsons, George R. 2003. The Travel Cost Method, in A Primer on Nonmarket Valuation, edited by Patricia A. Champ, et al., pp. 269-329. Netherlands: Kluwer Academic Publishers.

Song, Feng, Lupi, Frank, and Michael Kaplowitz. 2010. Valuing Great Lakes Beaches. Presentation at Agricultural and Applied Economics Association Meeting, Denver, Colorado, July 25-27, 2010.

Talhelm, Daniel R. 1988. Economics of Great Lakes Fisheries: A 1985 Assessment. Great Lakes Fishery Commission Technical Report No. 54.

U.S. Bureau of Economic Analysis, U.S. Department of Commerce. 2013.U.S. Economic Accounts.
http://ww.bea.gov

Vidiani. 2014. Maps of the World.
http://www.vidiani.com

Wisconsin Department of Natural Resources. 2012. Fish Consumption Advice for the Sheboygan River Area of Concern.
http://dnr.wi.gov/topic/fishing/documents/Sheboygan2012.pdf






This project is funded by the Wisconsin Coastal Management Program and the National Oceanic and Atmospheric Administration, Office of Ocean and Coastal Resource Management under the Coastal Zone Management Act, Grant# NA13NOS4190043.



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