What Are Clean Sediments Worth?

A new guide to tough questions

Estimating the benefits of cleaning up contaminated sediments in the Great Lakes poses a significant challenge for economists, resource managers, policy-makers, and concerned citizens. A new publication from UW Sea Grant tackles that challenge.

Estimating Economic Benefits of Cleaning Up Contaminated Sediments in Great Lakes Areas of Concern describes a two-stage approach to estimating the value the public places on large-scale cleanup projects and comparing that value to the estimated costs of the projects. The 87-page book was written by John R. Stoll, economist and professor of public and environmental affairs at UW-Green Bay; Richard C. Bishop, professor of agricultural and applied economics at UW-Madison; and J. Philip Keillor, UW-Sea Grant coastal engineering specialist.

The authors describe their approach via a case study of the proposed cleanup of the Fox River in northeast Wisconsin. The analysis is offered as an example only, and the authors make no specific recommendations regarding the current proposed clean-up.

The authors first suggest a "scoping study," which assesses what can easily be learned about potential benefits and costs from previously conducted studies. In some cases, this stage may provide a sufficiently accurate estimate of costs and benefits. In other cases, a second stage, involving a deeper investigation, may be necessary.

The authors discuss five methods of analysis that may be used in a second stage: benefits transfer, market valuation studies, travel cost demand estimation, hedonic methods, and contingent valuation (CV). The authors find the CV method most appropriate for the Fox River example because it incorporates the values of remediation to both users and nonusers of the river.

"The idea behind CV is that it's a way to estimate the value citizens place on a large project," Stoll said. "In a survey, you ask people what they'd be willing to give up, individually or per household, in order to receive a specified project outcome. Even if they're not going to pay directly, this 'willingness to pay' indicates how highly they value the cleanup," he said. "You can then compare the total public value to the estimated costs of the project."

A CV survey Stoll conducted in 1997 serves as an example. In that survey, 530 Wisconsin citizens indicated what reduction in household income they would accept in order to achieve various levels of cleanup. Stoll analyzes this response for three groups of households: those in counties adjacent to the river and lower Green Bay, those in other counties within the Fox-Wolf River Basin, and those in the remaining counties in the state. Because the costs would not be borne all at once, he analyzes these amounts as "payments" over five, 10, and 30 years at three interest rates.

It is important to note that such surveys do not address the question of who should actually pay for remediation of the Fox River or other Areas of Concern, Stoll said.

The CV study Stoll conducted was funded by the Great Lakes Protection Fund, the U.S. Environmental Protection Agency Great Lakes National Program Office, and Wisconsin Sea Grant.

The book includes a sample survey questionnaire. The price is $5.00, and it may be ordered from UW Sea Grant, (608) 263-3259. Refer to publication WISCU-T-02-0010.

- John Karl

Last updated 18 April 2002 by Karl
All contents copyright 2001 University of Wisconsin Sea Grant Institute

http://www.seagrant.wisc.edu/Communications/news/LD_stories/2002/Sediments.html