While few people question
the desirability of acting to protect and preserve Long
Island Sound, serious questions arise regarding the costs.
The Long Island Sound Study
has produced a management plan that sets out an ambitious
agenda to improve water quality, protect habitat and living
resources, and educate and involve the public. This agenda
includes major capital projects such as sewage treatment
plant improvements, combined sewer overflow abatement
programs and polluted surface runoff controls.
The potential long-term
costs for the sewage treatment plant programs alone approach
$8 billion. Is an investment of this magnitude justified? Is
the Sound really worth saving? What is the Sound actually
worth in real dollars?
To address such questions,
the Long Island Sound Study turned to Dr. Marilyn A.
Altobello, a University of Connecticut Associate Professor
of Agricultural and Resource Economics. She was commissioned
to develop estimates of values and economic impacts of the
important water quality-dependent uses of Long Island Sound.
These would be the uses most affected by the management plan
actions and they are the ones that might best characterize
the worth of the Sound monetarily.
Altobello investigated
commercial fishing and shellfishing, and recreational
fishing, boating, and beach swimming on both Connecticut and
New York sides of the Sound. She also developed estimates of
coastal wetland values and intrinsic or "non-user" values,
and examined residential property values. Her work was
conducted in 1990 and consequently used 1990 data when
available. All dollar amounts were stated in 1990 dollars.
Her analysis, in most
cases, employed three categories of information: the value
of the activity, the direct effects of the activity on the
region's economy, and the indirect or multiplier or "ripple"
effects.
COMMERCIAL ACTIVITIES
For commercial fishing and
shellfishing, the starting point is the reported income
received by harvesters for their catch in 1990 ($53
million). While this is the harvest value it may he taken to
represent the total direct effects of commercial fishing and
shellfishing. The direct effects would include expenditures
for such things as diesel fuel for the boats, ice to cool
the catch, fishing gear and insurance. The indirect effects
would include the wages of employees of fishing-related
businesses, subsequently spent in the region on other goods
and services.
Economists typically use a
"multiplier" to account for the indirect or ripple effects,
thus providing a realistic estimate of the total dollar
impact of an activity. Such multipliers are developed
through case studies in comparable regions and the
application of rigorous mathematical analyses. Most of the
multipliers used by Altobello were drawn from an
input-output model of marine-oriented industries in New
London County, Connecticut, developed in 1984 at the
University of Connecticut.
Using the $53 million
harvest value figure, a New London County-based multiplier
was applied to yield a result of $148 million, representing
the value of the direct plus the indirect effects. However,
Altobello suggests that since data were not available for
the value of processing, wholesaling and retailing, the
total economic value of the commercial fishing industry of
Long Island Sound could easily be twice that.
RECREATIONAL ACTIVITIES
With more than 8 million
people living in the Long Island Sound watershed and
millions more visiting each year, recreation becomes the
dominant regional economic factor. Altobello presents an
analysis of swimming, boating and sport fishing as the three
major water quality- dependent Long Island Sound
recreational activities.
Values were based on
responses to previously conducted surveys in other regions
where people expressed a dollar amount they would be willing
to pay per day, if charged for these activities. After
adapting these data to the Long Island Sound context, the
figures were multiplied by the number of documented
user/days thus providing the user values. The base figure
(value per day) for beach swimming was $13.34 with a total
user value of $182 million; an $8.48 base figure for boating
provided $99 million; and $7.46 for sport fishing yielde $22
million. This yields a total recreational user value of $303
million.
Direct economic effects of
the recreational activities were based upon expenditures
made by activity participant. Such expenditures would
include restaurants, groceries, lodging, transportation, and
the purchase of bait and tackle, boats, motors, trailers and
marine accessories.
For beach swimming, a
method comparable to the commercial fishing and shell
fishing case was again employed. Using statistics from Rhode
Island and Florida beaches, an estimate of $291 million was
generated for the direct economic effects of Long Island
Sound beach swimming. Using another New London County-based
multiplier provided an estimate of the total direct and
indirect effects--$661 million.
For sport fishing,
Connecticl and New York data provided a direct effects
estimate of $432 million. Using yet another New London
County-based multiplier yielded estimated direct and
indirect effects at $1.043 billion.
For recreational boating,
the total direct effects were extrapolated from Connecticut
data to yield a Soundwide figure of $1.465 billion. A
multiplier developed from a 1984 Rhode Island boating
industry study yielded estimated direct and indirect effects
at $3.223 billion.
NON-USER VALUES
While Altobello has been
able to demonstrate that Long Island Sound is a real
economic resource, there are other values that are less
easily quantifiable. Beyond the economics associated with
the direct or current use of the Sound's resources, are
those values belonging to the essential nature of the
estuary. These intrinsic values may not be directly
observable or as easily measured, but they are real and they
are economically important. They cover intangibles such as
aesthetics, and uncertainties such as future demand. Studies
from other regions have examined the relationship between
intrinsic values and total estimated recreational user
values. Altobello suggests that intrinsic values, by
inference, may equate to 50 percent of the recreational user
value; thus, half of $303 million, or about $152 million.
The importance of natural
habitats and good water quality to near-shore residential
property values is hard to estimate and Altobello recommends
further study in this area. She does, however, make an
attempt to develop an estimated economic value of Long
Island Sound coastal wetlands based upon their biological
productivity and other attributes. The calculated economic
value amounted to approximately $94 million.
CONCLUSIONS
To sum all this up, the
user values are added to the direct and indirect effects for
boating ($99 million + $3.223 billion = $3.322 billion),
swimming ($182 million + $661 million = $843 million) and
fishing ($22 million + $1.043 billion = $1.065 billion),
totaling $5.23 billion ($3.322 billion + 843 million +
$1.065 billion). Then to this total are added the figures
for commercial fishing and shellfishing of $148 million and
the intrinsic value estimate of $152 million. This gives us
a grand total of $5.53 billion!--good measure of the value
of Long Island Sound.
Even if we look only at the
direct and indirect economic effects--the revenue Long
Island Sound generates for the region each year--the figure
is over $4.9 billion.
In light of the proposed
major capital improvements to protect, preserve and restore
Long Island Sound, the annual return on this investment
would be substantial.
BY JOSEPH E. BLUMBERG
SEA GRANT MARINE ADVISORY PROGRAM
EDUCATOR-IN-RESIDENCE
LONG ISLAND SOUND STUDY
PUBLIC OUTREACH COORDINATOR
