Iowa Lakes Valuation Project



About the Project

What is the Iowa Lakes Valuation Project and what are its objectives?

The Iowa Lakes Valuation Project is an economic study of the use of Iowa’s lakes, the economic value of Iowa lake water quality, and the potential economic and social impacts of improvements to the water quality of Iowa’s lakes. The data for this study have been collected over a four-year period via annual surveys of a random sample of Iowa residents. By gathering recreational lake usage and other information from the same individuals over a four-year period, we have generated a unique data set for analyzing the impact of water quality on visitation and usage patterns over time.

To assess the value to Iowans of water quality improvements, we employ the economic concept of "maximum willingness to pay (MWTP)." MWTP is the dollar amount individuals are willing to pay and, in doing so, forgo other goods and services they could have used that money to purchase. The maximum willingness to pay is a standard concept of economic value for any type of good, environmental or otherwise, and is commonly used by policymakers and analysts for assessing how to spend limited public monies.

 

What is meant by the "economic value" or "benefit" of improving water quality in Iowa’s lakes?

The economic definition of the value of a good to an individual, say, a pair of shoes, is the amount of other goods and services that individual would be willing to do without if he or she absolutely had to in order to have the pair of shoes. So, if Laura has a pair of shoes that Jane wants and Jane is willing to give up other goods and services worth up to $300 for that pair of shoes, then the value of that pair of shoes to Jane is $300. It is convenient to measure this in dollars rather than in quantities of the exact goods and services, as this makes comparisons much simpler. For this reason, economists often use the term "maximum willingness to pay" (or "MWTP" for short) to refer to this economic value. Of course, what a consumer actually has to pay can be quite different from her maximum willingness to pay. A consumer who can find the pair of shoes on sale for only $20 will enjoy a great deal -- he receives what economists refer to as a "surplus" (or "net-benefit") of $280.

The economic value of water quality improvements in Iowa lakes can be defined as the maximum amount individuals are willing to pay to obtain those improvements. This maximum willingness-to-pay concept can appropriately be used by policymakers in deciding how to spend limited public monies. By identifying which public goods and services consumers most highly value, policymakers can identify which public projects are likely to improve the quality of life for their citizens the most, that is, which projects are the best value. For this reason, the economic value just described is the concept used by the federal government in doing cost-benefit analyses of government regulations.

In addition to the economic value of water quality improvements, local communities and regions are often interested in another measure of the economic impact of environmental improvements, namely, the impact that that those improvements bring to their local economy. Typically, this "expenditures impact" is measured in total dollars of spending generated locally by the environmental improvement and/or the number of local jobs these expenditures create. This type of information is particularly relevant for those interested in promoting and maintaining the viability of local communities and those interested in generating support from a local community for local investment in a good.

 

Who funded the project, who are the research partners, and where did the data come from?

The Iowa Lakes Valuation Project is a collaborative study involving economists and ecologists from the Iowa State University Department of Economics, Center for Agricultural and Rural Development, and the Department of Evolutionary Ecology and Organismal Biology. Dr. John Downing and other members of the ISU Limnology Laboratory have recently completed a five-year project to provide the Iowa Department of Natural Resources with a lake database that includes water chemistry, biological analysis, and watershed GIS data for 132 of Iowa’s principal recreation lakes. The Lakes Valuation Project was designed to complement the research being done by the ISU Limnology Laboratory by collecting use and valuation data for the same set of recreational lakes over a comparable time period. Both projects collected data through 2005. Some lakes on the Web site have been updated with more recent data.

EPA’s Star grant augments work begun with Iowa Department of Natural Resources funding and Iowa State University Center for Agricultural and Rural Development support. The funding for the first year of the survey was provided by the Iowa Department of Natural Resources. The STAR grant from EPA provided the necessary funding to continue the survey for the full four years, thereby allowing the collection of this unique multi-year data set and interdisciplinary study.

A four-year panel data set of survey responses was collected, including actual trip behavior and future expected trips for the years 2001 through 2006, water quality scenarios measuring willingness to pay for quality improvements, and knowledge and perceptions regarding lake quality for over 4,000 households.

 

What did the researchers find out about Iowa lakes and lake visitors?

Iowans report a high usage of lakes in the state of Iowa. Approximately 62 percent of Iowa households visited one of the 132 lakes listed in the survey and the average number of trips per year was just over eight in 2002. Figure 1 shows the average number of single-day trips taken in 2001 and 2002, as well as the number of trips respondents planned to take in 2003 to lakes in the state of Iowa, the Mississippi and Missouri Rivers, and lakes outside the state of Iowa. The average number of trips taken (or planned) to Iowa lakes is approximately eight trips for all three years, while the number of trips to the Mississippi and Missouri Rivers is slightly less than two trips each year. The average number of trips taken (or planned) to lakes outside Iowa is less than one per year.

Figure 1. Average number of trips taken

Water quality is more important than either proximity or local park facilities in determining where households recreate. Figure 2 shows the results of a question that asked respondents to allocate 100 importance points to a number of factors they might consider when choosing a lake for recreation. The average point allocation is shown. Respondents indicated that water quality was the single most important factor they consider when choosing a lake for recreation, with proximity of the lake and park facilities also being relatively important. In contrast, activities near the lake or town are not particularly important in their choice of a lake site.

Figure 2. Average allocation of importance points to factors important in choosing a lake for recreation  

What lake characteristics are most important to visitors?

Among water quality attributes, households view safety from bacterial contamination and water clarity as the most important, above the diversity or quantity of fish caught or the diversity of wildlife. Figure 3 shows the results of a question that asked respondents to allocate 100 importance points to a number of lake characteristics that might be important to them. Again, the average point allocation is shown. Respondents indicated that safety from bacterial contamination was the most important lake characteristic, with water clarity also receiving a fairly large point allocation. The lack of odor and the presence of a hard, clean, sandy bottom in swimming areas are also important to some respondents.

Figure 3. Average allocation of importance points to lake characteristics