Kevin Egan, Joseph Herriges, and Catherine Kling
Department of Economics
Center for Agricultural and Rural Development
John Downing
Department of Ecology, Evolution and Organisimal Biology
Iowa State University
R830818





Regulatory considerations, such as TMDL standards, require developing physical water quality standards.
Yet the linkage between the physical measures of water quality and the values associated with water resources is poorly understood.
Recreation demand models have found water quality matters, but have typically had to rely on limited measures, such as



Catch rates (e.g., Chen, Lupi, and Hoehn, 1999),
Toxin levels (Phaneuf, Kling and Herriges, 2000), or
Water quality indicators (Parsons, Helm, and Bondelid, 2003)
Understanding the linkage between physical attributes and water quality values is important to

 setting water quality standards prioritizing restoration efforts

 Collaborative project involving economists and ecologists studying Iowa lakes

Builds off of existing 5 year study of the ecological conditions of 132 lakes in Iowa (2000-2004)
 EPA Star grant augments work begun with Iowa DNR funding and CARD support – 4 year project
 A four-year panel data set of survey responses will be collected involving



Actual trip behavior and future expected trips, years 2001-2006
2 nd through 4 th year survey will contain water quality scenarios measuring WTP for quality improvements
Knowledge and perceptions regarding lake quality

 First of four mail surveys
 8000 Iowa residents selected at random
 Survey collected


 trip data for 132 lakes
• 2001 and 2002 actual trips
• 2003 anticipated trips attitudes regarding lake quality
Socio-demographic data
 62.1% response rate

Figure 2: Average number of day trips
9
8
7
6
3
2
5
4
1
0
2001 2002 2003
Iowa Lake s Mississippi/Missouri Rive r Lake s outside of Iowa
62.8% of Iowa households took at least one trip

Table 2. Lake Characteristics Summary Statistics
Variable Mean Std. Dev.
Minimum Maximum
Day Trips per
Individual
Price
6.68
135.79
10.46
29.47
0
94.12
52
239.30
Acres 672.20
2,120.30
10 19,000
Log(Acres)
Ramp
Wake
Handicap
Facilities
State Park
4.81
0.86
0.66
0.39
0.39
1.69
0.35
0.47
0.49
0.49
2.30
0
0
0
0
9.85
1
1
1
1

Table 3. Physical Water Quality Summary Statistics
Variable Mean Std. Dev.
Minimum Maximum
Secchi Depth (m)
Chlorophyll (ug/l)
1.17
40.93
0.92
38.02
0.09
2.45
5.67
182.92
NH
3
+NH
NO
3
4
(ug/l)
+NO
2
(mg/l)
Total Nitrogen (mg/l)
Silicon (mg/l) pH
Alkalinity (mg/l)
Inorganic SS (mg/l)
Volatile SS (mg/l)
292.15
1.20
2.20
Total Phosphorus (ug/l) 105.65
4.56
8.50
141.80
9.43
9.35
158.57
2.54
2.52
80.61
3.24
0.33
40.98
17.87
7.93
72
0.07
0.55
17.10
0.95
7.76
73.83
0.57
1.64
955.34
14.13
13.37
452.55
16.31
10.03
286.17
177.60
49.87

 Randomly divided sample into three segments:



Specification
Estimation
Prediction
 Modeling approach: repeated mixed logit
 Specification considerations

Inclusion/exclusion of specific water quality measures

 functional form (e.g., linear, quadratic or logarithmic) random versus fixed parameters

U ijt

( ;
 ij i
)
  ijt
, i

1,...,1286; j

0,...,129; t

1,...,52.
Conditional on the parameter vector,
 i
, the probability of observing that
Individual i chooses alternative j on choice occasion t follows the standard logit form:
L ijt


 ijt k
J 

0
 xp V ikt

P
 assuming i.i.d.
so that
P ijt
 
L ijt
   

U ijt





 z'
 z i p

P ij

  q '
Q j
  i a '
A j
  ijt
, j

J where z i
is the vector of socio-demographic data,
P ij
represents the computed travel cost or "price" of the recreation trip
calculated as: P ij
=.25*distance+
1
3
 
Q j
represents the p hysical water quality measures for each lake,
A j
represents the attributes for ea ch lake .

Variable
Income
Male
Age
Age 2
School
Household
Price
Log(Acres)
Ramp
State Park
Facilities
Wake

Using 6 physical
WQ measures
Variable
Mean Dispersion
Secchi Depth
-0.06
Chlorophyll
-5.79
Total Nitrogen
-0.35
Total Phosphorus
-0.0004
Inorganic SS
-2.61
Volatile SS
-2.50
-0.48
4.38
11.14
3.83
0.80
2.43
-12.24
3.75
18.86
14.86
14.40
10.48
2.44
Using 6 Physical
WQ measures
0.87
0.61
-0.15
-2.51
-0.73
-0.20

Secchi
Depth (m)
Chlorophyll
Total
Nitrogen
Total
Phosphorus
Inorganic
Suspended
Solids
Volatile
Suspended
Solids
West
Okoboji
Lake
Averages of the nine focus lakes
5.67
1.23
2.63
0.86
21.28
1.00
1.79
40.13
3.64
91.11
9.52
8.42
Medians of the non-impaired lakes
Averages of the
65 impaired lakes
0.90
0.70
6.55
1.10
56.76
2.77
43.87
153.70
5.42
20.42
3.62
15.49

Average Annual WTP
Nine focus lakes improved to
Sixty-five impaired lakes improved to the median of the non-
West Okboboji impaired lakes
Per Iowa household $11.86
$10.23
$13,675,685 $11,799,261 for all Iowa households
Predicted Trips
(8.0 currently)
8.3
8.2

Lake
Coralville Lake
Saylorville Lake
Red Rock Lake
Storm Lake
Trumbull Lake
Lake Darling
Black Hawk Lake
Badger Creek Lake
Rathbun Lake
Hannen Lake
Lakes with the Highest Valued Improvements
On EPA’s
Impaired
Waters
List
Annual
WTP
Secchi
Depth
(m)
Total
Phosphorus
(ug.l)
Total Annual
2002 Day Trips
Yes $10,600,000 0.8 204 457,000
No
No
$6,000,000
$3,700,000
0.7
1.5
101
99
600,000
284,000
Yes 0.5
89 232,000
Yes
Yes
Yes
Yes
No
No
$1,100,000
$900,000
$800,000
$800,000
$800,000
$600,000
$500,000
0.1
0.3
0.9
0.6
0.9
1.3
453
226
193
290
44
227
20,000
63,000
99,000
63,000
248,000
41,000
Average
Travel Cost
$106
$97
$112
$157
$168
$124
$138
$104
$139
$101
Average across all lakes
$300,000 1.2
106 83,000 $136

4
7
5
Figure 8: Lake zones
8
2
3
9
10
1
6


Recreator’s trip behavior is responsive to physical measures of Water Quality
Better water clarity increases recreational trips

Nutrients decrease recreational trips

 Allows consumer surplus measures to directly be linked to physical water quality improvements

Iowans value more highly a few lakes with superior water quality over all recreational lakes at an adequate level
 Findings allow prioritization for clean-up activities to generate the greatest recreation benefits for a given expenditure

Rank which lakes and in what order and most efficient levels of improvement



A second year of trip data

Perceptions data regarding water quality

Stated preference data regarding water quality improvements


Full Sample
Corr.
p-value
Water Contact
Corr.
p-value
Non Water Contact
Corr.
p-value
Day Trip Per
Capita
Secchi Depth
Chlorophyll
NH3+NH4
NO3NO2
Total Nitrogen
Total
Phosphorus
Silicon pH
Alkalinity
ISS
VSS
-0.33
-0.40
-0.09
-0.20
-0.33
-0.38
0.25
0.42
-0.30
-0.24
-0.04
-0.19
0.00
0.00
0.29
0.02
0.00
0.00
0.00
0.00
0.00
0.01
0.67
0.03
-0.32
-0.39
-0.10
-0.21
-0.34
-0.38
0.26
0.43
-0.29
-0.23
-0.03
-0.18
0.00
0.00
0.23
0.02
0.00
0.00
0.00
0.00
0.00
0.01
0.75
0.04
-0.25
-0.27
0.03
-0.13
-0.10
-0.15
-0.10
0.13
-0.16
-0.11
-0.15
-0.20
0.00
0.00
0.75
0.13
0.26
0.10
0.24
0.13
0.08
0.20
0.09
0.02