What is a clean beach worth? This is how economists calculate the numbers

Millions of Americans spend the summer outdoors, whether for a day at a local lake or a month-long road trip. For environmental economists like me, the choices made by vacationers and outdoor recreationists offer clues to a difficult puzzle: assessing the value of environmental resources.

In 1981, President Ronald Reagan issued an executive order requiring federal agencies to weigh the costs and benefits of new, major regulations and, in most cases, to adopt them only if the benefits to society outweighed the costs. Reagan’s order was intended to promote environmental improvements without unduly burdening economic growth.

Cost-benefit analysis has been so successful as a tool for policy analysis that every administration since Reagan has endorsed it. But it requires measuring benefits that are not “priced” in conventional markets. Fortunately, putting a price on non-market environmental outcomes, such as cleaner drinking water and fewer deaths from air pollution, has proven possible and extremely valuable. These estimates help justify actions such as cleaning up beaches and protecting wildlife refuges.

What is it worth to you?

According to a preliminary estimate by the U.S. Bureau of Economic Analysis, outdoor recreation contributes $373 billion annually to the U.S. economy. That’s 2% of our annual gross domestic product—more than agriculture, mining, or utilities, and almost as much as national defense.

Most politicians and local communities measure the economic value of outdoor recreation using such estimates, which calculate how much money these recreation activities contribute to the local economy through direct spending. For example, vacationers rent hotel rooms and use their spending to pay staff salaries and fund local investments through hotel taxes. Visitors to national parks pay entrance fees for park maintenance and contribute to the local economy through staff salaries and other spending on food and services around the park.

But leisure choices also reflect the value people place on the environment itself. Outdoor destinations provide services such as the opportunity to swim or hike in pristine nature. If a beach I wanted to visit is no longer accessible due to high concentrations of harmful bacteria, I might choose to drive a longer distance to a beach with clean water. By quantifying such additional time and financial expenditures, economists can measure people’s willingness to pay for changes in environmental quality.

Financing beach cleanups

In a recent study, I and other researchers calculated the increased travel and time people spend avoiding trash and litter at 31 beaches in Southern California. No one wants to go to a beach littered with syringes, plastic bottles, and discarded fishing nets. But cleaning up marine debris is expensive, and it’s difficult for communities to recoup the costs, especially at public beaches with free access. Understanding the value of clean beaches can help build support for funding trash pickup.

To measure the amount of trash, we hired workers to walk the beaches and count the amount of trash. We then surveyed Southern California residents about how often and where they go to the beach. This allowed us to relate the number of visitors to each beach to the amount of trash. Finally, we modeled the travel time and cost of each visitor to each beach to determine the relationship between the beach they chose, the cost of getting there, and the cleanliness of the beach.

Using this model, we found that visitors to these beaches would be willing to pay an additional $12.91 per visit if each of the beaches had 25 percent less litter. This equates to a total willingness of $29.5 million to take action to reduce marine litter at these beaches by 25 percent.

Reducing harmful algal blooms in Lake Erie

Trash on beaches is primarily an aesthetic nuisance, but some resource problems are more serious. For example, warm weather in the western basin of Lake Erie often leads to harmful algal blooms. These outbreaks, caused by phosphorus pollution from agriculture and cities, contain freshwater toxins that are dangerous to humans and wildlife. They can lead to beach closures and sometimes even drinking water bans.

Using similar techniques to the California study, I worked with another group of economists to estimate the economic value of reducing harmful algal blooms in Lake Erie. To model the relationship between recreational activities and water quality, we combined satellite data on harmful algal blooms in the lake during the summer of 2016 with visitation patterns from a survey of visitors to Lake Erie. Again, we used travel time to each location visited and personal expenditures to get there to represent the price of a trip. We then correlated the price of a trip with the location of the visit and the presence of harmful algal blooms.

Our results showed that if we curbed outbreaks by reducing phosphorus input into the Lake Erie Basin by 40 percent, swimmers, boaters and fishermen would save $800,000 to $970,000 per year because they would not have to travel as far to avoid algal blooms.

In spring 2018, Ohio declared the western Lake Erie watershed “impaired” by algal blooms, meaning it does not meet federal water quality standards. Our study provides a measure of Ohioans’ willingness to pay for a cleaner lake.

Preventing a major oil spill

People may choose other travel destinations to avoid dirty beaches or seaweed infestations. However, in the event of major environmental disasters, such as the BP Deepwater Horizon oil spill in the Gulf of Mexico in 2010, vacationers are more likely to cancel their trips altogether.

In a study using survey data on canceled vacation trips to Northwest Florida in the year following the BP oil spill, I worked with other economists to estimate the economic loss to Northwest Florida’s coastal cities. We found that the spill led to a 9 percent decline in travel to Northwest Florida’s beaches, resulting in economic losses of $252 million to $332 million across the Florida Panhandle. These losses were due to decisions to spend vacation time and money in places where the risk of polluted beaches was lower.

Since the Gulf Coast stretches from western Florida to Texas and has numerous beaches and fishing villages, this amount probably represents only a fraction of the economic damage caused by the oil spill due to canceled travel.

The value of pricing

Contrary to the fears of some environmentalists, the pricing of natural resources has led policymakers to recognize that natural capital is finite. In the past, it was easy to assume that use was free. Today, economic valuation research can help policymakers answer questions such as how much damage the BP disaster did to natural resources and whether the benefits of the EPA’s Acid Rain Program outweighed its costs. By assigning dollar values ​​to natural resources, the power of markets can be used to design policies and regulations that benefit everyone.

This article was adapted from The Conversation, a nonprofit, independent news organization that brings you facts and trusted analysis to help you make sense of our complex world. It was written by: Timothy Haab, The Ohio State University

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Timothy Haab receives funding from the National Oceanic and Atmospheric Administration and the University of Florida.