Another Reason to Keep the Great Lakes in a Great Condition
It’s hard to find a Michigan citizen who hasn’t made a trip to our coastline to enjoy swimming, boating, or some other water-related activity on one of the Great Lakes.
Picture Michigan in the summertime and you will likely think of some type of recreational activity unique to our state’s watershed ecosystem.
Michigan’s waters serve another purpose, however, that is far more unnoticed, but equally as important as the recreation opportunities that the Great Lakes have to offer. The ecosystem services (human benefits from natural ecosystems, such as clean drinking water and waste decomposition) present in the Great Lakes ecosystems have a unique impact on our economy. Michigan LCV board member, Sanjiv K. Sinha and Co-author Nina Misuraca Ignaczak explain this relationship, and why environmental restoration is crucial to maintaining it.
For the full article, read below--
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On the Economics of Restoring the Environment
By
Sanjiv K. Sinha, Ph.D., Board Member
&
Nina Misuraca Ignaczak, Oakland County Planning & Economic Development Services
Restoration economics is a relatively new, emerging area that focuses upon linking environmental restoration with quantitative measures of sustainable, equitable socio-economic development. The field seeks to elevate the status of “natural capital” to a level on par with social, physical and financial capital, arguing that restoration and augmentation of the environment increases other forms of capital through increased property values, job creation and retention, recreation opportunities and overall improved quality of life. In times of budget short-falls and tight fiscal policies, environmental restoration may garner support only if clearly linked to socio-economic benefit.
In an oft-cited 1997 article by Costanza and colleagues in the magazine Nature, the economic value of earth’s ecosystem services are estimated at about $33 trillion annually. Water resources contribute a majority of the value with marine systems responsible for about 63 percent, and fresh water ecosystems producing about 20 percent, or roughly $6.9 trillion, annually.
While these statistics provide a useful global perspective, local communities are often more interested in their own neck of the woods. Such localized estimates of ecosystem value are harder to come by. Several Michigan and Great Lakes studies in recent years have attempted to quantify the economic value of ecosystems at various scales.
A 2009 study sponsored by Oakland County Planning & Economic Services Division (Southeast Michigan) provides interesting data points on a county-wide basis. Key findings from this study indicate that Oakland County’s water resources produce an estimated $806 million in ecosystem services, $167 million attributable to 34,600 acres of lakes and ponds, and $639 million stemming from 56,400 acres of wetlands. So far as tourism, the study found that about 1.3 million people visited Oakland County, 40% of whom engaged in activities that depended on water resources, and spent an average of 3.5 days in the county.
This is rather impressive data, but how does it translate into environmental restoration and conservation efforts in the Great Lakes Basin? This question is especially relevant now that the Obama Administration has begun investing hundreds of millions of dollars in the Great Lakes Basin. Last year, the Basin received $475 million and this year given tighter budgets, it received $300 million.
From a Great Lakes Basin-wide perspective, a September 2007 report by Brookings Institution found that a $26 billion investment needed to implement the Great Lakes Regional Collaboration strategy would result in direct economic benefits of $6.5-11.8 billion from tourism, fishing, and recreation, $12-19 billion from rise in coastal property values, lower water treatment costs for the municipalities by $50-125 million, and unquantifiable but significant economic activity by making the region more attractive to businesses and workers. Overall, the report indicated that the region’s direct economic benefit of restoring the Great Lakes would be at least $50 billion. In addition, this direct economic benefit would also result in $30-50 billion in short-term multiplier effect for the region. In other words, the benefit-to-cost ratio or return-on-investment is nearly 4-to-1.
At the local ecosystem level, a $10 million NOAA-funded remediation and restoration project looked at the economic value of restoring Muskegon Lake on the west side of Michigan. The analysis, completed in May 2011by Grand Valley State University economist Paul Isley, looked at direct economic benefits on housing values, recreation values, and use/non-use values as a result of that $10 million investment to the area. Overall, he indicated that the region stands to benefit by nearly $66.9 million over a ten year time frame, which includes a $12 million rise in property values, $600,000 increase in local tax revenues, and nearly 65,000 additional annual visitors to the area. That is a nearly 6-to-1 benefit-to-cost ratio over a period of a decade, better than the returns from even the best performing hedge funds on Wall Street!
These studies indicate that there are clear economic benefits of environmental restoration to local communities. More data in this realm is needed to counter the perception that restoration is not cost-effective, or that it is only a purview of passionate environmentalists operating without considering social and economic impacts. Such information will help to elevate environmental restoration to its rightful status as vital component of sound, fiscal policy—one that can have both an immediate effect on job creation and a long-term impact on economic recovery.
