measuring the value of remediation in muskegon lake

MEASURING THE VALUE OF

REMEDIATION IN MUSKEGON

LAKE

Dr. Paul Isely

Seidman College of Business

Grand Valley State University

&

Carrie Hause

Elaine Isely

FUNDING National Oceanic and Atmospheric

AdministrationGreat Lakes CommissionWest Michigan Shoreline Regional

Development Commission

Area of Concern in Muskegon Lake

$10 million ARRA funding

Socioeconomic monitoring

PURPOSE

Hedonic Analysis of Housing Values

Travel Cost Study of Recreation Values

Contingent Valuation study of Use and Non-Use Values

HEDONICS

DATA County assessor database

House characteristics Sales information

AWRI shoreline inventory

Houses <100m from Lake not UsedHouses > 800m from Lake not UsedHouses affected by Lake Michigan not Used

MODELLnPrice as a function or:

Floor area .000359*** Basement area .000118*** age -.00563*** age2 .000018** Bear Lake .497*** Garage space .0562*** Industrial -.068 Stone .0529* Bathrooms .0606*** Yearsold 2 - 20 SUPPRESSED District2 -.24*** District3 -.26*** Occupancy2 -.18*** Occupancy3 -.0712 NEIGHBORHOODS SUPPRESSEDDistance Lake -.000151*** Ln natratio .0297*** Ln hardratio -.0532*** _cons 10.7***

N 934 legend: * p<.1; ** p<.05; *** p<.01

WHAT DOES THE MODEL MEAN?

CONTINGENT VALUATION

VALUE OF LAKE RECREATION

Mailed survey as part of a CV study

A little more than 15% response rate

THE QUESTIONTo restore just 1 acre of wetland habitat in

Muskegon Lake, 1 in every 300 households in Michigan would need to contribute $A to this fund. If more households contribute, more habitat can be restored.

Given your household income and expenses, would you be willing to make a one time, tax-deductible donation of $A? _____YES _____NO

THE RESULTS

Model 1 - $2.5 Million Model 2 - $9 Million

Average $5.7 Million

Re survey occurring this year to improve sample

TRAVEL COST

TRAVEL COST Stated costs plus time cost

Calculated costs using mileage and normal expenses plus time cost

These were averaged together for the model estimations

Travel Cost

Value in $

QuantityTrips

CONSUMER SURPLUS

VALUE OF A TRIP 2009 Coefficient on TRAVEL COST is -0.036

Value of a single trip is 1/(-βTRAVEL COST)

Value of a single trip to Muskegon Lake is $27.77

VALUE OF A TRIP 2010 AND 2011

?

QUESTIONSiselyp@gvsu.edu