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Socio-Economic Impact of the Presence of Asian carp in the Great Lakes Basin

Socio-Economic Impact of the Presence of Asian carp in the Great Lakes Basin

Socio-Economic Impact of the Presence of Asian carp in the Great Lakes Basin (PDF, 634 KB)

Prepared by
Salim Hayder, Ph.D.

Edited by
Debra Beauchamp

Fisheries and Oceans Canada, Policy and Economics
501 University Crescent, Winnipeg, Manitoba R3T 2N6

Table of Contents

Chapter 2: Literature Review

While a continuous effort has been made to improve the understanding of the impacts of AIS in the Great Lakes for the US economy (e.g. Felts, Johnson, Lalor, Williams, and Winn-Ritzenberg, 2010; Thomas, 2010; Austin, Anderson, Courant, and Litan, 2007; Leigh, 1998; and Ainsworth, 1977), until recently, comparatively less attention has been paid to measuring the impacts for Canada. Therefore, the extant literature provides very limited information for Canada. This section provides a summary of the extant literature that examines the economic aspects of invasive species threatening the Great Lakes from Canadian and/or US perspective.

Felts, Johnson, Lalor, Williams, and Winn-Ritzenberg (2010) examined the policy implications of AIS for the City of Milwaukee, and proposed that appropriate AIS policies balance the ecological responsibility, minimize economic damage by AIS, maximize Milwaukee’s economic vitality, and political feasibility. The report also concluded that in the short-term, the primary focus should be preventing AIS introductions from ships entering the Port of Milwaukee, while in the long-term, AIS management should also focus on managing and removing established AIS.

Using a bio-economic simulation model, Thomas (2010) conducted a cost-benefit analysis of preventative management for zebra and quagga mussels in the Colorado-Big Thompson system. The study showed that the boat inspection program was very effective, and almost entirely eliminated the possibility of invasion of the reservoir system. However, the benefits of reduced control costs to infrastructure were unlikely to exceed the costs of the boat inspection program, because the probability of invasion was likely to be low, even without the boat inspection program. The study also noted the following important limitations: (i) many benefits were omitted from the analysis; (ii) the scope of the analysis was limited; and (iii) the uncertainty inherent in the bio-economic model.

Employing specific improvements and aggregate improvement approaches, Austin et al. (2007) conducted a study to determine the costs and likely ecological impacts of restoring the Great Lakes,Footnote 22 and to estimate the economic benefits of those ecological impacts. The first approach identified the specific improvements in the environment expected from restoration, and then added up the individual estimates. The second approach estimated the increase in property values in all the areas likely to be affected by the restoration initiative.

Following those approaches, Austin et al. found that ecological restoration initiatives generated a present-value of the long-term economic benefits of over USD50 billion to the US economy.Footnote 23 In addition to these long-term economic benefits, the study estimated additional short-term benefits in the form of multiplier effects within the range of USD30 to 50 billion, primarily to the regional economy. However, the estimation did not capture the benefits of the development of new technologies and industries that would be generated by the investment in Great Lakes restoration.

Leigh (1998) evaluated the cost-effectiveness of alternate control strategies, and determined the economic value of enacting the ruffe control program for the Great Lakes fishery. Based on biometric changes that were projected to occur, the study showed that early control of a non-indigenous fish species such as ruffe, could result in significant returns on investment. Instituting a ruffe control program would, under a moderate-case projection of benefits, yield an estimated net public savings of USD513 million for the US over five decades up to 2050.

Using both market models of supply and demand and Structured Expert Judgement (based on relevant scientific research and their professional opinions), Rothlisberger, Finnoff, Cooke, and Lodge (2012) examined the impact of invasive species from ocean-going vessels on wildlife watching, raw water use, and commercial and sport fishing in the Great Lakes from the US perspective. Compared to a scenario of no ship-borne invasions, the study found that in the US waters, median damage aggregated across multiple (ecosystem) services was USD138 million/year, broken down as follows: commercial fishery - USD5.3 million; sport fishing - USD106 million (with a greater degree of uncertainty in impact distributions); and raw water useFootnote 24 - USD27 million (median additional operating costs aggregated over all Great Lakes facilities). The study also noted that the negative impact of invasive species on sport fishing alone might be as high as USD800 million, with a 5% probability.

Employing the hedonic property-value method, Zhang & Boyle (2010) found that as Eurasian watermilfoil (an invasive aquatic weed) infested in selected Vermont lakes, adding to the total macrophyte (an aquatic plant that grows in or near water) growth, property values could diminish by less than 1% to as high as 16%, with incremental increases in the infestation level.

Braden, Won, Taylor, Mays, Cangelosi, and Patunru (2008) estimated the economic benefits of remediation of an AOC in the Sheboygan River, Wisconsin, using hedonic analysis and a survey-based method. Hedonic analysis found that for owner-occupied homes within a 5-mile radius of the Sheboygan River AOC, the overall estimated loss of property value was USD158 million (8% of market value). The impacts were proportionally greatest for properties closest to the AOC. A survey-based method yielded a mean estimate of USD218 million (10% of property value) in willingness to pay (WTP) for full cleanup of the AOC.

Results of a separate study (Braden et al., 2008) focusing on an AOC on the Buffalo River, New York, showed that after controlling for numerous structural, community, and spatial effects, single-family residential property prices south of the river were depressed due to their proximity to the AOC by USD118 million (5.4% of total market value). Considering only the area for which the market study showed price discounts, the survey-based estimates revealed a WTP for full cleanup of the AOC of approximately USD250 million (14% of median-based market value).

On the Canadian north shore of Lake Erie, using contingent valuation methodology (a methodology used to estimate economic values of ecosystem and environmental services) on 703 users of the public marsh at Long Point and Point Pelee in 1978, Kreutzwiser (1981) found that recreational users spent a total of $119,000 to receive wetland benefits that were estimated to have a contingent value of $213,000 and generated directly and indirectly $225,000 in local spending (e.g. travel, food, accommodation) per year implying a return of 179%.

As indicated above, literature assessing the (net) economic impact of AIS in the Great Lakes for the Canadian economy is substantially less as compared to that for the US. Most of the Canadian studies (e.g. Genesis Public Opinion Research Inc., 2007; and EC, 2000) were undertaken from either a provincial or national perspective, and remarkably few studies (e.g. DFO, 2008; Krantzberg et al., 2008, 2006) highlighted the economic contributions of the Great Lakes for Canada by activity and/or area. The present study will discuss the pertaining literature by activity in Chapter 5.

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