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Sound Values

While few people question the desirability of acting to protect and preserve Long Island Sound, serious questions arise regarding the costs.

The Long Island Sound Study has produced a management plan that sets out an ambitious agenda to improve water quality, protect habitat and living resources, and educate and involve the public. This agenda includes major capital projects such as sewage treatment plant improvements, combined sewer overflow abatement programs and polluted surface runoff controls.

The potential long-term costs for the sewage treatment plant programs alone approach $8 billion. Is an investment of this magnitude justified? Is the Sound really worth saving? What is the Sound actually worth in real dollars?

To address such questions, the Long Island Sound Study turned to Dr. Marilyn A. Altobello, a University of Connecticut Associate Professor of Agricultural and Resource Economics. She was commissioned to develop estimates of values and economic impacts of the important water quality-dependent uses of Long Island Sound. These would be the uses most affected by the management plan actions and they are the ones that might best characterize the worth of the Sound monetarily.

Altobello investigated commercial fishing and shellfishing, and recreational fishing, boating, and beach swimming on both Connecticut and New York sides of the Sound. She also developed estimates of coastal wetland values and intrinsic or “non-user” values, and examined residential property values. Her work was conducted in 1990 and consequently used 1990 data when available. All dollar amounts were stated in 1990 dollars.

Her analysis, in most cases, employed three categories of information: the value of the activity, the direct effects of the activity on the region’s economy, and the indirect or multiplier or “ripple” effects.

COMMERCIAL ACTIVITIES

For commercial fishing and shellfishing, the starting point is the reported income received by harvesters for their catch in 1990 ($53 million). While this is the harvest value it may he taken to represent the total direct effects of commercial fishing and shellfishing. The direct effects would include expenditures for such things as diesel fuel for the boats, ice to cool the catch, fishing gear and insurance. The indirect effects would include the wages of employees of fishing-related businesses, subsequently spent in the region on other goods and services.

Economists typically use a “multiplier” to account for the indirect or ripple effects, thus providing a realistic estimate of the total dollar impact of an activity. Such multipliers are developed through case studies in comparable regions and the application of rigorous mathematical analyses. Most of the multipliers used by Altobello were drawn from an input-output model of marine-oriented industries in New London County, Connecticut, developed in 1984 at the University of Connecticut.

Using the $53 million harvest value figure, a New London County-based multiplier was applied to yield a result of $148 million, representing the value of the direct plus the indirect effects. However, Altobello suggests that since data were not available for the value of processing, wholesaling and retailing, the total economic value of the commercial fishing industry of Long Island Sound could easily be twice that.

RECREATIONAL ACTIVITIES

With more than 8 million people living in the Long Island Sound watershed and millions more visiting each year, recreation becomes the dominant regional economic factor. Altobello presents an analysis of swimming, boating and sport fishing as the three major water quality- dependent Long Island Sound recreational activities.

Values were based on responses to previously conducted surveys in other regions where people expressed a dollar amount they would be willing to pay per day, if charged for these activities. After adapting these data to the Long Island Sound context, the figures were multiplied by the number of documented user/days thus providing the user values. The base figure (value per day) for beach swimming was $13.34 with a total user value of $182 million; an $8.48 base figure for boating provided $99 million; and $7.46 for sport fishing yielde $22 million. This yields a total recreational user value of $303 million.

Direct economic effects of the recreational activities were based upon expenditures made by activity participant. Such expenditures would include restaurants, groceries, lodging, transportation, and the purchase of bait and tackle, boats, motors, trailers and marine accessories.

For beach swimming, a method comparable to the commercial fishing and shell fishing case was again employed. Using statistics from Rhode Island and Florida beaches, an estimate of $291 million was generated for the direct economic effects of Long Island Sound beach swimming. Using another New London County-based multiplier provided an estimate of the total direct and indirect effects–$661 million.

For sport fishing, Connecticut and New York data provided a direct effects estimate of $432 million. Using yet another New London County-based multiplier yielded estimated direct and indirect effects at $1.043 billion.

For recreational boating, the total direct effects were extrapolated from Connecticut data to yield a Soundwide figure of $1.465 billion. A multiplier developed from a 1984 Rhode Island boating industry study yielded estimated direct and indirect effects at $3.223 billion.

NON-USER VALUES

While Altobello has been able to demonstrate that Long Island Sound is a real economic resource, there are other values that are less easily quantifiable. Beyond the economics associated with the direct or current use of the Sound’s resources, are those values belonging to the essential nature of the estuary. These intrinsic values may not be directly observable or as easily measured, but they are real and they are economically important. They cover intangibles such as aesthetics, and uncertainties such as future demand. Studies from other regions have examined the relationship between intrinsic values and total estimated recreational user values. Altobello suggests that intrinsic values, by inference, may equate to 50 percent of the recreational user value; thus, half of $303 million, or about $152 million.

The importance of natural habitats and good water quality to near-shore residential property values is hard to estimate and Altobello recommends further study in this area. She does, however, make an attempt to develop an estimated economic value of Long Island Sound coastal wetlands based upon their biological productivity and other attributes. The calculated economic value amounted to approximately $94 million.

CONCLUSIONS

To sum all this up, the user values are added to the direct and indirect effects for boating ($99 million + $3.223 billion = $3.322 billion), swimming ($182 million + $661 million = $843 million) and fishing ($22 million + $1.043 billion = $1.065 billion), totaling $5.23 billion ($3.322 billion + 843 million + $1.065 billion). Then to this total are added the figures for commercial fishing and shellfishing of $148 million and the intrinsic value estimate of $152 million. This gives us a grand total of $5.53 billion!–good measure of the value of Long Island Sound.

Even if we look only at the direct and indirect economic effects–the revenue Long Island Sound generates for the region each year–the figure is over $4.9 billion.

In light of the proposed major capital improvements to protect, preserve and restore Long Island Sound, the annual return on this investment would be substantial.

BY JOSEPH E. BLUMBERG
SEA GRANT MARINE ADVISORY PROGRAM
EDUCATOR-IN-RESIDENCE
LONG ISLAND SOUND STUDY
PUBLIC OUTREACH COORDINATOR

Prepared and funded by the Long Island Sound Study. September 1997
Sponsoring agencies: US Environmental Protection Agency, Connecticut Department of Environmental
Protection, and New York State Department of Environmental Conservation.
Produced by New England Interstate Water Pollution Control Commission (NEIWPCC).

Download the full Sound Values fact sheet pdf document

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