The Economic Value of Water and Ecosystem Preservation

4. Estimating the Value of Freshwater Inflows Supporting Ecotourism
4.1. Introduction
Economics is typically described as the science of allocating scarce
resources among competing end uses. There is a long and well-developed list of
literature describing the foundations of social welfare analysis and public choice.
The most commonly accepted approach is that inputs and outputs are monetized
in order to provide a common metric by which various allocations and outputs
can be compared. The problem with environmental goods is that they are
typically public goods and no market exists by which to observe market prices
used to monetize these goods. Economists have expended much effort to
develop theories and methods by which to value these non-market goods. This
study makes use of two approaches: i) the Travel Cost Method and ii) a
production function approach.
This economic analysis examines the value of freshwater inflows on
ecotourism on the San Antonio Bay Region. While there are many definitions of
ecotourism, some related to the idea of sustainability, ecotourism in this study
refers primarily to tourism which is based on natural or ecological attractions
(Mathis, 2004b).
There are two main questions of importance. The first question concerns the
value of current sectors (e.g. tourism) that are supported by the freshwater
inflows. This first question yields information on the value of current activities,
which can be useful in comparing different activities supported by the same
resource, but it doesn’t yield insights into possible tradeoffs. A second question
concerns possible tradeoffs resulting from alternative management scenarios.
This question yields information on what the economic impact on a given sector
will be if the current management situation is changed (e.g. inflows are reduced).
A fundamental component for the economic analysis is the ecology of the
bay and estuary, which is a complex system made up of interdependent
elements (e.g. water, flora, land, etc.). The element of interest to this analysis is
the freshwater inflows to the estuary. Beneficial inflows are defined in the Texas
Water code (sec. 11.147) as a “salinity, nutrient, and sediment loading regime
adequate to maintain an ecologically sound environment in the receiving bay and
estuary system that is necessary for the maintenance of productivity of
economically important and ecologically characteristic sport or commercial fish
and shellfish species and estuarine life upon which such fish and shellfish are
dependent.” However, a complexity of the science underlying the understanding
of freshwater inflows on marine and river ecosystems has led to much infighting
resulting in little progress on the issue (Korosec, 2007). This study attempts to
more fully develop the economics behind freshwater inflows and ecotourism in
order to better inform the ongoing debate on environmental flows.