The Economic Value of Water and Ecosystem Preservation

More documents

Recommendations

Info

4.4. Production Function Approach – Analytical Approach and Description A key goal of the research is to provide useful economic information to inform the debate on freshwater inflows in Texas rivers. Of course, the debate is especially concerned with competing uses for freshwater inflows. Therefore, it is important to try to relate the value of ecotourism to quantities of freshwater inflows. A core tool in economics is the production function which mathematically relates known inputs to the production of outputs. Production functions are typically used to analyze the decisions made by a firm in producing their output. However, economists have also adapted production function analysis to estimate the value of irrigation water in the production of crops. As in many uses, water is typically under-priced relative to the costs of provision. One method to estimate amore accurate value of water in crop production is to use a crop-water production function. As in a standard production function, crop output is related to the input of water and other inputs (e.g. seed and fertilizer) to establish a mathematical relationship. From the estimated cropwater production function, the marginal physical product per unit of water can be calculated. The marginal physical product is then multiplied by the crop price to calculate a marginal value per unit of water. It is important to note that this estimated value is related only to crop price and water’s marginal physical productivity rather than to the economics of crop production (Gibbons, 1986). This study adopts a similar approach with the assumption that freshwater inflows are an input into the production of ecotourism. An ecotourism production function is estimated as a function of inflows and other key variables. This function is then used in conjunction with the ecotourism values estimated by TCM to calculate a marginal value for freshwater inflows. For this study, the freshwater inflows are the only input to ecotourism included in the model. The output, ecotourism, is equated with the number of visitors to the Aransas National Wildlife Refuge. This implies that ‘units’ of ecotourism are not produced until consumed. Finally, various factors are included to account for likely sources of correlation between input and output. These included precipitation, summer holiday period, nesting period for whooping cranes, and period for ‘winter Texans’. 4.4.1. Problems with representing freshwater inflows in a production function There are several problems with using a production function approach to estimating the value of freshwater inflows to the production of ecotourism. The primary problem is the complex relationship between inflows and the status of the ecosystem. In a typical production function approach, an input is applied in a fixed quantity resulting in a quantity of output (e.g. X lbs. of seed result in Y bushels of corn). For the current problem, maintenance of the status quo condition/productivity of the ecosystem is a result of maintaining the historical average flow regime, including intra-year high and low flow periods as well as the 38
occasional flood and drought events (Figure 4-3). It is thus quite difficult to determine what unit of water inflows to consider as the ‘input.’ Figure 4-3. Example of Flow Regime Variations Flow January December It is known that freshwater inflows have a highly significant impact on the ecosystem, but this is through a complex interaction with the other elements of the ecosystem. For example, one study states that high inflows help to boost blue crab populations which in turn serve as the primary source of nutrition for the whooping cranes (Stehn, 2001). Stehn (2001) further remarks that during years with poor crab production (e.g. such as 1993-4 and 2000-1), there is a marked increase in whooping crane deaths. As whooping cranes are a major attraction for birders/nature tourists, it is fair to hypothesize that there may also be an impact on tourist numbers. There is also the difficulty that ecosystem services are not simply an increasing function of freshwater inflows – too little (drought) can be as detrimental as too much (flooding). Furthermore, these natural variances are an important part of maintaining the health of the ecosystem. Also of concern is the duration which variations in flow must be maintained to have a beneficial or detrimental impact on the health of the ecosystem. Even ignoring the problem of the complex interactions of inflows with the ecosystem does not alleviate the problem. In agricultural science, production functions have been developed to account for the timing of irrigation application. However, water applications in agriculture are distinct; whereas, freshwater inflows are continuously applied in the production of ecosystems. Thus, there is a fundamental question in how to best incorporate the inflows into a production function. The present model is viewed as an initial step in this direction. Average inflow rates were taken on a monthly basis. These flows were then compared to visitor data lagging the flows by one month up to 18 months. The implicitly assumes that flows in a single month would have a significant impact on attracting tourists. The results of this analysis are discussed in Section 4.7. 39 High year Average Low year
Page 1 and 2: Final Report to the Texas Coastal M
Page 3 and 4: 5.2.2. Sources / Data .............
Page 5 and 6: Executive Summary The San Antonio B
Page 7 and 8: ecotourism included in the model. T
Page 9 and 10: 1. Overview of San Antonio Bay Regi
Page 11 and 12: and shellfish species and estuarine
Page 13 and 14: According to the Rockport-Fulton Ch
Page 15 and 16: effect is limited by assimilative c
Page 17 and 18: freshwater inflow acts as a mechani
Page 19 and 20: sulfide. Heavy metals bounds to sed
Page 21 and 22: inflow levels and populations of se
Page 23 and 24: and could potentially make the cran
Page 25 and 26: 3. Characterization of Ecotourism i
Page 27 and 28: Contributes actively to the conserv
Page 29 and 30: Figure 3-1. Public Protected Areas
Page 31 and 32: 1987 and then purchased in 1991. Pr
Page 33 and 34: 3.3.2. The Economics of Multiple Na
Page 35 and 36: Table 3-2. Average Willingness to P
Page 37 and 38: Table 3-3. Personal Income and Prod
Page 39 and 40: impact. It is necessary to conduct
Page 41 and 42: 4.2. Key Site Details for the Analy
Page 43 and 44: approach allows examination of ques
Page 45: This average number of trips from t
Page 49 and 50: The results of the regression yield
Page 51 and 52: gallons, which results in a value o
Page 53 and 54: Aransas distinguishes itself from C
Page 55 and 56: thresholds vary according the size
Page 57 and 58: The total number of full-time and p
Page 59 and 60: The County also shows a lower educa
Page 61 and 62: Refugio shows a rapid decrease in t
Page 63 and 64: IM t+ n ic = E t ic ⎡⎛ E × ⎢
Page 65 and 66: included an economic analysis of th
Page 67 and 68: Table 5-5. Employment Shift-Share A
Page 69 and 70: Fishing and related activities. The
Page 71 and 72: Figure 5-15. Employment change by s
Page 73 and 74: 5.3.2. Input-Output Analysis The in
Page 75 and 76: Calhoun Calhoun County’s experien
Page 77 and 78: an advantage, particularly in oyste
Page 79 and 80: Impacts on the Freshwater Inflows t
Page 81 and 82: However, due to the lack of consist
Page 83 and 84: This implicitly assumes that flows
Page 85 and 86: for fresh product. This fishery wil
Page 87 and 88: Elliot, D. (2007). Competitive Adva
Page 89 and 90: Pearce, D. W. (1994). The MIT Dicti
Page 91 and 92: The Nature Conservancy. (2002). "Na

The Economic Value of Water and Ecosystem Preservation

Create successful ePaper yourself

Delete template?

Save as template?