Comparing households’ total economic values and recreation value of instream flow in an urban river

Abstract

The empirical importance of non-use values relative to use values appears to vary by uniqueness of the natural environment being valued. At one extreme is the Grand Canyon, where non-use values are orders of magnitude higher than use values. For protecting water quality used for water-based recreation and drinking water, non-use values are still significant, but about half the magnitude of these two use values. In this paper we investigate the relative importance of non-use values for maintaining instream flows in an urban river in the City of Fort Collins, Colorado, USA. At the request of the City Council, a contingent valuation method (CVM) survey was conducted. A dichotomous choice CVM survey of households estimated that the Total Economic Values (TEV – sum of non-use and recreation) of city households is $234 per year. A second CVM question specifically about recreation use value of the same households yielded an estimated annual WTP of $90 per year. Thus, the TEV to maintain current instream flow is 38% recreation value and 62% non-use values, suggesting the importance of non-use values even for a non-unique, but locally significant urban river. Summing up the TEVs per household in the city yields an annual value of $171 per acre foot, several times larger than annual water lease rates in Northern Colorado. However, the present value of this TEV per acre foot is less than the price for purchasing water rights in order to maintain instream flows. Thus, unless the City of Fort Collins partners with downstream cities, who would also benefit from instream flows, annual leases are the most efficient option for maintaining instream flows.

Keywords:

• existence value
• Colorado
• non-use value
• contingent valuation
• willingness to pay

Notes

1. The four reference operating conditions are: (1) familiarity with the commodity to be valued; (2) prior valuation or exchange experience (in our case the sales tax add on votes); (3) there must be little uncertainty; (4) WTP not WTA values are measured.

2. Latest mail-in ballot election was 45% (see http://www.fcgov.com/cityclerk/results-2011 apr.php) and the 1995 mail-in ballot was 42% (see http://www.usmayors.org/best practices/bp_volume_2/fortcoll.htm).