Allison

Giffin
Econ 352

Can Dams have more fun?
Assessing the relative recreational values of dams and free flowing rivers


Introduction:

Hearing the mighty din of the Elwha crashing through a parched river basin

was a triumphant moment for the multitude that previously relied on its bounty.
The removal of both the Elwha River Dam and the Glines Canyon Dam was the
largest dam breach in U.S. history, and it marked a new era in which all five species
of pacific salmon that previously roamed its waters would return.

Dams are truly an environmentalists conundrum. They irrigate fields and

can provide communities with a cheap, carbon-free, storable source of power, but at
the expense of the riparian ecosystem. The destruction of which breeds a host of
economic and environmental misfortunes. Some of those economic losses, like the
loss in livelihoods of those who rely on riverine species of fish, are more easily
quantifiable and thus comparable to the benefits of hydropower and irrigation.
Others are tougher to pin down. There are what many people describe as the
unquantifiable benefits in beauty and the joy of recreating in a healthy riparian
ecosystem. There is no market price for the pleasure of sidling up to a riverside with
a six-pack and a fishing pole. Given the cultural significance of river recreation
however, making an effort find a value of recreational activities is an integral part in
attempting to make a reasonable economic conjecture as to whether a free-flowing
river, or a dam is more valuable to society.

What confounds research into recreational values is the fact that reservoirs

come with not a complete loss of, but a different set of recreational benefits when
they are open to the public for recreational purposes. The reservoirs behind some
dams are even stocked with lake fish like bass and catfish. Lake Billy Chinook and
Lake Simtustus on the Deschutes River in Oregon, and North Fork Reservoir also in
Oregon, are two examples in the Northwest. It is not at all clear whether motorboats
are more valuable than whitewater rafting, or that fishing for bass and catfish is
more valuable then fishing for salmon and steelhead. Calm water and white water
are simply two different venues with which to recreate, and attempting to evaluate
these benefits in monetary terms requires using non-market valuation techniques.
One could simply ascertain market prices for fish and boating services but that
would not accurately capture a whole host of more obscure experiential values.

The literature on these recreational values indeed is primarily composed of

survey analysis using contingent valuation (CV) and travel cost (TC) methods.
Briefly, the former is a stated preference model wherein respondents are asked
what they would be willing to pay (or willing to accept) to maintain the existence of
(or be compensated for the loss of) some resource. The travel cost method is a
revealed preference model in which the total value of some resource is ascertained
not by asking individuals directly, but by collecting information on the costs
associated with enjoying that resource (like transportation, associated services etc.).
Most studies involving the recreational values of natural areas employ these
methods, but there are reasons to take their results with ample quantities of salt.
Surveys are tough because the reliability of a response can be shoddy, especially
depending on the type of survey. Without going into too much detail, the respondent

might overestimate the amount they would be willing to pay (when given choices
among a range of values) if they have an overall environmental ethos or because of a
social desirability effect in which they want to respond in a way they think is
pleasing to the interviewer, an effect magnified by in-person surveys. Respondents
dont actually have to pay, so there are no consequences for exaggerating, and the
results are perceived to be going to a good cause. Recreational estimates might be
over-estimated in this case (Diamon, Hausman. 1994).

Methodology

While the literature on recreational benefits of rivers and dams is largely

uniform in methodology, it is somewhat disjoint in other ways. The primary venue

with which to look at the issue seems to be assessing the overall economic impact of
dam breaching, i.e., looking at recreation values in one area before and after the
existence of a dam (loomis et al. 1986, Loomis, 1996, Laitila, Paulrud. 2008, Kruse,
Scholz. 2006, Robbins, Lance, Lewis. 2008). These studies usually include
recreational values (the ones used in this paper are), but none look at recreational
values alone. This is why it is also useful to also look at the literature on the
recreational benefits of rivers in general, and compare these results to studies on
the recreational values of dams in general (no studies that made such a comparison
could be found). Both dam breach studies, and inter-study comparisons of dams vs.
rivers come with their own set of advantages and drawbacks.

Recreational Value of Rivers

There is a rich literature on the benefits of rivers. It is notable, however, that

there are very few meta-analysis that look at multiple rivers (Sanders, Walsh,
McKean. 1991). Most studies attempt to value a single area (Loomis et al. 2000,
Sanders, Walsh, Loomis. 1990.). Loomis et al. (2000) find that local households were
willing to pay on average $27.081 per month to restore a 45-mile section of the
Platte River in Colorado. The study does not, however, parse out exactly what part of
this payment is directed towards recreation benefits (another unfortunate
commonality in the river valuation literature) versus other benefits like water
purification, flood control, and erosion control. Sanders et al. (1990) get closer by
separating recreation values from other benefits, and estimating a demand function
for protecting existing rivers in the Rocky Mountains of Colorado. They find that
recreation values depend on the probability of visitation, and are $6.78, $32.19, and
$52.53 for respective probabilities of 0, .1 to .99, and 1. A similar study (Sanders et
al. 1991) uses contingent valuation (CV) and travel cost (TC) surveys to estimate the
benefits of Rivers in the same area, and the results from the two methods are
compared. Total annual household recreation values from CV are $34, and the TC
method results yield a similar value of $37.50. The similarity of results may indicate
that both methods are accurate ways of achieving estimations of non-market
resources.

Although there are few studies that looked at recreation as a whole in any

depth, there are a surprising number of studies that focus solely on recreational

1 This and every subsequent value discussed is converted to 2011 American Dollars using the CPI

fishing, perhaps because of the activitys long history (over millennia) of cultural
significance, or perhaps because of its subsistence value (Loomis, Sorg, Donnelly
1986, Rolfe, Prayaga. 2007, Laitila, Paulrud. 2008, Robbins et al. 2008). These
studies that solely focus on fishing value unanimously come to the conclusion that
dams drastically reduced the value of recreational fishing. This is possibly due to the
fact that these studies do not take into account the addition of possible mitigation
techniques like fish passage technology, artificial introduction of lake fish to dam
reservoirs, or hatcheries that may boost the value of fishing in a reservoir. Loomis et
al. (1986) used TC and CV survey methods to calculate economic loss in recreational
fishing that would result if fishing quality dropped by half due to hydropower
development in Henrys Fork, Idaho. They estimated that a 50% reduction in the fish
catch (a reasonable estimate given the characteristic drastic losses in fish
populations from the establishment of hydropower dams) would result in an annual
loss of $1,857,068.54 in total fishing benefits.

Recreational Value of Dams
Unlike the relative bounty of literature on the recreational value of rivers,
only Rolfe and Prayaga (2007) looked at the recreational value of man-made
reservoirs. While it is possible to obtain recreational values of lakes, this would
likely yield inaccurate results because there are very important differences between
a natural lake and a man-made reservoir that would render it unwise to substitute
the value of one for the value of the other. While not empirically established, it is

likely that most would value a natural lake more than a man-made reservoir in
terms of recreational values alone for aesthetic and environmental reasons.

Rolfe and Prayage estimated the value of recreational fishing in three

freshwater dams in Queensland, Australia using TC and CV methods (Rolfe, Prayaga,

2007). Mean WTP for a 20% improvement in fishing experience across all three
dams is $36.75 in 2011 American dollars. While pertinent, this study compares
unimproved values to improved values in the dams, rather than the values of the
undammed river vs. the dammed river. It thus contributes little to the discussion of
whether or not dams are worth their construction and maintenance costs, unless
these estimated values from dam improvement can be compared to recreational
fishing values in a river with similar characteristics.

Recreational Values before and after Dam Breach

Given the lack of literature that muddles attempts to value recreation in

reservoirs vs. recreation in free-flowing rivers, it is much more fruitful to look at

studies that measure the net economic impact of dam breaching on recreation
values in one area. This appears to be the most voluminous area of study, and it is
most pertinent to the discussion at hand because dam breaching in an area holds all
other factors constant besides the existence of a dam (i.e. same ecosystem, same
accessibility, same socioeconomic and cultural demographics, same water quality,
etc). There are enough cases of either ex-post or contingent valuation of ex-ante
dam breaching to come up with a reasonable estimate of the change in economic
recreation value to restoring a free-flowing river. Most of the literature in this area

focuses on either solely sport fishing or recreation values in their entirety (loomis et
al. 1986, Loomis, 1996, Laitila, Paulrud. 2008, Kruse, Scholz. 2006, Robbince, Lance,
Lewis. 2008).

One of the most well documented cases of dam breach is the Elwha River on

the Olympic Peninsula in Washington State. Loomis et al. (1996) use CV to obtain
estimates of the WTP for removing two dams on the Elwha. They find that mean
annual value per household is $59 locally, $73 for Washington State, and $68 for the
entire country. The study unfortunately does not differentiate recreational value
from total value, but mentions in the survey that the removal of the dam will restore
fish populations, which indicate that recreational angling values willincrease.

Laitila and Paulrud (2008) use CV surveys to determine anglers estimates

for the value of dam breach at Storsj Kapell. Average WTP per visit increases by
537 SEK from 250 SEK (or by $84.60 from $39.39 in 2011 US dollars) and average
visit frequency was estimated to increase by %17 from 2.000 to 2,340 fishing days,
all with zero change in fish stock. If fish stocks were to double as a result of dam
breach (a more likely scenario), these values become a 1830 SEK increase in the
value of a fishing day, and the number of fishing days is estimated to increase by
%72.

Kruse and Scholz (2006) estimated that total recreational angling benefits

from removing dams on the Klamath (Near Portland, Oregon) were $5 million in
Siskiyou County. This value was determined under the assumption of a 100%
increase in fish population and a dam deconstruction cost of $8 million (Kruse,
Scholz. 2006). The studys methodology was primarily extrapolating on existing

literature (the benefit transfer approach), and while finding non-fishing recreational
values was attempted, they too, could not find a reasonable estimate in this area.

Robbins et al. (2008) take an entirely different approach, claiming to engage

in the first ex-post analysis of sport fishery restoration after dam removal on the
Kennebec River in Maine. They too use a CV survey, but after the breach as opposed
to before. They find that average direct economic impact per angler per trip after
dam breach was $56.19, annual economic impact per angler was $356.35, and total
annual economic impact was $548,421. They note that Specifically, anglers are
spending more to visit the fishery, a direct indication of the increased value anglers
place on the improved fishery. (pg. 3)

McKean et al. (2005) were the only authors that measured the effect of dam

breach on specific recreational activities other than fishing. They applied TC surveys
to estimate demand for specifically non-fishing recreational values in the
impounded Snake River in eastern Washington (Mckean et al. 2005). They
measured the net effect of dam breach by subtracting the loss in the value of lake-
centric activities (motor-boats, water skiing) from the added benefit of river-centric
recreational activities (white water rafting). The study concludes that there is a net
benefit to breach, with before breaching values reaching a total of $7.5 million per
year, and after breaching values between $193 million to $316 million per year.
Table 1 below summarizes the findings of each study on the recreational effects of
dam breaching. The differences in metrics used between studies highlight the non-
uniformity of the literature on recreational values of dam breaching.

 Author

Loomis et al.
(1996)

Metric Used
Value
Annual benefits to
$59 locally,
recreation to dam
$73 for WA
removal per
$$68 for U.S.
individual

Average increase

Laitila, Paulrud
in WTP for

(2008)
recreational
$84.60
angling per visit
after dam removal
Kruse and Scholz
Total recreational

(2006)
angling benefits
$5 million
from dam removal
Robbins et al.
Total recreational

(2008)
angling benefits
$548,421
from dam removal
McKean et al.
Total recreational

(2005)
angling benefits
$185.5 million
from dam removal

Location

Elwha river in
Washington State

Storsj Kapell,
Sweden
Klamath River,
Oregon (Siskiyou
County)
Kennebec River,
Maine
Snake River,
Washington State

Taken together, it appears as though comparing the relative values of

recreation activities in dams vs. rivers is pretty difficult to grasp, but the literature
overwhelmingly agrees that the value of recreational fishing is greater in free-
flowing rivers then it is in dammed rivers.

Drawbacks to CV Studies on Dam Breach

There is, however, one significant drawback to studies on recreation values

from dam breaching. None of these studies look at the ability of mitigation
techniques to effectively allay the loss in value from fish mortality due to dams.
Operations like artificial introduction of lake fish to reservoirs, hatcheries, and fish
passage mechanisms might render recreational values equal or even greater then
that of free-flowing rivers. Given the general agreement that wild fish are much

more valuable then hatchery fish (apparent in both market values and general social
stigma), it is unlikely that these techniques will impart a value to recreational
fishing in dammed rivers equal to that of free-flowing rivers, especially net the costs
of implementing such mechanisms. Nonetheless, this information, taken with more
concrete valuation of non-angling recreational activities associated with lakes like
motor-boating, would yield a more concrete, more accurate value of these resources
then the literature currently offers. Without the addition of fish mortality mitigation
techniques in these studies, the estimates for recreational value of dam reservoirs
might be much lower then is empirically the case.

To summarize, the currently most accessible avenue with which to view

recreational values of dams vs. that of rivers is to look at studies specifically

targeting dam breach. Looking at the same area before and after the existence of a
dam has the advantage of holding an entire host of variables constant, such that the
most accurate assessment of recreational value can be reached. However, more
general global estimates are harder to reach, since most of the literature looks at
very specific areas. In other words, while these studies hold the aforementioned
variables constant within the area studied, the findings of any study like this cannot
be extrapolated more generally because of variation in these factors across different
rivers (intra-study robustness as opposed to inter-study robustness).

The second venue with which to ascertain recreation values involves looking

at studies that assess the economic recreational value of rivers and comparing them
with separate studies assessing the economic recreational value of dam reservoirs
and natural lakes. The most urgent problem with doing this is the thin literature on

the recreational benefits of man-made reservoirs. Only Rolfe and Prayaga examined
the recreational value of reservoirs specifically, and only in an isolated region of
Australia, hardly applicable to the rest of the world. Even if more sources were
available, this technique also suffers from the problem of being able to hold different
factors constant, since almost none of them look at the same area. Differences in
water quality, local demographics, culture, ecosystem composition, and accessibility
make these values difficult to compare and would thus require a statistically large
number of cases in order to get a sense of an overall trend.

Conclusion

A study that would truly answer this question would therefore be a meta-

analysis of a large number of dam breach case studies across a wide variety of areas
with differing ecosystems, visitation frequencies, area demographics, size, and
water quality. Using the second method, the ideal study would involve a statistically
large meta analyses of the recreational values of free flowing rivers, and compare
them not only with the recreation value of dammed rivers, but with the recreation of
dammed rivers with and without the addition of things like fish passage
mechanisms, artificial introduction of lake fish to reservoirs, and hatcheries. This of
course is no easy task, but undertaking it would serve as a cohesive that binds all the
positive aspects of the incoherent constellation of literature that exists now.

Sources:

1.) Diamond, Peter A., and Jerry A. Hausman. "Contingent valuation: Is some
number better than no number?." The Journal of economic perspectives 8.4
(1994): 45-64.

An Assessment of how credible and reliable are contingent valuation surveys.

Credibility is defined as whether the respondent is answering the right question.
Reliability is defined as the size and direction of bias present in the answers.
They determine a host of factors relating to why CV surveys are not effective
policy tools.
2.) Loomis J. Paula Kent, Liz Strange, Kurt Fausch, Alan Covich. Measuring
the Total Economic Value of Restoring Ecosystem Services in an
Impaired River Basin: Results from a Contingent Valuation Survey.
Ecological Economics [serial online]. April 2000;33(1):103-117.
Willingness to pay was estimated using a contingent valuation survey for five
ecosystem services: dilution of wastewater, water purification, erosion
control, fish and wildlife habitat, and recreation. Focus groups and in-person
surveys asked respondents WTP for restoring a 45-mile section of the Platte
River in Colorado .The results were analyzed using a dichotomous WTP
model. The model estimates that households are willing to pay an average of
$21 per month to restore the area, but the study does not parse out
recreational values from less tangible measures like habitat value, water
purification, flood control, and erosion control. They are taken together. It is
worth noting that in-person interviews might foster a social desirability
response in the respondent that causes WTP to be estimated higher than it is
in actuality.

3.) Sanders, Larry D., Richard G. Walsh, and John B. Loomis. "Toward
empirical estimation of the total value of protecting rivers." Water
Resources Research 26.7 (1990): 1345-1357.
A statistical demand function for the protection of rivers in the Rocky
Mountains of Colorado is developed using contingent valuation surveys
plugged into a theoretical model of a utility function. Questions like Do you
favor or oppose protecting each of the following rivers from diversions and
dams were rated on a five-point scale along with WTP for their protection in
terms of option value, existence value, bequest value, and recreational value.
Recreation values are $4, $19, and $31 for probability of visiting next year
from 0, .1 to .99, and 1 respectively.

4.) Sanders L, Walsh R, McKean J. Comparable Estimates of the
Recreational Value of Rivers. Water Resources Research [serial online].
July 1991;27(7):1387-1394.
Contingent Valuation and Travel Cost surveys are used to estimate various
benefits of rivers in the Colorado Rocky Mountains. The results of the CV and
TC are then compared in order to assess the validity of the behavioral
intentions reported in CVM surveys compared to actual behavior-based TCM
analysis. Total annual household recreation use values from contingent
valuation surveys are $20.91 in 1983 dollars. The travel cost method yields
similar results: $23.06 in 1983 dollars. They conclude that the similarity of
the results suggest that the two methods are both useful measurements for

assessing the recreational value of rivers.

5.) Loomis, John, C. F. Sorg, and D. Donnelly. "Economic losses to
recreational fisheries due to small-head hydro-power development: a
case study of the Henry's Fork in Idaho." Journal of Environmental
Management, UK 22.1 (1986): 85-94.
Using a survey of anglers, the Travel Cost and Contingent Value Methods
were applied to calculate the economic losses in recreational cold-water
fishing that might result if fishing quality dropped by half due to hydropower
development. A 50% reduction in fish catch on the Henry's Fork of the Snake
River in eastern Idaho due to a dam is estimated to result in an annual loss of
$920,000 in fishing benefits. If, instead, a 50% reduction in size of fish caught
occurs as a result of a dam, the annual loss in fishing benefits would be $1.07
million.

6.) Rolfe J, Prayaga P. Estimating Values for Recreational Fishing at
Freshwater Dams in Queensland. Australian Journal Of Agricultural And
Resource Economics [serial online]. June 2007;51(2):157-174.
This study uses travel cost and contingent valuation methods to estimate
value for recreational fishing in three freshwater impoundments in
Queensland (i.e. manmade dams). Mean WTP for a 20% improvement in
fishing experience across all three dams is $32.83 ($19.02, $43.03, and
$36.45 respectively)

7.) Parsons, George R., and Mary Jo Kealy. "Randomly drawn opportunity
sets in a random utility model of lake recreation." Land Economics 68.1
(1992): 93-106.
A random utility model is applied to assess the recreational demand for
boating, fishing, swimming, and viewing in Lake Erie. Average equivalent
variation per occasion per individual (in 1978 dollars) is $13.64 for boating,
$0.65 for fishing, $7.71 for swimming, and $3.35 for viewing. The random
utility model is used when there are a large number of substitutes, or a large
opportunity set available to an individual.
8.) Loomis J. Measuring the Economic Benefits of Removing Dams and
Restoring the Elwha River: Results of a Contingent Valuation Survey.
Water Resources Research [serial online]. February 1996;32(2):441-
447.
This study uses contingent valuation method to obtain estimates of WTP for
removing two dams on the Elwha River. Mean annual value per household is
$59 locally, $73 for Washington State, and $68 for the entire country. Logit
coefficient (t-statistic) for fish importance is 1.5618 locally, 1.5469 in
Washington State, and .6585 in the entire United States. The study does not,
unfortunately parse out recreational values from this estimate.

9.) Laitila T, Paulrud A. Anglers' Valuation of Water Regulation Dam

Removal for the Restoration of Angling Conditions at Storsjo-Kapell.
Tourism Economics [serial online]. June 2008;14(2):283-296.
This study uses contingent valuation to determine anglers estimates for the
value of dam removal in Sweden. Average WTP increases by 537 SEK
(Swedish Krona), economic value of large fish doubles and average visit
frequency is estimated to increase by 17%, even with no change in the fish
stock. If fish stocks were to quadruple, this estimates turns into a 1830SEK
increase in the value of a fishing-day, and the number of fishing days would
increase by 72%.
10.)
Kruse, Sarah A., and Astrid J. Scholz. "Preliminary economic
assessment of dam removal: The Klamath River." Prepared by Ecotrust,
Portland, Oregon (2006).
This study aims to obtain a total economic value of dam removal in Siskiyou
County by 1.) ascertaining the likely impact of dam removal on river-front
property 2.) costs and benefits of removing the dam vs. maintaining it, and
most pertinent to this paper 3.) attempts to quantify both the market and
non-market values of dam removal of the six dams on the Klamath River to
local stakeholders and to the region. Methodology was primarily
extrapolating from already existing studies. Non-fishing recreational values
are deemed unknown, but recreational angling benefits from removing dams
on the Klamath are assessed to be $4.5 million in Siskiyou County assuming a
100% increase in fish population and a dam deconstruction cost of $73
million.

11.) Robbins, Jesse Lance, and Lynne Y. Lewis. "Demolish it and They Will
Come: Estimating the Economic Impacts of Restoring a Recreational
Fishery." JAWRA Journal of the American Water Resources Association
44.6 (2008): 1488-1499.
This study performs what the authors suspect to be the first ex-post analyses
of sport fishery restoration from dam removal using a contingent valuation
survey for anglers on the Kennebec River in Maine. They find that average
direct economic impact per angler per trip after dam breach was $53.96,
annual economic impact per angler was $342.22, and total annual economic
impact was $526,679.19. They note that Specifically, anglers are spending
more to visit the fishery, a direct indication of the increased value anglers
place on the improved fishery.

12.) McKean, John R., et al. "Willingness to pay for non angler recreation at
the lower Snake River reservoirs." Journal of Leisure Research 37.2
(2005): 178-194.
This study applies the travel cost method to estimate demand for non-fishing
recreational values in the impounded Snake River in eastern Washington.
The effect of dam breach on these recreational values is then assessed by
subtracting the loss in the value of certain activities (boating, water skiing)

from the added benefit of whitewater recreational activities. The study

concludes that total non-angler benefits without breaching is nearly $7.2
million per year, while non-angler recreation with breaching (net the loss in
benefit from activities that cannot be done on white water) is anywhere from
$185.5 to $303.5 million per year

13.) Pyle, Michael T. "Beyond fish ladders: Dam removal as a strategy for
restoring America's rivers." Stan. Envtl. LJ 14 (1995): 97.
Provides a framework by which advocates of dam removal can effectively
lobby for political support, including rationales for dam removal (threats to
human safety and property, obsolescence and increasing maintenance costs),
necessary steps and the costs of dam removal, and most pertinent to this
discussion, the political obstacles to dam removal. Besides power generation
concerns, there is considerable resistance to dam removal from reservoir
communities that are concerned that certain recreational activities will not
be available once the reservoir is drained. Unfortunately, while detailed, the
article does not offer any monetary valuations of these concerns, thus they
cannot be compared.

14.) Lejon, Anna GC, B. Malm Renflt, and Christer Nilsson. "Conflicts
associated with dam removal in Sweden." Ecology and Society 14.2
(2009): 4.
Study identifies four major reasons for dam removal, as well as political,
economic, and technical obstructions to the dam removal process. Reasons
for removal include safety, law and policy, economy, and ecology. Obstacles
include: funding, cultural-historical values, and threatened species. Cultural-
historical values are particularly relevant in that communities living close to
the reservoir use it for swimming, fishing, and boating. Some of the early
opposition to removing the Elwha dam came from people who liked to go
boating and fishing in the reservoirs.


15.) Martin, J. and Hesterlee, C. (2002). Energy Production and Reservoir
and River Water Quality: Regulatory Framework. J. Energy Eng., 128(3),
3359.

Provides a comprehensive overview of the regulatory structure of river
quality and dam construction laws in the United States.