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A National Survey of Willingness to Pay for Restoration of Louisiana’S Coastal Wetlands

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A National Survey of Willingness to Pay for Restoration of Louisiana’S Coastal Wetlands America’s Wetland? A National Survey of Willingness to Pay for Restoration of Louisiana’s Coastal Wetlands Final Project Report Department of Agricultural Economics Mississippi State University Revised April 1, 2013 Daniel R. Petrolia * Matthew G. Interis Joonghyun Hwang Mississippi State University Michael K. Hidrue University of Delaware Ross G. Moore USDA Farm Service Agency, Selmer, TN GwanSeon Kim University of Georgia *Corresponding Author: [email protected] The authors wish to express their sincere gratitude to Kerry St. Pe and all the staff of the Barataria-Terrebonne National Estuary Program for providing valuable information and their assistance in improving the quality of the survey instrument. This research was conducted under award NA06OAR4320264 06111039 to the Northern Gulf Institute by the NOAA Office of Ocean and Atmospheric Research, U.S. Department of Commerce; and supported by the USDA Cooperative State Research, Education & Extension Service, Multistate Project W-2133 “Benefits and costs of Natural Resources Policies Affecting Public and Private Lands” (Hatch # MIS-033120). 1 EXECUTIVE SUMMARY A nationwide survey was conducted in the summer of 2011 via Knowledge Networks to estimate the willingness to pay (WTP) for a large-scale restoration project in the Barataria-Terrebonne National Estuary in coastal Louisiana. A split-sample approach was used to administer both a binary-choice (contingent valuation) and multinomial-choice (choice experiment) version of the survey, with the latter used to estimate willingness to pay for increments in three specific wetland ecosystem services: wildlife habitat, storm surge protection, and fisheries productivity. A total of 3,464 respondents completed the valuation exercise, of which 3,228 (93%) had neither visited nor live/lived in the study region. (Note also that only 32 respondents, < 1%, were Louisiana residents). Of the 1,397 respondents who completed the binary-choice version of the survey, 601 (43%) were willing to pay some positive amount of money for the proposed restoration project (costs ranged between $25 and $2,825 per household). Of the 2,067 respondents who completed the multinomial-choice version of the survey, 1,250 (60%) were willing to pay for some version of the restoration. Results indicate that confidence in federal and state government agencies, political leanings, and “green” lifestyle choices were significant explanatory factors regarding support. All three wetland ecosystem services significantly affected project support, with increased fisheries productivity having the largest marginal effect, followed by improved storm surge protection, and increased wildlife habitat. Mean WTP for an intermediate-scale restoration program ranges between $909 and $1,751 per household, with a total value between $105 billion and $201 billion, which exceeds a recent (and by far the largest) $100 billion restoration cost estimate. 2 TABLE OF CONTENTS I. Introduction…………………………………………………………….…..4 II. Study Area: Barataria-Terrebonne National Estuary………………….….13 III. Survey Design……………………………………………………………..17 IV. Survey Administration…………………………………………………….26 V. Data ……………………………………………………………………….29 VI. Overview of Economic Theory, Non-Market Valuation, Stated Preference Methods, and Consequentiality ……………………….43 VII. Random Utility and Econometric Models………………………………...51 VIII. Results…………………………………………………………………….56 IX. Summary and Conclusions………………………………………………..69 X. References………………………………………………………………...72 XI. Appendix: Survey Instrument……………………………………………78 3 CHAPTER I INTRODUCTION The wetlands of coastal Louisiana make up one of the most important, productive ecosystems in the United States. They support the largest commercial fishery in the lower 48 states, and comprise the seventh-largest delta on Earth, containing 37 percent of the estuarine herbaceous marshes in the continental United States (Couvillion et al. 2011).1 Over 2 million residents - more than 47% of the state’s population- live in Louisiana’s coastal parishes (Wang 2012). These wetlands provide habitat for mammals, amphibians, fishes, and migratory birds and act as nurseries for shellfish and fish. The wetlands also provide valuable nutrients to surrounding habitats and help improve Louisiana’s water availability and quality. A primary function is that they act as natural water collection areas. As water moves through wetlands, many processes occur that benefit nature and society. These processes include cleaning pollution out of the water, absorption of excess nitrogen and phosphorous by wetland plants, denitrification, and destruction of intestinal bacteria in wastewater (Coreil and Barrett-O’Leary 2004). Wetlands also play a vital role in reducing damage from storms along Louisiana’s Gulf Coast. The wetlands provide a natural barrier for the inland by reducing storm surge and decreasing wave energy. This can be seen through a comparison of the damage to Florida’s Atlantic Coast and Louisiana’s Gulf Coast from Hurricane Andrew in 1992. Florida’s coast does not have the wetland barriers that Louisiana’s coast has, and Florida received much more 1 The coastal zone covers approximately 14,913 square miles, of which 6,737 square miles is water and 8,176 square miles is land (Louisiana Oil Spill Coordinator's Office 2005). 4 damage from the Hurricane Andrew than did Louisiana (Coreil and Barrett-O’Leary 2004). After the devastation of Hurricanes Katrina and Rita, models were used to examine the role that wetlands play in reducing storm damage. One such model examined the hypothetical situation where the wetlands east of the Mississippi River Gulf Outlet, the Gulf Intracoastal Waterway, and Lake Borgne turned into open water eight feet deep. That model found the if this open water scenario had existed the storm surge from Hurricane Katrina would have been three to six feet higher in St. Bernard Parish and New Orleans East (Working Group for Post-Hurricane Planning for the Louisiana Coast 2006). Wetlands also capture storm water runoff that can cause flooding. Wetlands that make up 15 percent of the acreage in a watershed have the ability to reduce flood peaks by up to 60 percent (Coreil and Barrett-O’Leary 2004). The wetlands of Louisiana also play a vital role for the state economy. The wetlands provide habitat for harvestable animals and timber. Twenty six percent (by weight) of commercial fish landings in the lower 48 states is provided by Louisiana’s wetlands. Also, this area is the nation’s largest shrimp, blue crab, and oyster producing areas (National Marine Fisheries Service 2005). Almost 30,000 of Louisiana’s citizens have a job that is provided through this commercial fishing industry (Louisiana Department of Wildlife and Fisheries 2005). The wetland timber industry contributes about $2 billion to the state, along with many jobs for the people of Louisiana (Coreil and Barrett-O’Leary 2004). Louisiana’s wetlands also play an important role in protecting the state’s and the nation’s energy infrastructure from storm damage. Nearly 9,300 miles of oil and gas pipelines cross the wetlands of coastal Louisiana (United States Army Corps of Engineers 2004). Coastal Louisiana is also the home of the pricing point for natural gas throughout North America (Henry Hub), and Port Fourchon is a port and supply point for hundreds of offshore drilling operations in the Gulf 5 of Mexico. A third of the nation’s oil and gas supply and 50 percent of the nation’s oil refining capacity is produced or transported in or near Louisiana’s wetlands (Louisiana Department of Natural Resources 2006). International commerce infrastructure is also protected by the wetlands. There are ten major navigation routes that are located in southern Louisiana. The ports in this area are some of the largest ports in the United States. These ports handle approximately 469 million tons of cargo each year, which represents 19% of the annual waterborne commerce in the United States (United States Army Corps of Engineers 2003). Louisiana’s wetlands also provide enjoyment, employment, and revenue through many recreational opportunities. In 2001, hunters spent $446 million, anglers spent $670 million, and wildlife watchers spent $165 million in Louisiana. Much of this can be attributed to the state’s coastal wetlands (Coreil and Barrett-O’Leary 2004). Wetland Loss Louisiana has been one of the states most affected by wetland loss in the United States. Couvillion et al. (2011) estimate that coastal Louisiana has undergone a net change in land area of approximately 1,883 square miles from 1932 to 2010, representing a 25 percent decrease, which is about the size of the state of Delaware. These losses in Louisiana account for about 90 percent of the total wetland loss in the lower 48 states (Couvillion et al. 2011). Estimated lost rates vary, with Coreil and Barrett-O’Leary (2004) reporting about 2.3 square miles per year since the 1930s, but in excess of 40 square miles per year during the last 50 years, and between 25 and 35 square miles per year during the 1990s. The most recent estimate is a loss rate of 16.57 square miles per year for the period 1985-2010 (Couvillion et al. 2011). Recently, 6 Hurricanes Katrina and Rita destroyed approximately 200 square miles of marshlands in a single hurricane season (Coastal Protection and Restoration Authority of Louisiana (CPRA) 2007). Overall, during the past 100 years, these losses represent an acceleration of 10 times the natural rate (Coastal Protection and Restoration Authority of Louisiana
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