AN ECONOMIC BENEFIT ANALYSIS FOR ABANDONED MINE DRAINAGE REMEDIATION IN THE WEST BRANCH SUSQUEHANNA RIVER WATERSHED, PENNSYLVANIA July 3, 2008 Submitted to: Trout Unlimited West Branch Susquehanna Restoration Initiative P.O. Box 27 Mill Hall, PA 17751 Submitted by: Downstream Strategies, LLC www.downstreamstrategies.com 219 Wall Street Morgantown, WV 26505 Evan Hansen, Alan Collins, Julie Svetlik, Sarah McClurg, Alyse Shrecongost, Rob Stenger, Mariya Schilz, and Fritz Boettner TABLE OF CONTENTS 1. INTRODUCTION..............................................................................................................................................1 2. BACKGROUND ................................................................................................................................................6 2.1 THE WEST BRANCH SUSQUEHANNA RIVER WATERSHED ............................................................................6 2.2 ABANDONED MINE DRAINAGE POLLUTION ..................................................................................................7 3. JOBS AND ECONOMIC ACTIVITY ...........................................................................................................13 3.1 METHODOLOGY.........................................................................................................................................14 3.2 RESULTS....................................................................................................................................................16 3.3 SUMMARY .................................................................................................................................................17 4. RECREATIONAL SPENDING......................................................................................................................18 4.1 PARTICIPATION IN OUTDOOR RECREATION ................................................................................................18 4.2 PENNSYLVANIA WILDS .............................................................................................................................22 4.3 ECONOMIC IMPACT OF OUTDOOR RECREATION..........................................................................................24 4.4 ECONOMIC IMPACT OF AMD ON RECREATIONAL SPENDING IN THE WBSR WATERSHED ..........................25 4.5 SUMMARY .................................................................................................................................................25 5. PROPERTY VALUES.....................................................................................................................................27 5.1 STUDY AREA .............................................................................................................................................27 5.2 DATA AND METHODS.................................................................................................................................29 5.3 RESULTS OF THE STATISTICAL MODEL.......................................................................................................30 5.4 AGGREGATE IMPACT OF ABANDONED MINE DRAINAGE ON PROPERTY VALUE ...........................................33 5.5 SUMMARY .................................................................................................................................................33 6. DRINKING WATER.......................................................................................................................................34 6.1 IMPACTS ON PUBLIC WATER SUPPLIES .......................................................................................................34 6.1.1 Systems now affected by AMD .............................................................................................................37 6.1.2 Systems likely to be affected in the future by AMD..............................................................................37 6.1.3 Other systems.......................................................................................................................................38 6.1.4 Summary ..............................................................................................................................................39 6.2 IMPACTS ON WATER SUPPLIES FOR HOMES AND BUSINESSES .....................................................................40 6.3 SUMMARY .................................................................................................................................................42 7. WILLINGNESS-TO-PAY FOR REMEDIATION.......................................................................................43 7.1 MAIL SURVEY............................................................................................................................................43 7.2 SURVEY RESULTS ......................................................................................................................................46 7.2.1 Awareness of streams, rivers, and pollution........................................................................................46 7.2.2 Use of Growing Greener funds............................................................................................................47 7.2.3 Willingness-to-pay to clean up abandoned mine drainage in the watershed.......................................47 7.3 SAMPLE WTP ESTIMATES..........................................................................................................................49 7.4 AFFECTED POPULATION WTP ESTIMATES .................................................................................................50 7.5 COMPARISONS WITH OTHER COMPONENTS OF THIS STUDY ........................................................................52 7.6 SUMMARY .................................................................................................................................................53 8. CONCLUSIONS ..............................................................................................................................................54 8.1 REMEDIATION GENERATES JOBS AND STIMULATES THE LOCAL ECONOMY ................................................54 8.2 RECREATIONAL SPENDING WILL INCREASE WITH CLEANER WATERS .........................................................54 8.3 PROPERTY VALUES WILL INCREASE WITH AMD REMEDIATION .................................................................54 8.4 DRINKING WATER OPTIONS WILL BE CHEAPER AND MORE PLENTIFUL .......................................................55 8.5 RESIDENTS ARE WILLING TO PAY FOR REMEDIATION.................................................................................55 8.6 SUMMARY .................................................................................................................................................55 ii REFERENCES ..........................................................................................................................................................56 APPENDIX A: LOST VALUE OF RECREATION ..............................................................................................59 APPENDIX B: DETAILS ON THE HEDONIC PROPERTY PRICE METHOD..............................................61 APPENDIX C: IN-WATERSHED WILLINGNESS-TO-PAY QUESTIONNAIRE ..........................................64 APPENDIX D: OUT-OF-WATERSHED WILLINGNESS-TO-PAY QUESTIONNAIRE ...............................68 APPENDIX E: DETAILS ON THE WILLINGNESS-TO-PAY MODEL...........................................................72 iii TABLE OF TABLES Table 1: Types of local economic benefits addressed in this report............................................... 4 Table 2: Abandoned mine drainage–focused remediation plans in the West Branch Susquehanna River watershed ..................................................................................................................... 11 Table 3: Expenditures by category for active and passive treatment............................................ 15 Table 4: Multipliers, benefits, wages, and jobs resulting from remediation expenditures ........... 16 Table 5: Participation in fishing, hunting, and wildlife viewing in Pennsylvania in 2006 (thousands)............................................................................................................................. 18 Table 6: Number of visits to the West Branch Susquehanna River watershed to participate in outdoor recreation.................................................................................................................. 19 Table 7: Recent trends in participation in outdoor activities in Pennsylvania.............................. 20 Table 8: Expenditures on fishing, hunting, and wildlife viewing in Pennsylvania in 2006 (million $)............................................................................................................................................ 24 Table 9: Economic impact and net economic value of fishing and hunting in Pennsylvania (billion $) ............................................................................................................................... 24 Table 10: Variables used in the property value model ................................................................. 30 Table 11: Summary statistics for the property value model dataset ............................................. 30 Table 12: Withdrawals by active public water systems in the West Branch Susquehanna