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Socio-Economic Impact of the Presence of Asian carp in the Great Lakes Basin

Socio-Economic Impact of the Presence of Asian carp in the Great Lakes Basin

Socio-Economic Impact of the Presence of Asian carp in the Great Lakes Basin (PDF, 634 KB)

Prepared by
Salim Hayder, Ph.D.

Edited by
Debra Beauchamp

Fisheries and Oceans Canada, Policy and Economics
501 University Crescent, Winnipeg, Manitoba R3T 2N6

Table of Contents

Matrix 1: Total Economic Valuation Flowchart

Description

Matrix 1 is titled “Total Economic Valuation Flowchart”. The first element is “Total Economic Value,” which is directly divided into “Use Value” and “Non-Use Value.” Under Use Value fall “Current Use” and “Future Use.” From Current Use flow “Direct Use” and “Indirect Use”. Under “Direct Use” is Ecosystem Services, which are broken down into “Extractive Use” and “Non-Extractive Use”. Under “Indirect Use” is also Ecosystem Services. From Future Use flow “Option Value” and “Research Value.” Under Non-Use Value fall “Existence Value” and “Bequest Value.”

Definitions

Use Value: The value people derive from using a good.

Current Use Value:

Direct use: Directly consumable goods and services through ecosystem services.

Ecosystem services: Include provisioning services such as food, water (Millennium Ecosystem Services Assessment, 2005).

Extractives use: Extractive uses result in water level and/or commodities provided by the Great Lakes (e.g. commercial fishing).

Non-extractives use: Non-extractives uses do not cause water level and/or commodities provided by the Great Lakes (e.g. wildlife watching).

Indirect use: Indirectly consumable goods and services through ecosystem services.

Ecosystem services: Include provisioning services such as include regulating services (e.g. climate, floods, disease, water quality) and supporting services (e.g. soil formation, nutrient cycling) (Millennium Ecosystem Services Assessment, 2005).

Future Use Value:

Option value: The amount someone is willing to pay to keep open the option of future use of the resources (e.g. possibility of commercial/recreational fishing in the future). Footnote 117

Research Value: Scientific research potential that may result in new discoveries/knowledge and/or new developments that have broader application in future. Some of the potential beneficial effects include new understanding of the biology and ecology of the area, new understanding of inter-specific interactions and competition, new chemicals/medicines with broader applicability.

 Non-Use Value: The value people derive from a good/resource independent of any use people might make of that good/resource.

Bequest value: Conservation for future generations (e.g. future biodiversity). Bequest value takes into account people’s WTP for future total use by their children and future generations.

Existence value: Existence value arises because people intrinsically value the existence of the Great Lakes regardless of its use. Existence value includes the benefits from knowing that the Great Lakes are being used by others as well as cultural values for an economy.Footnote 118

Matrix 2: The Great Lakes - Total Economic Valuation Flowchart

Description

Matrix 2 is titled “The Great Lakes - Total Economic Valuation Flowchart”. The first element is “Total Economic Value of the Great Lakes: $13,800 Mil. +++”. All other elements point upwards toward it. The total economic value is broken down into “Use Value: $13,800 Mil. +++” and “Non-Use Value: Not Quantified.” Use value is divided into “Current Use: $13,800 Mil. +” and “Future Use: Not Quantified”. Future use is divided into “Option” and “Research Value”, both of which have a “Not Quantified” upward contributing element. Current use has two upward contributing elements: “Direct use: $13,800 Mil.” and “Indirect Use: Not Quantified.” Indirect Use has one upward contributing element: Ecosystem Services: Not Quantified. Direct use has two upward contributing elements,: “Extractive Use: $1,822 Mil.” and “Non-Extractive Use: $11,970 Mil.” Extractive use is broken down as follows: Drinking Water: $532 Mil.; Agricultural Water: $165 Mil.; Industrial Water: $96 Mil.; Commercial Fishing: $227 Mil.; Recreational Fishing; $568 Mil.; Hunting: $106 Mil; and Oil and Gas: $137 Mil. Non-extractive use is broken down as follows: Rec. Boating: $7,291 Mil.; Beach Use: $248 Mil.; Wildlife Viewing: $218 Mil.; Com. Navigation: $4,214 Mil.; Aquaculture; Not Quantified; Heating and Cooling; Not Quantified; Hydropower Production: Not Quantified; and Other Recreational Benefits: Not Quantified. Non-use value is broken down into “Existence Value” and “Bequest Value” both of which have a “Not Quantified” upward contributing element.

Matrix 3: Summary of Empirical Studies Used for Valuation of Economic Activities in the Great Lakes basin

Description

Matrix 3 is titled “Summary of Empirical Studies Used for Valuation of Economic Activities in the Great Lakes basin.” It is presented in a table with five columns. The columns are captioned from left to right as follows: “Name of the Author”; “Time Period and Area Covered”; “Method of Analysis”; “Conclusion/Information Used”; and “Limitations noted and/or Adjustment Made for the current Study.” The table has 12 main rows, which have one to two sub-rows each. Main row 1 is “Raw water use”, under which there are two sub-rows. Sub-row 1.1 Name of the author: The Great Lakes Commission (2010); Time period and area covered: 2008 the US by State and Canada by Province and Lake; Method of analysis: Water use database; Conclusion/information used: Ontario’s annual water consumption was 180 million m3. In Quebec, total consumptive use was 161.7 million m3.; Limitations noted and/or adjustment made for the current study: 2000 data was used for Ontario and 1993 data was used for Quebec due to data unavailability and assumed that water use estimates for 2006 are not anticipated to be greatly different than those reported assuming a similar data collection and assessment approach. Sub-row 1.2 Name of the author: Statistics Canada (2009) cited in Marbek (2010); Time period and area covered: 2007 - Great Lakes basin; Method of analysis: Survey; Conclusion/information used: Ontario - The operating and maintenance costs of treating 180.5 million cubic metres of raw intake water from the Great Lakes basin was approximately $260 million.; Limitations noted and/or adjustment made for the current study: Underestimation of economic valuation as it excludes consumer surplus. Adjustment has been made for inflation. Main row 2 is “Industrial Water”, under which there are two sub-rows. Sub-row 2.1 Name of the author: The Great Lakes Commission (2010); Time period and area covered: 2008 the US by State and Canada by Province and Lake; Method of analysis: Water use database; Conclusion/information used: Ontario’s industrial users consumed 80.4 million m3 of water from the Great Lakes each year. In Quebec, total consumptive use was 17.3 million m3.; Limitations noted and/or adjustment made for the current study: See notes for The Great Lakes Commission (2010). Sub-row 2.2 Name of the author: Dachraoui and Harchaoui (2004); Time period and area covered: 1981-1996 – Canadian business sector industries; Method of analysis: Seemingly unrelated regression techniques on data from EKLEMS database maintained by Statistics Canada; Conclusion/information used: The shadow price of water intake - $0.73/m3. The introduction of water recirculation reduces the shadow price estimate to $0.55 cubic metre.; Limitations noted and/or adjustment made for the current study: Adjustment has been made for inflation. Main row 3 is “Agricultural water use,” under which there are two sub-rows. Sub-row 3.1 is Name of the author: The Great Lakes Commission (2010)); Time period and area covered: 2008 the US by State and Canada by jurisdiction; Method of Analysis: Water use database; Conclusion/information used: Ontario’s annual water consumption was 120 million m3. In Quebec, total consumptive use was 33 million m3.; Limitations noted and/or adjustment made for the current study: See notes for The Great Lakes Commission (2010). Sub-row 3.2 is Name of the author: To (2006) cited in Marbek (2010); Time period and area covered: 2000-2004; Method of analysis: Average market crop price; Conclusion/information esed: The loss in profitability in the short-term due to a decrease in water, assuming fixed costs, ranged from $3.79/m3 for ginseng, to 0.22/m3 for sweet corn.; Limitations noted and/or adjustment made for the current study: Stated many challenges with this simple method of calculating the value of water and various data gaps and therefore, should be seen as a first approximation. Main row 4 is “Commercial Fishing,” under which there is one sub-row. Sub-row 4.1 is Name of the author: Ontario Ministry of Natural Resources website (2010); Time period and area covered: 2008 – Great Lakes Basin; Method of analysis: No information; Conclusion/information esed: Value of commercial fishing after processing was in 2008 was in the range of $180 - $215 million.; Limitations noted and/or adjustment made for the current study: Underestimation of economic valuation as it excludes consumer surplus. Main row 5 is “Recreational Fishing,” under which there is one sub-row. Sub-row 5.1 is Name of the author: DFO (2008); Time period and area covered: 2005 – Great Lakes Basin; Method of analysis: Recreational Fishing Survey on 16,000 households within Canada and in other countries; Conclusion/information used: The total direct expenditures and major purchases/investment of $443.0 million in recreational fishing in the Great Lakes based on travel costs and expenditures for fishing trips.; Limitations noted and/or adjustment made for the current study: Adjustment has been made by scaling down as well as adjusting for inflation. Main row 6 is “Recreational Hunting,” under which there is one sub-row. Sub-row 6.1 is Name of the author: EC (2000); Time period and area covered: 1996 – Canada by jurisdiction; Method of analysis: Survey among a sample of approximately 87,000 Canadians; Conclusion/information used: Residents of Ontario spent $200.6 million and residents of Quebec spent $285.6 million; Limitations noted and/or adjustment made for the current study: As no specific estimate was provided for the Great Lakes basin, adjustment has been made by scaling down as well as adjusting for inflation. Main row 7 is “Recreational Boating,” under which there is one sub-row. Sub-row 7.1 is Name of the author: Genesis Public Opinion Research Inc. (2007)); Time period and area covered: 2006 – Canada by jurisdiction; Method of analysis: Online surveys and publicly available data from Industry Canada; Conclusion/information used: The total expenditures (direct and indirect) in Ontario was $7.3 billion.; Limitations noted and/or adjustment made for the current study: As no specific estimate was provided for the Great Lakes basin, adjustment has been made by scaling down as well as adjusting for inflation. Main row 8 is “Beaches and Lakefront Use,” under which there is one sub-row. Sub-row 8.1 is Name of the author: Krantzberg and de Boer (2006); Time period and area covered: 2004 – Canadian portion of the Great Lakes; Method of Analysis: Derived by proportionally scaling the value derived by Shaikh (2004) for the US; Conclusion/information used: The estimated Willingness to Pay value for Canadian Great Lakes beachgoers was in the range of $200 - $250 million; Limitations noted and/or adjustment made for the current study: Adjustment has been made for inflation. Main row 9 is “Wildlife Viewing,” under which there is one sub-row. Sub-row 9.1 is Name of the author: EC (2000); Time period and area covered: 1996 – Canada by jurisdiction; Method of analysis: Survey among a sample of approximately 87,000 Canadians; Conclusion/information used: Ontario residents spent $410.9 million and Quebec residents spent $281.0 million.; Limitations noted and/or adjustment made for the current study: As no specific estimate was provided for the Great Lakes basin, adjustment has been made by scaling down as well as adjusting for inflation. Main row 10 is “Commercial Navigation,” under which there is one sub-row. Sub-row 10.1 is Name of the author: The Canadian Shipowners Association website (2011); Time period and area covered: The Great Lakes, St. Lawrence Waterway; Method of analysis: No information; Conclusion/information used: The estimated annual economic contribution of $4 billion (direct and indirect impact) from cargo handling, vessel services, and inland transportation services on this integrated waterway system in Canada.; Limitations noted and/or adjustment made for the current study: No information. Main row 11 is “Oil and Gas,” under which there is one sub-row. Sub-row 11.1 is Name of the author: Ontario Ministry of Natural Resources website (2012); Time period and area covered: 2009 – the Great Lakes; Method of analysis: No information; Conclusion/information used: 88,000 cubic meters of crude oil with a wellhead value of $50 million and 240 million cubic meters of natural gas with retail value of $80 million was produced; Limitations noted and/or adjustment made for the current study: Adjustment has been made by scaling down as well as adjusting for inflation. Main row 12 is “General – Consumer Surplus,” under which there is one sub-row. Sub-row 12.1 is Name of the author: EC (2000); Time period and area covered: 1996 – Canada by jurisdiction; Method of analysis: Survey among a sample of approximately 87,000 Canadians; Conclusion/Information Used: No information; Limitations noted and/or adjustment made for the current study: As no specific estimate was provided for the Great Lakes basin, adjustment has been made by scaling down as well as adjusting for inflation.

Summary of Empirical Studies Used for Valuation of Economic Activities in the Great Lakes basin
Name of the Author Time Period and Area Covered Method of Analysis Conclusion/Information Used Limitations noted and/or Adjustment Made for the current Study
Raw water use
The Great Lakes Commission (2010) 2008 the US by State and Canada by Province and Lake Water use database Ontario’s annual water consumption was 180 million m3. In Quebec, total consumptive use was 161.7 million m3. 2000 data was used for Ontario and 1993 data was used for Quebec due to data unavailability and assumed that water use estimates for 2006 are not anticipated to be greatly different than those reported assuming a similar data collection and assessment approach.
Statistics Canada (2009) cited in Marbek (2010) 2007 - Great Lakes basin Survey Ontario - The operating and maintenance costs of treating 180.5 million cubic metres of raw intake water from the Great Lakes basin was approximately $260 million. Underestimation of economic valuation as it excludes consumer surplus. Adjustment has been made for inflation.
Industrial Water
The Great Lakes Commission (2010) 2008 the US by State and Canada by Province Water use database Ontario’s industrial users consumed 80.4 million m3 of water from the Great Lakes each year. In Quebec, total consumptive use was 17.3 million m3. See notes for The Great Lakes Commission (2010)
Dachraoui and Harchaoui (2004) 1981-1996 – Canadian business sector industries Seemingly unrelated regression techniques on data from EKLEMS database maintained by Statistics Canada The shadow price of water intake - $0.73/m3. The introduction of water recirculation reduces the shadow price estimate to $0.55 cubic metre. Adjustment has been made for inflation.
Agricultural water use
The Great Lakes Commission (2010) 2008 the US by State and Canada by jurisdiction Water use database Ontario’s annual water consumption was 120 million m3. In Quebec, total consumptive use was 33 million m3. See notes for The Great Lakes Commission (2010)
To (2006) cited in Marbek (2010) 2000-2004 Average market crop price The loss in profitability in the short-term due to a decrease in water, assuming fixed costs, ranged from $3.79/m3 for ginseng, to 0.22/m3 for sweet corn. Stated many challenges with this simple method of calculating the value of water and various data gaps and therefore, should be seen as a first approximation.
Commercial Fishing
Ontario Ministry of Natural Resources website (2010) 2008 - Great Lakes Basin   Value of commercial fishing after processing was in 2008 was in the range of $180 - $215 million. Underestimation of economic valuation as it excludes consumer surplus.
Recreational Fishing
DFO (2008) 2005 – Great Lakes Basin Recreational Fishing Survey on 16,000 households within
Canada and in other countries
The total direct expenditures and major purchases/investment of $443.0 million in recreational fishing in the Great Lakes based on travel costs and expenditures for fishing trips. Adjustment has been made by scaling down as well as adjusting for inflation.
Recreational Hunting
EC (2000) 1996 – Canada by jurisdiction Survey among a sample of approximately 87,000 Canadians Residents of Ontario spent $200.6 million and residents of Quebec spent $285.6 million As no specific estimate was provided for the Great Lakes basin, adjustment has been made by scaling down as well as adjusting for inflation.
Recreational Boating
Genesis Public Opinion Research Inc. (2007) 2006 – Canada by jurisdiction Online surveys and publicly available data from Industry Canada The total expenditures (direct and indirect) in Ontario was $7.3 billion. As no specific estimate was provided for the Great Lakes basin, adjustment has been made by scaling down as well as adjusting for inflation.
Beaches and Lakefront Use
Krantzberg and de Boer (2006) 2004 – Canadian portion of the Great Lakes Derived by proportionally scaling the value derived by Shaikh (2004) for the US The estimated Willingness to Pay value for Canadian Great Lakes beachgoers was in the range of $200 - $250 million Adjustment has been made for inflation.
Wildlife Viewing
EC (2000) 1996 – Canada by jurisdiction Survey among a sample of approximately 87,000 Canadians Ontario residents spent $410.9 million and Quebec residents spent $281.0 million As no specific estimate was provided for the Great Lakes basin, adjustment has been made by scaling down as well as adjusting for inflation.
Commercial Navigation
The Canadian Shipowners Association website (2011) The Great Lakes, St. Lawrence Waterway   The estimated annual economic contribution of $4 billion (direct and indirect impact) from cargo handling, vessel services, and inland transportation services on this integrated waterway system in Canada.  
Oil and Gas
Ontario Ministry of Natural Resources website (2012) 2009 – the Great Lakes   88,000 cubic meters of crude oil with a wellhead value of $50 million and 240 million cubic meters of natural gas with retail value of $80 million was produced. Adjustment has been made by scaling down as well as adjusting for inflation.
General – Consumer Surplus
EC (2000) 1996 – Canada by jurisdiction Survey among a sample of approximately 87,000 Canadians   As no specific estimate was provided for the Great Lakes basin, adjustment has been made by scaling down as well as adjusting for inflation.
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