Economic Valuation of Beach Erosion Control and Benefit Transfers

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Project Type: 
Research
Project Number: 
R/CE-128
Inception Date: 
2001
Completion Date: 
2003
Theme Area: 
Coastal Communities and Economics

Participants:

P. Joan Poor St. Mary's College of Maryland Co-Principal Investigator
Ju-Chin Huang UNH - Department of Economics Principal Investigator

Students Involved:

Mustafa Oktem UNH - Department of Economics
Min Qiang Zhao UNH - Department of Economics
Anthony Penta UNH - Department of Economics
Abstract: 

An erosion control program can have multiple (a bundle of) impacts on beach attributes, including property protection, aesthetic changes of the beach, potential danger to wildlife habitat, restricted beach access, etc. The purpose of this research is to value beach erosion control programs in terms of their effects on beach uses.

We propose to "dissect" alternative erosion control programs according to their impacts on beaches and to elicit individuals' preferences and values for the impacts of the control programs. The impacts to be valued include sand beach preservation, property protection, structure visibility, threat to wildlife habitat, threat to swimmers/surfers, beach access restrictions, water quality and erosion on the neighboring beaches. The overall economic value of a particular beach erosion control program can then be derived by combining the values of the impacts induced by the program, which enables economic comparison of programs and assessment of new programs based on the potential impacts.

A theoretical model to describe how an individual values changes in beach attributes will be developed. Two surveys, in-person and mail, will be conducted. Conjoint analysis and dichotomous choice survey methods are employed to elicit individuals' preferences for beach attributes induced or created by beach erosion control policies. These survey techniques are commonly used in marketing research to value bundles of goods or characteristics.

The data collected from the surveys can be used to estimate monetary values of beach attributes associated with erosion control. This proposed research is the first economic study to simultaneously examine the multiple impacts on beaches by erosion control programs and to derive monetary values associated with them. The proposed economic valuation of erosion control values the generic impacts of erosion control programs; hence, it is less site-specific. Theoretically, the estimated monetary values of impacts of erosion control can be applied to value other sites (beaches) as long as the values can be adjusted with the characteristics of the population at the new sites. The transferability of impact values from one population to the other will be tested in this study.

Objectives: 

1) Identify the effects of erosion control programs on beach quality/use

2) Derive individuals' preferences regarding erosion control and obtain information on their willingness to pay (WTP) for beach protection via two surveys: an in-person survey of beach users and a mail survey of residents of New Hampshire and Maine

3) Derive monetary values of the changes in beach attributes induced/created by erosion control programs and evaluate the programs based on the estimated values (or losses)

4) Provide a guideline of economic valuation of beaches to policy makers and planners who have to weigh alternative beach uses and development plans

5) Examine and test the transferability of the estimated values for evaluating new or alternative erosion control programs at different sites

Methodology: 

A particular erosion control program often has potential multiple (a bundle of) impacts on beach attributes, including property protection, aesthetic changes to the beach due to visible device, potential danger to wildlife habitat, restricted beach access, etc. We propose to value the impacts of control programs on beaches. The overall economic value of a particular control program can then be derived by combining the values of the effects induced by the program.

Conjoint analysis and dichotomous choice survey methods are employed to elicit individuals' preferences for bundles of beach attributes induced or created by beach erosion control policies. The data collected from the surveys can be used to estimate monetary values of beach attributes associated with erosion control. The proposed valuation method is less site-specific, so theoretically the estimated monetary values are more transferable between sites (beaches) as long as the values can be adjusted with the characteristics of the affected population.

Rationale: 

The economic value of beach protection is important to policy makers (state and federal government officials) who must weigh the impacts of various types of protection programs and the cost of implementing these programs. In addition to property protection, there is increasing interest in other impacts of erosion control such as beach recreation and alteration of wildlife habitat.

Erosion control programs should be valued by their overall impacts on beaches. The proposed research will be the first study on the monetary values of the changes in a whole bundle of beach attributes induced by erosion control programs.

Accomplishments: 
Through various channels (focus group meetings, surveys, media interviews, Maine Beach Conferences, etc.), many people have learned more about beach usage and erosion issues. The information brochures/booklets of beach erosion control have been distributed to more than 6000 people--both N.H./Maine residents and beach visitors from other states/countries.
 
In this research, the intrinsic values of beach preservation and benefits/losses of beach recreation due to erosion and erosion control are studied. Randomly selected households in N.H. and Maine and recreationists at N.H. and Maine beaches were surveyed to understand individual preferences for beach preservation and erosion control. Three surveys, two household mail surveys and one on-site beach survey, were conducted in 2000 and 2002. Detailed information on beach recreation and reaction to effects of erosion control was collected in the surveys. Two essays, based on the data collected in the first mail survey and the on-site survey, were produced and are included in the Completion Report.
 
The results show that individual households value beach preservation. However, they are also concerned about the potential negative effects of erosion control on beach environment especially the negative effects on wildlife habitat, salt water quality, and neighboring beaches. The values of erosion control can be exaggerated if the negative effects are not taken into account. Moreover, the degree of concerns is affected by individual characteristics such as work status and gender. Regarding beach recreation, erosion significantly reduces number of beach trips and causes social welfare losses. However, the erosion control to prevent erosion can also reduce the demand for beach recreation due to the potential negative effects of erosion control.
 
It is also found that the impact of erosion and erosion control on demand for beach recreation depends on the activities of beach trips. For example, the welfare loss of erosion is larger for those who sunbathe than those who fish near the beach. Activities play an important role in determining how beachgoers view erosion and erosion control. The results of the surveys point to the same finding that individual heterogeneity is crucial to valuation of erosion control.
 
Estimated benefits and costs from existing studies are often used to infer the benefits and costs for new regulations by government agencies for limited budget. The advantages of transferring benefit and cost measures are apparent. However, the results of benefit transfers can be misleading due to the quality of the existing studies, the similarity of the existing and new studies, and the method used to transfer values. Smith et al. (1999) note that benefit transfer analysis must be conducted within a policy framework that allows for changes in both the features of the natural resource under consideration as well as the characteristics of the people who care about it.
 
In this study, erosion control programs are evaluated through a set of identified generic impact attributes and the values of attributes are allowed to be correlated and vary across individual characteristics. Deriving economic values of erosion control that vary with individual and beach characteristics is critical to benefit transfers; i.e., the estimated individual specific economic values of erosion control can be adjusted according to demographics and beach feature so they can be applied to beaches outside of the studied area. As shown in this research, the comparison of erosion control programs to account for program effects and the demographics of program locations is feasible and future research to validate and ensure the transferability is warranted.
 
This research provides the framework for policy makers and planners to incorporate monetary values associated with erosion control efforts for beach recreation and estuary habitat management into the total benefit measures of erosion control. More specifically the information collected from this project will be made available to groups such as the Southern Maine Beach Stakeholders Association, the Southern Maine Regional Planning Commission’s beach planners, the Maine Coastal Program, the N.H. Coastal Program, and the N.H. Wetlands Bureau. This project is the beginning of the economic valuation research of beach erosion control in N.H. and Maine. It will contribute significantly to future sensitivity analysis and policy development research. Based on the results from this project, future collaboration with these groups to continue the economic research in erosion control will be pursued.

Publications

Available from the National Sea Grant Library (use NHU number to search) or NH Sea Grant

Journal Article

  • Huang, J., J. Poor and M. Zhao (2007). Economic valuation of beach erosion control. Marine Resource Economics 22(3):221-238, 2007.

Report

  • Huang, J (2002). The sand beaches of New Hampshire and Maine.

Thesis/Dissertation

  • Zhao, M.Q. (2004). Welfare analysis in discrete choice models: a Monte Carlo simulation study. Master's Thesis, University of New Hampshire.

Proceeding

  • Huang, J., G. Parsons, M. Zhao and P. Poor (2007). A combined conjoint-travel cost demand model for measuring the impact of erosion and erosion control programs on beach recreation. Proceedings, EPA Workshop on Valuation for Environmental Policy: Ecological Benefits, April 23-24, 2007, Arlington, Va., Session II: Wetlands and Coastal Resources.