economic values of the verde river: an introduction, and a suggested look ahead
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Economic Values of the Verde River: An Introduction, and a Suggested Look Ahead. Prepared for: A Community Conversation: The Verde River - An Economy for a Sustainable Future Supported by: The Nature Conservancy Prepared by: Bob Raucher, PhD Jim Henderson, MS Stratus Consulting - PowerPoint PPT PresentationTRANSCRIPT
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Economic Values of the Verde River: An Introduction, and a Suggested
Look Ahead
Prepared for: A Community Conversation:The Verde River -
An Economy for a Sustainable Future
Supported by: The Nature Conservancy
Prepared by:Bob Raucher, PhD
Jim Henderson, MSStratus Consulting
Boulder, CO
May 19, 2011
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Presentation Outline
A brief overview of the economic value to the region of the Verde River and associated groundwater resources
Based on work funded by The Nature Conservancy
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Economic Values to the Region
Many ways to consider economic values from a regional perspective
“Gross Regional Product” approach
– Traditional accounting of the market value of goods and services produced annually
– For Verde Valley, perhaps $1 billion annually Other traditional, market-based metrics
– Value of all the property assets
– Housing stock: perhaps $6 billion, Valley-wide
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Additional Economic Values to the Region Many other important “values” originate outside of
the market -- “Nonmarket” goods and services– Recreational activity and scenic vista enjoyment – Agrarian character of portions of the Valley – Habitat for wildlife (including special status
species) Challenging (and very unusual) to assess the total
value provided to a region by a natural asset (such as the Verde River)– Which types of values can be quantified? – How to estimate change in value-added from
potential changes in natural asset (e.g., changes in streamflow or aquifer levels)?
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Focus on Economic Value to the Region
Values measured are the “direct” values
– Output-oriented perspective (i.e., economic activity)
– There are also “multiplier effects” for some uses, where business revenues and payments to employees are re-spent in the local economy
– Does not include all the inherent value of the Verde River and groundwater
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Categories of Water Use We Could Value
Recreation and Tourism– State Parks, National Monuments, Fishing, Verde
Canyon RR; Agriculture
– Production agriculture and wine industry Municipal / Residential
– Municipal water utility use, exempt wells, privately-owned public water systems
Commercial / Industrial– Sand and gravel / cement, and golf
Ecological– Threatened and endangered species
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Recreation and Tourism as an Example
Growth sector, with high annual economic value at baseline (current) conditions
– More than $87 M direct revenues, plus $14 M in multiplier impact, creating 737 local jobs
Not all values included (e.g., bird watching and boating, due to lack of data on visitation)
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Recreation and Tourism – Direct Revenue, Regional Impact and Employment
M = million, * Not estimated
State Parks = Dead Horse Ranch State Park, Red Rock State Park, and Slide Rock State Park
National Monuments = Tuzigoot National Monument, Montezuma’s Castle State Park
Category Annual Direct
Expenditures/Sales Multiplier Effect Employment
State Parks $35.3 M
National Monuments $33.7 M $14.0 M 575
Fishing $8.0 M $2.6 M 112
Verde Canyon RR Approx. $10 M + * Approx. 50
Total $87.0 M $16.6 M 737
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Agriculture
Mostly production agriculture including livestock and livestock products– For Middle Verde: $29 million per year in
sales ($33 million in expenses) Local sales of organic and other locally grown
produce is increasing– Small relative monetary value– Important noneconomic benefits
• Preserves open space and agricultural heritage
• Promotes local sustainable values
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Wine Industry
Rapid growth sector (doubling every year for last 3 years)
Wine industry direct revenue – $5.5 M /year Additional wine industry regional economic
impact – $3 M per year Potential change in annual values depends on
increasing local grape production
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Summary of Estimated Annual Economic Values
M = million
* In addition to direct values, there are multiplier effects for these sectors
** Commercial/industrial values are generally believed to be large but cannot be estimated
Sector Current Annual
Value, $M
Recreation and Tourism 87 *
Production Agriculture 29
Wine Industry 5.5 *
Municipal/Residential 13 – 17.5
Commercial/Industrial **
Ecological 19 – 29
Total 154 – 168 +
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Conclusions from Economic Values
Regional water resources (Verde River and aquifer system) provide significant “economic value” to the region
– At least $150M/yr in direct value
– Probably considerably higher
• Not all types of values could be considered
• Multiplier effects not included in total
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Some Key Observations
Having an idea of the economic value of the River provides many important insights on economic value, and what value might be gained (or lost) due to water resource impacts
“Not everything that can be counted counts, and not everything that counts can be counted.” (Albert Einstein, attributed)
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The Triple Bottom Line (TBL) Approach: Aligning Economics with Sustainability
Three bottom lines, to reflect:– Financial results (cash flow, output, revenues, costs)– Social outcomes (e.g., community values, fairness)– Environmental (e.g., ecosystems, water quality, carbon
footprint)
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A Typical Triple Bottom Line Depiction(implying a mythical “Bliss Point” shown in white)
Economy Society
Environment
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TBL Graphic: Choosing the Least Cost Option May Not Deliver Social and Environmental Values to the Community
Social
Environmental Financial
1
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Options that Meet Broader Goals May Increase Financial Costs, but Yield Larger Net Benefits to the Community
Social
Environmental Financial
1
2
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TBL of Philadelphia’s Green Stormwater Control
• Recreation ($525M)• Property values/aesthetics ($575 M)• Green Jobs ($125 M)• Public health: Heat stress ($1.1 B)• Energy cost savings ($36M)
• Cost of Green = cost of Grey CSO control
• Air quality ($222 M)• Water quality ($147 M)• Carbon footprint ($27 M)• Ecosystems (+)
ENVIRONMENTAL (> $400M)
SOCIAL (> $2.3B)
FINANCIAL
==
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Parting Thoughts The economic information provides useful insights
– Recreation and tourism contribute significant economic value to the region
– In the agricultural sector, the growth of the wine industry is significant
– Ecologic values are significant, but challenging to quantify
Looking forward, a Triple Bottom Line perspective may be a useful way to evaluate alternative future paths– Look beyond the financial outcomes, and include
important social and environmental values
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Thank You!
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