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Bay Blog: economics


Bay Foundation estimates economic benefits of a restored Chesapeake

A new report from the Chesapeake Bay Foundation (CBF) indicates the economic benefits of a restored Chesapeake Bay could total $130 billion each year, as the watershed’s “pollution diet” creates clean air and water, protects properties from floods and fuels local restaurant and recreation industries.

Image courtesy olorak/Flickr

The Chesapeake Bay Total Maximum Daily Load (TMDL), which the Annapolis-based nonprofit calls the Clean Water Blueprint, was established in 2010 to reduce pollution loads across the watershed. It limits the amount of nitrogen, phosphorous and sediment that can enter rivers and streams to improve water quality. Jurisdictions use Watershed Implementation Plans (WIPs) to put these limits in place.

According to the report, which was produced by ecological economist Spencer Phillips and CBF Senior Scientist Beth McGee, the annual value of the natural benefits provided by a “pre-Blueprint” Bay is an estimated $107 billion. Once the TMDL is put in place and its benefits are realized, this amount would increase 21 percent to $129.7 billion. While Virginia is set to benefit most from a restored Bay—increasing its annual earnings by $8.3 billion—other watershed states would also benefit: Pennsylvania would see an earnings increase of $6.1 billion, Maryland $4.6 billion, New York $1.9 billion, West Virginia $1.3 billion and Delaware $205 million.

“The conclusion is clear: the region’s environmental and economic health will improve when we fully implement the [Clean Water] Blueprint,” said Phillips in a media release. “The cleanup plan was designed with the understanding that all people and communities in the watershed can contribute to making the Bay cleaner, and that everyone will benefit when pollution is reduced. Our analysis confirms this.”

While its report doesn’t address the annual watershed-wide cost of restoration, CBF estimates this figure is in the range of $5 billion.

Learn more.

Note: This blog post was written by a staff-member of the Chesapeake Bay Program.


Investments in habitat restoration create jobs, support small businesses

An economic analysis from the U.S. Fish and Wildlife Service (USFWS) shows that federal investments in on-the-ground restoration can stimulate local economies, creating jobs and supporting small businesses.

With a focus on two of its habitat restoration programs—the Partners for Fish and Wildlife Program and the Coastal Program—the USFWS determined that for every federal dollar spent, $7 to $9 of restoration work happens on the ground and almost $2 of economic activity is gained by the state in which the work takes place.

Both of these nation-wide programs use federal and private funding to implement on-the-ground habitat restoration projects on public and privately owned land. According to the USFWS, the programs' impacts cut across two dimensions: first, their understood expertise and stable funding pulls in additional funding from other partners; second, the programs’ spending creates work, generates tax revenues and stimulates local economies through paid wages and subsequent spending.

Image courtesy Margrit/Flickr

In Maryland, for instance, the Coastal Program has directed $1.4 million toward the eradication of nutria from marshes and wetlands. Introduced to the region in the mid-1940s, the invasive nutria has destructive feeding habits, pulling up plant roots that would otherwise hold valuable marshland in place. The Maryland Nutria Project, which is administered by the USFWS and brings federal, state and private partners together to trap and manage nutria, has created more than 55 jobs and generated $2.5 million in spending on Maryland’s Eastern Shore.

“The Partners for Fish and Wildlife and Coastal programs are important drivers for creating employment,” said USFWS Director Dan Ashe in a media release. “The benefits reach far beyond the local communities where these projects take place to provide national economic stimulus. At the same time, this restoration work provides benefits to all Americans by creating healthy natural areas, including shorelines, streams, wetlands and forests on privately owned lands.”

Learn more.


More habitat means more fish

An investment in habitat conservation could be a smart one for fisheries and the economies that depend on them, according to a new report.

In More Habitat Means More Fish, released this week by Restore Americas Estuaries, the American Sportfishing Association and the National Oceanic and Atmospheric Administration, the link between healthy habitats and strong fisheries is made clear: without feeding or breeding grounds, fish cannot grow or reproduce, which means fewer fish and a decline in fisheries-dependent jobs, income and recreational opportunities.

Most of the nation’s commercial and recreational fish depend on coastal and estuarine habitats for food and shelter. Investments and improvements in these habitats can have immediate and long-lasting effects on fish populations.

The construction of an oyster reef, for instance, can provide food and shelter to a number of aquatic species. The conservation of marshes and underwater grass beds can boost the number and diversity of fish and their prey. And the restoration of fish passage to once-blocked rivers can open up new habitat to those species that must migrate upstream to spawn.

“Investing in coastal and estuarine habitat restoration is essential… for the long-term future of our fisheries,” said Restore Americas Estuaries President and CEO Jeff Benoit in a media release. “In order to have fish, we have to have healthy habitat. If we want more fish, we need more healthy habitat.”

Read more about More Habitat Means More Fish.


Restoration of urban stream has big impact on D.C. economy

Restoring urban streams can help restore urban communities, according to a new analysis from the U.S. Geological Survey (USGS).

In a report released last week, the USGS documents the contributions that the restoration of an Anacostia River tributary made to the Washington, D.C., metropolitan area, from the creation of jobs to the creation of open space for residents. The yearlong restoration of a 1.8 mile stretch of Watts Branch is one in a series of case studies highlighting the economic impacts of restoration projects supported by the Department of the Interior.

Image courtesy U.S. Fish and Wildlife Service Northeast Region

Completed in 2011, the efforts to restore Watts Branch included the restoration of an eroded stream channel and the relocation and improvement of streamside sewer lines. The work—a collaboration between the U.S. Fish and Wildlife Service, the National Park Service, the U.S. Environmental Protection Agency, the District Department of the Environment, the D.C. Water and Sewer Authority and others—reduced erosion, improved water quality and wildlife habitat, and provided local residents with an urban sanctuary where green space is otherwise limited.

The restoration project also accounted for 45 jobs, $2.6 million in local labor income and $3.4 million in value added to the District of Columbia and 20 counties in Virginia, West Virginia and Maryland.

According to the EPA, $3.7 million in project implementation costs were funded by multiple agencies and organizations, including the EPA and National Fish and Wildlife Foundation.

Read more about Restoring a Stream, Restoring a Community.


Ask a Scientist: How big of an industry is the Chesapeake Bay?

This month’s Ask a Scientist column focuses on a different kind of science: economics. We asked Beth McGee, senior scientist with the Chesapeake Bay Foundation, to answer a question about the importance of the Chesapeake Bay to our region’s economy. As you’ll read, the Chesapeake Bay is more than an extraordinary ecological system – it’s also an incredibly valuable industry.

When you think of an “industry” – like the steel, health care or business industries – you think of a well-oiled, intricate business system.  You could calculate the economic value of that industry in terms of jobs created, value of their product, and other economic benefits.

If you think about it, the Chesapeake Bay ecosystem is also an enormous, productive industry. Like any other system, every part – rivers, wetlands, forests, animals, people and so on – has a role in the whole “machine” working at optimum levels.

So how much is the “Chesapeake Bay industry” worth? According to many economists, placing a value on the Bay is difficult because some of its features are difficult, if not impossible, to quantify.  For example, how much is a beautiful sunrise over the Bay worth? Or the joy of catching our first rockfish of the season?  Or watching our children play on the beach? Because we can’t quantify these values in terms of dollars, they are not explicitly factored into our estimate of the Bay’s value.

The best we can do to estimate the Bay’s overall economic value is to compile information on its tangible “products and services” – the “parts” of the entire Bay industry. 

In 2004, the Blue Ribbon Finance Panel report estimated that the Bay’s value was more than one trillion dollars related to fishing, tourism, property values and shipping activities. If you were to adjust that figure for inflation, the number would have increased to roughly $1.144 trillion by 2011.

A recent report released by the Chesapeake Bay Foundation provides some more specific examples of the economic benefits associated with the Chesapeake Bay ecosystem.

  • The commercial seafood industry in Maryland and Virginia contributed $2 billion in sales, $1 billion in income, and more than 41,000 jobs to the local economy. 
  • The saltwater recreational fishery contributed $1.6 billion in sales, which then created more than $800 million of additional economic activity and roughly 13,000 jobs.
  • Activities related to recreational striped bass fishing (such as expenses, travel and lodging) generates roughly $500 million of economic activity.
  • Further upstream, nearly two million people go fishing in Pennsylvania each year, contributing more than $1.6 billion to the economy.

If you were to add income generated from forestry, recreational boating, ecotourism, heritage tourism, shipping, and many other industries, it’s easy to see how the “Chesapeake Bay Industry” could reach one trillion dollars.

That figure could be higher if we restored the health of the Chesapeake Bay and its rivers and streams to make them even more productive. When the Bay’s “products and services” decline, there are costs.

  • A fish kill in the Shenandoah River watershed in 2005 – likely caused in part by poor water quality – resulted in roughly $700,000 lost in retail sales and revenues.
  • The oyster decline over the last 30 years has meant a loss of more than $4 billion in Maryland and Virginia.

Investing in clean water technologies creates jobs and stimulates local economies. A recent study by the University of Virginia found that better agricultural practices, such as livestock stream exclusion, buffer plantings and cover crops, would generate significant positive economic impacts. Every $1 of state and/or federal funding invested in agricultural best management practices would generate $1.56 in economic activity in Virginia.

For urban areas, an analysis of the value of investing in water and sewer infrastructure concluded that these investments typically yield greater returns than most other types of public infrastructure.  For example, $1 of water and sewer infrastructure investment increases private output (Gross Domestic Product) in the long-term by $6.35.

And what about the costs and benefits of regulation?  A recent report by the Economic Policy Institute states: “Regulations are frequently discussed only in the context of their threat to job creation, while their role in protecting lives, public health, and the environment is ignored.”  Furthermore, the same study reports that the Office of Management and Budget reviewed major regulations covering 2000 to 2010 and found that, each year, the benefits substantially exceeded the costs an average of seven times over.

No industry can survive using a model of constant production without reinvestment.  The longer we go without “reinvesting our profits” into our “ecosystem machine” – via wastewater upgrades, critical habitat restoration, good development and agricultural practices, and other actions – the greater our costs are going to be in terms of our health, our quality of life, our pockets and the waterways we care about.

Alicia Pimental's avatar
About Alicia Pimental - Alicia is the Chesapeake Bay Program's online communications manager. She manages the Bay Program's web content and social media channels. Alicia discovered her love for nature and the environment while growing up along Buzzards Bay in Massachusetts. When she's not at work, Alicia enjoys cooking, traveling, photography and playing with her chocolate lab, Tess.


Cleaning Up Chesapeake Bay Will Benefit Region's Economy, According to New Report

The Chesapeake Bay region’s economy has been significantly affected by water pollution in the Bay and its rivers, according to a new report by the Chesapeake Bay Foundation (CBF).

The report, The Economic Argument for Cleaning Up the Bay and Its Rivers, states that the Chesapeake Bay TMDL, a federal “pollution diet” being developed to clean up the Bay and its rivers, will not only result in clean water and a healthy Bay, but also a strong regional economy.

“The Chesapeake Bay can be a fertile source of jobs as well as crabs and rockfish,” said CBF Maryland Executive Director Kim Coble. “This report totals up what we've lost economically with the Bay's decline, and how much more we stand to lose if we don't increase our commitment to reducing pollution.”

One of the Bay’s most significant contributions to the region’s economy is the seafood industry. A 2008 NOAA report indicated that the commercial seafood industry in Maryland and Virginia contributed $3 billion and more than 41,000 jobs to the local economy.

However, the blue crab and oyster fisheries have declined due to polluted water, resulting in substantial economic losses. Between 1998 and 2006, watermen, grocers, wholesalers, restaurants and crab processors in Maryland and Virginia lost about $640 million due to the decline of crabs in the Bay. The decline of the Chesapeake oyster and its fishery – which were once called “Chesapeake gold” because of their profitability – has cost Virginia and Maryland more than $4 billion in losses in the past 30 years.

The Chesapeake Bay’s economic contributions go well beyond fisheries. Efforts to clean up the Bay and its rivers will also benefit the region’s economy, according to the report. A recent University of Virginia study found that implementing agricultural conservation practices such as buffers, cover crops and livestock fencing to levels necessary to restore the Bay would create 12,000 jobs in one year.

Clean waterways are also linked to increased property values. A U.S. Environmental Protection Agency study indicated that clean water can increase by up to 25 percent the value of single-family homes that are located as much as 4,000 feet from the water.

Economic losses are not restricted to the immediate areas surrounding the Bay. In Pennsylvania, nearly two million people go fishing each year, contributing more than $1.6 billion to the economy. However, polluted streams have restricted brook trout to a small fraction of its historic distribution. In Virginia, where one million anglers cast their rods each year, a 2005 fish kill on the Shenandoah River resulted in roughly $700,000 lost in retail sales and revenue.

Nature activities such as wildlife watching, ecotourism and boating dependent are large economic drivers for the Bay region and are all dependent on clean water. Roughly eight million people spent $636 million, $960 million and $1.4 billion in Maryland, Virginia and Pennsylvania, respectively, in 2006 on wildlife-watching expenses and equipment.

For more details, read the full report at CBF’s website.

Keywords: economics
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