Valuing Investments in Conservation

In early May the Orono Bog Boardwalk will open for its 2016 season.  This joint venture of the Orono Land Trust, the City of Bangor, and the University of Maine is a hidden treasure.  For me, there is a magical moment on the boardwalk when you emBog Boardwalk prior to recent constructionerge from the woods onto the open space of the Orono bog. The walk holds more pleasures as well.  It is a walk that helps me better understand the nature of Maine.  If you have not visited the boardwalk, this should be on your 2016 must do list.

On more than one occasion people have asked me what is the economic value of the boardwalk.  As a resource and environmental economist there is no easy answer to this question.  There are at least five ways to think about the value of projects like this that conserve nature and provide access for humans to enjoy and learn.

First, the most fundamental way to think about the economic value of the boardwalk is the idea of opportunity costs.  The nature around the boardwalk and the resources embodied in the structure itself could have been put to other uses.  The land might have gone for housing or commercial development and the money and hours of volunteer labor might have gone to other uses.  At the very least the economic value of the boardwalk equals these costs of the opportunities that were given up.

Second, the boardwalk has effects on neighboring private properties.  In the last twenty years economists have documented how nature preserves, parks, and recreation areas all raise the value of properties in their vicinity.  The effect extends to environmental improvements as well.  Former UMaine economist Kevin Boyle, graduate student Holly Michael, and Maine DEP biologist Roy Bouchard, for example, showed how better water quality in lakes improves property values of residences around lakes.  So the extent to which the bog boardwalk raises residential property values, those higher values are part of the boardwalk’s economic value.

A third way to think about economic value is economic impact.  Conservation and nature-based tourism facilities create jobs and support local businesses through the expenditures of users, investments in the infrastructure, and the economic multiplier effects of these expenditures.  A great example of this type of research is the study by  Bowdoin College economist David Vail of the economic impacts of the Appalachian Mountain Club’s Maine Woods Initiative.  Vail documents the jobs and income effects that this highly innovative AMC initiative has in one of the poorest areas of Maine.  In the report AMC Senior Vice President Walter Graff speculates how this project is perhaps  “…a replicable model for future land conservation and economic development.”

Economic impact in this sense is harder to measure for the bog boardwalk because most of its users are local residents and it is difficult to say what of their local expenditures are attributable to their use of the boardwalk.  The fact is that virtually all of the work maintaining and programming the boardwalk is volunteer rather than paid labor.  Boardwalk Director Jim Bird, Founding Director Ron Davis, and long-time board member Jerry Longcore have contributed thousands of hours of effort, plus a cohort of stalwart volunteers pitches in every year as well.  (When you visit the boardwalk you will see a poster documenting all of this effort.)

A fourth way to think about the economic value of the boardwalk is to consider, very simply, its value.  Tens of thousands of people every year stroll, study, paint, reflect, converse, teach, and otherwise find satisfaction at this wonderland.  For each of these people the boardwalk creates value, wellbeing, utility, happiness, or sense of purpose.  Over the past 30 years economists have tried to place a dollar value on such experiences through techniques called non-market valuation.  The environmental community has embraced this idea because they feel the need to have dollar values to justify public and private resources spent to build and maintain the resources.  The goal for environmental groups has been to trust that environmental values will stand up to market values in so-called benefit-cost analyses.

While I participated in some of this research in my career (ask me about the arcane topic of temporal reliability of contingent values of black fly control), I am increasingly skeptical of such approaches.  There are technical questions about how good these techniques are at estimating dollar values that are equivalent to the values generated by markets for private consumption goods and services.  More fundamentally, scholars including economists worry that searching for dollar values “commodifies” nature and actually leads people to value it less over time.

This leads to my fifth and final idea of economic value.  Environmental ethicist Bryan Norton (see his book Sustainability) has argued that there are some things in nature that are just so important to humans that they should be protected.  No toting up of benefits and costs should be required.  This is not an economic rationale per se, rather it says that the human economy is nested within a larger system (nature) that has parts to it that are too important to treat as just another input in our economy.

Of course, beyond economic value of the boardwalk, there is intrinsic value in the bog without reference to human value. I wrote about this last year in What Are Birds For? Nature does not need human use or appreciation for it to have value.

All of these are legitimate ways to think about the value of the Orono Bog Boardwalk, parks, clean water, hiking trails, etc.  For me, these many values of nature and the facilities we build to enjoy and conserve it are what make Maine the special place that it is.

Mark W. Anderson

About Mark W. Anderson

I am proud to be a Mainer, born in Caribou and schooled at Brewer High School, Bowdoin College, and the University of Maine. I am grateful for a 35 year career at UMaine, the last decade in the School of Economics.