Friday, November 13, 2009

An economic valuation of Mavericks

Save The Waves recently completed a study looking at the non-market value of the Mavericks area (wave and adjacent park). The study was conducted by Dr. Makena Coffman and Dr. Kimberly Burnett from the University of Hawaii. They based their findings on an on-site survey of visitors over a 6 month period in 2009. They used the Travel Cost Method to determine the non-market value (consumer surplus) of those visitors and their estimated an annual value ($24 million/year) using their best guess on annual attendance to the area.

Here are some of the key findings:

  • The average visitor received $56.7 in consumer surplus per visit
  • 7% of those interviewed were there to surf Mavericks
  • ~12% were visiting to watch surfing
  • Surfers were nearly 5 times more avid than other visitors
  • They estimated 421,431 visits to the Mavericks area per year
  • The total economic benefit from the Mavericks region is $23.8 million/year
  • This study did not include the annual contest in their analysis

It is important to note that the study included all visitors to the Mavericks areas, not only surfers or those watching surfers, so this value includes the value of the whole Mavericks area.

The final study has not been published yet. Once it does, I'll post it.

You can read a Half Moon Bay Review article about the study here.

The article got a few things confused and Deal LaTourrette, the Excutive Director responded:

Dear Editor,
We appreciate the coverage of the recently released results from our Mavericks economic study in Greg Thomas’ November 11th article, “The $24 Million Wave,” but feel compelled to clarify some key points with your readers:

1) While the study was designed to measure the economic value of the surf break and surrounding area, it also attempts to measure non-economic valuation factors such as the cultural, social and environmental value of the wave. The study is not all about dollars and cents, and a key finding was completely omitted from Thomas’ article: "Almost 90% of the respondents labeled surfing an ecotourism activity, and thus important to the cultural and environmental health of the community. Respondents believed that Mavericks helped to positively define the Half Moon Bay area." This underscores the importance of these studies to be used as a tool to help policy-makers make conservation decisions that allow ecotourism to thrive, while at the same time preserving unique environmental, social, and cultural phenomena.

2) This research project was funded by a grant from the Morgan Family Foundation. Mavericks Surf Ventures helped by supplying information on the area and connecting researchers with key local organizations, such as the Half Moon Bay Chamber of Commerce. MSV and Jim Beam DID NOT fund or financially support the study.

3) The Center for Responsible Travel at Stanford University and the University of Hawaii Economic Research Organization, co-authors of the study, are independent researchers who were commissioned by Save The Waves to execute an academic study. They have no affiliation with Save The Waves, nor did commercial interests influence the study in any way.

Thanks for helping us clear up these important points.

Sunday, November 8, 2009

The Cost of Poor Water Quality at Surfrider Malibu

Surfrider Beach at Malibu needs no introduction. Unfortunately, neither do the water quality problems. Malibu has been a chronically polluted beach for decades, consistently getting an "F" on Health the Bay's beach water quality report card. One of the primary culprits is over-capacity and improperly sited septic systems. For years, the City of Malibu has resisted constructing sewage systems as an anti-growth measure while polluting nearby beaches.

Thanks to a strong coalition that included the Malibu Surfing Association, Heal the Bay, Santa Monica Baykeeper and the West LA / Malibu Chapter of the Surfrider Foundation this all changed last Thursday when the LA Regional Water Quality Control Board voted to eliminate septics from Malibu and force the City to install waste water treatment systems. Read more about the outcome here and here and in the LA Times here.

$: Poor water quality is a public health burden that has costs.

Water quality contamination can cause skin rash, eye and ear infections, significant respiratory disease and Gastrointestinal (GI) illness. These illnesses have a variety of economic costs -- ranging from medical expenses to lost time at work to non-market impacts.

At Malibu, Given and Pendleton (2006) estimated that were were 25,000 to 100,000 excess GI illness (meaning above allowable level of illness at clean beaches) in Malibu due to poor water quality.

This results in $1.1 to $4.2 million in public costs annually due to illness associated with contaminated water in Malibu.

$: Clean water has benefits.

Clean water attracts more visitors who spend money (economic impacts) and clean water increase their enjoyment (consumer surplus).

Hanemann & Pendleton (2004) looked at economic benefits of improving beach water quality at Malibu Surfrider Beach by one letter grade. From a C to a B.

They showed that improving water quality at Malibu Surfrider would have two impacts on beach goers. First, the number of trips taken to Surfrider beach would increase by 1,538 visits per year.

The second major impact of an improvement in water quality is the annual consumer’s surplus of beach users improves by more than $140,000/ year.

In addition, the total economic impact (local spending) would increase by $45,000/year.

These are the benefits for one grade. The benefits would be much higher for a 3 or 4 grade level improvement (F to B/A)*.

*The model is nonlinear so you cannot use these figures to extrapolate directly.

These studies show that improving the water quality in Malibu will reduce the high public welfare burden associated with poor water quality and result in increased visits, increased societal benefits (consumer surplus benefits) and increase economics impacts (spending associated with beach visits).

You can read more detail and see the references in my testimony here.