Economic considerations module: introduction | construction costs | operation and maintenance costs | safety and other liability risks | property value | recreational value | aesthetic value | ecological value | references | appendix

Recreational value

Free-flowing rivers and lakes behind dams offer recreational opportunities. The types of recreational activities offered by lakes and rivers are different from one another, and therefore the removal of a dam will change the character of the recreational activities available. Members of your community may favor or oppose dam removal on the basis of the possible changes in recreational opportunities. Further, recreation-based businesses depend on the character of the recreational opportunities in the surrounding area.

For the purposes of this module, recreation has been split into two different categories for consideration. The first category is recreation by community members, that is, a valuation of the recreational benefits that each option has for residents of your community. The second category is the economic benefit gained from tourists from outside the community. The valuation process for each of these is different.

Repair

Impoundments provide several pond and lake recreational activities. Many impoundments in Wisconsin offer excellent sport-fishing opportunities. The fisheries found in impoundments are generally warm- and cool- water fisheries supporting smallmouth and largemouth bass, northern pike, muskellunge, walleye, panfish, and many others. Impoundments also offer boating opportunities, such as motorboating, rowboating, sailing and flatwater canoeing and kayaking. Impoundments can be used for swimming and innertubing. Larger impoundments offer waterskiing, kneeboarding, and wakeboarding. Impoundments that freeze over in the winter provide opportunities for ice fishing, ice skating and hockey. Lakes may support waterfowl habitat, providing hunting opportunities.
 

Figure 12. Canoeing in the Deerskin River impoundment. (Photo courtesy of Stephanie Lindloff, River Alliance of Wisconsin.)
 

Businesses, particularly those at or near large impoundments, may rely directly on the impoundment for income. Many of these are recreation-based businesses, such as marinas, lake fishing tackle and bait shops, and boat rental businesses. Other nearby businesses, such as restaurants and lodges, may indirectly rely on people who come to use the impoundment. Loss of the impoundment may mean severe economic hardship for these businesses. They may go out of business, move their business to a new location, or change the nature of their business. In any case, such business owners are likely to support repairing the dam and restoring the impoundment.

With respect to your community's use and enjoyment of the lake, in one sense this value is easy to understand (for example, someone can easily communicate to another person that they really like to fish in the pond). On the other hand, the value of the use of a natural resource, like a forest or a mountain range, or the impoundment created by a dam, is inherently hard to quantify in the same way that, say, you can estimate how much it will likely cost in dollars to physically repair a dam. Nevertheless, there are sometimes very good reasons to try to make a dollar estimate of things that are not easily expressed in monetary terms. You need to use a common scale of comparison, and dollars are convenient in this case because so many other sections in this module discuss items with monetary values.

Therefore, this section of the module is asking your community to make a dollar estimate for the enjoyment and use of the impoundment. Estimating this value in dollar terms is not minimizing the importance of these issues, but is ensuring that these important values will be fully included with all the other factors that will go into your decision regarding your dam.

Of course, how to make this dollar estimation is the hard part. However, there is strong precedent in economic work for this type of exercise, especially considering that there may be many people in your community for whom using the lake recreationally holds very real importance and value. The first step will be to estimate the value that each person in your community places on using the dam impoundment for recreational purposes. If asking this question of every person in your community is not feasible, then try to get a representative opinion by surveying as many people as you can.

The community survey included in another part of this guidance document contains questions that ask people to make these dollar estimates, so you may consider using that tool to gather information. Otherwise, you could gauge opinion at a town meeting, or by using some other method you devise.

Once the survey information is collected, the goal is to create an average dollar amount representing how much one person values the recreational uses of the lake and the river. For instance, if you collected 50 surveys whose reported values for river recreation summed to $1,000, then the average value would be $20. That is, each person in your community would then be said to value the river's recreational opportunities in an amount equal to $20.

The final step, then, is to multiply this figure by every person in your community. You will have to decide in advance whom you want to include in this total population figure; for example, will you include children, too? Although children don't pay the bills, they may well be the group in the community that uses the lake the most.

An example calculation for purposes of the worksheet would look as follows:

($20 per person estimate) x (5000 people in the community) = ($100,000 total recreational value)

The second major benefit calculation you will need to make is the value of tourism generated by the impoundment and adjacent areas. How much business does your lake primarily support? How much tourism does it bring into town? Again, you will want to estimate this value as an aggregate by adding the values of every affected party. By summing these values, you can determine the economic value (how much money the lake brings to town) of your lake to your city every year. Economic consultants are able to estimate this benefit; it is highly advisable to retain one to help you do these estimations.

Because these economic benefits accrue on a yearly basis, you will have to adjust this valuation as you have done for previous categories. An example estimate might look like this:

($10,000 annual economic benefit to businesses) x (10 years) = ($100,000 benefit of the lake)

Finally, you should also consider the potential economic impacts of any development projects that your community plans to do that will impact the lake's recreational activities. For example, if it appears that your lake is worth a combined $100,000 in income to local businesses over the next 10 years, but you know that a large-scale development project is planned that will give motorboats and more tourists access to the water, you may want to include an estimate of these future benefits in your decision. You could use the examples of other communities as a guide to estimate the potential economic benefits of development projects.

You might consider being somewhat conservative, however, in your estimation of future economic impacts, because you would not want to choose a course of action based upon overly optimistic forecasts of an economic boom that doesn't occur. As with all benefits that accrue on an annual basis, choose a reasonable number of years to make your worksheet estimate possible. Again, it would probably be best to retain an economic consultant to help you make these estimates.

Examples: Repair

Deerskin Dam, Deerskin River, Wisconsin

• Warm-water fishing
• Ice fishing
• Waterfowl hunting
• Motor boating
• Ice skating

Bloomer Dam, Duncan Creek, Wisconsin

• Lake fishing (warm water fishery) continued

Ward Paper Mill Dam, Prairie River, Wisconsin

• Warm and cool water fishing (sometimes a few trout)
• Motor boating
• Swimming
• Ice fishing
• Ice skating
• Snowmobiling
• Sailing
• Waterfowl hunting
• Waterskiing

Shopiere Dam, Turtle Creek, Wisconsin

• Maintain swimming hole downstream of dam, although very dangerous
• Maintain impoundment, which is centerpiece of park and community

Lake George Dam, Lake George National Wildlife Refuge, North Dakota

•  “Ducks Unlimited plans to finish a $100,000 dam repair project Tuesday at Lake George that will provide a brood marsh for hundreds of ducks, an official said. Fixing the dam, which was first built in the 1930s by the Works Progress Administration, will create a freshwater marsh of about 47 acres …. The marsh should handle 500 to 1,000 ducks …. The project involves repairing the dam, which washed out many years ago, and installing a water control system to prevent a future washout…. The project, which started Nov. 13, is being paid for by Ducks Unlimited and the federal North American Wetlands Conservation Act.” Source: The Bismarck Tribune, 12/11/95.

Removal

Free-flowing rivers also provide many recreational opportunities. Rivers provide canoeing and kayaking as well as swimming and innertubing. Rivers also offer excellent fishing, although the character of a fishery may change after the dam is removed. The removal of a dam tends to cool the water in the river, and may change a warm-water fishery to a cool- or cold-water fishery. The fisheries in rivers may support warm-water fish as well as cool- and cold-water species, depending on the temperature of the river. Some rivers may support all of these types of fisheries along their lengths through the seasonal migration of fish. Because the removal of a dam may change the character of the fishery, it may change the types of sport fish in the river and their abundance. The types of fish anglers are interested in catching may be a consideration in the dam repair or removal decision.

The recreational opportunities of free-flowing rivers provide opportunities for recreation-based businesses. Any existing river-based recreation business will probably enjoy increased trade. The change of the water resource to a river may also attract new river-recreation businesses to the area. Also, recreation businesses that rely on the impoundment can change their business strategy to take advantage of the new recreation opportunities afforded by the river. For example, a boat rental business could change to a canoe rental and shuttle business. Also, a community can use dam removal to spur economic development along the river where it flows through town. Examples of this strategy would include creating a riverwalk or a waterfront business district.
 

Figure 13. Fishing in the free-flowing Milwaukee River after removal of the Woolen Mills Dam, West Bend, Wisconsin. (Photo courtesy of Stephanie Lindloff, River Alliance of Wisconsin.)

The removal of a dam will uncover relatively large amounts of previously flooded land. Possible uses for these lands will depend on who holds ownership to these lands. The Legal Aspects module of this guide can provide help on determining land ownership after dam removal. If the uncovered lands are publicly owned, they may be dedicated as new open spaces adjacent to the river, such as parks, nature walks, birdwatching areas, or other natural areas. The Legal Aspects module  also can provide information on mechanisms for dedicating park and other open space lands.

The process of making value estimations for the river recreation scenario is analogous to the repair option, and you should refer back to repair section for additional guidance. Use the included survey or some other method to estimate the recreational value of a free-flowing river to people in your community. Because the river does not yet exist, people will have to make their estimations on the basis of the most current information or predictions about what the river will be like. The Dam and River Ecosystems Basics module of this decision-making guide can give you an idea about what restored rivers in drained impoundments will look like.

Just as with the repair option, you will also want to make an estimation of the economic impact of tourism based on the scenario of a free-flowing river. Tourism opportunities and their potential worth to local businesses are much different than in a lake/impoundment situation. In this case, the estimate will be more predictive than for the lake scenario. In fact, this economic estimate may be tied much more closely to any development plans you will be implementing to improve the newly created riverfront. Still, you may find many business owners who are eager to start new ventures on the river. Your predictions of future benefits should be conservative and must be adjusted in the usual manner discussed previously to account for their annual and continuous nature. Hiring an economic consultant may again be the best way to make these estimates.

Examples: Removal

Oak Street Dam, Baraboo River, Wisconsin

• Riverwalk and parks along river
• Revitalization of the waterfront businesses and historic district
• Smallmouth bass, paddlefish, and sturgeon fishing
• Canoeing and kayaking with returned rapids

Deerskin Dam, Deerskin River, Wisconsin

• Fishing on 3.5 to 5 miles of restored of trout stream; warm-water fish would migrate downstream to next dammed lake downstream.
• Improved bird watching

Bloomer Dam, Duncan Creek, Wisconsin

• Cold water fishery restored, increased trout fishing
• Canoeing
• Natural wooded area and hiking trails

Orienta Dam, Iron River, Wisconsin

• Restored fish passage, resulting in an additional 1.2 miles of stream for trout and salmon from Lake Superior
• Increased canoeing possibilities
• Natural waterfall restored, with photographic opportunities

North Avenue Dam, Milwaukee River, Wisconsin

• Developed riverwalk after dam removal
• Restored fish passage for trout and salmon from Lake Michigan

Woolen Mills Dam, Milwaukee River, Wisconsin

• Developed park on newly uncovered land after dam removal
• Restored high quality smallmouth bass and channel catfish sport fisheries

Ward Paper Mill Dam, Prairie River, Wisconsin

• Restore fish passage for a variety of species, including northern pike, muskellunge, smallmouth bass, and trout
• Canoeing and kayaking
• Bird watching

Indianford Dam, Lake Koshkonong, Wisconsin

• Predicted annual loss of $5,250,000 in tourism sales and 200 tourism related jobs if dam removed, based on the assumption that businesses that rely on water-based recreation as a primary customer base would close rather than adapt to the free-flowing river (Marcouiller and others, 1999)

Shopiere Dam, Turtle Creek, Wisconsin

• Larger park/public space
• Restore fish passage for smallmouth bass

Edwards Dam, Kennebec River, Maine

• Planning personnel cited an increase in recreational and tourist activity as the likely result of removing the dam. One official noted that “Over the last few years, … more people are working as guides, selling supplies and providing lodging and meals to fishing enthusiasts.” Source: Central Maine Morning Sentinel, 9/29/98.

 

Next section: Aesthetic value

URL: http://www.ies.wisc.edu/research/wrm00/econrec.htm