### Valuing Preservation and Improvements of Water Quality in Clear Lake

Christopher Azevedo, Joseph Herriges, and Catherine Kling

Staff Report 01

- SR 94 March 2001

Center for Agricultural and Rural Development

Iowa State University Ames, Iowa 50011

- 1070 www.card.iastate.edu

Christopher Azevedo is a postdoctoral research associate, Center for Agricultural and Rural Development (CARD). Joseph A. Herriges is a professor of economics, Department of Economics, Iowa State University. Catherine L. Kling is a professor of economics, Department of Economics, and head of the Resource and Environmental Policy Division (CARD), Iowa State University.
The authors would like to thank the following individuals for their help in survey design and data collection: John Downing, Jeff Kopaska, Kevin Egan, Jay Corrigan, Jinhua Zhao, David Knoll, Jim Wahl, and the participants of the Clear Lake focus group.
For questions or comments about the contents of this paper, please con tact Catherine L. Kling, 568 Heady Hall, Iowa State University, Ames, IA 50011

- 1070Ph: 515

- 294

- 5767, Fax: 515

- 294

- 6336, e

- mail: ckling@iastate.edu . Joseph A. Herriges, 280D Heady Hall, Iowa State University, Ames, IA 50011

- 1070; Ph: 515

- 294

- 4964, Fax: 515

- 294

- 0221, e

- mail: jaherrig@iastate.edu

. This publication is available online on the CARD website: www.card.iastate.edu . P ermission is granted to reproduce this information with appropriate attribution to the authors and the Center for Agricultural and Rural Development, Iowa State University, Ames, Iowa 50011

- 1070.
Iowa State University does not discriminate on the basis of race, color, age, religion, national origin, sexual orientation, sex, marital status, disability, or status as a U.S. Vietnam Era Veteran. Any persons having inquiries concerning this may contact the Director of Affirmative Action, 318 Beardshear Hall, 51 5

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- 7612.ii 

### Contents

Abstract

................................ ................................ ................................ .............................. iii
Introduction

................................ ................................ ................................ .......................... 1 Survey Design and Implementation

................................ ................................ ..................... 1 Survey Results

................................ ................................ ................................ ..................... 4
Conclusions

................................ ................................ ................................ ........................ 16
Endnotes

................................ ................................ ................................ ............................. 18 Appendix A. Visitor’s Survey

................................ ................................ ........................... 19 Appendix B. Local Resident’s Survey

................................ ................................ ............... 29iii 

### Tables Table 1. Average number of trips by time period

................................ ................................ 5 Table 2. Average number of trips taken to other lakes and reservoirs

................................ 5



### Figures Figure 1. Clear Lake activities

................................ ................................ ............................. 5 Figure 2. Importance points

................................ ................................ ................................ . 6 Figure 3. Projects: visitors

................................ ................................ ................................ ... 7 Figure 4. Projects: local residents

................................ ................................ ........................ 8 Figure 5. Land use changes: visi tors

................................ ................................ .................... 8 Figure 6. Land use changes: local residents

................................ ................................ ........ 9 Figure 7. Willingness to pay for Plan A: visitors

................................ .............................. 11 Figure 8. Willingness to pay for Plan A: local residents

................................ ................... 12 Figure 9. Willingness to pay for Plan B, low improvement, visitors

................................ 14 Figure 10. Willingne ss to pay for Plan B, low improvement, local residents

................... 14 Figure 11. Willingness to pay for Plan B, high improvement, visitors

............................. 15 Figure 12. Number of trips taken at varying quality levels

................................ ............... 16iv 

### Abstract

This report presents summary statistics and other results of a survey of Clear Lake visitors and residents. The purpose of the survey was to collect information concerning use and value of water quality improvements at Clear Lake. Support for the survey was provided by the Iowa Department of Natural Resources.

### VALUING PRESERVATION AND IMPROVEMENTS OF WATER QUALITY IN CLEAR LAKE

Introduction This report describes the results of a study on Clear Lake as a recreational resource. It is intended to provide information on recreational usage of the lake , attitudes of recreators and local residents toward possible watershed management changes, as well as estimates of visitor’s and resident’s willingness to pay for water quality improvements at
the lake.



### Survey Design and Implementation
In this section of

the report, we provide an overview of the procedures used in selecting the samples and designing the Clear Lake Survey, the implementation procedures used to administer the survey, and the final survey response rates.

Sample Selection Two groups of resp ondents were targeted to receive the survey: recreational users (visitors) of the lake and local residents. Although other population segments may value water quality improvements at Clear Lake, for example to protect the wildlife habitat the lake provides to migratory birds, we believed that the largest values would be associated with those who actually visit the lake or live in its vicinity. However, it is important to note that all of the information provided in this report relates only to those two popu lation segments: those who have visited the lake at least once, and those who have residences in the cities of Clear Lake or Ventura, Iowa. To obtain addresses of visitors to the lake, potential respondents were intercepted while engaging in recreational activities at the lake. This occurred during the months of May, June, July, August, and September of 2000. A total of 1,024 recreators agreed to participate in a mail survey that was scheduled for October of that year. They were2 / Azevedo, Herriges, and Kling

informed that everyone who returned a completed survey would receive five dollars. The sample of local residents was provided by Survey Sampling, Inc., a sampling firm located
in Connect i cut. The sample of 900 names was randomly drawn from the white page listings for the cities of C lear Lake and Ventura, Iowa. It is important to note that the sampling of visitors on site, as was done here, will produce a sample that does not accurately represent the true population of visitors. This is
because individuals who take more than the aver age number of trips have a higher chance of being intercepted and interviewed than their true representation in the population. Likewise, individuals who take fewer than the mean number of trips will be under

represented in the sample. It is thus necessary to adjust the data by re

- weighting the observations so that they appropriately represent the actual population. All summary statistics reported here have already been appropriately adjusted.

Structure of the Survey The surveys mailed to the two groups (vi sitors and residents) were very similar. The survey was designed to focus on how the respondent values different levels of water quality at Clear Lake. In order to provide a baseline level of quality for the respondent,
current conditions at Clear Lake wer e described. This description was developed in consultation with limnologists John Downing and Jeff Kopaska of the Animal Ecology Department at Iowa State University, both of whom have studied the water quality
conditions at Clear Lake. Both versions of th e survey contained the following descri p tion
of the current cond i tions at the lake.Valuing Preservation and Improvements of Water Quality in Clear Lake / 3

Respondents were then pr e sented with various plans, each describing a different overall condition of the lake (as defined by the above attri b utes), and wer e asked about their willingness to pay for the plan. Plan A described a decrease in water quality, and Plan B described an increase in water quality. Data pertaining to both of these plans will
be summ a rized below. In addition to the valuation questions, b oth versions of the survey also co n tained questions pertaining to the respondents’ support for various projects for improving water quality, their opinion concerning various land use changes, and the water quality attributes most important to them. Finally , socioeconomic information was gathered from all respondents. The visitor’s and resident’s versions of the survey differed in that the visitor’s version collected information on the number of recreation trips the respondent took to the lake in the past ye ar, as well as information on the number of trips the respondent planned to make in the coming year under various scenarios. The visitor’s and resident’s versions of the survey are contained in Appendixes A and B.

Water clarity objects distinguishable 6 inches to 1

foot under water Algae blooms 10 to 12 per year Water color bright green to brown Water odor mild odor, occasionally strong Bacteria possible short

- term swim advisories Fish low diversity, good walleye Overall, the current condition of Clear Lake can be summarized in terms of

general water color4 / Azevedo, Herriges, and Kling

Response Rates The visitor’s version of t he survey was mailed in mid October while the resident’s version was mailed in early December. For both versions, respondents who did not return the survey were sent a reminder postcard approximately two weeks after the initial survey was mailed. After app roximately two more weeks, survey recipients who still had not returned the survey were sent a second copy of the survey. Of the 1,024 surveys mailed to the group of visitors, 26 were returned by the post office as undeliverable. Of the deliverable surveys , 662 were returned, resulting in a 66 percent response rate. Of the 900 surveys mailed to the group of local residents, 132 were returned as undeliverable. Of the deliverable surveys, 443 were returned, resulting in a 58 percent response rate.



### Survey Resu lts In this section of the report we provide summary statistics from the Clear Lake survey, focusing on ( a ) reported visitation and spending patterns, ( b ) attitudes toward various watershed and land use changes, and ( c ) implied valuations.

Visitation On a verage, visitors reported a high usage of Clear Lake between November 1999 and October 2000. The average total number of trips taken was 6.6. Of those trips, an average of 2.67 were multiple day visits (i.e. the respondents spent at least one night in or

a round Clear Lake). Respondents indicated that they expected to make an average of 6.63 trips to Clear Lake over the next year. Respondents reported having visited Clear Lake an average of 3.63 times over the past five years. Table 1 shows the average numbe r of trips (both multi

- day and single

- day) reported by time period, while Figure 1 shows the average percentage of time devoted to various activities reported by respondents. As expected, a majority of trips were taken during the summer months. The most po pular recreation activity engaged in by visitors was recreational boating. Table 2 shows the average number of trips taken from November 1999 through October 2000 to other lakes and reservoirs. Minnesota lakes, Saylorville Lake, the Mississippi River, and

other unlisted lakes appear to be the main alternatives to Clear Lake.Valuing Preservation and Improvements of Water Quality in Clear Lake / 5

T ABLE 1. Average number of trips by time period Time Period Number of Visits November 1999 through February 2000 0.62 March 2000 through May 2000 1.13 June 2000 through August 2000 3.70 September 2000 through October 2000 1.13

F IGURE 1 . Clear Lake activ i ties

T ABLE 2. Average number of trips taken to other lakes and rese r voirs Lake or Reservoir Number of Visits Lake or

Reservoir Number of Visits Lake Okoboji

- East and Wes t 0.98 Lake Odessa 0.05 Lost Island Lake 0.03 Rathbun Reservoir 0.97 Rice Lake 0.36 Mississippi River 0.77 Spirit Lake 0.23 Minnesota Lakes 1.76 Storm Lake 0.10 Wisconsin Lakes 0.19 Tuttle Lake 0.04 Lake Red Rock 0.40 Saylorville Lake 1.96 Oth er 2.78 Coralville Reservoir 0.126

/ Azevedo, Herriges, and Kling

Spending Respondents reported spending an average of $51 in or near the town of Clear Lake on a typical visit. Respondents from Iowa reported spending an average of $48 per trip,
while out

- of

- state respondents report ed spending an average of $93 per trip. Spending can also be categorized by the type of trip taken. Respondents who took only single

- day visits reported spending an average of $26 per trip, while respondents who took only multi

- day visits reported spending an average of $98 per trip.

Opinions Respondents were asked to allocate 100 importance points to the lake characteristics listed in Figure 2. The average point allocation is shown for both visitors and residents. Safety from bacterial contamination is t he most important characteristic for both visitors and local residents. As expected, those characteristics associated with water recreation are slightly more important to visitors, while water clarity and lack of water odor are slightly more important to l ocal residents.

F IGURE 2. Impo r tance pointsValuing Preservation and Improvements of Water Quality in Clear Lake / 7

Figures 3, 4, 5, and 6 show respo n dent’s opinions toward various water quality projects and land use changes. In general, both visitors and local residents appear to either support, or are indifferent to, m ost projects and land use changes. Very few respondents in either group oppose repair of storm drains or restoration to Ventura Marsh. Restrictions on residential development are supported by roughly 75 percent of local residents surveyed, with fewer than 10 percent opposing restrictions. The issue that generated the most opposition among respondents was the institution
of non

- motor boat days. Roughly 40 percent of visitors oppose non

- motor boat days, with about 34 percent supporting them. In the case of l ocal residents, roughly 30 percent

o p pose non

- motor boat days, while about 45 percent support them. Increased no

- wake zones are supported by about 60 percent of local residents and about 43 percent of visitors. Roughly 70 percent of local residents and onl y about 37 percent of visitors support limiting motor horsepower. There appears to be wide support for restoration of woodlands, prairies, and wetlands in both groups.

F IGURE 3. Projects: vis i tors8 / Azevedo, Herriges, and Kling

F IGURE 4. Projects: local res i dents

F IGURE 5. Land use changes: visitorsValuing Preservation and Improvements of Water Quality in Clear Lake / 9

F IGURE 6. Land use changes: local residents

Valuation One important goal of the survey was to estimate the value that both visitors and local residents place on the preservation and/or restoration of Clear Lake. Conserv ation budgets are tight and there are more projects than there is money to fund them. Thus, society must decide where to focus the available r e sources, both private and public sources. To help with these dec i sions, economists have devised methods to measur e the value people place on environmental goods as measured by their willingness to pay for the goods. Two of these techniques are employed in this study. The first method is based on observing the public use of a natural resource (visits to the lake) and inferring visitors’ willingness to pay for the resource from their behavior. The second method is based on directly asking whether people are willing to pay various sums of money to support a partic u lar project.
The first value estimated in this study is the willingness to pay for the existing level of Clear Lake visits. This can be thought of as providing a baseline of the value visitors place on preserving the existing level of the resource in terms of how much enjoyment they get from Clear Lake at its current level of water quality. Based only on the reported single

- day trips data, the average recreational value per season of Clear Lake is $28 per visitor. Analysis of multiple

- day trips has not been completed to date and is not10 / Azevedo, Herriges, and Kling

represented in this value . Since 25 percent of the reported trips to the lake were multiple

day trips, they represent a potentially significant source of value. Next, the value of various water quality changes was estimated. Both the visitor’s and resident’s version of the survey contained a scenario entitled Plan A. The description of the plan stated that if nothing is done to i m prove the water quality of the lake, it is likely to deteriorate over the next decade. Specifically, r e spondents were told to suppose
that the conditions at Clear Lake were as fo l lows:

They were then asked the following question, “Would you vote yes on a referendum to maintain the current water quality of Clear Lake and avoid the deteri o rated water quality as described under Plan A? The proposed proje ct would cost you $B (payable in five [$B/5] installments over a five

- year period). In this question, the value of “B” was varied so that different respondents were faced with different project costs. 1 Figure 7 plots the relationship between the pe r centage of visitors indicating they would be willing to pay the stated amount along the hor i zontal axis. Roughly 85 percent would be willing to pay $30 toward this plan ($6 annually for five years), but only about 20 percent wouldValuing Preservation and Improvements of Water Quality in Clear Lake / 11

F IGURE 7 . Willingness to pay for Plan A: visitors

be willing to pay $150. Based on these data, the average willingness to pay is

a p proximately $104 per visitor in support of Plan A. 2 Figure 8 plots the relationship between the pe r centage of local residents indicating they would be w illing to pay the stated amount along the horizontal axis. Though the trend is somewhat less pronounced for the local residents, statistical analysis clearly indicates that fewer people are willing to co n tribute at the higher bid levels. On average,
local residents would be willing to pay approximately $568 in su p port of Plan A. This significantly higher value for residents is not surprising given their continuous exposure
to the lake and its attributes. While Plan A focused on the respondent’s willingnes s to pay to avoid a deterioration in water quality, Plan B focused on willingness to pay for improvements in water quality. Two versions of Plan B were created: the first described a program that would result in a moderate improvement in water quality over the next five to ten years, while the second described a program that would result in a substantial i m provement in water quality over the next ten to twenty years. Both versions are shown below.12 / Azevedo, Herriges, and Kling

F IGURE 8 . Willingness to pay for Plan A: Local residen tsValuing Preservation and Improvements of Water Quality in Clear Lake / 13

Figure 9 shows the data from the visitor’s survey for the low quality improv e ment. As before, the relationship between the percentage of respondents indicating they would be willing to pay the stated amount of the horizontal axis is plotted. Based on these data, visitors would, on average, be willing to pay approximately $85 in support of the low quality improvement described in Plan B. This value is actually less than the $104 visitors were willing to pay for Plan A, which simply m aintained the current lake conditions. However, the two results are not statistically different, suggesting that visitors are willing to pay roughly $100 to maintain the lake, but little, if any, for modest improvements. Figure 10 shows the data from the l ocal resident’s survey for the low quality improvement. Based on these data, local residents would, on average, be willing to pay approximately $550 in support of the low quality improvement described in Plan B. Again, this value is slightly lower than the $568 local residents were willing to pay for Plan A, though the two are not statistically different. This indicates that local residents are willing to pay roughly $550 to maintain the lake, but little, in any, for modest improvements.14 / Azevedo, Herriges, and Kling

F IGURE 9. Willin gness to pay for Plan B, low improvement: visitors

F IGURE 10. Willingness to pay for Plan B, low improvement: local residentsValuing Preservation and Improvements of Water Quality in Clear Lake / 15

Figure 11 shows the data from the visitor’s survey for the high quality improv e ment. Based on these data, visitors would, o n average, be willing to pay approximately $425 in support of the high quality improvement described in Plan B. In addition to the values described above, visitors indicated that the quality changes described in the survey would affect the number of trips they would expect to take. As described above, visitors indicated that they took an average of 6.60 trips between
Nove m ber 1999 and October 2000. They also reported that over the course of the next year they e x pected to make 6.63 trips to Clear Lake. Afte r each quality change plan was described, the respo n dent was asked to consider all the recreation trips they made to Clear Lake in the past year, and report the number of trips they would have made if conditions were as described in the plan. This informat ion is summarized in Fi g ure 12. The response to the decreased water quality described in Plan A is dramatic. With the decrease in water qua l ity, visitors would take an average of about two trips. Visitors also responded to the higher water quality scenario s by indicating that they would increase the number of trips they would take. With the low quality improvement, respondents would take an average of 7.03 trips, while with the high quality improvement, respondents would take an average of 10.32 trips.
The average income level reported for the visitor’s survey was $45,000. Average household size was about 3 people, and about 61 percent of the respondents were male.

F IGURE 11. Willingness to pay for Plan B, high improvement: visitors16

/ Azevedo, Herriges, and Kling

F IGURE 12 . Number o f trips taken at varying quality levels

The average income level reported for the local resident’s survey was $40,000. Average household size was about 2.5 people, and about 67 percent of the respondents
were male.



### Conclusions

Clear Lake is very importan t as a recreational resource, with visitors reporting high, persistent usage of the lake. Both visitors and residents indicated a high willingness to pay to avoid further deterioration of the lake. When asked about their willingness to pay for improvement , respondents indicated that they are willing to pay only moderate amounts for a low quality improvement to the lake, but they are willing to pay substantially more for a significant quality improvement to the conditions at the lake. This strong preferenc e for the high quality improvement over the low quality improv e ment is also borne out by the number of trips visitors expect to take under each scenario. With the current conditions, visitors reported that they expect to take 6.63 trips next year. The expe cted number of trips falls to about 2 trips under Plan A (deterioratedValuing Preservation and Improvements of Water Quality in Clear Lake / 17

quality). With the low quality improvement, the expected number of trips is 7.03, not much different than the expected number of trips under current conditions, which is
consistent with the relatively low values reported for Plan A. However, with the high quality improvement, the expected number of trips jumps significantly, to about 10. Thus, respondents appear to highly value avoiding further deterioration to the lake, and if quality is to be improved at the lake, they indicate a strong preference for a high quality improvement. Finally, it is important to remember that the value estimates presented in this paper are point estimates. That is, though they are not reported in this paper, there is a sampling error associated with each estimate. For example, the point estimate for the local residents’ willingness to pay for Plan B is $550 with a margin of error of ± $226. 3

### Endnotes

1. The value of “B” varied bet ween $15 and $150 for visitors and between $45 and $450 for local residents.

2. The value of $104 was generated via a formal statistical model.

3. This margin of error represents a 90 percent confidence interval.

### Appendix A
Visitor’s Survey20 / Azevedo, Herriges, and KlingValuing Preservation and Improvements of Water Quality in Clear Lake / 2122 / Azevedo, Herriges, and KlingValuing Preservation and Improvements of Water Quality in Clear Lake / 2324 / Azevedo, Herriges, and KlingValuing Preservation and Improvements of Water Quality in Clear Lake / 2526

/ Azevedo, Herriges, and KlingValuing Preservation and Improvements of Water Quality in Clear Lake / 2728 / Azevedo, Herriges, and Kling

### Appendix B
Local Resident’s Survey30 / Azevedo, Herriges, and KlingValuing Preservation and Improvements of Water Quality in Clear Lake / 3132 / Azevedo, Herriges, and KlingValuing Preservation and Improvements of Water Quality in Clear Lake / 3334 / Azevedo, Herriges, and KlingValuing Preservation and Improvements of Water Quality in Clear Lake / 3536

/ Azevedo, Herriges, and KlingValuing Preservation and Improvements of Water Quality in Clear Lake / 3738 / Azevedo, Herriges, and Kling