The Economic and 

Market Value of 

Coasts and Estuaries: 

What’s At Stake? 

Edited by Linwood H. Pendleton 

Produced by 

Restore America's Estuaries
This project was made possible through funding provided by 

the National Oceanic and Atmospheric Administration, 

Minerals Management Service, The McKnight Foundation, 

Shell-World Sponsor of America’s Wetland: Campaign to 

Save Coastal Louisiana, and National Wildlife Federation. 

For more information contact: 

Restore America’s Estuaries 

2020 N. 14th St., Ste. 210 

Arlington, VA 22201 

(703) 524-0248 

www.estuaries.org
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

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Foreword ....................................................................................................................................................... 1

Chapter 1 – Understanding the Economics of the Coast: An Introduction to this Volume ................... 4

It’s All About Values (Economic Values, That Is)...................................................................................... 4

Economic Value vs. Economic Impact ....................................................................................................... 9

The Chapters That Follow ....................................................................................................................... 10

References ........................................................................................................................ 11

Chapter 2 – Accounting for Ecosystem Goods and Services in Coastal Estuaries................................ 14

Introduction.............................................................................................................................................. 14

Classifying Ecosystem Goods and Services Provided by Estuaries ......................................................... 15

Figure 1: Millennium Ecosystem Assessment Categorization of Ecosystem Goods and 

Services................................................................................................................................. 15

Table 1: Supporting Services Provided by Estuaries ................................................................. 16

Table 2: Regulating Services Provided by Estuaries ................................................................. 17

Table 3: Provisioning Services Provided by Estuaries .............................................................. 18

Table 4: Cultural Services Provided by Estuaries...................................................................... 19

Providing Ecosystem Goods and Services through Estuary Restoration................................................. 19

Figure 2: Total Economic Value of Estuarine Goods and Services* .................................... 22

State of the Art and Science: Case Study Examples................................................................................. 22

The Barataria-Terrebonne Estuary ...................................................................................................... 23

Figure 3: The Barataria-Terrebonne Estuary System*.......................................................... 24

The Peconic Estuary............................................................................................................................ 26

Figure 4: The Peconic Estuary Watershed and Surrounding System.................................... 27

Future Research Needs ............................................................................................................................ 29

Figure 5: Valuation Data Distributed by Ecosystem Service................................................ 30

Figure 6: Valuation Data Distributed by Cover Type ........................................................... 31

Figure 7: Valuation Data Distributed by Region................................................................... 31

Conclusions.............................................................................................................................................. 32

References ........................................................................................................................ 33

Chapter 3 – The Value of Estuary Regions in the U.S. Economy ........................................................... 37

Foundations of Analysis: Definitions and Data ....................................................................................... 38

Figure 1: Estuary Regions of the Continental United States................................................ 38

Table 1: Estuary Regions, Region Groups, and States.............................................................. 39

Table 2: U.S. Department of Agriculture Urban Influence Codes: 2003.................................. 40

Table 3: Ocean Industries defined by the National Ocean Economics Program ...................... 41

Previous Studies....................................................................................................................................... 42

Size: How Do We Measure the Size of Regional Economies? ................................................................. 42

Table 4: Estuary Economies in 2004 ........................................................................................ 43

Table 5: Proportion of State Economy in Estuary Regions ...................................................... 45

Table 6: Proportion of Estuary Region in Each State ............................................................... 46

Change: What Is Changing in Regional Economies, and At What Rates? .............................................. 47

Table 7: Economic Growth in Estuary Regions 1997-2004 .................................................... 48

Table 8: Employment Growth /Population Growth Ratio by Estuary Region.......................... 50

Table 9: Change in Urban Influence Classification 1993-2003................................................ 52

Table 10: Employment and Population Growth by Metro/Nonmetro....................................... 54

Table 11: Population and Employment Growth by Urban Influence Type............................... 55
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

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How Is Change Occurring in Estuary-Dependent Sectors Compared with Overall Rates of Change?... 59

Table 12: Tourism and Recreation Growth Compared with Overall Growth ........................... 60

Table 13: Tourism and Recreation as Percent of Economy and Growth 1990-2003................ 61

Applying Economic Analysis at the Local Level ...................................................................................... 62

Conclusion ............................................................................................................................................... 63

References ........................................................................................................................ 64

Chapter 4 – Estuarine Restoration and Commercial Fisheries .............................................................. 65

Background – Estuaries and Their Importance for Commercial Fishing................................................ 65

Trends in Estuarine-Dependent Harvests ................................................................................................ 66

Economics of Estuarine Restoration and Commercial Fishing ............................................................... 67

Estuarine Conditions and Supply of Commercial Fisheries .................................................................... 67

Estuarine Conditions and the Seafood Consumer.................................................................................... 69

Estimating Economic Impacts of Changes in Estuarine Condition on Commercial Fisheries ................ 70

Case Study – Estuarine Water Quality Conditions and Blue Crab Harvests........................................... 71

Measuring the Commercial Fishing Benefits of Estuarine Restoration – Meeting the Challenge........... 73

Literature Cited ................................................................................................................ 74

Table 1: 2004 Landings and Value of Top Estuarine Dependent Species Compared to Total 

Harvest by State and Region...................................................................................................... 76

Figure 1: The Value of the Top Estuarine Dependent Species Was 38% of fhe Total U.S. 

Harvest in 2004 ..................................................................................................................... 77

Figure 2: Chesapeake Bay Striped Bass Harvest, 1960–2004.............................................. 77

Figure 3: Total U.S. Commercial Landings and Top Estuarine-Dependent Species, 1985–

2004 ...................................................................................................................................... 78

Figure 4: Value of Total U.S. Commercial Landings and Top Estuarine-Dependent Species, 

1985–2004............................................................................................................................. 78

Figure 5: Estuarine Conditions Are Reflected in the Supply Curves for Fisheries Production 

(Si

 = impaired, Sb = baseline, and Sr = restored).................................................................. 79

Figure 6: Changes in Consumer Surplus under Varying Estuarine Conditions when Demand 

(D) Is Unaffected by Estuarine Conditions (Si

 = impaired, Sb = baseline, and Sr = restored).

.............................................................................................................................................. 79

Figure 7: Changes in Consumer Surplus under Varying Estuarine Conditions when Demand 

(Di

 = impaired, Db = baseline) Also Shifts with Environmental Quality (Si = impaired, Sb = 

baseline, and Sr

 = restored). .................................................................................................. 80

Figure 8: Dissolved Oxygen Levels in Different Years in Three Chesapeake Bay Tributaries 

During Months of Blue Crab Trotlining ............................................................................... 80

Figure 9: The Relationship Between Average Dissolved Oxygen Levels in Chesapeake Bay 

Tributaries and the Percentage of Stock Harvested by a Fixed (Sample Average) Amount of 

Trotline Gear......................................................................................................................... 81

Chapter 5 – Determining the Economic Value of Coastal Preservation and Restoration on Critical 

Energy Infrastructure ................................................................................................................................ 82

Introduction.............................................................................................................................................. 82

Perceived Conflicts Between Energy Production and Coastal Areas...................................................... 83

Potential Synergies between Coastal Restoration and Energy Infrastructure......................................... 84

Existing Literature on Coastal Restoration and Infrastructure Hardening ............................................. 85

Table 1: Richardson/Scott Estimated Economic Impacts, Short Oil Supply Outage (3 weeks)85
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

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Table 2: Richardson/Scott Estimated Economic Impacts, Short Natural Gas Supply Outage (3 

weeks)........................................................................................................................................ 85

Research Overview, Methods, and Results .............................................................................................. 86

Figure 1: Historic and Projected Land Loss......................................................................... 88

Figure 2: Potential At-Risk Energy Infrastructure ............................................................... 89

Figure 3: Storm Surge and Flooding Post-Katrina at Petrochemical Facility ....................... 90

Figure 4: Storm Surge Areas, Hurricanes Katrina and Rita ................................................. 91

Figure 5: Infrastructure in Hurricanes Katrina and Rita Inundation Zones.......................... 92

Figure 6: Potential At-Risk Infrastructure............................................................................ 92

Figure 7: Causes of Coastal Pipeline Ruptures, Historical and Projected Land Loss .......... 93

Conclusions.............................................................................................................................................. 94

References ........................................................................................................................ 95

Chapter 6 – Economic Benefits of Coastal Restoration to the Marine Transportation Sector............ 97

Introduction.............................................................................................................................................. 97

U.S. Marine Transportation Sector.......................................................................................................... 97

Links between Ports and the Environment............................................................................................... 99

A Framework for Estimating Restoration Benefits ................................................................................ 101

Conclusions............................................................................................................................................ 103

References ...................................................................................................................... 104

Table 1: Leading Exporters and Importers in World Merchandise Trade, 2004..................... 107

Table 2: U.S. International Merchandise Trade by Mode of Transportation, 2001 ................. 107

Table 3: U.S. Waterborne Foreign Trade by Region, 2003 ..................................................... 108

Table 4: U.S. Waterborne Foreign Trade by State, 2003......................................................... 109

Source: USDOT (2006).Table 5: Major U.S. Ports by Value of Cargo, 2003......................... 109

Table 5: Major U.S. Ports by Value of Cargo, 2003................................................................ 110

Table 6: Major U.S. Ports by Weight of Cargo, 2004.............................................................. 111

Table 7: U.S. Merchant Fleet, 2004......................................................................................... 112

Table 8: U.S. Marine Industry Sector Output and Employment, 2003.................................... 112

Table 9: Hurricane Katrina Damage Estimates for Louisiana’s Public Ports .......................... 112

Source: AAPA (2005).Table 10: Dredging Costs for FY 2005 ............................................... 112

Table 10: Dredging Costs for FY 2005.................................................................................... 113

Figure 1: Benefits from Coastal Restoration to Marine Transportation.............................. 113

Figure 2: Benefit Estimation: Natural Disasters.................................................................. 114

Figure 3: Benefit Estimation: Maintenance Dredging......................................................... 114

Case Study: Soil Erosion in the Maumee River Basin and Dredging in Toledo Harbor................... 115

Table 11: Annual Costs with and without Sediment Reduction .............................................. 115

Reference........................................................................................................................ 115

Chapter 7 – The Influence of Coastal Preservation and Restoration on Coastal Real Estate Values116

Introduction............................................................................................................................................ 116

Water and Property................................................................................................................................ 117

A Survey of the Literature ...................................................................................................................... 118

Case Studies from the Literature............................................................................................................ 119

Studies Using Hedonic and Conjoint Choice Methods to Determine the Importance of Water Quality 

to Property Prices .............................................................................................................................. 119

A. Leggett and Bockstael.............................................................................................................. 119

B. St. Mary’s River Watershed.................................................................................................... 120

C. Waukegan Harbor .................................................................................................................... 121

Studies Linking Other Water Bodies and Amenities to Property Values.......................................... 123
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

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A. Linking Risk and Insurance Rates to Property Values............................................................. 123

B. Estimated Premium Value of Waterfront Location or Water Views for a Range of Salt and 

Fresh Water Bodies (surrogates, assuming that estuaries are waterfront or nearly so)................. 124

Table 1: Summary of the literature findings ............................................................................ 126

Suggestions for Further Research.......................................................................................................... 128

References ...................................................................................................................... 131

Chapter 8 – The Economic Value of Coastal and Estuary Recreation ................................................ 140

Introduction............................................................................................................................................ 140

The Economic Value of Coastal Recreation: What’s at Stake? ............................................................. 142

Coastal and Estuary Recreation in the United States............................................................................ 143

Table 1: Coastal Recreation by State ...................................................................................... 145

The Economic Value of Coastal Recreation........................................................................................... 145

Building a Baseline of Economic Value............................................................................................ 145

Understanding and Estimating Recreational Values ......................................................................... 146

Figure 1: Activity Days as a Function of Accessing the Coast .......................................... 147

Figure 2: The Marginal Willingness to Pay for an Activity................................................ 148

Using Values from the Literature: Benefits Transfer and Value Ranges ............................................... 149

Benefits Transfer ............................................................................................................................... 149

Benefits Ranges................................................................................................................................. 150

Estimating a Baseline of Value .............................................................................................................. 150

Coastal Recreation................................................................................................................................. 150

Beach-Going...................................................................................................................................... 151

Table 2: Number of Annual Activity Days (millions) for Beach-Related Recreation in the 

United States (1999–2000) ...................................................................................................... 152

Table 3: Literature Review of Coastal Beach Visitation Studies for the United States .......... 153

Table 4: Estimated Annual Statewide Values of Beach-Going in the United States ($US 

millions)................................................................................................................................... 155

Recreational Fishing.......................................................................................................................... 156

Table 5: Literature Review of Coastal Recreational Fishing Studies for the United States.... 156

Table 6: Estimated Annual Statewide Values of Coastal and Estuary Recreational Fishing in 

the United States ($US millions) ............................................................................................. 159

Birdwatching and Whale Watching................................................................................................... 159

Table 7: Literature Review of Coastal and Marine Wildlife Viewing Studies for the United 

States........................................................................................................................................ 160

Table 8: Estimated Annual Statewide Values of Marine Wildlife Viewing (based on 

birdwatching activity) in the United States ($US millions) ..................................................... 161

Scuba Diving and Snorkeling............................................................................................................ 161

Table 9: Literature Review of Coastal Scuba Diving Studies for the United States ................ 162

Table 10: Estimated Annual Statewide Values of Scuba Diving in the United States ($US 

millions)................................................................................................................................... 163

Table 11: Literature Review of Coastal Snorkeling Studies for the United States .................. 164

Table 12: Estimated Annual Statewide Values of Snorkeling in the United States ($US 

millions)................................................................................................................................... 164

Coastal Recreation Is Valuable. So What? ............................................................................................ 164

Table 13: Estimated Annual Value of Select Coastal Activities in the United States............. 165

Recreational Use Value and Habitat Restoration.................................................................................. 166

Table 14: Links Between Environmental Conditions and Coastal Recreation ........................ 167

CASE STUDY: Economic Value in the Sunshine State .................................................................. 167

Table 15: Annual Participation in Coastal Recreational Activities in Florida ......................... 168

(1999/2000).............................................................................................................................. 168
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

v 

Table 16: The Potential Range of Economic Use Values for the Florida Coast ...................... 168

References ...................................................................................................................... 169
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

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The Economic and Market Value of America’s 

Coasts and Estuaries: What’s At Stake 

Foreword 

“America’s oceans and coasts are priceless assets. Indispensable to life itself, they 

also contribute significantly to our prosperity and overall quality of life. Too 

often, however, we take these gifts for granted, underestimating their value and 

ignoring our impact on them.” 

An Ocean Blueprint for the 21st Century: Final Report of the U.S. Commission on Ocean Policy, 

Recognizing Ocean Assets and Challenges, page 1. 

Our nation was built from the coast. The original colonies were founded on the coast. 

The Louisiana Purchase wasn’t just the largest land deal of its time, it was the largest 

transfer of wetland acreage in history. Americans, like people around the world, are 

drawn to the coast because of its beauty and productivity, and because our coasts are 

gateways to the world. The coast nurtures our frontier spirit, our need for outdoor 

recreation, and the constant American appetite for sweeping ocean views and quiet 

bayfront vistas. 

Because much of the American coast is made up of shifting sands or craggy cliffs, our 

use of the coasts historically has been concentrated in estuaries—the bays, coves, and 

river mouths where access is easy and safe harbor can be found. These areas are also 

special because of their biological importance to the nation. These estuaries, where 

freshwater meets the sea, are a fundamental cornerstone of ocean fisheries and 

aquaculture. Estuaries also generate oxygen, sequester carbon dioxide, and provide 

habitat to plants and animals, both marine and terrestrial. 

Unfortunately, we have a poor record of caring for our coasts and oceans. Years of badly 

planned coastal development have led to heroic, and sometimes desperate, measures to 

hold back the forces of nature by using engineering might rather than ecological 

stewardship. Seawalls have transformed once natural coasts into marine hazards unfit for 

the basic activities that first drew homeowners to the sea—swimming, boating, and 

fishing. Estuaries also have been under siege. 

Seen by many as bottomless pits where we can dump society’s refuse, estuaries have 

been poisoned across the country. Bays once filled with fish and oysters have become 

dead zones filled with excess nutrients, chemical wastes, and harmful algae. Wetlands, 

especially coastal salt marshes, have faired no better. When Mark Twain said “land was 

something they aren’t making any more of,” he probably never thought his country would 

begin a systematic program of filling coastal wetlands to create new waterfront property. 

But that is exactly what happened. Worse yet, coastal wetlands that were not filled were 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

2 

often dredged for harbors and marinas. The result has been a loss of more than half of 

the nations wetlands over the past 200 years1

. 

The damage and destruction borne by our coasts and estuaries has created more than 

physical and biological losses for our country. This damage also has diminished the 

economic productivity of the nation and the economic wellbeing of the millions of 

Americans who visit, use, and depend on the coast and the goods and services it provides. 

New efforts to protect restore America’s estuaries and coasts are likely to recapture much 

of this lost economic value and, in some cases, improve the economic importance of 

these areas to levels not see in generations. 

In this book, we examine the economic value of our coasts and estuaries with an eye to 

understanding the economic benefits of protecting and restoring America’s coasts and 

estuaries. The economic potential and value of the coast is richer and more complex than 

most people realize. Coasts and estuaries generate both economic value and economic 

impact—an important subtlety often overlooked in coastal development and planning. 

Coasts generate goods and services that are consumed through extraction (e.g., seafood); 

values that are never extracted, such as scenic views; and gases, such as oxygen, that are 

consumed globally. 

Understanding, accounting for, and estimating the many potential economic benefits of 

coastal and estuarine protection and restoration is no small feat. In this book, we 

introduce some of the critical concepts needed to begin to understand the economic 

importance of restoration. In Chapter 1, we introduce the basic economics tools, ideas, 

and methods used to value and quantify the economic contribution of coasts. (Readers 

with advanced knowledge of economics can skip this chapter.) In Chapter 2, Matthew 

Wilson and Stephen Farber develop an overarching framework of the economic goods 

and services provided by coasts and estuaries. This framework provides a way for 

readers to navigate the complexity of the economic system supported by coasts and helps 

identify those components of restoration that may generate the most substantial economic 

value. 

Protecting and restoring our coasts requires a hands-on, “boots on the ground” approach 

to guarding and even resurrecting the value that lies within our coasts and estuaries. In 

the remaining chapters, an expert panel of authors takes an appropriately hands-on 

approach to understanding the economic activity and value generated by key sectors of 

U.S. coasts and estuaries. Healthy coasts support jobs and wages, and improve housing 

values. Estuaries continue to be important producers of seafood and are the hubs of the 

nation’s international trade. Coasts provide recreational opportunities for nearly half of 

all Americans, generating tens of billions of dollars of economic value—far more value 

than is commonly recognized. Coasts also are home to a large share of the nation’s 

energy refining and distribution infrastructure. The health of coastal ecosystems, 

especially coastal wetlands, directly affects the economic vitality and resilience of the 

U.S. gas and petroleum industry. 

 

1

 http://www.nmfs.noaa.gov/habitat/habitatprotection/wetlands/index2c.htm 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

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The chapters that follow will guide readers through the current state of the art in our 

understanding of the links between coastal and estuarine condition and economic activity. 

These chapters will also move beyond literature and theory to show the potential 

magnitude of economic value and activity associated with selected coastal-dependent 

economic activities. In every chapter, we offer real data and guidance about how to find 

locally relevant data that may help readers understand the value of restoration in their 

state, county, or bay. We also provide case studies that show how economic concepts, 

data, and analysis can help reveal the economic value of protecting these resources and 

even improving these values through restoration. 

We encourage you to use this book as a primer, a reference, and a launching point for 

your own efforts to understand the potential economic benefits of coastal restoration 

where you live and work. The book is the seed of a living project to provide restoration 

professionals with the economic information and guidance needed to design, monitor, 

and implement coastal and restoration projects. Updates to chapters, new chapters, and 

links to the types of data found in this book are available online at www.estuaries.org and 

www.coastalvalues.org. 

Best wishes, 

Linwood Pendleton 

The Ocean Foundation 

Restoration Economics Advisor, Restore America’s Estuaries 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

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Chapter 1 – Understanding the Economics of the Coast: An 

Introduction to this Volume 

Linwood Pendleton 

The Ocean Foundation 

Coasts and estuaries affect people in many ways. The coast provides a place to live and 

recreate. Estuaries provide food for our growing population and shelter for boats, homes, 

and ports. And coasts and estuaries have direct and indirect effects on our physical, 

emotional, and personal wellbeing. Restoration of these coastal areas, likewise, will 

affect the personal and economic wellbeing of many people. 

Economic wellbeing means different things to different people. For some, economic 

wellbeing means having a good job. For others, economic wellbeing means happiness 

that sometimes comes at a financial cost (e.g., the cost of living near the beach). For 

politicians and public officials, economic wellbeing means economic activity, sustainable 

taxes, and funding for public projects. The quality of coastal and estuary areas and 

access to these areas influence all of these measures of economic wellbeing. 

Economics provides a framework for discussing and quantifying the effects that coasts 

and estuaries have on one aspect of personal wellbeing—our economic wellbeing. 

Unfortunately, the language of economics often is in terms we all know (value, impact, 

welfare), but the concepts that underlie economic terms often differ substantially from the 

meaning of these terms in everyday conversation. In this chapter, we provide a very brief 

introduction to the language and concepts of economics that every coastal professional 

and student needs to know to understand the economics of coasts and estuaries. The 

chapter is not intended as a comprehensive resource—we will point you to these 

resources along the way. Instead, the chapter is a quick run through the language and 

culture of economics. We hope you enjoy the trip. 

It’s All About Values (Economic Values, That Is)

Everyone thinks they understand value; value is part of everyday life. There are spiritual 

values, religious and moral values, good values on used cars, and the list goes on. When 

most people talk about the value of the coast, they might be talking about any of these 

values. When economists speak of values, however, the definition is much more narrow. 

For economists, value represents how much the use of a resource improves the economic 

wellbeing of one person or of society at large. 

For economists, economic wellbeing is an amalgam of values known as Total Economic 

Value (see http://www.csc.noaa.gov/coastal/economics/envvaluation.htm for a discussion 

of total economic value). Total economic value includes the value we place on goods 

that we can use directly (use value), the value we place on goods we use only indirectly 

(indirect use value), and even the value we place on goods we may never use (non-use 

value). Use value includes the value we place on fish we catch, trips to the beach, or the 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

5 

ability to see wonderful seascapes and salt marshes. The coast also produces many goods 

and services we do not use directly, but which support the production of things we do 

use. For instance, estuary habitats provide a nursery for many types of the fish we eat. 

Salt marshes may act to reduce bacterial contamination of runoff and in doing so provide 

clean water for swimming and surfing; their intertidal vegetation draws carbon from the 

atmosphere (as carbon dioxide) and sequesters it in roots and marsh soils, reducing one of 

the most abundant greenhouse gases (GHG). 

Many people value coasts and estuaries even if they never plan to visit these places or use 

the goods and services they provide. Some people would pay to protect a coast and its 

inhabitants (say, the Big Sur Coast of California and its many otters, elephant seals, and 

sharks) just to know it exists. This non-use value is called an existence value. People 

may also be willing to pay so that they may have a future opportunity to enjoy the coast 

and its many benefits (option value) or so future generations have this opportunity 

(bequest value). 

More recently, the taxonomy of values we enjoy from natural environments has been 

refined to include even finer distinctions (Agardy et al. 2005). In Chapter 2, Wilson and 

Farber take this new taxonomy one step further and apply it specifically to the goods and 

services we derive from healthy coasts and estuaries. 

Of course, it is one thing to identify coastal economic values, and another thing entirely 

to estimate these values. As a start, economists attempt to measure economic value by 

estimating the maximum one would pay to use a resource minus the actual cost of 

providing access to that resource. Why is this a measure of economic wellbeing? 

Consider the vernacular meaning of “a good value,” which usually is taken to mean that 

you paid a lot less for something than you thought it was worth. I grew up eating crabs in 

the little town of Deltaville, Virginia, on the Chesapeake Bay, where a simple softshell 

crab sandwich cost $2.50. That was a value even then! The same softshell crab 

sandwich served in Norfolk, Virginia, cost $7.00. Not much of a value, but I’d still buy 

one every now and then. But when I moved west to California, the cheapest softshell 

crab you could find anywhere was a minimum of $9.00, even without the bread and 

mayonnaise! The high cost is understandable. These crabs have to take a long flight to 

end up between two pieces of white bread in southern California, and the $9.00 cost 

reflects other potential uses of that cargo space and jet fuel. That’s just not worth it to me 

and flying crabs to the West Coast to fulfill my culinary wants also does not make sense 

from society’s perspective. Consequently, I only eat softshell crab sandwiches when I’m 

back on the Chesapeake, and I still have not convinced anyone that I deserve a crab 

sandwich subsidy from the government. 

The point of this story is that, for economists, the term “value” comes from the idea of 

value added—the amount society benefits from something beyond what it costs society to 

make it, provide it, or protect it for use. Value is not the same thing as price! People buy 

things in the market as long as their maximum willingness to pay for that thing is greater 

than the private cost of that thing. Let’s say you are out to dinner with friends and you 

decide you want some oysters on the half shell. If oysters are $1.00 each, then you might 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

6 

buy a half-dozen oysters. If you arrived and there were only one oyster, you might have 

been willing to pay much more than $1.00 for that oyster, maybe $6.00, especially if 

someone at the other table is asking about the same oyster. If there were two oysters, 

how much would you have paid for each, $4.00 apiece? 

For everything people consume, enjoy, or use in some way, there exists a relationship 

between the maximum amount someone would be willing to pay each time to enjoy this 

activity (whether it is eating an oyster or going to the beach) and the number of times 

they participate in this activity (say the number of oysters bought and eaten or the number 

of trips to the beach over the summer). Economists call the willingness to pay for one 

more of something the marginal willingness to pay (mWTP) and the total amount 

consumed or enjoyed is the quantity demanded (Q). The relationship between mWTP 

and Q is given by the demand function (Figure 1). We can estimate real demand 

functions, for oysters say, by looking at how many oysters people buy when oysters are 

available at different prices. (When we add this up across all oyster consumers, we get a 

market demand function,) Almost without exception, the more we consume of any good 

or activity, the less we are willing to pay for one more chance to enjoy it. At some point, 

you just can’t eat any more oysters! At that point your willingness to pay for another 

oyster is zero. 

Of course, oysters are not free, so we rarely have the luxury of eating until our hearts are 

content (also known as mWTP=$0.00). Harvesting oysters is costly. Growing oysters is 

often even more costly. The cost of providing additional oysters for the market climbs as 

the number of oysters brought to market increases (this is the marginal cost of oysters and 

is represented by the supply function in Figure 1). These costs reflect the real cost of 

getting oysters from seabed to table and include the cost of fuel, vessel maintenance, 

labor, inspection, transport, and delivery. In all cases, society has literally hundreds of 

other ways in which this kind of energy (human and petroleum) and equipment could 

have been used. When we apply these “factors of production” to oystering, we are taking 

them out of the economy. In the marketplace, the cost of these goods not only reflects 

the costs of production, but the economic value of these goods had they been used 

elsewhere in society (economists call this opportunity cost). For instance, consider that 

the diesel fuel an oysterman put in his boat could have been used to run a tractor to 

produce vegetables. This means that, from society’s point of view, the provision of 

oysters to the market had better generate added value. In fact, the market guarantees that 

oysters are only brought to market if the private value from buying and eating oysters is 

greater than the private cost of providing oysters. People continue to buy oysters and 

oyster harvesters and growers provide oysters as long as at least one person is willing to 

pay the costs of producing that last oyster and getting it to market. After that point, it is 

in no one’s interest to bring more oysters to market—consumers will not pay the 

increased cost, oyster producers will not sell for less, and society would be worse off if 

more time, energy, and money were invested in oyster production. 

The difference between the maximum that people would be willing to pay for something 

and the cost of providing that thing is what economists call “value.” In Figure 1, the 

demand function represents how much an individual (or society, when adding across all 

individuals) would be willing to pay for each unit of Q if we could somehow make them 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

7 

pay for each unit as they consumed it. The area under the demand function (A+B+C) 

then represents the maximum amount the individual (or society) would be willing to pay 

for Q (if they had to pay). The supply function represents how much it costs a producer 

(or society, if added across all producers) to produce each unit of Q if we could somehow 

track the cost as production increases (we call this marginal cost or MC) and the area 

under this supply function (C) is the total cost of production. Following the logic we 

outlined above, economic value is the difference between maximum willingness to pay 

minus the cost of production (areas A+B). In a market where Q is sold at price P (where 

P* is the market price of oysters and Q* is the total amount of oysters purchased), the 

consumer enjoys a value equal to area A (the consumer surplus) and the producer enjoys 

a value equal to area B (the producer surplus, a concept very closely related to profit). 

Figure 1 tells us at least three important things we need to keep in mind when thinking 

about the coastal economy. First, spending, and thus revenues, associated with coastal 

economic activity sets an upper bound on producer surplus, but tells us nothing about 

consumer surplus and thus nothing about the economic value of an activity. Second, 

people place a higher value on something when they can get it cheaper or for free. Many 

coastal activities are available at little or no cost, especially to local users, while nonresidents and tourists have to pay to travel to use these areas. As a result, these local 

users usually enjoy the greatest economic benefit from the provision of coastal goods and 

services. It also is true that many coastal economic activities that generate few revenues 

still generate significant economic value (e.g. birdwatching and beach-going). Third, in a 

well-functioning market, where producers only sell if they want to and consumers only 

buy if they want to, the market achieves a balance that maximizes economic value. 

When a market does not exist for something, however, there is no reason to believe that 

society will provide the best level of access or use of a resource. So when coastal goods 

and services fall outside of the market, we should be concerned that the access to coastal 

resources may not be socially optimal (and in virtually all cases is well below the social 

optimum.) 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

8 

In practice, measuring the economic value of products is difficult, and so statistics 

regarding the economic value of marketable coastal goods and services are rare. 

Generally, economists tend to fall back on market prices and expenditures or revenues. 

In Figure 1, the gross revenues for oysters (known as the landed value when measured at 

the dock) are given by the areas B + C or P*x Q* where P* is the market price of oysters 

and Q* is the total amount of oysters purchased. This value is not consumer surplus (area 

A) nor is it the producer surplus (area B), and so these gross revenues do not tell us much 

about the contribution oyster production makes to the wellbeing of society. 

A focus on gross revenues and expenditures places a great deal of attention on coastal 

activities that produce marketable goods while other activities (say birdwatching or 

surfing) may go unquantified from an economic perspective. As a result, too much 

attention may be given to the provision of marketed goods on the coast and too little 

attention given to other, non-marketed but economically valuable activities. As we 

discussed before, many coastal resources that are free or available at relatively low cost 

may have very high value! Since expenditures are not necessarily indicative of value, 

development that favors marketed goods at the expense less-marketed goods may not be 

in the best economic interests of society. 

Many coastal goods and services are not marketed because they cannot be captured and 

sold directly in the market. Consider fishing at a public pier or swimming at a public 

beach. In both cases, local laws or customs may make charging for access impractical. 

In other cases, coastal goods and services may simply defy capture and sale—oxygen 

produced by the ocean, sea views, and the use of the ocean’s surface for boating and 

surfing. When there is no mechanism to permit the capture and sale of something, it is 

said to be non-exclusive. Further, in some cases a good is not marketed because it cannot $/oyster 

B

A 

Demand (mWTP) for oysters 

Supply (MC) of oysters 

C

P

*

Q oysters Q

*
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

9 

be made “private.” When a good or service is non-exclusive and the enjoyment of that 

good by one person does not preclude or affect the enjoyment of that same good by 

someone else, we say that good is a public good. 

Unlike many other parts of our economy, coasts and oceans provide an unusually large 

number of economic goods and services that are difficult to introduce into the 

marketplace. In fact, many of these “difficult to market” coastal goods are entirely public 

in nature. As a result, a failure to understand the economic value of these goods and 

services would certainly impair our ability to appropriately manage the coast and ocean 

for the best economic outcome. In Chapter 2, Matthew Wilson and Stephen Farber 

provide a framework for classifying both marketed and non-marketed goods and services 

produced by coasts and oceans. In Chapter 8, we take a detailed look at the economic 

value of recreation along the coast by reviewing the literature to understand the potential 

consumer surplus of coastal recreational activities. The goal is to expand the reader’s 

understanding and appreciation for the important economic contribution of coastal goods 

and services that fall outside the traditional economic point of view. 

Economic Value vs. Economic Impact 

When many people talk about economic value, they are really talking about economic 

impact (or economic activity). Economic impact represents how much money, jobs, and 

taxes are generated by an activity. For instance, gross revenues from sales of oysters 

support jobs and local businesses, and form the basis against which sales taxes are levied. 

While gross revenue does not provide any information about economic value, these 

figures are important because they are easily measured and provide a good starting point 

for understanding the economic contribution oysters make to the local economy, 

especially the tax base. In chapters 3, 4, 5, and 6, the authors examine the economic 

impacts of coastal business activity (gross domestic product), fisheries, oil production 

and refining, and marine transportation. 

Employment and wages also represent economic impacts of an activity. In some cases, 

local or federal agencies attempt to estimate employment and wages directly by 

censusing firms (visit the National Ocean Economics Program, 

www.OceanEconomics.org to see data on employment and wages that are derived 

directly from firms.) In some cases, however, such data are not available. For instance, 

we may be interested in knowing specifically about employment associated with only 

those hotels located directly on a stretch of Narragansett Bay. Federal reporting laws 

make revealing employment and earnings information for small areas difficult. 

Nevertheless, it is possible to survey local hotel visitors, estimate their spending on 

lodging, and from this estimate the number of jobs supported by tourist spending on local 

hotels (see, for instance, Leeworthy and Wiley’s 2003 estimate of employment and wages 

associated with the Channel Islands National Marine Sanctuary). 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

10 

Economic value and economic impact cannot be compared directly. Without appropriate 

research, it is difficult to know how much of gross output or revenues (areas B + C or 

P*x Q*) can be considered economic value (areas A+B). It is always the case that the 

true producer surplus (area B in Figure 1) is substantially less than gross revenues (areas 

B + C or P*x Q* where P*), but the relationship between gross revenues and consumer 

surplus is unknown. 

Even though economic value and impact are not comparable, we often find ourselves 

making comparisons anyway. The reason for this is simple: much of the debate about 

environmental protection and management comes down to jobs and revenues vs. the 

environment. On the business side (including commercial fishing), our data largely are 

derived from measures of economic impact. On the non-commercial side, which includes 

many of the beneficiaries of coastal management and restoration, we measure the 

contribution of environmental improvement in terms of economic value (usually 

consumer surplus). When we compare economic impact to economic value we 

automatically put the non-commercial users at a distinct disadvantage against 

businesses—economic revenues always overstate the economic value to the producer. 

Nevertheless, as we see in Chapter 8, the non-commercial economic value of coastal uses 

can be very high. For recreational uses, Pendleton conservatively estimates that the 

economic value of coastal recreation in the United States is on the order of $20 billion to 

$60 billion annually for beach-going, angling, birdwatching, and snorkeling/diving—a 

figure that shows the value of these activities to U.S. residents beyond what they pay to 

enjoy these opportunities. 

The Chapters That Follow 

In the chapters that follow, the authors explore both the economic value of coastal uses 

(Chapters 2, 7, and 8) and the economic impact and activity of certain coastal and 

estuarine economic sectors (Chapters 2, 3, 4, 5, and 6.) In doing so, we hope to introduce 

the many ways in which estuarine and coastal restoration can affect the economy. These 

chapters are starting points for the reader. The bibliographies serve as excellent resources 

for those interested in learning more about the economic and market impacts of 

restoration. Readers will also find detailed case studies that highlight the economic 

contributions of the coast, estuaries, and the restoration of these special resources. 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

11 

References: 

Agardy, T., Alder, J., Dayton, P., Curran, S., Kitchingman, A., Wilson, M. A., Catenazzi, 

A., Restrepo, J., Birkeland, C., Blaber, S., Saifullah, S., Branch, G., Boersma, D., 

Nixon, S., Dugan, P., Davidson, N., Vorosmarty, C. 2005. Coastal Systems: An 

Assessment of Ecosystem Services In Ecosystems and Human Well-Being: 

Current States and Trends, ed. (Millennium Ecosystem Assessment), 515-49 pp. 

Island Press. Washington, D.C. 

Leeworthy, V.R. and P.C. Wiley. 2003. Socioeconomic Impact Analysis of Marine 

Reserve Alternatives for the Channel Islands National Marine Sanctuary. 

National Ocean Service. National Oceanic and Atmospheric Administration, 

Silver Spring, MD. 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

12 

BASIC GUIDES TO ECONOMIC CONCEPTS AND METHODS

Economic Valuation of Natural Resources: A Guidebook for Coastal Resources 

Policymakers 

http://www.mdsg.umd.edu/programs/extension/valuation/handbook.htm 

This online book is written for non-economists, addressing basic concepts of economic 

value and other tools often used in decision making. 

Ecosystem Valuation 

http://www.ecosystemvaluation.org/index.html 

This website is designed for non-economists who "need answers to questions about the 

benefits of ecosystem conservation, preservation, or restoration and 'providing' a clear, 

non-technical explanation of ecosystem valuation concepts, methods, and applications." 

Environmental Valuation: Principles, Techniques, and Applications 

http://www.csc.noaa.gov/coastal/economics/envvaluation.htm 

This is found on CSC’s website under Restoration Economics. 

Ocean and Coastal Resource Management 

Basic principles of economics with links to various methods can be found at: 

http://coastalmanagement.noaa.gov/initiatives/shoreline_eco_prin_sup.html 

MARINE ECONOMIC DATA ON THE WEB

The National Ocean Economics Program 

http://www.oceaneconomics.org 

The NOEP provides a full range of the current and historical economic and socioeconomic information available on changes and trends along the U.S. coast and in coastal 

waters. The site includes time-series information of economic and social indicators with 

clear definitions and descriptions for the coast and coastal ocean. 

Non-market Literature on Coastal and Ocean Resources 

This is a searchable database, with abstracts and some links to full text articles, for all 

known journal articles and technical reports that provide value estimates for the economic 

value of coastal and ocean resources in the United States. Enter this site through 

http://www.oceaneconomics.org, choose Non-market and then choose valuation studies. 

NOAA's Coastal and Ocean Resource Economics 

http://marineeconomics.noaa.gov/ 

CORE projects include socioeconomic monitoring in the Florida Keys National Marine 

Sanctuary, the first-ever nationwide estimate of participation rates in marine-related 

recreation activities, an extensive beach valuation effort in Southern California, and many 

other research activities. 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

13 

Spatial Trends in Coastal Socioeconomics (STICS) 

http://marineeconomics.noaa.gov/socioeconomics/ 

The STICS website provides socioeconomic data by coastal area or watershed, as well as 

access to multiple tools that can be used to customize, analyze, and generate reports 

based on these data across time and space. 

Coastal Information Directory (CID) 

http://www.csc.noaa.gov/cgi-bin/id/cid2k/cid2k.cgi?page='lrl' 

CID provides access to web, library, and data resources relevant to coastal issues. The 

information can be browsed by library, data set, or pre-selected category. 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

14 

Chapter 2 – Accounting for Ecosystem Goods and Services in 

Coastal Estuaries 

Matthew A. Wilson 

School of Business Administration and The Gund Institute for Ecological Economics, 

University of Vermont 

Stephen Farber 

Graduate School of Public and International Affairs, University of Pittsburgh 

Introduction 

Throughout history, humans have favored coastal locations as desirable places to live, 

work, and play. Forming a highly dynamic zone of convergence between land and sea, 

the coastal regions of the earth serve as unique geological, ecological, and biological 

domains of vital importance to a vast array of terrestrial and aquatic life (Agardy et al.

2005; UNEP 2006; Wilson et al. 2005). Given this abundance, it is perhaps not surprising 

that coastal estuaries have long served as a focal point for human activity on planet Earth. 

Early on, estuaries—bodies of water where oceans and rivers meet—served as places of 

relative shelter that also provided staging areas for harvesting food and fiber. As trading 

between human settlements developed, major ports often grew up near estuaries to offer 

sea-going vessels protection and provide access to the interior via freshwater river 

systems (e.g., London, Shanghai, Alexandria, and San Francisco). The industrial 

revolution increased the use of the coastal zone not only for the transport of raw materials 

and finished goods, but also for new uses such as water extraction and the discharge of 

waste. With the ascendance of late-industrial society, recreational aspects of the coastal 

zone have increased in importance, as inland waterways, stretches of beach, coral reefs, 

and rocky cliffs provide opportunities for leisure activity. 

Due to this rich abundance, today there are few if any coastal estuaries that have not been 

affected in some way by human intervention (Agardy et al. 2005; Vitousek et al. 1997; 

Wilson et al. 2005; Lotze et al. 2006). Just the fact that so many people live in close 

proximity to the coastal zone is a form of pressure on the natural structures and processes 

that provide the goods and services people desire. The population and development 

pressures that estuarine areas are now experiencing raise significant challenges for 

planners and decision makers. Communities must often choose between competing uses 

of the coastal environment and the myriad goods and services provided by healthy, 

functioning ecosystems. Should this shoreline be cleared and stabilized to provide new 

land for urban development, or should it be restored to its natural state to serve as wildlife 

habitat? Should that wetland be drained and converted to agriculture, or should more 

wetland area be created to provide water filtration services? Should this inlet be dredged 

and mined for the production of sand and gravel, or should it be preserved to provide 

natural tidal flow? 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

15 

To choose from these competing options, it is important to know what ecosystem goods 

and services will be affected by coastal development or management and how these 

goods and services create value for different members of society (Farber et al. 2006). 

When confronting decisions that require tradeoffs between different ecosystem services, 

decision makers cannot escape making social choices: whenever one alternative is chosen 

over another, that choice indicates which alternative is deemed to be worth more than 

other alternatives. In this paper, we show that any effort to choose between the benefits 

associated with coastal estuaries should begin with a rigorous understanding of the many 

ecosystem goods and services that could be produced by these complex systems. 

Classifying Ecosystem Goods and Services Provided by Estuaries 

Coastal estuaries include a variety of geophysical structures, including coastal plain 

estuaries (Chesapeake Bay), tectonic estuaries (San Francisco Bay), bar-built estuaries 

that form lagoons or bays (Barataria-Terrebonne), and fjords (Kenai). One common 

feature of estuaries is the presence of complex hydrodynamic and nutrient fluxes that 

result from the intermixing of fresh and saline waters. This intermixing creates salinity 

gradients that allow for the survival of a rich array of fauna and flora. The physical 

transport of sediments and nutrients also results in unique geophysical features such as 

bars, mud flats, lagoons, and wetlands that offer habitat for an extremely diverse group of 

organisms. Estuaries are the year-round home for many species (oysters), while other 

species move in and out of estuaries on a seasonal basis for reproduction and growth 

(salmon and shrimp). 

This rich array of estuarine types and associated flora and fauna provides a diverse 

mixture of goods and services to humans worldwide. An ecosystem service, by 

definition, supports “the conditions and processes through which natural ecosystems, and 

the species that make them up, sustain and fulfill human life” (Daily 1997). Ecosystem 

goods, on the other hand, represent the material products that are obtained from natural 

systems for human use (DeGroot et al. 2002). Ecosystem goods and services occur at 

multiple scales, from climate regulation and carbon sequestration at the global scale, to 

flood protection, water supply, soil formation, nutrient cycling, waste treatment, and 

pollination at the local and regional scales (DeGroot et al. 2002; Heal et al. 2005). They 

also span a range in the degree of direct connection to human wellbeing. 

Accurate definition and classification of ecosystem goods and services is an essential 

preliminary step in the valuation of coastal estuaries. In this paper, we adopt a modified 

version of the newly standardized system developed in the U.N.-sponsored Millennium 

Ecosystem Assessment (Millennium Ecosystem Assessment 2003) and adapt that system 

to a previously developed typology of ecosystem goods (DeGroot et al. 2002; Farber et 

al. 2006). The general categorization of goods and services adapted from the Millennium 

Ecosystem Assessment (2003) is reproduced below in Figure 1. 

Figure 1: Millennium Ecosystem Assessment Categorization of Ecosystem Goods and 

Services 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

16 

In an important departure from the previous literature on ecosystem services (Costanza et 

al. 1997; Daily 1997), the Millennium Assessment classification introduced “supporting 

services” as a new classification of services provided by ecosystems. While not providing 

direct services themselves, this new type of service, which includes nutrient cycling and 

soil formation, is necessary for the production of the other three service categories: 

regulating services, provisioning goods and services, and cultural services. As the list 

suggests, there is no single category that captures the entire diversity of what functioning 

ecological systems provide to humans. 

In Tables 1 through 4, we take the Millennium Ecosystem Assessment classification 

system a step further, using the framework to identify specific goods and services 

provided by estuaries and match them with relevant ecosystem functions. The end result 

is a classification of different types of ecosystem estuarine structures and functions and 

the types of goods and services we expect to be provided by them. 

Table 1: Supporting Services Provided by Estuaries 

Supportive Services Ecosystem structures and functions that are essential to the delivery of ecosystem 

services 

Nutrient cycling Storage, processing, & 

acquisition of nutrients 

Net Primary Productivity 

Soil formation Capture of sediments and 

accumulation of organic matter 

Formation of wetlands substrate and soils 

Biological regulation and 

biodiversity 

Species interactions, including 

pollination 

Control of pests and diseases 

Reduction of herbivory 

Pollination of wetlands plants 

Habitat The physical place where 

organisms reside 

Refugium for resident & migratory species 

Spawning and nursery grounds for shrimp and 

other fish 

Hydrological cycle Movement and storage of H2O 

through the biosphere 

Aquifer recharge 

Maintain salinity gradients 

Regulating

Benefits obtained from 

regulation of 

ecosystem processes

• climate regulation

• disease regulation

• flood regulation

Provisioning

Goods produced or 

provided by 

ecosystems

• food 

• fresh water

• fuel wood

• genetic resources

Cultural

Non-material benefits 

from ecosystems

• spiritual 

• recreational 

• aesthetic

• inspirational

• educational

Supporting

Services necessary for production of other ecosystem services

•Nutrient Cycling

• Soil Formation

• Primary production

Regulating

Benefits obtained from 

regulation of 

ecosystem processes

• climate regulation

• disease regulation

• flood regulation

Provisioning

Goods produced or 

provided by 

ecosystems

• food 

• fresh water

• fuel wood

• genetic resources

Cultural

Non-material benefits 

from ecosystems

• spiritual 

• recreational 

• aesthetic

• inspirational

• educational

Supporting

Services necessary for production of other ecosystem services

•Nutrient Cycling

• Soil Formation

• Primary production
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

17 

As Table 1 shows, estuaries are complex ecological systems that provide a wide array of 

goods and services. For example, the nutrient cycling of estuaries provides critical 

supportive functions essential for the delivery of ecosystem services to humans (Lugo & 

Snedaker 1974). The fertility derived from nutrient cycling and the hydrological cycle in 

turn creates habitat that supports a vast array of fish, mammals, birds, and reptiles, many 

of which are important as human food sources and as cultural services, such as recreation 

and research (Ruitenbeek 1994). Chapter 4 addresses the effects of estuarine health on 

fish harvest. The accumulation of organic matter and the capture of sediments from 

upriver also form rich substrate and soils that are essential to agricultural production 

worldwide (Rivas & Cendrero 1991). 

Table 2: Regulating Services Provided by Estuaries 

Regulating services delivered by estuaries are especially important to humans. These 

services (listed in Table 2) include disturbance regulation, which involve the wind and 

flood protection afforded by coastal wetlands (Farber 1987). A study of Hurricane 

Andrew in 1993 concluded that storm surge in coastal Louisiana is reduced by 1 foot if 

intervening wetlands are increased 3.8–4.3 miles, depending on location (CWPRA 2006). 

In Chapter 5, Dismukes examines the relationship between coastal erosion and energy 

infrastructure in the Gulf of Mexico. Biochemical processes in estuaries also provide for 

the detoxification of human-based wastes that are commonly generated by coastal 

urbanization. Detoxification creates health benefits from direct water contact, and 

indirectly through food consumption (Kawabe & Oka 1996). Vegetation in some 

estuarine systems, such as wetlands and mangroves, provides for erosion control, 

reducing both the influx of sediments and coastal retreat (Tovilla-Hernandez et al. 2001). 

Estuaries also create their own climate conditions (wind, temperature, and moisture) 

which may moderate climate gradients for people living near the coast (Johnston et al. 

2002). 

Regulating Services Maintenance of essential ecological processes and life support systems 

Gas regulation Regulation of the chemical 

composition of the atmosphere 

and oceans 

Biotic sequestration of CO2 

Vegetative absorption of VOCs 

Climate regulation Regulation of local and global 

energy balance & hydrological 

cycle, and other biologically 

mediated climate processes. 

Direct influence of land cover on temperature, 

precipitation, wind, humidity, etc. 

Disturbance regulation Dampening of environmental 

fluctuations/disturbance 

Storm protection (e.g., by barrier islands) 

Flood protection (e.g., by wetlands and forests) 

Soil retention Erosion control and sediment 

retention 

Prevention of soil loss by wind, wave action, 

runoff, or other removal processes from wetlands 

and barrier islands 

Waste Assimilation Removal or breakdown of 

nutrients and compounds 

Pollution detoxification and sequestration 

Water purification 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

18 

Table 3: Provisioning Services Provided by Estuaries 

As discussed earlier, estuaries are exceedingly rich ecological systems, thereby providing 

a number of essential natural resources and raw materials that people value (Janssen & 

Padilla 1999; Tovilla-Hernandez et al. 2001). Provisioning services listed in Table 3 

include foodstuffs such as edible plants and animals, as well as fertile arable land for 

producing crops and grazing domesticated animals (Johnston et al. 2001). Estuaries 

worldwide are also noted for providing raw materials such as lumber, fuelwood, and 

organic matter for building and manufacturing as well as supplying fuel and energy 

(Barbier 2000; Semesi 1998). Many medicinal and pest control chemicals are obtained 

from estuarine-dependent species and the genetic resources of estuarine species are well 

known (Primavera 1991). Estuaries and their associated structures, such as wetlands and 

mangrove forests, also provide critical filtering, retention, and storage of potable water in 

addition to providing a critical medium for commercial transportation. 

Provisioning Services Provision of natural resources and raw materials 

Water supply Filtering, retention, and 

storage of water 

Provision of potable water and water 

purification 

Medium for transportation and ports 

Provision for irrigation and industrial use 

Food Edible plants and animals 

Arable land 

Hunting, fishing, crops, grazing, and aquaculture 

Building & manufacturing Lumber, skins, plant fibers, oils, dyes, etc. 

Fuel and energy Fuel wood and organic matter 

Raw materials 

Fodder and fertilizer Leaf litter, salt hay, excrements, etc. 

Genetic resources Genetic resources Variety of gene pools in fish species 

Medicinal and plant 

resources 

Biological and chemical 

substances for use in 

agriculture and human 

treatment 

Medicines and pest control chemicals obtained 

from estuarine-dependent species 

Ornamental resources Resources for fashion, 

handicraft, jewelry, pets, 

worship, decoration, & 

souvenirs 

Shells used as jewelry 

Dried grasses 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

19 

Table 4: Cultural Services Provided by Estuaries 

Finally, Table 4 shows cultural services, including recreation, which is easily measurable 

by the number of people using estuaries for a variety of recreational purposes (Farber 

1988). The economic valuation of those services would reflect economic concepts such 

as willingness to pay for the recreation, or willingness to accept compensation for its loss. 

The enhancement of these services from restoration would have to estimate the increases 

in usage, but this is measurable through surveys or comparative studies of estuaries under 

different conditions. For example, in Chapter 8, Pendleton examines the economic value 

of coastal recreation. The aesthetic significance of estuaries, such as wetlands and barrier 

islands, may be expressed through people’s preferences for proximity to those ecological 

features. It may be easier, however, to directly measure the value of the service through 

housing market price premiums for location (Smith et al. 1991). Kildow shows in 

Chapter 7 how proximity to coasts and estuaries and the environmental condition of these 

resources influences housing values. Spiritual services may be reflected in stories and 

folklore in a culture that incorporates some element of estuaries in the story theme. Cajun 

folklore is a good example of this service in coastal Louisiana. Even estuarine-dependent 

cuisine can become a cultural phenomenon, as Cajun cooking illustrates. 

 

Providing Ecosystem Goods and Services through Estuary Restoration 

Actively managing ecosystems for the delivery of ecosystem services focuses on the links 

between ecosystem functions and services. The goal is to sustain the flows of valuable 

services in an efficient, fair, and sustainable manner, taking into consideration the 

complex interactions within ecosystems and between humans and their supporting 

ecosystems (Farber et al. 2006). Alterations of ecosystems change the mix of services 

through changes in ecosystem structures/processes (Palmer et al. 2004). For instance, the 

level of some services may increase and others may decrease; increasing wetlands for 

storm protection may reduce fisheries habitats by reducing marsh/water edge, while 

increasing channel dredging may increase transportation pathways but may also reduce 

aesthetic beauty. Decisions about development in estuaries inevitably involves trade-offs 

between competing ecological services over time. 

Cultural Services Enhance emotional, psychological and cognitive well being 

Recreation Opportunities for rest and 

enjoyment 

Eco-tourism, birdwatching, outdoor sports, beachgoing, fishing, etc. 

Aesthetic Enjoyment of landscape and 

its elements 

Coastal beaches and wetlands, added value to coastal 

housing 

Clean water 

Science & education Development of knowledge A “natural field laboratory” for understanding coastal 

biological and physical processes 

Use of estuaries as motif in books, film, painting,

folklore, national symbols, architecture, advertising, 

etc. 

Spiritual & historic 

Spiritual or historic 

information 

Natural features with religious or historic values 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

20 

Coastal estuaries around the world are currently undergoing significant pressures caused 

by human population growth (Agardy et al. 2005). Approximately 44% of the global 

population in 1994 lived within 150 km of a coastline (Cohen et al. 1997). Today, that 

trend appears to be accelerating. Already, more than half of the U.S. population lives 

along the coast and in coastal watersheds (Beach 2002). For example, in Chapter 3, 

Colgan finds that more than 43% of the nation’s population resides in counties with 

estuaries. Coastal states are among the nation’s fastest growing and are expected to 

experience most of the absolute growth in population in the decades ahead (Beatley et al.

2002). Humans are now a major agent influencing the morphology and ecology of the 

coastal zone, either directly by means of engineering and construction works and/or 

indirectly by modifying the physical, biological and chemical processes at work within 

the coastal system (Townend 2002). 

With recent events such as Hurricane Katrina, restoring coastal estuaries has increasingly 

been recognized as having the potential to provide significant benefits to society 

(Costanza et al. 2006). Cleaner drinking water, soil stabilization, buffering of hazardous 

waste, and the restoration of wildlife habitat are all examples of ecosystem services that 

might be delivered by revitalized estuarine landscapes. Actively restoring degraded or 

damaged coastal estuaries involves alterations of structures and processes in order to 

restore degraded hydrologic, physical, chemical, and biological functions (Palmer et al.

2004). These functions, such as nutrient cycling and sediment deposition, are the 

supporting functions for ecosystem services. Alterations in these supporting functions 

will change the flow of ecosystem services, possibly increasing the value of the estuary to 

humans. The ultimate objective of estuary restoration may be to increase the value of the 

estuary; but it may also be to simply replicate a more natural system. 

Focusing restoration on the useful services that might be derived from estuaries can be a 

useful and compelling perspective that engages the community, management agencies, 

and politicians (Farber et al. 2006). This perspective requires characterization and 

measurement of the changes in service flows anticipated from a contemplated restoration 

project. Valuation of these changes combines economic valuations of services, or 

“prices” ($P) with anticipated changes in the service flows (∆S) for a change in Total 

Economic Value equal to: 

∆TEV = $P x ∆S, 

assuming no change in the price. This highlights the need to both evaluate changes in 

service flows and the economic “prices” associated with them over time due to changes 

in demands for these services (Wilson & Carpenter 1999). 

The measure of changes in service flows requires careful consideration of exactly what 

the service flows are. In some circumstances, it is possible to evaluate trade-offs, or 

prices, using dollars. Working in dollars is particularly convenient, since the types of 

non-ecological values that arise from activities that degrade ecosystem services are often 

measured in a dollars (Heal et al. 2005). These monetary valuations can be viewed as

representing the willingness to pay to restore or sustain services, or willingness to accept 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

21 

compensation in the absence of restoration or sustainability. However, it may not always 

be possible to accomplish this type of measurement, and rather than trying to force 

measurement into dollar units in inappropriate circumstances, non-monetary measures 

can be employed, such as ratings or rankings. In such cases, trade-offs can be established 

between services, as long as services being compared can be evaluated using consistent 

metrics, such as jobs, Net Primary Productivity (NPP), or Net Environmental Benefit 

equivalency ratings (Efroymson et al. 2004). 

A full suite of valuation techniques is often required to quantify the value of goods and 

services provided by coastal estuaries. The “total economic value” (TEV) includes values 

for the direct use of estuaries (such as a food source), indirect uses (such as storm 

protection), and non-use values (such as just knowing the estuary exists). A range of 

methods, developed by economists, can be used to establish this TEV (Freeman 1993). 

Figure 2 depicts a framework that links ecosystem structures and processes with the 

output of specific goods and services, which can then be assigned monetary values using 

the range of valuation techniques described in the literature and shown in the boxes at the 

bottom of the diagram (Desvouges et al. 1998; Freeman 1993; Heal et al. 2005). In 

narrowly economic terms, the natural assets of the coastal zone can thus yield direct 

(fishing) and indirect (nutrient cycling) use values as well as non-use (preservation) 

values of the coastal system. Once accounted for, these values can then be aggregated to 

estimate the total value (TEV) of the estuarine system (Anderson & Bishop 1986). 

For example, nutrient cycling is observable partially through the evaluation of Net 

Primary Productivity (NPP), which is the net production of biomass. NPP is a welldeveloped concept in ecology and is meaningfully measurable (Catovsky et al. 2002). 

The transformation of NPP into useful plant and animal forms provides the value from 

that supportive service. Soil formation is a supportive service that incorporates sediments, 

coral and skeletal remnants, and vegetative materials into wetland substrates. Wetlands 

creation is a measurable outcome of this process. The vegetation in coastal wetlands 

vegetation also provides for the regulation of important gases, such as sequestration of 

CO2. Sequestered gases and absorbed toxins are measurable regulating services that have 

economic value (van Kooten & Bulte 1999). 

Provisioning services may be measured and valued in non-monetary units. Genetic 

resources include the variety of species in an estuary and the variation in genotypes 

within species. This variety is measurable and has value insofar as variety provides 

insurance values in the face of uncertainty. For example, the seven species of Pacific 

salmon provide for a variety of salmon with different harvest seasons. Within a species, 

different populations provide genetic variety and locational variation that are important to 

the survival of the species. For example, NOAA (2006) has identified 15 distinct 

population segments of steelhead in Washington, Oregon, Idaho, and California. 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

22 

Figure 2: Total Economic Value of Estuarine Goods and Services* 

* Adapted from Turner (2000) and Wilson et. al. (2005). 

Total economic value is composed of a number of different types of market-based values, 

which can be determined using observable market behaviors, and nonmarket-based 

values associated with different goods and services provided by the estuary system. As 

Figure 2 suggests, a variety of methods may be necessary to capture the value of the 

many disparate services provided by the natural features of a complex ecological system. 

As most valuation research studies tend to apply a single methodology to assess the 

benefits associated with environmental assets, there is a risk that policy audiences may 

assume that one single study provides the “true value” of an entire ecological system. In 

this context, it is critical, therefore, that a more holistic approach be taken, emphasizing 

the potential relationships among economic values estimated by different analysts using 

different valuation techniques. 

State of the Art and Science: Case Study Examples 

Two case studies reveal the diverse economic values of goods and services delivered by 

estuaries. Estuaries provide a wide range of ecosystem goods and services to people. 

However, because of the inherent linkages between ecological structures and processes 

within an estuary, it is often difficult to isolate and study the production of one ecosystem 

good or service without also considering the other goods and services associated with it. 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

23 

Additionally, empirical valuation data for coastal estuaries often appears scattered 

throughout the scientific literature, are somewhat uneven in quality, address only a 

limited number of services, and are scattered across a variety of geographic contexts 

(Pendleton, et al., 2007). To address this gap in the literature, below we review economic 

analyses done in two different estuaries in order to exemplify work in the field as well as 

provide useful insights for further research. Expanding our knowledge of ecosystem 

goods and services covered at each site brings the resulting restoration effort closer to 

providing a full accounting of all the valuable goods and services associated with 

ecological restoration. 

The Barataria-Terrebonne Estuary 

The Barataria-Terrebonne Estuarine System (BTES) in coastal Louisiana lies at the foot 

of the world’s third largest river, the Mississippi, which drains about 40 percent of the 

contiguous United States, funneling millions of tons of sediments and nutrients annually 

through lower Louisiana. Lying just south and west of the City of New Orleans and Lake 

Pontchartrain, the BTES is wedged between the Mississippi and Atchafalaya rivers, 

comprising approximately 4.2 million acres of levees, forests swamps, marshes, islands, 

bays, and bayous (see Figure 3). 

The BTES provides habitat for millions of migratory waterfowl, a supportive function 

(Table 1), and provides for a commercial harvest of more than 600 million pounds of 

finfish and shellfish every year (a provisioning service, Table 3) (Caffey & Breaux 2005). 

Diverse flora and fauna and a unique combination of land and water features yield a 

variety of goods and services. For example, both freshwater and saltwater wetlands 

throughout the BTES provide prime habitat for an array of plant life such as bald cypress 

and swamp maple, as well as wildlife such as alligators, muskrats, egrets, and herons, 

which are useful commercially as well as recreationally (a cultural service, Table 4). 

Water stored in inland freshwater wetlands after a heavy rain is released slowly, reducing 

flood peaks and property damage (a regulating service, Table 2) as well as supplying 

aquifer recharge and drinking water to coastal communities (a supporting and 

provisioning service, Tables 1 and 3). Barrier islands and coastal marshes create a critical 

zone of friction that slows winds and waters of tropical storms and hurricanes arriving 

from the Gulf of Mexico (a regulating service, Table 2). 

The BTES provides a good example of the wide variety of ecosystem services provided 

by estuaries. This estuarine system supports a thriving commercial fishery and 

recreational activities, provides protection against coastal storms, and supports a unique 

Cajun culture. Farber and Costanza (1987) estimated the marginal productivity of a 

coastal system in Terrebonne Parrish, Louisiana, by attributing commercial values for 

several species to the net biomass, habitat, and waste treatment of the wetland ecosystem 

(Farber & Costanza 1987). Arguing that the annual harvest from an ecosystem is a 

function of the level of environmental quality, the authors chose to focus on the 

commercial harvest data for five different native species—shrimp, blue crab, oyster, 

menhaden, and muskrat—to estimate the marginal productivity of wetlands. The annual 

economic value (marginal product) of each species, adjusted to 2005 dollars using the 

Consumer Price Index, was as follows: shrimp $21.29/acre; blue crab $1.31/acre; oysters 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

24 

$15.76/acre; menhaden $11.37/acre; and muskrat pelts $23.70/acre. Taken together, the 

total value marginal productivity of wetlands in Terrebonne Parish was estimated at 

$73.43 per acre. 

Figure 3: The Barataria-Terrebonne Estuary System* 

A more recent study of the economic impacts of the estuary show that hunting and 

trapping within the four major parishes alone contributed $137 million in spending for 

the economy of the region in 1994 (Industrial Economics 1996). Aquaculture accounted 

for $10 million, and agriculture in these parishes accounted for $180 million in spending. 

The levels of these provisioning (Table 3) services are highly dependent on the 

conditions of the estuary and its accompanying barrier islands. Shipbuilding within the 

estuary was responsible for $1.2 billion in spending. The viability and cost of 

shipbuilding would be dependent on estuarine conditions, as storm protection and the 

ability to move built vessels to open water are critical factors for this industry, providing 

regulating services (Table 2). In addition to the commercial activity that is dependent on 

its resources, the BTES provides area residents and visitors with a number of recreational 

opportunities. Recreational fishing, hunting, and wildlife viewing contributed $956 

million (1994 dollars) in spending in the four-parish region (Industrial Economics 1996). 

These commercial and recreational industries alone were responsible for roughly 11% of 

the total spending in this region. In these instances the estuary has provided important 

natural inputs to the commercial and recreational activities. 

It is very important to note that spending generated from activities is not itself a measure 

of economic value or ecosystem services, as interpreted by economists. In the examples 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

25 

above—shipbuilding, recreation, and aquaculture—spending is also the result of nonecological services from labor, built infrastructure, etc. To understand the economic 

value of the ecosystem services of estuaries, we would first need to determine what 

difference these estuaries made to the wellbeing of people; for example, how recreational 

fishing contributes to the economic wellbeing of people, how much more income is 

generated from aquaculture due to the services of estuaries, or how much less costly 

shipbuilding is because of the estuaries. However, the examples are suggestive of some 

type of dependency of these activities on the existence and functioning of estuaries. 

There are additional goods and services provided by the BTES other than those that 

provide inputs to various commercial processes or recreational uses. For instance, the 

storm protection services of the wetlands in the BTES and its barrier island system, a 

regulatory service, are very important to the natural and built infrastructure in coastal 

Louisiana (Costanza et al. 2006). Significant property damages have been attributed to 

flooding from tidal surges and rainfall as well as wind damage associated with major 

storm events in the region, including Hurricane Katrina (Bohannon & Enserink 2005; 

Kerr 2005). For example, Farber and colleagues collected historical data on property 

damages associated with hurricanes that have damaged the coast of Terrebonne parish 

(Farber 1987; Farber & Costanza 1987). Damage estimates were derived from data 

provided by the U.S. Army Corps of Engineers and included both wind and flood 

damage. Controlling for other factors, such as population and hurricane strength, the 

authors estimated the increase in damages resulting from increased proximity to the 

landfall of a hurricane. They concluded that, if a 1-mile band of wetlands on a 250-milelong strip of coast were to disappear, the net present value of expected damages (inflated 

to $2005 using the single family home construction price index) would range from $2.82 

million (8% discount rate) to $9.22 million (3% discount rate). These present values can 

be translated into $17.46 and $58.73 per acre, respectively. 

In a separate analysis, Farber (1996) uses an Avoided Cost (AC) method for measuring 

the storm surge protection value of coastal wetlands against damage to property in coastal 

Louisiana. Using a cost assessment of building levees around major southern Louisiana 

cities in the BTES, Farber estimates the annualized costs of purchasing land, building 

materials, and labor as well as performing annual maintenance. The analysis assumes that 

annual wetland loss rates remain constant at 25,806 acres per year, and shows that the 

total annualized costs for levee construction have a very large range—from $69.9 million 

to $10.6 billion depending on assumed discount rates (original estimates inflated to 

$2005 using U.S. Army Corps of Engineers construction cost indices for levees and 

floodwalls: http://www.usace.army.mil/publications/eng-manuals/em1110-2-1304/aa.pdf). 

In addition to protecting property from storms and saltwater inundation, wetlands in the 

BTES clean the water passing into them, removing unwanted nutrients, pathogens, and 

sediment (a regulating, waste assimilation service; Table 2). Various coastal 

municipalities have found this function to be an effective tertiary treatment for 

wastewater (Breaux et al. 1995; Costanza et al. 1989; Farber 1996). In a series of case 

studies taken from Breaux et al. (1995), Industrial Economics (1996) estimated the per-
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

26 

acre value of wetlands for treating different wastewater streams in the BTES. The net 

present value estimates of the wastewater treatment services range widely, from $98.4 per 

acre for municipal water treatment to $5,551 per acre for potato chip manufacturing 

waste treatment (original estimates inflated to $2005 using the GDP deflator and a 3% 

discount rate). 

Taken together, the results reviewed above show that the total economic importance of 

the BTES cannot be captured by any single economic measure, nor have all of the 

possible ecosystem goods and services been monetized (see Figure 1). Using our 

framework for classifying ecosystem goods and services, it is clear that the estuary 

supports several provisioning services, including major industries such as shipbuilding 

and commercial fisheries that have direct and indirect impacts on the regional economy. 

Additionally, the estuary provides several cultural and regulating services, such as 

recreational opportunities, storm protection, and waste assimilation. However, we also 

know that the BTES provides spiritual and cultural values that are integral to Cajun 

culture (Caffey & Breaux 2005), and we also understand that supporting services such as 

soil formation from the sedimentation of the Mississippi River are critical to alleviating 

subsidence of communities in the region(Bohannon & Enserink 2005). Yet these 

monetary values remain unknown because they have not been fully analyzed in the 

economic literature. Given the variety of assets associated with this complex system, we 

therefore anticipate that several new empirical studies using different valuation 

techniques will be required to assess the full range of values. 

The Peconic Estuary 

The Peconic Estuary System (PES), situated at the East End of Long Island, New York, 

consists of more than 100 bays, harbors, embayments, and tributaries (Figure 3). The 

major river discharging freshwater into the estuary is the Peconic River. This freshwater 

then mixes with saltwater to form the numerous bays in the estuary leading out into the 

Atlantic Ocean. The area surrounding the estuary’s watershed consists of rolling 

farmland, scenic beaches, woodlands, and wetlands featuring numerous rare ecosystems 

that are home to many plant and animal species (Balla et al. 2005; Peconic Estuary 

Program 2001). The environmental and natural resources of the PES—the bay waters, 

beaches, wetlands, ecosystems, habitats, and parks and watershed lands—provide many 

valued goods and services to the public. 

Currently, the PES is in relatively good condition (Balla et al. 2005). For instance, there 

is “a larger percentage of undisturbed habitats and a greater diversity of natural 

communities within this watershed than anywhere else in the coastal zone of New York 

State” (Peconic Estuary Program 2001, p. 10). While excessive nutrient loading in an 

estuary can result in low dissolved oxygen levels (Whitehead et al. 1997), overall the 

PES is not currently experiencing widespread low levels of oxygen, and toxic 

contamination is not currently a significant problem in the estuary (Peconic Estuary 

Program 2001). 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

27 

Figure 4: The Peconic Estuary Watershed and Surrounding System 

The bay waters, nearshore eelgrass beds, and wetlands support significant stocks of fish, 

shellfish, birds, and other species used for water-dependent and water-related commercial 

activities (a provisioning service, Table 3). According to the recent Peconic Estuary 

Program, Comprehensive Conservation Management Plan, in 1993 more than 1,000 

establishments in the PES were identified as “estuarine-dependent” and gross revenues 

for those establishments exceeded $450 million per year (Peconic Estuary Program 

2001). The living resources of the estuary also attract visitors and residents, providing 

cultural, recreational, and aesthetic services (Table 4). East End towns such as Southold, 

Riverhead, and East Hampton are home to approximately 100,000 people year-round, and 

the population swells in the summer to over 280,000. While visiting the PES, visitors 

spend money on goods and services that contribute to the local economy. For instance, in 

1995 a survey was conducted by Economic Analysis Inc. asking seasonal visitors how 

much they spent at roadside farmsteads and at vineyards while visiting the area 

(Grigalunas & Diamantedes 1996). The results reveal that in 1995 the public spent 

approximately $8.7 million at farm stands and $2.4 million at vineyards in PES-related 

activities. 

The PES also provides critical nursery and habitat services for fish and shellfish species 

that are used by commercial fisheries. In an example of coastal wetland productivity 

analysis, Johnston et al. (2002) used a simulation model based on biological functions 

that contribute to the overall productivity of the food web in the PES in Suffolk County. 

Based on habitat values for finfish, shellfish, birds, and waterfowl, an average annual 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

28 

abundance per unit area of wetland habitat in the PES is estimated by summing all 

relevant food web values and habitat values for a year (Johnston et al. 2002). The value 

of fish and shellfish is based on commercial harvest values. The marginal value of bird 

species usage of the habitat is based on the benefits human receive from viewing or 

hunting waterfowl (recreational services). Using these values as input data, the simulation 

model resulted in annual values (1995 dollars) for three nearshore habitat types: eelgrass 

($1,065 per acre/year); saltmarsh ($338 per acre/year); and inter-tidal mud flat ($67 per 

acre/year). 

To illustrate the range of non-market economic values associated with PES, a series of 

empirical studies conducted as part of the multidisciplinary Peconic Estuary Program 

have explored a suite of different ecosystem goods and services using a range of nonmarket valuation techniques(Grigalunas & Diamantedes 1996; Johnston et al. 2002; 

Johnston et al. 2001; Opaluch et al. 1999). For instance, open space, proximity to clean 

water, and scenic vistas are often cited as a cultural, aesthetic service (Table 4) that 

provides a primary attractor of residents who own property and live within PES. Hedonic 

pricing (HP) techniques have been used to show that the prices of East End housing units 

vary with respect to characteristics such as ambient environmental quality (i.e., proximity 

to shoreline, water quality) because buyers will bid up the price of units having more of a 

desirable attribute (Johnston et al. 2001; Opaluch et al. 1999). Principal findings of the 

first-stage hedonic analysis show that a parcel of land in the PES adjacent to preserved 

open space has, on average, a 12.8% higher per-acre value than a similar parcel located 

elsewhere. 

Among other things, the PES is very popular because of the numerous recreational 

opportunities, including swimming, beach use, bird and wildlife viewing, boating, and 

fishing (Peconic Estuary Program 2001). To capture the benefits associated with outdoor 

recreational uses in the PES, a Travel Cost (TC) analysis was conducted (Johnston et al.

2002; Opaluch et al. 1999). In 1995, a recreational survey was administered to residents, 

second homeowners, and visitors to the PES. Results reveal that in 1995, over 127,000 

people took 3.3.million swimming, boating, fishing, or shellfishing outings and over 

150,000 people engaged in about 5.2 million beach use, birdwatching, wildlife viewing, 

or hunting trips (Opaluch et al. 1999). Taken together, the annual value (original 

estimates are inflated to $2005 using the consumer price index) of each activity were 

estimated as follows: $63 million for viewing birds and wildlife, $29 million for 

recreational fishing, $23 million for boating, and $15 million for swimming. 

As noted earlier, the PES is widely recognized as a uniquely beautiful and important 

natural resource. To capture this value, a Contingent Valuation (CV) survey was 

conducted to estimate the value associated with the existence of the PES as a unique 

natural place (Johnston et al. 2002; Opaluch et al. 1999). The CV survey was conducted 

by Opalauch and his colleagues over a 6-month period in 1995 with residents and second 

homeowners in the PES. The focus of the survey was on the restoration and protection of 

five natural resources, including wetlands, shellfishing areas, and eelgrass areas. Based 

on responses to contingent choice questions developed by the authors, the average 

estimated annual per-acre dollar values (original estimates are inflated to $2005 using the 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

29 

consumer price index) were $5,760 for unpolluted shellfish grounds, $6,144 for 

saltmarsh, and $7,680 for eelgrass beds. Aggregated over a 25-year time horizon at a 7% 

discount rate, the net present values per acre ranged from $39,680 to protect safe 

shellfishing areas to $108,800 to protect eelgrass (Opaluch et. al. 1999; p.117). 

Taken together, it is clear that the numerous ecological assets of the PES are enjoyed by 

both residents and visitors to the area. Bountiful living resources support commercial 

activities as well as many non-market assets. Several efforts to quantify the ecosystem 

goods and services associated with this unique resource have been illustrated here. 

However, as with the case of the BTES above, we can also see that critical supporting 

services such as soil formation and nutrient cycling remain un-monetized. Similarly, we 

might reasonably anticipate that spiritual and historical values accrue from the existence 

of the PES, yet these assets remain unaccounted for in the economic literature. No single 

methodology can capture the total asset value of the PES; rather, a combination of 

different methods—each designed to measure a different good or service—appears to 

provide an improved understanding of the values offered by the estuary. 

Future Research Needs 

The BTES and PES studies reveal that many different landscape features and ecological 

processes associated with estuaries provide essential natural services to humans, but that 

the reporting of their economic values still remains uneven in quality and scope. For 

example, as the case studies show, commercial values, opportunities for recreation, and 

aesthetic amenities receive major attention in the economic literature. Other services, 

such as spiritual and historic values, soil formation, and nutrient cycling, receive less 

attention. While perhaps not surprising given the early development of ecological 

economics as a field of study, the uneven distribution of empirical analyses raises critical 

issues for decision makers that will need to be addressed as scholars strive to better 

understand the full economic benefits associated with estuary restoration. 

Wilson and Liu (2007) recently performed a literature search of peer-reviewed 

publications related to coastal ecosystem services. This search yielded more than 300 

citations. Each citation was located and reviewed by the authors. About 230 citations 

(>77%) were rejected because they were not peer-reviewed or did not explicitly address 

the economic valuation of coastal ecosystem goods and services. The literature review 

yielded a total of 70 studies and 155 data observations for further analysis and discussion. 

Results from these studies were sorted by land cover type, ecosystem good and service, 

valuation methodology, and region of study and are presented below. 

The recent review of the peer-reviewed literature reveals that many different landscape 

features and ecological processes within the coastal and nearshore marine zone provide 

essential natural services to humans, but that the reporting of their economic values 

remains unevenly distributed (Wilson and Liu 2007; Pendleton et. al. 2007). For 

example, as the pattern of data in Figure 5 confirms, opportunities for recreation and 

natural amenities (e.g., nearshore fisheries, white sandy beaches) get an inordinate 

amount of attention in the economic literature, while other services such as spiritual and 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

30 

historic or biological control do not get much attention at all. Similarly, as Figure 6 

shows, nearshore ocean, open space, freshwater wetlands, and saltwater wetlands, 

marshes, or salt ponds have tended to receive the most attention in the peer-reviewed 

literature, while areas such as mangroves and coral reefs have received far more limited 

attention by economists. Finally, as Figure 7 clearly shows, the vast majority of economic 

valuation studies in the peer-reviewed literature have been conducted in the United States 

with other regions such as Europe, Australia, and New Zealand lagging behind. While 

perhaps not surprising given the early development of environmental and ecological 

economics as a field of study, the uneven distribution of empirical analyses raises critical 

issues for decision makers that will need to be addressed in the not-too-distant future. 

Figure 5: Valuation Data Distributed by Ecosystem Service 

In recent decades the field of economic valuation and environmental benefit transfer has 

matured into a viable approach for estimating the value of environmental goods and 

services (Wilson & Hoehn 2006). The international peer-reviewed literature in the field 

has grown substantially, and transfer methods are increasingly being recognized as 

distinct from those used in conventional market valuation analyses. In the maturation 

process, the use of ecosystem services as a distinct theoretical framework has developed, 

and innovative methods for measuring economic values associated with these services 

have emerged (Farber et al. 2006; UNEP 2006). 

Nevertheless, our ability to assess the total economic value of complex ecological 

systems such as coastal estuaries remains dependent on the quality of original benefit 

estimation (Desvouges et al. 1998). Total value assessment is simply not feasible when 

there are no original economic studies for identified ecosystem goods or services, the 

original studies are outdated, or they are poorly designed and reported. While the latter 

constraint may be theoretically obvious, it all too often limits the use of benefit transfer in 

practice. The lack of benefit studies across multiple contexts remains one of the 

significant challenges to the growth and sustainability of online databases. From a 

0 20 40 60 80 100

Sources

Spritual and historic

Aethetic

Recreation

Net primary production

Water supply

Water regulation

Biological control

Distrubance regulation

Habitat 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

31 

practical policy perspective, important ecological services may be neglected in policy 

analysis because there are simply no suitable empirical studies from which benefits may 

be inferred (Pendleton, et al., 2007). 

Figure 6: Valuation Data Distributed by Cover Type 

0 10 20 30 40

 Sources

Nearshore Open Space

Nearshore Ocean--50m

depth or 100km offshore

Semi-enclosed Seas

Mangrove

Coral Reefs and Atolls

Nearshore Islands

Seagrass beds or Kelp

forests

Nearshore Freshwater

Wetlands

Saltwater Wetlands,

Marshes or Salt Ponds

Beaches and Dunes

Estuaries and Lagoons

Figure 7: Valuation Data Distributed by Region 

Creative thinking is needed to put in place the incentives that will stimulate empirical 

data collection to supply the raw information needed for the full assessment of benefits 

provided by coastal estuaries. Innovative, interdisciplinary thinking must continue be 

encouraged to foster the development of a comprehensive research effort—one that is 

coupled with methodological tools that facilitate our ability to extend ecological and 

economic knowledge from one context to another with minimal loss of information. The 

challenge is to maintain an inclusive rather than an exclusive perspective as analysts from 

different disciplines and professional backgrounds work together to expand our collective 

knowledge and understanding. 

0 20 40 60 80 100 120

Sources

Europe

Central and South America

North America

Australia and New Zealand

East Asia

Southeast Asia
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

32 

Conclusions 

Ecosystem goods and services form a fundamental connective link between people and 

coastal estuarine systems. Accurate definition and classification of ecosystem goods and 

services is therefore an essential preliminary step in the valuation of coastal estuaries. In 

this paper, we have shown how ecosystem goods and services delivered by estuaries 

contribute to human welfare through both simple and complex pathways. Using an 

integrated framework developed for the assessment of ecosystem goods and services, we 

have considered how ecological structures and processes, land use decisions, and human 

values interact in the coastal and nearshore marine environment. The concept of 

ecosystem goods and services has allowed us to analyze how human beings as welfaremaximizing agents actively translate complex ecological structures and processes into 

value-laden entities that can be understood by people. 

The literature reviewed here demonstrates both the opportunities and the challenges 

inherent in estimating the total economic value of estuarine ecosystem goods and 

services. As the pattern of data in the BTES and PES case studies suggests, one of the 

major insights from our analysis is the discrepancy between the ecosystem goods and 

services that have been well-documented in the published valuation literature and those 

that could potentially contribute significantly to human welfare, both directly and 

indirectly. Accounting for “missing” economic values that have not yet been analyzed 

represents a significant challenge for scientists, planners, and decision makers involved in 

coastal zone management. 

Our analysis further suggests that methodological guidelines and standards for the total 

economic assessment of ecosystem goods and services in estuaries are still evolving. 

Nevertheless, it is evident that, by using the ecosystem goods and services classification 

framework within specific contexts, defensible dollar estimates can be obtained and 

thereby add to the information base for coastal management and decision making. 

Economic estimates may require considerable creative research and have substantial 

uncertainties. The best available data suggest that humans attach substantial positive 

values to the many marketed and non-marketed goods and services provided by estuaries. 

We conclude with the observation that the studies presented here represent a very small 

subset of estuaries in the world. Hence, our ability to generalize remains limited, but 

promises to grow as more environmental valuation studies are done. The observations 

and results presented here provide valuable insights into the challenges and limitations of 

ecosystem service valuation as it is currently practiced. The experiences summarized here 

should be useful to ecologists, managers, and social scientists as they collaborate to 

estimate the future direction for development in the coastal environment. 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

33 

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The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

37 

Chapter 3 – The Value of Estuary Regions in the U.S. 

Economy 

Charles S. Colgan 

University of Southern Maine 

The deteriorating condition of the nation’s critical estuary habitats is well-documented.1

 

The need to restore estuaries to their previously high level of natural functioning and the 

means to achieve restoration also are well-understood. The causes of estuarine 

degradation are many and varied, but primarily arise from differing types of economic 

activities. Despite the negative consequences of economic activity on estuarine health, 

the economic importance of healthy estuarine habitat is ubiquitous in all discussions of 

plans for estuarine habitat restoration. A strong connection between economic activity 

and the case for estuarine habitat restoration is widely acknowledged, but the explicit 

links between economic activity and estuarine health are not well developed and rarely 

exploited by policy makers. 

This paper examines the role of the nation’s estuary regions in generating economic 

activity that contributes to the total value of goods and services in the United States and 

as sources of livelihoods in order to assess what, in very general terms, is at stake in 

decisions about efforts to preserve and restore estuarine resources. The predominant 

focus in this paper is on the measurement of total economic activity in estuarine regions. 

Other papers in this series examine the specific dimensions of activities, such as ports and 

fisheries, that are obviously directly connected to estuaries. Understanding these direct 

connections is important, but ports, energy, real estate development, and fisheries are in 

turn connected to a complex network of other activities that together comprise the 

regional economy. The analysis of specific sectors of economic activity is the beginning 

of the process of measuring the economic value of estuaries; the full picture requires an 

understanding of both the details of estuarine-dependent sectors and their connections to 

the larger economies in which these sectors function. 

To see this larger picture, this chapter explores the nature of the economies of estuarine 

regions from several different perspectives: 

• Size: how do we measure the size of regional economies in which estuaries are 

located? 

• What is changing in the economy of estuary regions, at what rates, and how do 

the changes define the context within which estuary restoration takes place? 

• Where is change occurring in the estuary region? 

• How is change occurring in estuary-dependent sectors compared with overall 

rates of change? 

 

1 A National Strategy to Restore Coastal and Estuarine Habitat (Restore America's Estuaries 2002)
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

38 

To address these questions, we use a quasi-national perspective, focusing on the 

economies of the estuary regions of the lower 48 states. The regions chosen are those 

defined and discussed in the National Strategy for the “lower 48” states. The unique 

geographies of Alaska and Hawaii complicate the discussion, so these states are omitted, 

though the principles of economic analysis developed here can certainly be applied to 

these states as well. The picture that emerges from this analysis is far from complete or 

adequate for people in specific regions who are trying to decide how to proceed with 

decisions about specific restoration projects. For that reason, the concluding section of 

the paper points to resources where data is available for readers wishing to understand 

their own regional economy. 

Foundations of Analysis: Definitions and Data 

We begin the development of our framework by setting out measures of economic 

activity. As noted above, we assess these measures in terms of the major estuary regions 

of the United States, based on the regions defined in A National Strategy to Restore 

Coastal and Estuarine Habitat (Restore America's Estuaries 2002). These regions are, 

in one sense, larger than the areas usually encompassed by specific estuarine restoration 

projects. But the data presented here allows an economic dimension to be added to the 

details about estuary restoration in the national strategy, and serves to illustrate basic 

principles of economic measurement and analysis that can be useful at any geographic 

level. 

Figure 1: Estuary Regions of the Continental United States 

Puget Sound

Ore-Wash 

Coast

No. 

Calif

So. 

Calif

Western 

Gulf

Central

Gulf

Eastern

Gulf

Southern

Gulf

Florida

Atlantic 

Georgia South

Carolina 

North

Carolina 

Chesapeake

Bay 

Delaware

River 

N.Y Bight

Gulf of

Maine 

Lake

Ontario 

Lake

Erie

Lake

Huron 

Lake

Michigan 

Lake

Superior 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

39 

Table 1: Estuary Regions, Region Groups, and States 

Group Region States 

Gulf of Maine Maine, New Hampshire, Massachusetts 

N Y Bight 

Rhode Island, Connecticut, New York, New 

Jersey 

Delaware River New Jersey, Pennsylvania, Delaware 

Northeast 

Atlantic 

Chesapeake Bay 

Pennsylvania, Maryland, District of Columbia, 

Virginia 

North Carolina North Carolina 

South Carolina South Carolina, North Carolina 

Georgia Georgia 

Southeast 

Atlantic 

Florida Atlantic Florida 

Southern Gulf Florida 

Eastern Gulf Florida, Alabama 

Central Gulf Mississippi, Louisiana, Texas 

Gulf of 

Mexico 

Western Gulf Texas 

Northern California California California Southern California California 

Oregon-Washington 

Coast Oregon, Washington Pacific 

Northwest Puget Sound Washington 

Lake Erie New York, Pennsylvania, Ohio, Michigan 

Lake Ontario New York 

Lake Michigan Michigan, Indiana, Illinois, Wisconsin 

Lake Huron Michigan 

Great 

Lakes 

Lake Superior Michigan, Wisconsin, Minnesota 

These broadly defined estuary regions encompass a variety of terrain and ecosystems, as 

well as a variety of socioeconomic characteristics. One key socioeconomic dimension is 

the distinction between urban areas and rural areas, which roughly measures the intensity 

of land use. The standard method for doing this is to distinguish between metropolitan 

and nonmetropolitan areas, which are designated according to data based on the 

decennial census from the Office of Management and Budget. While useful, the metrononmetro distinction does not contain a great deal of information. A more useful 

taxonomy is provided by the Urban Influence Codes developed by the U.S. Department 

of Agriculture, primarily for the purpose of understanding key characteristics of rural 

(nonmetropolitan) areas. 

The urban influence codes extend the metro-nonmetro distinction by looking at the size 

of the largest central place (city or town) in the county and, for nonmetro areas, whether a 

county is adjacent to a metro area. Population size of the most densely settled place and 

the relative location of each county within the region compared to the most densely 

settled place thus can be incorporated into the taxonomy. For rural areas, the question of 

adjacency to a metro area is a particularly important factor, since a metro area’s 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

40 

economic influence can extend well beyond its borders. Measuring change using this 

approach allows an analysis of the spread of economic activity across the landscape as an 

indicator of potential impacts on estuaries. The Urban Influence Codes are shown in 

Table 2. 

Table 2: U.S. Department of Agriculture Urban Influence Codes: 2003 

 

Central Place 

Population 

Location Relative to 

Metro Area 

1 million or 

greater 

250,000 to 1 

million Metro 

Less than 

250,000 

Adjacent to Metro Area 20,000 or 

greater Not adjacent to Metro 

Area 

Adjacent to Metro Area 

2,500 to 19,000 Not adjacent to Metro 

Area 

Adjacent to Metro Area 

Nonmetro

Less than 2,500 Not adjacent to Metro 

Area 

 

For this analysis, the socioeconomic measures to be used are population, employment,

and output. 

• Population change is the most commonly used measure of socioeconomic change 

in regions, but it is primarily a measure of longer-term change. Population 

changes relatively slowly, and does not easily pick up shorter-term fluctuations in 

economic activity. 

• Employment data are the most consistently measured data on economic activity at 

the regional level. Employment is measured in different ways, such as by place of 

employment and by place of employee’s residence. It is measured across the 

country for most industries on a monthly basis, and time series of the data can be 

constructed in some cases for more than 30 years. 

• Output is a measure of what is produced in the economy. The statistic used is the 

gross domestic product (GDP) or the state-level version, the gross domestic 

product-state (GDP-S). These measures are estimated on a “value added” basis. 

That is, they avoid double counting the production of one industry that is also the 

input to another industry. For example, the output of commercial fishing does not 

equal the sum of the sales of the fish harvester to the processor plus the sales of 

the processor to the supermarket. Rather, the correct measure is the value added 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

41 

by the harvester in catching the fish, by the processor in transforming the fish into 

a salable product, and by the market in displaying the fish for the consumer (and 

perhaps by the restaurant for preparing the fish and by trucking companies for 

moving the fish between various stages). 

 

The organizing taxonomies to be used are the “coastal economy” and the “ocean 

economy.” These concepts were developed for the National Ocean Economics Program 

(NOEP) and are fully described in A Guide to the Measurement of the Market Data for 

the Ocean and Coastal Economy in the National Ocean Economics Program available at 

www.oceaneconomics.org. This data is the outgrowth of research describing the 

economic activity associated with coastal and ocean areas going back more than 30 years. 

This research is briefly summarized in the section on literature below. 

The NOEP data used for this analysis include total employment and output for all sectors 

in each estuary region to gauge the total magnitude of economic activity. In addition, the 

NOEP data allow for analysis of specific industries. These industries are shown in Table 

3. This chapter includes an analysis of tourism and recreation, a key estuary-dependent 

sector. The analysis in this paper complements the discussion of the economic value of 

recreation in the accompanying chapter by Pendleton. 

Table 3: Ocean Industries defined by the National Ocean Economics Program 

Construction – Marine Tourism & Recreation 

Marine-related Construction Amusement and Recreation Services, NEC* 

Living Resources – Marine Boat Dealers

Fishing Eating & Drinking Places

Fish Hatcheries and Aquaculture Hotels & Lodging Places

Seafood Processing Marinas

Seafood Markets Recreational Vehicle Parks & Campgrounds

Minerals – Offshore Scenic Water Tours

Limestone, Sand, & Gravel Sporting Goods Retailers 

Oil and Gas Exploration Zoos, Aquaria

Oil and Gas Production Transportation – Marine 

 Deep Sea Freight Transportation

Marine Passenger Transportation 

Ship & Boat Building Marine Transportation Services

Boat Building and Repair Search and Navigation Equipment

Ship Building and Repair Warehousing 

 * Not elsewhere classified 

The identification of economic activity as part of the ocean economy depends in part on 

the industry, as defined under the North American Industrial Classification System, and 

in part on location. For a list of the specific industries and NAICS codes, see the NOEP 

Users Guide. Certain establishments (places of business) are defined as part of the ocean 

economy when they are located near the shoreline (in this case, by location in a shoreadjacent zip code). In Table 3, these industries are shown in italics. 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

42 

Previous Studies 

Previous studies of the economy of the estuary region and estuary-related industries have 

been defined not in terms of estuaries as the key geographic feature but in terms of coasts 

and oceans. The first attempt at measuring economic activity related to the oceans 

attempted to estimate an “ocean GDP” from a national perspective. In 1974, the Bureau 

of Economic Analysis (the agency responsible for maintaining the National Income and 

Product Accounts) engaged a consultant to undertake a special study for the Assistant 

Secretary of Commerce for Policy to identify the contribution of the ocean to the GNP 

(Nathan Associates 1974). In that study, the BEA developed estimates for Gross Product 

Originating from the Ocean-Related Activities using the Economic Census data for 1972. 

Two follow-up studies used a similar approach to estimate the values for 1977 and 1987 

(Pontecorvo, Wilkinson et al. 1980; Pontecorvo 1988). 

Following studies on the national ocean economy, attention turned to the coastal 

economy. Luger developed a methodology for measuring coast-dependent, coast-linked, 

and coastal-service activities (Luger 1991). This approach significantly expanded the 

types of economic activities brought into the measurement process. By focusing on the 

coastal zone, Luger also brought the Great Lakes into the analysis, since they are defined 

for federal management purposes as part of the coastal zone. 

Another group of studies on the economic value of the oceans has focused on the 

economy of various regions as influenced by the oceans. Some of these studies have 

been done at the state level (Moeller and Fitz 1994) (Kildow, Colgan et al. 2005), while 

others have been done at the multi-state and international level (Colgan and Plumstead 

1993) (Statistics New Zealand, 2006). Studies of the Ocean Economy in Canadian 

provinces also have been undertaken (Mandale, Foster et al. 1998; Mandale, Foster et al. 

2000). These studies have tended to rely on employment in specific industries or 

estimates of output from regional econometric models, and have thus focused on the 

market-related activities that are the most easily measured. 

These various studies were the foundations on which the data series used by the National 

Ocean Economics Program and used in this paper were developed. The NOEP approach 

derives measurements of the coastal and ocean economies using the most detailed records 

available. The result is a nationally consistent data set from the county level to the 

national level that provides both detail on key sectors and the flexibility to define regions 

in different ways. The NOEP data also provides sub-state estimates of GDP for the ocean 

and coastal economies, which are not available in any other federal data sets. For more 

information see (Colgan 2006). 

Size: How Do We Measure the Size of Regional Economies? 

Table 4 presents data on the population, employment, and gross domestic product (GDP) 

from each of the continental U.S. estuary regions in 2004. The actual magnitudes are 

given for each region, along with the proportion of the U.S. total population, 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

43 

employment, and GDP. The subtotals of each estuary region group are shown, along 

with the totals of all estuary regions. 

Table 4: Estuary Economies in 2004 

 Population % of US Employment 

Percent 

of US 

GDP 

(Millions of $) % of US 

Gulf of Maine 7,301,185 2.5% 3,572,361 2.6% $354,857 3.0%

NY Bight 25,249,074 8.5% 10,891,224 7.8% $1,286,113 11.0% 

Delaware River 6,630,623 2.2% 3,047,511 2.2% $318,250 2.7%

Chesapeake Bay 5,188,369 1.7% 3,228,576 2.3% $301,864 2.6%

Total North 

Atlantic 44,369,251 15.0% 20739672 14.9% $2,261,085 19.4%

North Carolina 1,907,423 0.6% 733,567 0.5% $52,257 0.4%

South Carolina 1,875,763 0.6% 727,957 0.5% $52,027 0.4%

Georgia 799,620 0.3% 308,606 0.2% $22,016 0.2%

Florida Atlantic 8,003,332 2.7% 3,237,208 2.3% $294,639 2.5%

Total 

South Atlantic 12,586,138 4.2% 5007338 3.6% $420,940 3.6%

Southern Gulf 1,402,660 0.5% 547,810 0.4% $44,501 0.4%

Eastern Gulf 4,704,515 1.6% 1,932,458 1.4% $155,228 1.3%

Central Gulf 8,993,578 3.0% 3,921,796 2.8% $398,241 3.4%

Western Gulf 1,169,069 0.4% 394,376 0.3% $30,974 0.3%

Total Gulf of 

Mexico 16,269,822 5.5% 6796440 4.9% $628,943 5.4%

Southern 

California 16,630,780 5.6% 7,072,280 5.1% $735,681 6.3%

Northern 

California 10,592,542 3.6% 4,744,068 3.4% $567,543 4.9%

OregonWashington 

Coast 2,610,431 0.9% 735,572 0.8% $148,200 0.9%

Puget Sound 3,864,854 1.3% 1,803,453 1.3% $186,581 1.6%

Total Pacific 33,698,607 11.4% 14796252 10.7% $1,594,630 13.7%

Lake Ontario 1,260,578 0.4% 544,919 0.4% $44,812 0.4%

Lake Erie 7,541,639 2.5% 3,288,116 2.4% $288,103 2.5%

Lake Huron 551,184 0.2% 196,339 0.1% $13,864 0.1%

Lake Michigan 9,843,927 3.3% 4,491,371 3.2% $440,784 3.8%

Lake Superior 488,609 0.2% 201,897 0.1% $13,458 0.1%

Total 

Great Lakes 19,685,937 6.6% 8722642 6.3% $801,022 6.9%

Total All 

Estuary Regions 126,609,755 42.7% 56,062,344 40.4% 5,706,619 49.0% 

It is apparent that the estuary regions comprise a very significant portion of the total 

United States economy. The estuary regions make up about 12.6% of the area of the 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

44 

continental United States, but on that relatively small area can be found nearly 43% of the 

U.S. population, about 40% of employment, and almost half (49%) of the output of the 

U.S. economy. 

The North Atlantic region (Maine through Virginia) is the largest of the major regions, 

with 15% of population and employment and 20% of output. This is because the region 

includes the New York Bight estuary region, which runs from Long Island Sound to the 

Delaware River and borders the New York metropolitan area. The two California regions 

(Southern and Northern) are next largest after the New York Bight, followed by Lake 

Michigan. The smallest regions are Lake Huron and Lake Superior. 

Another indicator of the economic importance of estuary regions is a comparison of the 

relative proportions of population and GDP in each region. A region whose share of the 

national economy exceeds its share of national employment serves as an “economic 

center.” A region such as this produces, on average, more output per worker than other 

regions where the share of employment is larger than that of output. By this standard, all 

of the North Atlantic estuary regions plus all of the Pacific estuary regions qualify as 

economic centers, as do the Florida Atlantic, Central Gulf of Mexico, Lake Erie, and 

Lake Michigan regions. 

The proportion of the national economy found in estuary regions provides one 

perspective on the size of these areas. Another is to be found by examining the relative 

size of the economic activity in a state’s estuary counties (those counties comprising the 

estuary regions) as a proportion of the state’s total economy. Thus, one might ask: what 

proportion of each state’s economy is to be found in the estuary counties in that state? 

This question is addressed in Table 5. Each state is shown, along with the population, 

employment, and output to be found in all counties identified as part of an estuary region. 

The table also shows, for each state, which estuary regions or portions of estuary regions 

are found in that state. 

Connecticut, Delaware, and Rhode Island are the three states in which the economy is 

entirely within the estuary regions. States with over 90% of their economy (measured by 

GDP) in estuary regions include Maine, Massachusetts, and New Jersey. States with 

between 80% and 90% include California and Louisiana. Florida and Washington State 

have almost at 80% of their economy in the estuary regions.2

 

2

 Florida’s political and estuarine geographies create some artificial distinctions when the county 

boundaries are used. It may be plausibly argued that all of Florida is within an estuary region, including 

the central Florida counties excluded in this analysis. 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

45 

 

Table 5: Proportion of State Economy in Estuary Regions 

State Name 

Population 

in Estuary 

Region(s) 

% of State 

Population 

in Estuary 

Regions(s) 

Employment 

in Estuary 

Region(s) 

% of State 

Employment 

in Estuary 

Region(s) 

GDP in 

Estuary 

Region(s) 

% of 

State 

GDP in 

Estuary 

Region(s) 

Estuary 

Region(s) 

included in state 

Alabama 726,338 16.1% 268,219 14.8% $19,035 13.5% Eastern Gulf 

Southern Calif. California 27,223,322 76.0% 11,816,348 80.7% $1,303,224 85.8% Northern Calif. 

Connecticut 3,498,966 100.0% 1,583,549 100.0% $182,468 100.0% N.Y. Bight 

Delaware 830,069 100.0% 406,260 100.0% $52,298 100.0% Delaware River 

Florida Atlantic 

Florida 13,328,406 76.7% 5,432,923 76.2% $474,240 77.8% Southern Gulf 

Eastern Gulf 

Georgia 855,383 9.6% 324,940 8.6% $23,109 6.8% Georgia 

Illinois 6,020,034 47.4% 2,819,551 50.5% $306,575 57.4% Lake Michigan 

Indiana 754,656 12.1% 23,732 0.9% $23,732 10.3% Lake Michigan 

Louisiana 3,575,024 79.3% 1,511,068 81.2% $133,058 83.1% Central Gulf 

Massachusetts 5,587,689 87.2% 2,761,203 88.9% $287,347 91.9% Gulf of Maine 

Maryland 2,262,404 46.0% 1,271,922 52.6% $115,658 50.1% Chesapeake Bay 

Maine 1,224,242 93.1% 552,632 93.9% $41,092 95.0% Gulf of Maine 

Lake Michigan 

Michigan 5,044,878 49.9% 1,911,168 45.7% $167,156 45.6% Lake Huron 

Lake Erie 

Minnesota 214,615 4.2% 100,464 3.9% $7,230 3.2% Lake Superior 

Mississippi 606,962 20.9% 210,443 19.9% $15,262 19.8% Central Gulf 

North North Carolina 

Carolina 2,046,672 24.0% 490,480 11.9% $43,449 13.4% South Carolina 

New 

Hampshire 1,062,219 81.8% 774,342 20.8% $55,130 17.0% Gulf of Maine 

N.Y. Bight New Jersey 8,293,936 95.5% 3,664,133 96.6% $397,808 97.0% Delaware River 

N.Y. Bight 

New York 16,316,589 84.6% 6,930,262 85.2% $407,189 44.9% Lake Ontario 

Lake Erie 

Ohio 2,766,162 24.2% 1,359,914 25.9% $115,825 27.2% Lake Erie 

Oregon 2,114,503 29.4% 1,003,214 58.4% $91,240 67.8% Ore-Wash Coast 

Delaware River 

Pennsylvania 5,432,681 43.8% 2,569,193 47.4% $243,279 52.5% Lake Erie 

Chesapeake Bay 

Rhode Island 1,079,916 100.0% 467,533 100.0% $41,844 100.0% N.Y. Bight 

South 

Carolina 1,736,514 41.4% 687,182 39.7% $49,155 37.4% South Carolina 

Western Gulf Texas 5,980,661 26.6% 2,594,661 28.1% $280,895 31.1% Central Gulf 

Virginia 1,375,597 18.4% 1,308,706 38.1% $136,735 41.8% Chesapeake Bay 

Puget Sound Washington 4,360,782 70.3% 1,976,690 73.5% $200,166 79.1% Ore-Wash Coast 

Lake Michigan Wisconsin 82,545 1.5% 976,667 36.6% $81,290 39.1% Lake Superior 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

46 

Table 6: Proportion of Estuary Region in Each State 

Estuary 

Region 

States 

Inclu

ded Population 

% of 

Estuary 

Region Employment 

% of 

Estuary 

Region 

GDP 

(Millions) 

% of 

Estuary 

Region 

LA 3,575,024 39.8% 1,511,068 38.5% $133,058 33.4% 

Central Gulf MS 606,962 6.7% 210,443 5.4% $15,262 3.8% 

TX 4,811,592 53.5% 2,200,285 56.1% $249,921 62.8% 

MD 2,262,404 43.6% 1,271,922 39.4% $115,658 38.3% 

PA 1,550,368 29.9% 647,948 20.1% $49,471 16.4% Chesapeake 

Bay VA 1,375,597 26.5% 1,308,706 40.5% $136,735 45.3% 

DE 830,069 12.5% 406,260 13.3% $52,298 16.4% 

NJ 1,918,241 28.9% 846,486 27.8% $80,989 25.4% Delaware 

River PA 3,882,313 58.6% 1,794,765 58.9% $184,964 58.1% 

AL 726,338 15.4% 268,219 13.9% $19,035 12.3% Eastern Gulf FL 3,978,177 84.6% 1,664,239 86.1% $136,193 87.7% 

 Florida FL 7,947,569 99.3% 3,220,874 99.5% $293,546 99.6% 

Atlantic GA 55,763 0.7% 16,334 0.5% $1,093 0.4% 

Georgia GA 799,620 100.0% 308,606 100.0% $22,016 100.0% 

MA 5,014,724 68.7% 2,529,249 70.8% $270,316 76.2% 

Gulf of Maine ME 1,224,242 16.8% 552,632 15.5% $41,092 11.6% 

NH 1,062,219 14.5% 490,480 13.7% $43,449 12.2% 

MI 3,160,154 41.9% 1,206,920 36.7% $117,876 40.9% 

NY 1,334,479 17.7% 594,802 18.1% $45,558 15.8% 

OH 2,766,162 36.7% 1,359,914 41.4% $115,825 40.2% Lake Erie 

PA 280,844 3.7% 126,480 3.8% $8,844 3.1% 

Lake Huron MI 551,184 100.0% 196,339 100.0% $13,864 100.0% 

IL 6,020,034 61.2% 2,819,551 62.8% $306,575 69.6% 

IN 754,656 7.7% 288,677 6.4% $23,732 5.4% 

MI 1,142,091 11.6% 436,584 9.7% $30,970 7.0% Lake Michigan 

WI 1,927,146 19.6% 946,559 21.1% $79,508 18.0% 

Lake Ontario NY 1,260,578 100.0% 544,919 100.0% $44,812 100.0% 

MI 191,449 39.2% 71,325 35.3% $4,445 33.0% 

Lake Superior MN 214,615 43.9% 100,464 49.8% $7,230 53.7% 

WI 82,545 16.9% 30,108 14.9% $1,783 13.2% 

CT 3,498,966 13.9% 1,583,549 14.5% $182,468 14.2% 

MA 572,965 2.3% 231,954 2.1% $17,031 1.3% 

NJ 6,375,695 25.3% 2,817,647 25.9% $316,819 24.6% 

NY 13,721,532 54.3% 5,790,541 53.2% $727,950 56.6% 

NY Bight 

RI 1,079,916 4.3% 467,533 4.3% $41,844 3.3% 

North Carolina NC 1,907,423 100.0% 733,567 100.0% $52,257 100.0% 

Northern 

California CA 10,592,542 100.0% 4,744,068 100.0% $567,543 100.0% 

Oregon- OR 2,114,503 81.0% 562,335 76.4% $134,615 90.8% 

Washington 

Coast WA 495,928 19.0% 173,237 23.6% $13,585 9.2% 

Puget Sound WA 3,864,854 100.0% 1,803,453 100.0% $186,581 100.0% 

NC 139,249 7.4% 40,775 5.6% $2,873 5.5% South Carolina SC 1,736,514 92.6% 687,182 94.4% $49,155 94.5% 

Southern 

California CA 16,630,780 100.0% 7,072,280 100.0% $735,681 100.0% 

Southern Gulf FL 1,402,660 100.0% 547,810 100.0% $44,501 100.0% 

Western Gulf TX 1,169,069 100.0% 394,376 100.0% $30,974 100.0% 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

47 

Of the 21 estuary regions described in this paper, seven are entirely contained within one 

state (North Carolina, Georgia, northern and southern California, Puget Sound, Lake 

Huron, and Lake Ontario). The remaining 14 regions are split between states. Thus 

another question that may be asked is: what proportion of each estuary region is found 

within each state comprising all or part of that region? This question is addressed in 

Table 6, which lists each region and the states comprising it, along with the population, 

employment, and GDP that each state contributes to the region. 

Change: What Is Changing in Regional Economies, and At What Rates? 

Changes in economic activity using employment and output in the estuary regions are 

shown in Table 7, which shows change from 1998–2004 in employment and in real gross 

state product.3

 Measuring both employment and output is important because, as Table 7 

shows, employment can decline even while output grows, or the growth in output can be 

several times the rate of growth. These differences are caused by growth in productivity 

(output per unit of inputs), which has been significant over this period. 

There are significant differences in growth trends among the regions. In general, the 

southern regions (South Atlantic and Gulf of Mexico) are growing much faster on all 

measures than northern regions. The fastest change has been in the Southern Gulf region, 

essentially the coastal areas of southwestern Florida. This region, although a relatively 

small region of only 1.4 million people, has seen the fastest growth on all three measures. 

Fast economic and population growth is also the story on the Atlantic side of Florida and 

in the eastern Gulf region from Florida to Alabama. 

On the other hand, the economy of the Great Lakes estuary regions has clearly been 

suffering. Lake Huron shows declines in population and employment and the smallest 

growth in GDP of all regions. Employment and population declines also characterize the 

Lake Erie region, and employment declines are occurring in all of the Great Lakes 

regions except Lake Superior. 

 

 

3

 Real gross state product is the chain-weighted gross state product estimate from the Bureau of Economic 

Analysis. It eliminates the effects of inflation. 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

48 

Table 7: Economic Growth in Estuary Regions 1997-2004 

 

Employment 

Growth 

Population 

Growth 

GDP 

Growth* 

Gulf of 

Maine 3.4% 2.1% 16.9%

NY Bight 3.8% 2.1% 13.3%

Delaware 

River 2.7% 4.0% 13.0%

Chesapeake 

Bay 5.4% 6.3% 17.6%

North 

Carolina 2.9% 1.5% 13.6%

South 

Carolina 6.2% 4.4% 17.3%

Georgia 4.9% 2.7% 8.9%

Florida 

Atlantic 9.1% 6.8% 18.0%

Southern 

Gulf 13.8% 20.6% 35.3%

Eastern 

Gulf 7.2% 4.8% 16.1%

Central 

Gulf 5.7% 2.2% 8.4%

Western 

Gulf 6.6% 5.0% 12.0%

Southern 

California 6.3% 5.4% 19.5%

Northern 

California 4.9% 1.0% 18.2%

OregonWashington 

Coast 6.6% 3.1% 15.7%

Puget 

Sound 5.8% 1.4% 9.0%

Lake 

Superior 0.1% 1.3% 10.8%

Lake Huron -0.2% -3.8% 1.4%

Lake 

Michigan 1.6% -3.2% 6.8%

Lake Erie -0.8% -2.9% 3.4%

Lake 

Ontario 0.2% -1.7% 5.6%

* Chain Weighted GDP in 2000 dollars. For more 

information see www.bea.gov 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

49 

Understanding the nature of economic change provides an important context for estuary 

restoration efforts. In rapidly growing areas, estuary restoration will take place within an 

overall setting of rapid change. That change may lead to additional estuary degradation, 

creating a tension between efforts to protect existing estuary qualities and efforts to 

restore what has already been damaged. At the same time, rapid growth can create new 

wealth in a region, some of which may be tapped to fund the restoration of damages that 

have occurred in the past. 

Conversely, in slow-growing regions, much emphasis is likely to be put on finding ways 

to spur economic and population growth. In such regions, the role of an estuary as a 

regional resource that provides amenity-based values, sustains natural resource industries, 

and provides other services will be one of the foundations on which a return to economic 

growth might be based. In such regions, estuary restoration has to be seen as protecting 

or rebuilding a key asset. 

An examination of the relative rates of employment and population growth can help to 

better understand the context for estuary restoration. These rates are shown in Table 8, 

which shows the ratio of employment to population growth between 1998 and 2004. A 

ratio greater than 1 indicates that employment is growing faster than population; a ratio 

less than 1 indicates that population is growing faster than employment. A negative 

number, as in Lake Michigan and Lake Ontario, indicates that either population or 

employment growth is negative. 

An employment growth rate faster than population growth indicates intensifying uses of 

the land for economic purposes as opposed to residential purposes. In most cases, this 

means expanding uses of land for commercial purposes such as shopping centers, office 

buildings, parking lots, etc. will be growing faster than housing and related uses. Such 

growth can intensify the growth in nonpoint pollution sources, putting additional stresses 

on estuary systems. More detailed information about the patterns of residential versus 

commercial growth within a region may help set priorities for restoration activities that 

are needed to halt or restore damage in fast-changing areas, and may point to the need to 

pay particular attention to the water systems located in or near commercial development 

centers as a priority. Such attention would seem particularly important in areas such as 

Northern California, Puget Sound, and the Oregon-Washington Coast in the west; the 

Central Gulf; and the South Atlantic estuary regions from North Carolina to Florida. 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

50 

Table 8: Employment Growth /Population Growth Ratio by Estuary Region 

 

Employment 

Growth/ 

Population 

Growth 

Ratio 

Gulf of Maine 

 

1.62 

NY Bight 

 

1.83 

Delaware River 

 

0.66 

Chesapeake Bay 

 

0.86 

North Carolina 

 

1.94 

South Carolina 

 

1.42 

Georgia 

 

1.82 

Florida Atlantic 

 

1.34 

Southern Gulf 

 

0.67 

Eastern Gulf 

 

1.50 

Central Gulf 

 

2.57 

Western Gulf 

 

1.32 

Southern California 

 

1.16 

Northern California 

 

5.04 

Oregon-Washington 

Coast 

 

2.15 

Puget Sound 

 

4.05 

Lake Superior 

 

0.09 

Lake Huron 

 

0.04 

Lake Michigan 

 

-0.50 

Lake Erie 

 

0.26 

Lake Ontario 

 

-0.14 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

51 

The analysis so far addresses what is changing within the socioeconomic environment of 

the regions. It is also necessary to ask where the change is occurring. For this purpose, 

the counties comprising the estuary regions are analyzed in terms of their size and their 

location on a continuum for urban to rural. The Urban Influence Codes discussed above 

provide a single metric permitting this analysis. 

One of the most important characteristics of population and economic growth in America 

is the extent to which growth is spreading across the landscape. Called “sprawl” by 

some, it is in reality part of a pattern of economic growth that can be found throughout 

the world that is primarily connected to the changing shape of urban areas and the shift 

from an industrial to a post-industrial economy (Bruegmann 2005). Whatever it is called, 

this spread of activity across the landscape presents those restoring estuaries with three 

different types of challenges: 

• In existing urban areas (defined as metropolitan areas by the census), high 

densities of economic development and population put high levels of stress on 

estuaries from human activity and present both the largest needs for and 

challenges in estuary restoration. However, estuary restoration can also benefit a 

larger concentration of people, and is more likely to be of benefit to such types of 

activities as ports and energy facilities, as discussed in other chapters. 

• In areas transitioning from rural to urban or from smaller to larger urban, 

restoration and protection strategies implemented at an early stage in the 

transition can prevent the need for much more complex and expensive restoration 

projects in the future. 

• In rural, low-density areas, restoration may be the key to protecting the natural 

resource industries on which these regions have traditionally depended and that 

are likely to be the key to maintaining some level of prosperity. 

The location of change can be depicted in several different ways. In Table 9, the number 

of counties in each of the urban influence classifications based on the 1990 and the 2000 

censuses are shown. Table 10 and Table 11 show population and employment growth for 

the different types of counties between 1998 and 2004. Table 10 shows a breakdown by 

metro and nonmetro counties (using the 2000 Census definitions), while Table 11 

provides detailed data for each of the urban influence types for each estuary region. 

In Table 9, a positive number represents the number of counties that entered into a given 

category between the 1993 (based on Census 1990) and 2003 (based on Census 2000) 

urban influence categories. A negative number represents a decline in the number of 

counties in that cell between the two years. An empty cell indicates no change took place 

in that cell. For reference, the total number of counties in each estuary region is also 

shown. 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

52 

Table 9: Change in Urban Influence Classification 1993-2003 

Metro Nonmetro 

 20,000 or greater 2,500-19,999 Less than 2,500 

 

 

 

 

 

1 

million 

or 

greater 

250,000 

- 1 

million 

Less 

than 

250,000 

Adjacent 

to Metro 

Area 

Not 

adjacent 

to 

Metro 

Area 

Adjacent 

to Metro 

Area 

Not 

adjacent 

to 

Metro 

Area 

Adjacent 

to Metro 

Area 

Not 

adjacent 

to 

Metro 

Area 

Total 

Counties 

Gulf of 

Maine 1 2 -1 -2 32 

NY Bight 5 -4 1 -2 41 

Delaware 

River 1 -2 1 15 

Northeast 

Atlantic 

Chesapeake 

Bay 2 -2 2 -1 -1 43 

North 

Carolina 1 2 -1 2 1 -2 -2 -1 35 

South 

Carolina 24 

Georgia 5 2 -1 2 -5 -3 26 

Southeast 

Atlantic 

Florida 

Atlantic 4 -5 1 1 -1 15 

Southern 

Gulf 1 -1 5 

Eastern 

Gulf 1 1 2 -2 -1 -1 26 

Central 

Gulf -3 6 -1 -2 2 -2 22 

Gulf of 

Mexico 

Western 

Gulf 1 1 2 -4 11 

Northern 

California -4 3 1 19 California 

Southern 

California -1 1 4 

OregonWashington 

Coast 2 -1 -1 16 Pacific 

Northwest 

Puget 

Sound 1 2 -1 -1 -1 -1 1 9 

Lake Erie -2 1 1 1 -1 17 

Lake 

Ontario -1 2 -1 6 

Lake 

Michigan 2 2 -4 33 

Lake Huron 11 

Great 

Lakes 

Lake 

Superior 2 -2 15 

Table 9 shows several patterns. A sense of the dynamism of economic and demographic 

activity can be seen from the number of urban influence categories where change 

occurred within an estuary region. The most dynamic regions are Puget Sound, North 

Carolina, Georgia, the eastern and central Gulf of Mexico, Chesapeake Bay, and Lake 

Erie. North Carolina and Georgia also exhibit a great deal of change, but South Carolina 

does not. 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

53 

Over the period of examination, more counties entered the metro and larger population 

categories than other categories. This pattern reflects population growth and increasing 

urbanization. For example, the New York Bight and Atlantic Florida both show growth 

in the number of counties in metro areas with a central city of 1 million or more, and a 

decline in the number of counties in metro areas with 250,000 to 1 million people. This 

reflects an increase in the largest metro areas in both regions. Lake Erie, on the other 

hand, experienced a decline in the number of counties in the largest metro regions and 

growth in the number of counties in the smaller metro regions consistent with the 

economic growth trends noted above. 

Overall, 24 nonmetro counties switched to metro status over the decade. Georgia, where 

nine counties changed status out of a nonmetro urban influence code, led all areas in 

increasing urbanization. Five of these counties moved to metro areas, while four moved 

to categories with larger central places (cities or towns). 

The other information contained in the urban influence codes is location relative to metro 

areas. The number of nonmetro counties that were not adjacent to a metro area in the 

1993 codes declined by 20 in the 2003 codes, reflecting continued expansion of metro 

areas outward. These are the “transition areas” referred to above. The number of 

counties adjacent to metro areas increased by a net of only 3, but this reflected a decline 

in the number of smaller adjacent counties (those with a central place population of less 

than 20,000). There was a growth of eight counties in the largest central-place population 

category adjacent to metro areas. Overall, this is further evidence of the expansion of 

metro areas, not only in terms of gross population but also geographically into what had 

been rural areas. 

Among the estuary regions, the most dramatic shifts from rural to urban are to be found 

in North Carolina, which lost five counties in the smaller rural areas (central population 

less than 2,500). The Lake Michigan estuary region saw a drop of counties in the 

category of 2,500–19,999 central-place population/not adjacent to metro areas. Two of 

those counties moved to the next largest size category and two moved into metro areas. 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

54 

Table 10: Employment and Population Growth by Metro/Nonmetro 

Estuary Region 

Metro/ 

Nonmetro 

Employment 

Growth 

Population 

Growth 

Employment Growth/ 

Population Growth Ratio 

Metro 3.2% 1.8% 1.8 Gulf of Maine 

Nonmetro 5.2% 6.4% 0.8 

Metro 3.8% 2.2% 1.7 NY Bight 

Nonmetro 3.3% 0.8% 4.0 

Metro 2.4% 3.7% 0.6 Delaware River 

Nonmetro 13.1% 10.2% 1.3 

Metro 5.7% 5.6% 1.0 Chesapeake Bay 

Nonmetro 3.4% 7.8% 0.4 

Metro 3.3% 3.3% 1.0 North Carolina 

Nonmetro 2.4% -0.6% -4.0 

Metro 7.3% 6.7% 1.1 South Carolina 

Nonmetro 4.2% 0.3% 15.9 

Metro 4.8% 6.2% 0.8 Georgia 

Nonmetro 5.0% 0.0% 2696.4 

Metro 9.0% 7.9% 1.1 Florida Atlantic 

Nonmetro 16.5% 16.9% 1.0 

Metro 14.9% 24.8% 0.6 Southern Gulf 

Nonmetro -2.4% 0.9% -2.6 

Metro 7.2% 5.0% 1.4 Eastern Gulf 

Nonmetro 7.5% 5.9% 1.3 

Metro 5.8% 2.6% 2.2 Central Gulf 

Nonmetro 2.4% -0.8% -2.9 

Metro 7.3% 6.2% 1.2 Western Gulf 

Nonmetro -0.7% -3.9% 0.2 

Southern 

California Metro 6.3% 5.4% 1.2 

Northern Metro 5.0% 0.9% 5.7 

California Nonmetro 1.6% 1.5% 1.1 

Oregon- Metro 7.9% 3.2% 2.4 

Washington Coast Nonmetro 2.7% 2.8% 1.0 

Metro 5.8% 1.2% 4.7 Puget Sound 

Nonmetro 6.9% 7.6% 0.9 

Metro 0.3% 0.9% 0.4 Lake Superior 

Nonmetro -0.1% 3.4% 0.0 

Metro -0.9% -4.1% 0.2 Lake Huron 

Nonmetro 0.8% -2.4% -0.3 

Metro 1.4% -3.4% -0.4 Lake Michigan 

Nonmetro 4.8% -0.6% -7.7 

Metro -0.7% -2.9% 0.3 Lake Erie 

Nonmetro -1.2% -4.1% 0.3 

Metro 0.4% -2.6% -0.2 Lake Ontario 

Nonmetro -0.4% 3.3% -0.1 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

55 

Table 11: Population and Employment Growth by Urban Influence Type 

Estuary 

Region 

Region 

Type 

Population 

Growth 

Employment 

Growth 

Estuary 

Region 

Region 

Type 

Population 

Growth 

Employment 

Growth 

 

Metro >1m 10.4% 6.8% Metro >1m 4.1% 3.9% 

Metro .25-

1m -0.1% 6.0% 

Metro .25-

1m 7.7% -3.4% 

Metro 

<.25m 4.8% 6.6% 

Metro 

<.25m 10.4% 0.2% 

Nonmetro 

Adjacent 

>20k 3.8% 6.0% 

Nonmetro 

Adjacent 

2.5-19.9k 0.3% 4.2% 

Nonmetro 

Adjacent 

2.5-19.9k 1.3% 6.6% 

Nonmetro 

Nonadjacent 

2.5-19.9k 1.1% -4.6% 

Nonmetro 

Nonadjacent 

2.5-19.9k 0.6% 3.4% 

Rural 

Adjacent 

>2,5k -0.1% -5.9% 

Gulf of 

Maine 

Rural 

Adjacent 

>2,5k -0.5% 11.3% 

Central 

Gulf 

Rural 

Nonadjacent 

<2.5k -0.8% -15.4% 

Metro >1m 6.3% 2.5% Metro >1m 0.3% 3.4% 

Metro .25-

1m 4.7% 0.6% 

Metro .25-

1m -0.1% 7.7% 

Metro 

<.25m 3.7% 6.5% 

Metro 

<.25m 2.1% -14.5% 

Nonmetro 

Adjacent 

>20k 2.7% -1.5% 

Nonmetro 

Adjacent 

>20k -1.4% -4.1% 

NY Bight 

Nonmetro 

Adjacent 

2.5-19.9k 2.9% 8.3% 

Nonmetro 

Adjacent 

2.5-19.9k 2.8% -3.0% 

Metro >1m 4.4% 2.8% 

Western 

Gulf 

Rural 

Nonadjacent 

<2.5k -0.4% -5.4% 

Metro .25-

1m 9.7% 10.8% Metro >1m 3.7% 5.0% 

Metro 

<.25m 2.5% 10.1% 

Southern 

California Metro .25-

1m 4.1% 13.3% 

Delaware 

River 

Nonmetro 

Adjacent 

>20k 2.2% 10.2% Metro >1m 3.5% -1.5% 

Metro >1m 5.0% 6.5% 

Metro .25-

1m 4.3% 8.4% 

Metro .25-

1m 3.7% 1.9% 

Metro 

<.25m 0.8% 12.9% 

Metro 

<.25m 13.1% 7.4% 

Nonmetro 

Adjacent 

>20k 7.5% 2.3% 

Chesapeake 

Bay 

Nonmetro 

Adjacent 

>20k 8.3% 8.4% 

Northern 

California 

Nonmetro 

Nonadjacent 

>20k 4.7% 1.0% 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

56 

Estuary 

Region 

Region 

Type 

Population 

Growth 

Employment 

Growth 

Estuary 

Region 

Region 

Type 

Population 

Growth 

Employment 

Growth 

 

Nonmetro 

Adjacent 

2.5-19.9k 5.5% 6.6% 

Nonmetro 

Nonadjacent 

2.5-19.9k 1.5% 1.5% 

Nonmetro 

Nonadjacent 

2.5-19.9k 5.3% 8.4% Metro >1m 0.8% 4.5% 

Rural 

Adjacent 

>2,5k 11.8% 9.1% 

Metro .25-

1m 5.2% 0.9% 

Rural 

Nonadjacent 

<2.5k 6.3% 5.3% 

Metro 

<.25m 3.6% 3.6% 

Metro >1m -2.1% 8.6% 

Nonmetro 

Adjacent 

>20k 1.8% 1.8% 

Metro .25-

1m 6.6% 5.3% 

Nonmetro 

Nonadjacent 

>20k 5.1% 5.2% 

Metro 

<.25m 9.0% 0.4% 

Nonmetro 

Adjacent 

2.5-19.9k 0.2% 7.9% 

Nonmetro 

Adjacent 

>20k 9.1% -3.6% 

Nonmetro 

Nonadjacent 

2.5-19.9k 4.1% 4.4% 

Nonmetro 

Nonadjacent 

>20k 10.4% 8.2% 

OregonWashington 

Coast 

Rural 

Adjacent 

>2,5k 7.5% 2.0% 

Nonmetro 

Adjacent 

2.5-19.9k 17.6% -2.4% Metro >1m 6.4% 0.1% 

Nonmetro 

Nonadjacent 

2.5-19.9k 6.4% 5.7% 

Metro 

<.25m 4.0% 11.6% 

Rural 

Adjacent 

>2,5k 5.7% 0.8% 

Nonmetro 

Nonadjacent 

>20k 0.6% 5.5% 

North 

Carolina 

Rural 

Nonadjacent 

<2.5k 3.1% -7.6% 

Nonmetro 

Adjacent 

2.5-19.9k -1.0% 9.3% 

Metro .25-

1m 5.1% 9.3% 

Puget 

Sound 

Rural 

Nonadjacent 

<2.5k 12.0% 8.9% 

Metro 

<.25m 4.5% 3.5% 

Metro .25-

1m 4.1% 0.9% 

Nonmetro 

Adjacent 

>20k 4.9% -2.9% 

Nonmetro 

Nonadjacent 

>20k 5.9% 5.7% 

Nonmetro 

Nonadjacent 

>20k 8.4% 15.8% 

Nonmetro 

Adjacent 

2.5-19.9k 3.5% 6.0% 

South 

Carolina 

Nonmetro 

Adjacent 

2.5-19.9k 7.3% -5.5% 

Lake 

Superior 

Nonmetro 

Nonadjacent 

2.5-19.9k -0.3% 1.6% 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

57 

Estuary 

Region 

Region 

Type 

Population 

Growth 

Employment 

Growth 

Estuary 

Region 

Region 

Type 

Population 

Growth 

Employment 

Growth 

 

Metro .25-

1m 6.6% 6.4% 

Rural 

Adjacent 

>2,5k 2.2% 9.3% 

Metro 

<.25m 2.3% 5.6% 

Rural 

Nonadjacent 

<2.5k 1.5% -4.9% 

Nonmetro 

Adjacent 

>20k 6.8% 3.0% 

Metro 

<.25m -3.1% -4.1% 

Nonmetro 

Adjacent 

2.5-19.9k 3.3% -3.9% 

Nonmetro 

Adjacent 

2.5-19.9k 5.5% -2.1% 

Nonmetro 

Nonadjacent 

2.5-19.9k 1.2% -0.7% 

Nonmetro 

Nonadjacent 

2.5-19.9k 7.3% -4.2% 

Georgia 

Rural 

Nonadjacent 

<2.5k 8.3% 5.3% 

Rural 

Adjacent 

>2,5k 4.4% 15.5% 

Metro >1m -1.0% 7.4% 

Lake Huron 

Rural 

Nonadjacent 

<2.5k 8.3% 2.8% 

Metro .25-

1m 0.0% 10.8% Metro >1m 11.7% -4.0% 

Metro 

<.25m 3.1% 11.4% 

Metro .25-

1m 8.1% 7.5% 

Nonmetro 

Adjacent 

>20k -1.2% 16.7% 

Metro 

<.25m 6.1% -2.1% 

Florida 

Atlantic 

Nonmetro 

Adjacent 

2.5-19.9k -0.9% 19.5% 

Nonmetro 

Adjacent 

>20k 6.4% -10.5% 

Metro .25-

1m 1.0% 22.5% 

Nonmetro 

Nonadjacent 

>20k 12.5% 1.0% 

Metro 

<.25m 0.5% 50.5% 

Nonmetro 

Adjacent 

2.5-19.9k 1.0% 5.4% 

Southern 

Gulf 

Nonmetro 

Adjacent 

>20k 2.5% 0.9% 

Nonmetro 

Nonadjacent 

2.5-19.9k 6.2% 3.7% 

Metro >1m 1.5% 6.6% 

Rural 

Adjacent 

>2,5k 8.1% 9.2% 

Metro .25-

1m 1.0% -0.1% 

Lake 

Michigan 

Rural 

Nonadjacent 

<2.5k 15.5% 10.3% 

Metro 

<.25m 4.9% 8.4% Metro >1m 11.0% -3.3% 

Eastern 

Gulf 

Nonmetro 

Adjacent 

>20k 3.3% 12.9% 

Lake Erie 

Metro .25-

1m -2.4% -2.0% 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

58 

Estuary 

Region 

Region 

Type 

Population 

Growth 

Employment 

Growth 

Estuary 

Region 

Region 

Type 

Population 

Growth 

Employment 

Growth 

 

Nonmetro 

Adjacent 

2.5-19.9k 4.1% 6.1% 

Metro 

<.25m 14.0% 4.9% 

Nonmetro 

Nonadjacent 

2.5-19.9k 5.6% -6.4% 

Nonmetro 

Adjacent 

>20k 5.5% -4.1% 

Rural 

Adjacent 

>2,5k 1.5% -1.9% Metro >1m -1.6% -3.2% 

Metro .25-

1m -0.5% 6.1% 

Nonmetro 

Adjacent 

>20k -0.9% 5.3% 

Lake 

Ontario 

Nonmetro 

Nonadjacent 

>20k -5.2% -0.2% 

In Table 10, population and employment growth rates are shown along with the ratio of 

employment growth rate to population growth rate. Rural (nonmetro) areas show faster 

growth in employment than population in the New York Bight, Delaware River, South 

Carolina, Georgia,4

 the Eastern Gulf, and Northern California. If these growth rates 

continue, these regions are probably the “transition” areas of the next decade. However, 

these may not be the only transition areas. The patterns of growth within metro areas and 

in nonmetro counties adjacent to metro areas are also critical in defining transition areas. 

This is explored in Table 11. 

From Table 11, we see that employment growth is exceeding population growth in the 

metro counties of the Gulf of Maine, New York Bight, South Carolina, Eastern Gulf, and 

Northern California. 

• In the Gulf of Maine, employment growth is particularly strong in the smaller 

nonmetro counties (those with a city and population less than 1 million), and 

the differences between employment and population growth are very high in 

all of the nonmetro counties. The largest differences are in the nonmetro 

counties with the smallest towns but that are adjacent to metro areas; in these 

counties population has slightly declined while employment has grown by 

more than 11%. 

• In the New York Bight region, the smaller metro counties are seeing the 

greatest differential between employment and population growth. 

 

4

 The very high ratio for nonmetro Georgia is an arithmetic artifact of the negligible population growth 

compared with moderate employment growth. 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

59 

• In South Carolina, there is a pattern of growth at the extremes. The larger 

metro areas and the larger nonmetro areas distant from the metro areas show 

the fastest growth overall, and faster employment growth than population 

growth. 

These three regions illustrate the variety of patterns of growth occurring across the 

estuary regions, and show that “sprawl” or urban growth is not a simple process. 

Socioeconomic change across the landscape is occurring at very different rates in the 

estuary regions, and each region exhibits somewhat different patterns of growth. 

How Is Change Occurring in Estuary-Dependent Sectors Compared with 

Overall Rates of Change? 

The discussion so far has focused on overall relationships between economic 

characteristics and estuary restoration. A general relationship between economic health 

and estuarine health has been hypothesized and the implications of recent patterns of 

economic change as measured by different concepts have been explored. It also is 

possible to use these measures to examine some activity that is more directly dependent 

on estuarine health. We chose tourism and recreation for this purpose. 

The direct connections between tourism and recreation and estuary health are examined 

in some detail in the chapter by Pendleton. Here we look at the changing role of tourism 

and recreation in the economy of the estuary regions. Tourism and recreation plays an 

important role in the economies of both urban and rural places. In urban areas, tourism 

and recreation combined is not only an important industry in its own terms, it also 

depends upon and thus reflects the natural amenities that people in urban areas have come 

to expect, including the ability to go to the beach, or to boat, or to visit parks or trails 

along bodies of water. Such amenities are part of what people expect in urban areas 

today. For rural areas, tourism and recreation comprises one of the most important 

alternatives to the competitively threatened manufacturing and natural resource 

industries. 

As noted above, this discussion of tourism and recreation uses the National Ocean 

Economics Program definition of tourism and recreation, which limits the definition to 

establishments located in zip codes adjacent to the shores of the oceans or Great Lakes. 

This definition substantially (though not entirely) narrows the measurement of tourism 

and recreation to establishments directly connected to the water. 

Table 12 compares employment in 1990 and 2003 for each estuary region for both total 

employment and tourism and recreation. The amount of growth for both measures is also 

shown. Table 13 shows the proportion of each estuary region’s employment in tourism 

and recreation in both years, along with the growth rates in total employment and in 

tourism and recreation employment. 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

60 

Table 12: Tourism and Recreation Growth Compared with Overall Growth 

 Total Employment 

Tourism & 

Recreation 

Employment Growth 1990-2003 

 1990 2003 1990 2003

Total 

Employment 

Tourism & 

Recreation 

Employment 

Gulf of 

Maine 6,415,075 7,098,570 83,691 86,455 683,495 2,764

NY Bight 20,435,561 21,445,139 162,448 320,260 1,009,578 157,812

Delaware 

River 5,469,579 5,958,739 22,615 38,006 489,160 15,391

Chesapeake 

Bay 3,275,823 6,111,622 55,243 70,514 2,835,799 15,271

North 

Carolina 1,117,116 1,401,270 9,959 26,371 284,154 16,412

South 

Carolina 1,099,163 1,390,832 19,678 38,190 291,669 18,512

Georgia 524,318 585,744 11,178 17,268 61,426 6,089

Florida 

Atlantic 2,527,712 6,233,868 88,622 131,684 3,706,156 43,062

Southern 

Gulf 371,264 1,050,020 28,043 42,714 678,756 14,671

Eastern 

Gulf 442,929 3,650,094 41,106 88,946 3,207,165 47,840

Central 

Gulf 6,173,144 7,700,371 53,866 107,336 1,527,227 53,469

Western 

Gulf 626,327 775,861 12,342 25,552 149,534 13,210

Southern 

California 13,509,767 13,973,180 69,296 104,259 463,413 34,963

Northern 

California 8,571,910 9,442,122 114,873 165,632 870,212 50,759

OregonWashington 

Coast 811,847 1,419,291 9,089 13,503 607,444 4,414

Puget 

Sound 1,459,329 3,546,426 86,792 105,677 2,087,097 18,885

Lake 

Superior 278,787 391,330 7,866 9,032 112,543 1,166

Lake 

Michigan 6,842,620 8,982,820 62,497 102,265 2,140,200 39,768

Lake Huron 356,542 391,367 4,579 5,372 34,825 794

Lake Erie 6,450,527 6,571,172 39,898 65,412 120,645 25,514

Lake 

Ontario 1,082,428 1,087,583 4,294 7,537 5,155 3,243

Total All 

Regions 87,841,768 109,207,421 987,974 1,571,984 21,365,653 584,010
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

61 

Table 13: Tourism and Recreation as Percent of Economy and Growth 1990-2003 

 

Tourism & Recreation 

as Percent of 

Employment Growth 1990-2003 

 1990 2003

Total 

Employment 

T&R 

Employment 

Gulf of 

Maine 1.3% 1.2% 10.7% 3.3%

NY Bight 0.8% 1.5% 4.9% 97.1%

Delaware 

River 0.4% 0.6% 8.9% 68.1%

Chesapeake 

Bay 1.7% 1.2% 86.6% 27.6%

North 

Carolina 0.9% 1.9% 25.4% 164.8%

South 

Carolina 1.8% 2.7% 26.5% 94.1%

Georgia 2.1% 2.9% 11.7% 54.5%

Florida 

Atlantic 3.5% 2.1% 146.6% 48.6%

Southern 

Gulf 7.6% 4.1% 182.8% 52.3%

Eastern Gulf 9.3% 2.4% 724.1% 116.4%

Central Gulf 0.9% 1.4% 24.7% 99.3%

Western 

Gulf 2.0% 3.3% 23.9% 107.0%

Southern 

California 0.5% 0.7% 3.4% 50.5%

Northern 

California 1.3% 1.8% 10.2% 44.2%

OregonWashington 

Coast 1.1% 1.0% 74.8% 48.6%

Puget Sound 5.9% 3.0% 143.0% 21.8%

Lake 

Superior 2.8% 2.3% 40.4% 14.8%

Lake 

Michigan 0.9% 1.1% 31.3% 63.6%

Lake Huron 1.3% 1.4% 9.8% 17.3%

Lake Erie 0.6% 1.0% 1.9% 63.9%

Lake 

Ontario 0.4% 0.7% 0.5% 75.5%

Total All 

Regions 1.1% 1.4% 24% 59%

Table 13 shows that tourism and recreation has been growing in importance in most 

estuary regions. In 13 of the 21 regions, tourism and recreation has become a larger part 

of the employment base over the period. The growth of tourism and recreation has 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

62 

exceeded that of overall employment in these 13 regions, often by substantial margins. 

The fastest growth was in North Carolina, but all South Atlantic regions showed 

significantly faster growth in tourism and recreation than overall. This was also true of 

all Great Lakes regions, indicating that tourism and recreation is one of the bright spots in 

an otherwise difficult economy. 

Applying Economic Analysis at the Local Level 

The analysis presented in this paper illustrates the kinds of questions that need be 

answered to form the economic background of strategies to preserve and restore 

estuaries. It has been presented at an aggregate level to provide a general economic 

picture related to the nation’s major estuarine regions as these have already been defined 

and examined, and to set the stage for more detailed analysis at the local level by the 

various organizations and institutions involved throughout the country in protecting and 

restoring estuaries. The question of how this analysis can be translated to the local level 

needs to be addressed on a case-by-case basis. However, information resources are 

available for those who wish to examine these issues. 

All data in this report are drawn from the ocean and coastal economic data series made 

available by the National Ocean Economics Program. Users can consult the NOEP 

website at www.oceaneconomics.org to get complete access to this data series. The 

Users Guide to the NOEP data provides detailed discussion of the estimation procedures 

for the data, as well as discussions of sources, strengths, and weaknesses in the data that 

should be helpful to users unfamiliar with economic data. 

In addition to the employment and other economic activity data, the NOEP also has 

detailed data on such activities as fisheries landings, oil and gas production, and other 

coastal and marine economic activity. These data can be used to supplement the 

employment and related data. 

The NOEP data series are derived in turn from a number of federal and state data sources. 

Key among these are the employment data from the Bureau of Labor Statistics 

(www.bls.gov) and the gross state product data from the Bureau of Economic Analysis 

(www.bea.gov). Employment data from BLS are derived from employment data reported 

to all state departments of labor by employers. The data may also be accessed from state 

departments of labor websites. Beginning in 2003, this data are also geocoded by latitude 

and longitude, which will eventually permit more custom-defined geography to be used 

in watershed analysis. 

In working with this data, it is very helpful to have an understanding of the North 

American Industrial Classification System (NAICS). An introduction to this topic is 

available online at http://www.census.gov/epcd/www/naics.html. 

Population and housing data are available from the Census Bureau (www.census.gov), 

but those interested in coastal watersheds will find the compilation of socioeconomic data 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

63 

by NOAA in the Spatial Trends in Coastal Socioeconomics (STICS) database particularly 

helpful. These data may be found at www.marineeonomics.noaa.gov. 

Conclusion 

With only 13% of the land area of the continental U.S., the estuary regions of the United 

States comprise a hugely disproportionate share of the national economy, with 43% of 

population, 40% of employment, and 49% of output. In eight states, the estuary regions 

comprise 80% or more of the state’s economy, and these regions comprise more than half 

of the state’s economy in 14 states. The economic “footprint” of estuary regions is thus 

significant throughout the county, and restoring the health of estuaries is a matter of 

concern to the health of a large part of the economy. 

Estuary regions are undergoing a great deal of change. There is substantial variety in the 

rates of growth in the estuary regions, from the fast-growing regions of the South to the 

slow growth and even decline in the Great Lakes. Faster growing regions challenge 

those involved in estuaries to balance protection against further degradation with 

restoration of past degradation. Slower growing regions must incorporate estuary 

restoration with efforts at economic restoration. 

There are also important differences among the regions in the patterns of economic 

growth across the landscape. In some, the urban areas are growing more rapidly, but 

often within the smaller urban regions and in the rural areas immediately adjacent to the 

urban areas. Much of the economic growth is being driven by employment growth rather 

than population growth, resulting in increasing use of the land for commercial 

development. These regions in transition from rural to urban present another area where 

an appropriate balance must be struck between efforts at preservation and restoration. 

One of the key aspects of economic change of critical importance to those concerned with 

estuaries is the rapid growth of tourism and recreation activities in the areas immediately 

adjacent to waterways. Employment growth in tourism and recreation exceeded overall 

employment growth in 13 of the 21 estuary regions, and in five of these regions tourism 

and recreation employment nearly doubled between 1990 and 2003. This rise in tourism 

and recreation is a clear sign of the growing importance of estuaries as a source of 

amenities in urban areas and of a growth industry in rural areas. Given these trends, it is 

likely that recreation-related values of estuaries will assume growing importance in the 

future. 

The analysis presented here is at a highly aggregated regional level. It is designed to 

illustrate the type of information available about estuary regions economies and how an 

understanding of regional economies can help illuminate the context in which estuary 

restoration takes place. Data are available from a variety of sources to conduct more 

detailed analysis in the areas where specific projects are being undertaken. The other 

papers in this series also provide more detailed pictures of economic values related to 

estuaries. 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

64 

References

 

Bruegmann, R. (2005). Sprawl: A Compact History. Chicago, University of Chicago 

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Colgan, C. S. (2006). Measuring the Ocean and Coastal Economy: Theory and Methods, 

 National Ocean Economics Project. 

 

Colgan, C. S. and J. Plumstead (1993). Economic Prospects for the Gulf of Maine. 

 Augusta, ME, Gulf of Maine Council on the Marine Environment. 

 

Luger, M. (1991). "The Economic Value of the Coastal Zone." Environmental Systems 

21(4): 278-301. 

 

Mandale, M., M. Foster, et al. (2000). The Economic Value of Marine Related Resources 

in New Brunswick. Fredericton NB, New Brunswick Department of Fisheries and 

Aquaculture. 

 

Mandale, M., M. Foster, et al. (1998). Estimating the Economic Value of Coastal and 

Ocean Resources: The Case of Nova Scotia. Chester NS, Oceans Institute of 

Canada. 

 

Moeller, R. M. and J. Fitz (1994). Economic Assessment of Ocean Dependent Activities. 

Sacramento, CA, California Research Bureau. 

 

Nathan Associates (1974). Gross Product Originating from Ocean-Related Activities. 

Washington DC, Bureau of Economic Analysis. 

 

Pontecorvo, G. (1988). "Contribution of the Ocean Sector to the U.S. Economy: 

Estimated Values for 1987- A Technical Note." Marine Technology Society 

Journal 23(2): 7-14. 

 

Pontecorvo, G., M. Wilkinson, et al. (1980). "Contribution of the Ocean Sector to the 

U.S. Economy." Science 208(30 May 1980): 1000-1006. 

 

Restore America's Estuaries (2002). A National Strategy to Restore Coastal and Estuarine 

Habitat. No City. 

 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

65 

Chapter 4 – Estuarine Restoration and Commercial Fisheries 

Douglas Lipton 

Stephen Kasperski 

Department of Agricultural and Resource Economics 

University of Maryland College Park 

Background – Estuaries and Their Importance for Commercial Fishing 

A large share of the 10 billion pounds of U.S. commercial fish landings worth over $3.8 

billion ex-vessel are species that are dependent on estuarine conditions for at least some 

stage of their life history.1

 Houde and Rutherford (1993) put the share of estuarinedependent commercial landings at just over 50%, but the Environmental Protection 

Agency puts the figure closer to 75% (http://www.epa.gov/nep/about1.htm). Although 

not specified in either study, we assume these estimates are by volume, not by value of 

the catch. Whatever the actual percentage of estuarine-dependent catch, the implication 

is that the health of our nation’s estuaries is critical to the health of our commercial 

fishing industry. 

Menhaden (Brevoortia tyrannus) at 1.5 billion pounds is the second most abundant

species in the U.S. harvest behind Alaskan pollock (Theragra chalcogramma). On a 

species basis, it constitutes the highest volume estuarine-dependent commercial harvest. 

While menhaden spawn offshore, Atlantic coast and Gulf of Mexico estuaries serve as 

nursery areas for juveniles (Ahrenholz 1991). Menhaden constitute an important part of 

the food web in these estuaries, both as phytoplankton consumers and forage for higher 

trophic level species (Reintjes 1969). Menhaden is a low unit value species, as it is 

mainly used to produce fish meal and oil, and thus the landed value is only about $72 

million. 

In terms of value of harvest, estuarine-dependent species groups such as Gulf shrimp, 

Pacific salmon, oysters (Pacific and Eastern), and non-ocean clams dominate, along with 

single species of lobster (Homarus americanus) and blue crab (Callinectes sapidus). 

Gulf shrimp harvests, with an ex-vessel value of $367 million in 2004, consists mostly of 

three species. In order of value landed they are white shrimp (52%), brown shrimp 

(41%), and pink shrimp (7%). American lobster is the highest value estuarine-dependent 

species and the second highest in value of all species harvested (behind sea scallops). 

Lobster landings in 2004 were valued at $315 million. Pacific salmon harvests in 2004 

were valued at $273 million. Salmon species in order of landed value are: sockeye 

(52%), Chinook (19%), coho (11%), pink (10%), and chum (8%). Blue crab makes up 

the next most important estuarine-dependent species or species group in terms of value, at 

$143 million. As a single species, it is fifth behind lobster, white shrimp, brown shrimp, 

 

1

 Landing statistics are for 2004 from the National Marine Fisheries Service website. 

http://www.st.nmfs.gov/st1/commercial/landings/annual_landings.html. Ex-vessel value refers to the 

price paid directly to fishermen; the total value added of the U.S. seafood industry is $31.6 billion.
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

66 

and sockeye salmon. The final two major estuarine-dependent species groups are oysters 

at $111 million, and non-ocean clams2

 at just under $100 million. Together, menhaden, 

Gulf shrimp, Pacific salmon, blue crab, oysters, and clams amounted to an ex-vessel 

harvest worth almost $1.4 billion, or 38% of the value of the U.S. harvest. Numerous 

other estuarine-dependent species contribute to the commercial harvest, and would 

increase this estuarine dependence significantly, but the point is clear that a major portion 

of the U.S. commercial fishing industry relies on these estuarine-dependent species (Fig. 

1). 

The importance of estuarine-dependent species to the commercial fish landings varies by 

region, depending greatly on the extent of estuaries within the region. For the Gulf of 

Mexico, the top estuarine-dependent species constitute 89% of the value of landings, 

whereas California and Pacific Island landings are only 13% estuarine-dependent (Table 

1). 

Trends in Estuarine-Dependent Harvests 

In this section, we look at the trend in the key estuarine-dependent species harvest over 

the past 20 years. In an earlier study, Summers et al. (1987) explored the relationship 

between macro pollution variables and landings and effort for five northeastern estuaries 

over the period 1880–1980. They found that dissolved oxygen concentrations, which 

served as a proxy for water quality conditions, had a significant positive relationship with 

fish stock abundance in these estuaries. They also found a weak but consistently positive 

relationship between the level of dredging activity and the fish stock. 

A variety of factors may be involved in determining whether the harvest of an individual 

species has increased, decreased, or remained the same during a specified time period. 

For example, if overfishing was occurring for part of the period and then a stock 

rebuilding management plan was implemented, the harvest might first show a decline and 

then an increase. This is what happened to the harvest of striped bass from Chesapeake 

Bay (Figure 2). A variety of factors were implicated in the decline of the striped bass 

population, including overharvesting and a decline in estuarine habitat and habitat quality 

(Kahn and Kemp 1985; Brandt and Kirsch 1993; Breitburg et al. 1997). However, a 

moratorium on fishing in some states, and a severe cutback in fishing pressure in other 

states, eventually led to the striped bass stock being considered fully restored. This stock 

rebuilding occurred without any significant improvement in habitat. Even with a fully 

recovered stock, some argue that the current striped bass population is unhealthy due to 

poor estuarine conditions and a lack of prey (USGS 2002). The point is that one can look 

at the trends in harvest over time, but it is difficult to draw conclusions about the impact 

of estuarine conditions from this information alone. In a later section, we will discuss 

how one might attribute the health of these commercial resources to the health of the 

estuaries on which they depend. 

 

2

 Ocean clams include surf clams and ocean quahogs. Non-ocean clams include hard clams, softshell 

clams, geoduck and Manilla clams. 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

67 

Overall, U.S. commercial fisheries landings have increased significantly since 1985 

(Figure 3). Most of this increase can be attributed to the development of the Alaskan 

groundfish fisheries, and particularly the take of Alaskan pollock. In contrast, landings of 

the species that comprise the top estuarine-dependent species trended downward over the 

period, declining by 31%. As a consequence, the top estuarine species that constituted 

64% of the U.S. catch in 1985 made up only 28% by 2004. 

When the value of commercial landings are compared, the decline in the importance of 

estuarine-dependent species is somewhat ameliorated by the fact that the real value of 

overall commercial harvests has declined since 1985, and because the top estuarinedependent species tend to have higher prices than the average price of seafood (Figure 4). 

In 1985, the top estuarine-dependent species accounted for 57% of the value of the U.S. 

harvest. In 2004, estuarine harvest had fallen to 39% of the total U.S. catch. While top 

estuarine landings as a percent of total harvest fell by 56%, the value of those landings as 

a percentage of total value fell by only 32%. 

Economics of Estuarine Restoration and Commercial Fishing 

The basic economic laws of supply and demand can be applied to understand the market 

for commercial fisheries, but there are added complications due to the common property 

nature of fish resources. This common property problem is the subject of most of the 

commercial fisheries economics literature analyzing the reasons for biological and 

economic overfishing. This chapter is focused on estuarine restoration, and while there is 

an interaction between the common property problem and the impact of estuarine 

conditions on the seafood market (McConnell and Strand 1989), we focus mainly on the 

latter. To isolate the effects of estuarine conditions from problems arising from the 

common property nature of the fishery, we assume in the following discussion that we 

are dealing with a commercial fishery where a catch quota has been set, and the property 

rights issue has been dealt with by means of assigning transferable quotas to individual 

fishermen or vessels. 

Estuarine Conditions and Supply of Commercial Fisheries 

In Figure 5 we show the baseline supply curve (Sb

) for a fishery under the current set of 

estuarine conditions and the resulting fish stock size. This supply curve reflects the 

aggregate cost of catching fish for the entire fishing fleet. Given the stock of fish 

available, the more the fleet harvests the more costly it becomes to harvest a greater 

amount. If there is impairment in estuarine conditions leading to a reduction in the stock 

of fish available to the fleet, a new supply curve (Si) emerges that has a higher cost of 

production at every point for the same level of harvest. Conversely, if estuarine 

conditions improve and the fish stock available increases, a new supply curve (Sr

) will 

have a lower cost at every point for the same level of harvest. Figuring out how these 

supply curves shift, if at all, due to changes in estuarine condition is complex and 

difficult, but they capture the economic impacts of estuarine restoration or degradation. 

 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

68 

Let us assume for simplicity that the consumer demand for the fish in the particular 

estuary of interest is such that no matter what the amount captured, the price will remain 

unaffected. This situation is termed “perfectly elastic demand,” and it might be a 

reasonable assumption, for example, if the catch from this particularly estuary was such a 

small part of the overall harvest that it had no impact on market prices. This perfectly 

elastic demand (D) is the horizontal line in Figure 5 that intersects the axis at the market 

price of $3.00 per pound. By seeing where it intersects the three supply curves 

representing the baseline estuarine state, a degraded estuary, and a restored estuary, we 

can determine the amount of fish of a given species that will be harvested given this 

demand. Fishermen will harvest the least under the most impaired conditions, somewhat 

more under the status quo, and even more under restored conditions. 

In economics, we are concerned with more than just how many fish will be caught under 

varying estuarine conditions. We also want to know how the price changes for the fish 

and what the overall impact is on the producer and consumer. At this stage, because we 

have assumed perfectly elastic demand, there is no price change. We will relax that 

assumption in the next section. For now, we are concentrating on the impacts on the 

fishermen under perfectly elastic demand. The three supply curves in Figure 5 contain all 

the information we need to know about the impact of estuarine restoration or degradation 

on the fishermen’s welfare. The supply curve reflects the incremental short-run costs to 

the fishermen of producing increasing amounts of fish. If we add up these incremental 

costs for each unit out to the point where the demand curve intersects the supply curve, 

we obtain the total short-run variable costs to produce the quantity. Graphically, we can 

obtain this total by measuring the area under the supply curve up to the point where 

demand intersects. For simplicity we have drawn the supply curves emanating from the 

origin and as straight lines. This makes it easy to calculate the area under the supply 

curve by using the formula for the area of a triangle, one-half the base times the height. 

Since the base is 3,000 pounds of fish and the height is $3.00 per pound, the area of the 

triangle, or variable cost of production, is $4,500. The fishermen are paid the price 

multiplied by the quantity, or $9,000 for the 3,000 pounds of fish. The difference 

between the $9,000 revenue and the $4,500 cost is called producer surplus, which is 

closely related to the overall profit for fishermen, in this case equaling $4,500. 

We can perform the same calculations for the impaired estuary supply curve (Si

) and the 

restored estuary supply curve (Sr

). For the impaired estuary, hypothetical revenues are 

lower, at only $3,000, but hypothetical costs of production are lower as well, at $1,500, 

leaving a producer surplus of $1,500. The difference between the producer surplus for 

the baseline and further impaired estuary of $3,000 is the estimate of the loss to 

fishermen due to the impairment. In contrast, under these conditions, the restored estuary 

would result in fishermen revenues of $30,000, production costs of $15,000, and a 

producer surplus of $15,000. Thus, the hypothetical return to fishermen of restoring the 

estuary from its baseline condition would be estimated to be $9,500 in this case. 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

69 

Estuarine Conditions and the Seafood Consumer 

Now we will focus on seafood consumers and see how they are affected by changes in 

estuarine conditions. We start by modifying the demand curve from the previous 

discussion to allow for a more typical condition—when more of the good being 

purchased is made available on the market, the lower the price will need to be for 

consumers to purchase the higher amount. This leads to the downward sloping 

(hypothetical) demand curve in Figure 6. With the baseline conditions in the estuary 

from above, this downward sloping demand curve intersects the baseline supply curve at 

a hypothetical price of $3.00 per pound. At this price, consumers would purchase the 

entire 3,000 pounds available. If the price were higher, consumers would not purchase as 

much and the excess fish would go unsold even though the fishermen could still make a 

profit by lowering the price. At a price lower than $3.00, consumers would like to buy 

more fish, but fishermen costs of production would be higher than they can sell them for. 

Thus, the 3,000 pounds of fish at $3.00 per pound is a “market clearing” or “market 

equilibrium” condition under this scenario. 

We use consumer surplus to measure the change in welfare to consumers in a way similar 

to the concept of producer surplus introduced above. From the demand curve in Figure 6, 

we see that consumers in aggregate are willing to pay higher prices for quantities less 

than the market-clearing 3,000 pounds, but they get to purchase the entire 3,000 pounds 

for $3.00 per pound. For example, if only 1,500 pounds are available, the willingness to 

pay is $4.50, $1.50 higher than the market-clearing $3.00 price. If we add all the price 

differences between what the demand curve indicates consumers would be willing to pay 

and what they actually have to pay, we have an estimate of consumer surplus. 

Graphically, this is the area of the triangle in Figure 6 where the base intersects the axis at 

the $3.00 price and whose length is determined by the equilibrium quantity of 3,000 

pounds. The steepness of the demand curve depends on consumer preferences for the 

species of fish and the availability of close substitutes. This will determine at what price 

the curve intersects the axis, and thus, the height of the triangle for the area formula. In 

our example, the consumer surplus is calculated from the triangles in Figure 6 as $4,500 

for the baseline conditions, $8,000 for a restored estuary, and $2,200 for the more 

impaired estuary. From this we can calculate the economic benefit to consumers for 

restoration from baseline conditions as the difference in consumer surpluses, or $3,500. 

Similarly, moving from the baseline condition to a further impaired estuary results in a 

consumer surplus decline of $2,300. 

The type of changes that lead to supply shifts in estuarine production might also lead to 

shifts in the demand curve. For example, heavy metal or persistent toxic contaminants 

such as Polychlorinated biphenyls (PCBs) or Polycyclic aromatic hydrocarbons (PAHs) 

may not only harm fish stocks (Lipton and Strand 1997) but also erode consumer 

confidence and demand for seafood products (Swartz and Strand 1981; Montgomery and 

Needleman 1997). The demand curve is based on consumer perceptions about the 

attributes of the product in question and of substitute products. If consumers believe that 

some of those attributes have changed, such as the safety of fish consumption in regard to 

human health, this will change their demand. Specifically, this will lead to some form of 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

70 

downward shift in demand as either an increase in the slope of the curve, a shift in the yintercept, or both. The depiction in Figure 7 shows demand being shifted from the 

baseline condition (Db

) to an impaired condition (Di), with both the slope and the yintercept being decreased. The downward movement reflects the fact that when 

consumers become concerned about seafood safety, the maximum amount they are 

willing to pay for any quantity of fish is less than when they are not concerned about 

safety. An important distinction between the shifts in supply discussed above and the 

shifts in demand is that supply shifts require that the estuarine impairment have some 

physical impact on the fish population. Shifts in demand only require shifts in perception 

about attributes. In fact the perception shifts can even be shown scientifically to be 

wrong, but demand may not adjust if consumers have no confidence in the scientific 

studies or are confused by or unaware of the results (see Storey et al. 2006). 

The change in consumer surplus that results from declining demand can be compared to 

the results when demand is not affected by estuarine conditions. Consumer surplus with 

the impaired estuary and reduced demand is only $1,750. Thus, moving from the 

baseline condition to an impaired estuary results in a consumer surplus loss of $2,750, 

$450 more than when demand did not decrease. 

Estimating Economic Impacts of Changes in Estuarine Condition on 

Commercial Fisheries 

The previous section outlined how changes in estuarine conditions are reflected in the 

seafood market, resulting in impacts on seafood producers and consumers. As discussed 

in the striped bass example, it may be difficult to demonstrate that these impacts are due 

to changes in estuarine conditions and not some other factor that impacts fish stocks. 

Rose (2002) explores this difficulty and suggests modeling solutions from an ecological 

perspective. In this section we highlight some of the empirical approaches economists 

have applied to estimate what the actual shifts in supply and demand are, and thus 

measure the societal costs from estuarine impairment or the benefits from estuarine 

restoration. 

Lynne et al. (1981) conducted one of the first attempts to value estuarine conditions as an 

input into a commercial fishery. Their focus was on the contribution of marshland to the 

productivity of commercial fish populations. Using two different bioeconomic models, 

they estimated that the value of 1 acre of marshland as a contributor to commercial 

fisheries ranged from $.25 to $39.04. Subsequently, Ellis and Fisher (1987) created a 

model of commercial fishing based on data and methods from Lynne et al. (1981) which 

incorporates both fishing effort and wetland acreage into a function that describes the 

fishery supply curve. Due to the dynamic nature of fishery stocks, a dynamic model of 

optimal harvests for a given level of wetland acreage was derived. The model simulated 

the welfare gain to commercial fishermen associated with discrete increases in wetland 

acreage. They estimated that an increase in wetland acreage from 25,000 to 100,000 

acres resulted in a combined producer and consumer benefit of $193,000 (in 1981 

dollars). An increase to 400,000 acres of wetland results in a benefit of $438,000. Kahn 

and Kemp (1985) employed a bioeconomic model to estimate the impact on striped bass 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

71 

harvest in Chesapeake Bay from a change in the acreage of submerged aquatic vegetation 

(an important habitat and food source in estuarine environments). Viewing the 

ecosystem as an input to fishing productivity, they were able to estimate that a 40% 

decline in the acreage of submerged aquatic vegetation led to a loss in the striped bass 

fishery of $200,000 in 1978 dollars. 

The Oil Pollution Act and Superfund legislation led to the need for economic estimates of 

the damages caused by oil spills and other pollution events. These laws made polluters 

fiscally responsible for the damage their actions caused, and thus the need to be able to 

calculate a defensible estimate. A number of modeling approaches were developed in 

response (Grigalunas et al. 1986; Grigalunas et al. 1988; Lipton and Strand 1997; Collins 

et al. 1998). In Grigalunas et al. (1988) a damage function is estimated from an 

integrated ocean systems/economic model to measure the economic damages resulting 

from pollution incidents. They also account for the loss of lower trophic biota through 

the reduction of the in situ value of the commercially harvested species. Therefore, not 

only are the commercial species being harvested valued, but other components of the 

food web are valued as inputs into the food web of the harvested species. The resulting 

model is used to determine the effects of the same-sized oil spill on different marine 

ecosystems, in different geographic locations, and in different seasons. 

In the case of a catastrophic event like an oil spill, the damage may be due to a closure of 

the fishing grounds, either in addition to or instead of damage to the fish stocks 

themselves. For salmon in Prince William Sound, this was the case after the Exxon 

Valdez oil spill. Lipton and Strand estimated that the closure of the sockeye salmon 

fisheries resulted in a lost harvest of between 14.5 and 47.6 million pounds. As shown in 

Figure 6, the lower supply resulted in higher salmon prices, increasing from $1.29 per 

pound to $1.60. The net change in revenue to sockeye salmon fishermen due to the lower 

harvest and higher prices was $3.95 million. The estimated consumer surplus loss to 

salmon consumers was $30 million, as the price increased from $2.20 to $2.60 per pound. 

Finally, there have been several studies on decreased seafood demand due to poor 

estuarine conditions. An early study by Swartz and Strand (1981) examined the effects 

of the contamination of one river system, the James River, on the demand for seafood 

products from nearby but not contaminated sources. They found that the news of 

pollution in one system will adversely affect demand for the uncontaminated seafood. 

Therefore, news of pollution events will not only affect local seafood demand, but will 

also have a detrimental effect on regional seafood demand. This impact was borne out in 

a more recent study on the impact of concerns about Pfiesteria in the mid-Atlantic region 

(Parsons et al. 2006). They found that just the news about a Pfiesteria-related fish kill 

would have a negative impact on seafood consumers, even though there was no known 

health danger. 

Case Study – Estuarine Water Quality Conditions and Blue Crab Harvests 

 

Our case study is taken from Mistiaen et al. (2003). We examined the role of dissolved 

oxygen levels in the catch of blue crab in tributaries of the Chesapeake Bay. In these 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

72 

tributaries, commercial crab pots are not allowed. Commercial fishermen use trotlines, 

which consist of a long line with baited hooks that are hung from floats. The crabber 

leaves the line in the water for a period of time to attract the crabs and then slowly 

retrieves the line toward the boat. Crabs clinging to the bait are then captured with a dip 

net. 

We examined data for the monthly commercial blue crab harvest from the Patuxent, 

Choptank and Chester rivers. The Choptank and Chester rivers drain into the Chesapeake 

Bay from the eastern shore of Maryland and the Patuxent River from the western shore. 

We hypothesized that estuarine water quality would negatively impact the blue crab 

harvests from these three tributaries. To test the hypothesis we needed to adjust for other 

factors not related to water quality that would impact the rate of harvest. These other 

factors included the size of the blue crab population within the estuary during the month 

that fishing occurred and the level of effort of fishermen. To estimate the size of the blue 

crab population within each tributary we used data from a monthly trawl survey that is 

conducted to estimate fish populations in the Chesapeake Bay. The harvest and amount 

of fishing effort was obtained from monthly fishermen logbook records provided to the 

Maryland Department of Natural Resources. Water quality was indicated by the average 

level of dissolved oxygen measured at fixed monitoring stations within each estuary. The 

water quality data is collected twice monthly during the season as part of the Chesapeake 

Bay water quality monitoring program. Figure 8 graphs the dissolved oxygen data, 

demonstrating the variability among the three river systems in addition to the year-to-year 

and month-to-month variability. 

 

A non-linear mathematical equation was developed that related the percentage of the crab 

population in the river system in a month that was harvested to the level of fishing effort 

and the water quality as measured by the dissolved oxygen variable. The model was 

made more complicated by the fact that improvements from low dissolved oxygen 

conditions should have a large impact on the health of the blue crab resource, but these 

benefits would diminish until some threshold is reached where further improvements in 

dissolved oxygen have no impact on the crab population. Non-linear statistical 

regression techniques were used to determine whether the water quality measure 

significantly influenced the percent harvest and also provided the magnitude of this 

impact. The results of the statistical analysis confirmed that the impact of dissolved 

oxygen on crab harvests was significant. The actual relationship between dissolved 

oxygen and percentage of population harvested is shown in Figure 9. The numbers in 

Figure 9 were calculated at the averages from the sample for the population size of crabs 

and the amount of fishing effort. The threshold level for dissolved oxygen was 5 mg/l, so 

that at that level or above, the average amount of gear used would harvest about 14% of 

the adult blue crabs in the estuary. Below the dissolved oxygen threshold, the same 

amount of gear, fishing on the same size population of blue crabs, would result in a 

harvest 9% or less of the available population, depending on how low the oxygen levels 

were. 

 

Focusing on just the Patuxent River, we found that average dissolved oxygen was 5.6 

mg/l, which is above the threshold. At that dissolved oxygen level, we estimate the 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

73 

harvest would be 468,380 pounds of crab. At a price of around $1.00 per pound, 

$468,380 would be an estimate of the revenue to the crab fishermen in the area. For 

purposes of this demonstration, we assume that the cost of harvesting is $100,000, 

yielding net income of $368,380 to the fishermen. Next we simulated the impact of a 

decline in estuarine water quality so that average dissolved oxygen was only 4 mg/l. The 

resulting harvest would only by 240,395 pounds, worth $240,395. This lower harvest 

level would be attained with the same level of fishing effort or cost as before, $100,000. 

Thus, the new net income level is $140,395. The net loss to crab fishermen due to the 

degraded water quality is $227,985. 

Measuring the Commercial Fishing Benefits of Estuarine Restoration – 

Meeting the Challenge 

Estimating the benefits to commercial fishing from estuarine restoration relies on 

standard and well-accepted economic and statistical techniques. A variety of models 

exist, with varying degrees of sophistication and complexity. The greatest constraint, 

therefore, is the availability of the data at the appropriate temporal and spatial scales to 

reliably run, test, and verify these models. Fish harvesting data are mainly collected for 

the purpose of managing the fish stock on a species-by-species basis. The harvesting 

data may be used in a single species stock assessment, and also to monitor the catch to 

ensure it meets management goals such as an overall quota or limit on fishing effort. 

 

Data on estuarine conditions are often collected to develop models that can predict how 

conditions will change with watershed management actions such as a reduction in 

nutrient pollution. Collection of estuarine data also facilitates monitoring of conditions to 

determine whether they are improving, declining, or remaining the same. The temporal 

and spatial scale of the data collection will depend on how it is intended to be used. 

Often the data are collected, at most, monthly, over large geographic areas. 

 

Marrying the fisheries harvest data with the estuarine water quality data collected is often 

a hit-or-miss proposition. The more spatial and temporal resolution in the estuarine 

condition data, the more likely the data can be matched up with the fishing data on a scale 

close to how fishing decisions are made. Estuarine fishing trips are made on a daily 

basis, and even within the same day different areas may be chosen to be fished depending 

on the species sought and the environmental conditions at that time. Using monthly data 

over a large geographic area to explain the harvest from a fishing trip introduces a great 

amount of error into the analysis and makes it more difficult to reveal the relationship 

between the environmental conditions and fishing success. As greater investment is 

made in coastal observing systems that provide synoptic real time environmental data, 

greater attention should be applied to coordinating this new data source with fisheries 

data, thereby allowing the implementation of the approaches described in this chapter. 

This will also be necessary for the implementation of ecosystem-based approaches to 

fisheries management, where the interactions between fish stocks and their environment 

are explicitly considered in the development of management actions. 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

74 

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Collins, A., M. Stapleton, and D. Whitmarsh. 1998. Fishery-pollution interactions: A 

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Houde, E. D., and E. S. Rutherford. 1993. Recent trends in estuarine fisheries: 

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Lynne, G. D., P. Conroy, and F. J. Prochaska. 1981. Economic valuation of marsh areas 

for marine production processes. Journal of Environmental Economics and 

Management 8: 175-186. 

McConnell, K.E., and I.E. Strand. 1989. Benefits from commercial fisheries when 

demand and supply depend on water quality. Journal of Environmental 

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Storey, M.L., R.A. Forshee, P.A. Anderson and S.A. Miller. 2006. Communicating riskrisk to the public: The case of the health benefits and risks of eating seafood. A 

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The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

76 

Table 1: 2004 Landings and Value of Top Estuarine Dependent Species Compared 

to Total Harvest by State and Region 

Estuarine Total Catch % Estuarine 

Northeast Atlantic Pounds $ Pounds $ Pounds $ 

Connecticut 7,340,877 $ 16,051,872 18,191,546 33,399,341 40.4% 48.1% 

Delaware 2,497,300 $ 3,446,713 4,287,586 5,418,902 58.2% 63.6% 

Maine 73,989,294 $ 306,710,368 228,387,852 367,093,095 32.4% 83.6% 

Maryland 40,895,842 $ 42,165,469 49,558,406 49,300,782 82.5% 85.5% 

Massachusetts 11,315,922 $ 51,773,912 337,971,219 327,472,781 3.3% 15.8% 

New Hampshire 388,881 $ 1,791,215 22,083,703 8,834,680 1.8% 20.3% 

New Jersey 24,863,427 $ 17,276,144 187,831,060 145,940,296 13.2% 11.8% 

New York 3,950,297 $ 19,376,683 34,519,376 46,901,466 11.4% 41.3% 

Rhode Island 4,389,359 $ 22,117,607 109,874,792 76,328,816 4.0% 29.0% 

Virginia 428,003,015 $ 47,909,798 481,608,557 160,441,740 88.9% 29.9% 

Region Total 597,634,214 $ 528,619,781 1,474,314,097 1,221,131,899 40.5% 43.3%

Southeast Atlantic 

Georgia 8,016,212 $ 12,902,608 9,657,803 14,373,620 83.0% 89.8% 

North Carolina 92,824,526 $ 40,688,325 136,451,548 77,138,498 68.0% 52.7% 

South Carolina 9,633,394 $ 13,442,892 12,438,628 18,541,887 77.4% 72.5% 

Region Total 110,474,132 $ 67,033,825 158,547,979 110,054,005 69.7% 60.9%

Florida 

Florida East Coast 8,961,916 $ 15,659,705 28,707,967 39,981,018 31.2% 39.2% 

Florida West Coast 25,731,327 $ 40,795,774 83,673,556 147,353,252 30.8% 27.7% 

Region Total 34,693,243 $ 56,455,479 112,381,523 187,334,270 30.9% 30.1%

Gulf of Mexico 

Alabama 20,149,909 $ 31,908,898 26,558,704 37,035,271 75.9% 86.2% 

Louisiana 1,051,992,537 $ 238,027,030 1,096,520,352 274,792,138 95.9% 86.6% 

Mississippi 181,419,809 $ 42,810,751 183,761,862 43,790,554 98.7% 97.8% 

Texas 77,122,646 $ 150,977,353 85,557,054 166,208,228 90.1% 90.8% 

Region Total 1,330,684,901 $ 463,724,032 1,392,397,972 521,826,191 95.6% 88.9%

California and the 

Pacific 

California 8,352,095 $ 25,085,680 378,734,911 139,350,374 2.2% 18.0% 

Hawaii 0 $ - 24,387,206 57,395,284 0.0% 0.0% 

Region Total 8,352,095 $ 25,085,680 403,122,117 196,745,658 2.1% 12.8%

Northwest Pacific 

Alaska 698,523,522 $ 257,395,268 5,354,643,130 1,202,463,755 13.0% 21.4% 

Oregon 6,797,572 $ 16,455,838 294,752,226 101,081,003 2.3% 16.3% 

Washington 40,650,572 $ 87,238,030 190,877,357 164,224,903 21.3% 53.1% 

Region Total 745,971,666 $ 361,089,136 5,840,272,713 1,467,769,661 12.8% 24.6%
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

77 

Figure 1: The Value of the Top Estuarine Dependent Species Was 38% of fhe Total 

U.S. Harvest in 2004 

$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

$3.0

$3.5

$4.0

Billion

Total U.S. Landings Top Estuarine Species

Figure 2: Chesapeake Bay Striped Bass Harvest, 1960–2004. 

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

9,000,000

1960

1963

1966

19691972

1975197819811984

1987

19911994199720002003

Pounds
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

78 

-

2,000

4,000

6,000

8,000

10,000

12,000

1985

19871989

1991

1993199519971999

20012003

Million Pounds

Top Estuarine Species All Species

$-

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

1985

19861987

1988

19891990

1991

1992

1993

1994199519961997199819992000

2001

20022003

2004

Millions ($2005)

Top Estuarine Species All Species

Figure 3: Total U.S. Commercial Landings and Top Estuarine-Dependent Species, 

1985–2004 

Figure 4: Value of Total U.S. Commercial Landings and Top Estuarine-Dependent 

Species, 1985–2004 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

79 

P

R 

I 

C 

E 

QUANTITY 

S

b

S

i

S

r

$3.00 

1,000 3,000 10,000 

Figure 5: Estuarine Conditions Are Reflected in the Supply Curves for Fisheries 

Production (Si = impaired, Sb = baseline, and Sr = restored). 

Figure 6: Changes in Consumer Surplus under Varying Estuarine Conditions when 

Demand (D) Is Unaffected by Estuarine Conditions (Si

 = impaired, Sb = baseline, and 

S

r

 = restored). 

P

R 

I 

C 

E 

QUANTITY 

S

b

S

i

S

r

$3.00 

3,000 

D

2,200 4,000 

$2.00 

$4.00 

$6.00 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

80 

Figure 7: Changes in Consumer Surplus under Varying Estuarine Conditions when 

Demand (Di

 = impaired, Db = baseline) Also Shifts with Environmental Quality (Si = 

impaired, Sb

 = baseline, and Sr = restored). 

Figure 8: Dissolved Oxygen Levels in Different Years in Three Chesapeake Bay 

Tributaries During Months of Blue Crab Trotlining 

Dissolved Oxygen

0

2

4

6

8

10

12

14

May

July

September

November

January

June

August

October

December

May

July

September

November

January

June

August

October

December

May

July

September

November

Mg/l

Chester Choptank Patuxent

P

R 

I 

C 

E 

QUANTITY 

S

b

S

i

$5.50 

2,000 

D

b

$6.00 

$3.00 

$3.75 

3,000 

D

i
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

81 

Figure 9: The Relationship Between Average Dissolved Oxygen Levels in Chesapeake 

Bay Tributaries and the Percentage of Stock Harvested by a Fixed (Sample Average) 

Amount of Trotline Gear 

0%

2%

4%

6%

8%

10%

12%

14%

16%

0 1 2 3 4 5 6 7 8

Dissolved Oxygen (mg-l)

Percent of Stock Harvested
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

82 

Chapter 5 – Determining the Economic Value of Coastal 

Preservation and Restoration on Critical Energy 

Infrastructure 

David E. Dismukes, Professor and Associate Director

Michelle L. Barnett, Research Associate 

Kristi A. R. Darby, Geologist 

Louisiana State University 

Center for Energy Studies 

Introduction 

The origins of U.S. oil and gas development are in the Appalachian regions of the eastern 

United States. The famous Drake wells in Pennsylvania marked the beginning of a new 

era for energy production and use in the United States that was already beginning to 

occur in other places around the world. By the beginning of the 20th century, oil and gas 

exploration and production (E&P) activity was expanding rapidly in North America, 

Russia, the Caucasus, and gradually into Persia (modern-day Iran). 

It did not take oil and gas drilling speculators, often referred to as “wildcatters,” long to 

recognize what appeared to be some unique opportunities for hydrocarbon resources in 

and around lakes, marshes, bayous, and other swampy areas, particularly along the 

coastal regions of the Gulf of Mexico (GOM). The initial developments at Spindletop, 

Texas, and the neighboring developments in Jennings, Louisiana, a few years later, 

marked the beginning of a new industry and new way of life along the central Gulf coast. 

The need for low-cost, flexible, and abundant supplies of energy became particularly 

important in the aftermath of World War II, when the U.S. economy began a rapid period 

of growth and industrialization. But energy products did not simply spring from the 

ground and enter the burgeoning factories of the Northeast and upper Midwest. A wide 

range of infrastructure was needed to process, refine, transport, and deliver (or distribute) 

these energy products to end users, including: 

• Refineries: industrial facilities that use combinations of heat, steam, and 

various catalysts to “crack” hydrocarbons into various components that result 

in gasoline, diesel fuel, jet fuel, and kerosene, among many others. 

• Gas processing facilities: facilities that clean or process raw or “wet” natural 

gas immediately after the time of production. 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

83 

• Pipelines: transport for a variety of raw, unprocessed hydrocarbons, or 

finished (refined) products that include natural gas, natural gas liquids, crude 

oil, gasoline, and diesel, among others. 

• Petrochemical facilities: industrial facilities located around producing basins 

like the GOM to further process various types of hydrocarbons. The modern 

plastics and chemicals industries are based on these types of processes. 

• Support infrastructure: an eclectic variety of facilities that support activities in 

coastal areas and offshore, including ports, crew bases, pipeline coating 

facilities, and platform fabrication facilities, among others. 

Over time, as ever-increasing shares of energy production were concentrated in coastal 

regions like the GOM, an ever-increasing share of energy-related infrastructure arose to 

support, or be supported by, those E&P activities. Today, the GOM region is home to an 

overwhelming number of energy production, processing, and transportation activities. 

Consider that the GOM region accounts for: 

• Approximately 30 percent of total U.S. crude oil production (EIA 2007a); 

• Roughly 20 percent of total natural gas production (EIA 2007b); 

• Over $6 billion in federal royalties and fees (MMS 2007); 

• Over 45 percent of total U.S. petroleum refining capacity and 62 percent 

of the capacity east of the Rockies (EIA 2007a); 

• 60 percent of all U.S. crude oil imports (EIA 2007a); 

• 43 percent of the Strategic Petroleum Reserve (SPR)1

 storage capacity (US 

DOE 2007). 

Thus, the economic contribution and importance of energy production and infrastructure 

in the GOM region is significant. However, the relationship that this exceptionally high 

valued economic activity has on the environment has received a considerable amount of 

attention, most of it negative. Of particular concern has been the degree to which these 

activities have actually been responsible for coastal erosion problems. 

Perceived Conflicts Between Energy Production and Coastal Areas 

The development of energy production, and its corresponding infrastructure, has not 

come without a certain degree of criticism regarding the potentially negative impacts 

these activities have on coastal areas. One area of particular concern has been the 

intrusion of these oil and gas activities into sensitive coastal areas. For instance, many 

coastal areas in Louisiana are peppered with numerous pipelines and pipeline canals, as 

well as canals creating access to the numerous production facilities located within the 

 

1

 The SPR can be thought of as the nation’s emergency inventory of crude oil that can be withdrawn during 

period of crisis or natural disaster. For instance, withdrawals of crude oil supplies from the SPR were 

authorized during Hurricane Katrina. 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

84 

coastal zone. The concern of many environmentalists has been that these canals can lead 

to salt water intrusion in sensitive wetlands, thereby undermining a potentially important 

barrier to coastal erosion. 

A second area of concern, which has garnered an increasing amount of research attention 

over the past several years, is geological subsidence thought to be contributing to land 

loss and coastal erosion along the GOM. Generally, subsidence is a lowering of a portion 

of the Earth’s crust relative to a benchmark such as mean sea level (U.S. Department of 

the Interior, Geological Survey, 2007a). A wide range of natural and man-made factors 

can contribute to subsidence. There are multiple mechanisms by which subsidence can 

occur, including fault-activated, flexural, and extraction-induced (Davidson 1997). There 

are various competing theories on which factors, or combination of factors, are creating 

subsidence along the GOM and to what extent these factors are natural or man-made 

(Gonzalez and Tornqvist 2006). 

Potential Synergies between Coastal Restoration and Energy 

Infrastructure 

While considerable attention has been paid to the negative impacts of energy 

development on coastal areas, little analyses or thought has been given to the potential 

synergies between restoration activities and this important infrastructure. Industry, for 

instance, has invested billions in infrastructure assets along the GOM. Coastal erosion 

threatens these assets and potentially threatens the delivery of important energy resources 

to consuming areas throughout the country. 

Thus, coastal erosion, in the extreme case, can have two negative impacts on energy 

industries operating in coastal areas. The first and most obvious is the economic damage 

(or loss) of the exposed infrastructure in the area. This damage or loss could have 

considerable economic value. Consider, for instance, that the replacement value for a 

major pipeline segment today ranges from $500,000 to $1 million per mile. Thus, the 

destruction of several miles of pipeline can be a considerable loss. 

The second impact would be the lost income that results from delivery interruptions from 

either a temporary outage or complete loss. Pipeline companies, for instance, make 

money by moving crude oil or natural gas from one location to another. If they are not 

moving volumes, they are not making money. The same is true for producers: if their 

ability to move production from their wells and platforms is interrupted, they are not 

making any profit on the significant assets in which they have invested for the duration of 

the outage. 

Thus, industry is tied to the coastal restoration challenge. There could be considerable 

economic benefits to energy supply security and deliverability from a natural form of 

hardening (or protection) for energy infrastructure assets in the region. Shell Oil 

Company’s participation through the America’s Wetlands Campaign is a prime example 

of how energy companies can have both a significant impact on coastal restoration and 

support energy security and deliverability. 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

85 

Existing Literature on Coastal Restoration and Infrastructure Hardening 

Very little serious empirical literature has examined positive valuation issues between 

coastal restoration activities and energy infrastructure. The literature to date has been 

more along the lines of an “avoided cost” approach; i.e., studies have examined the 

potential costs, usually in terms of catastrophic outages, that could result from failing to 

restore areas of the coast. 

The only significant study to date in this area has been a study by Richardson and Scott 

conducted on behalf of the Louisiana Department of Natural Resources (Richardson and 

Scott 2004). This study takes a catastrophic loss approach and examines the economic 

impacts of significant energy production interruptions (oil and natural gas) to the Gulf 

Coast region, as well as other geographic areas of the United States. For instance, the 

basic premise of the study is that coastal erosion can lead to transportation failures, 

thereby interrupting important energy resource supplies to the regional and national 

economy. The results of their economic impact modeling for interruptions to oil supply 

and natural gas, respectively, are presented in Tables 1 and 2. 

Table 1: Richardson/Scott Estimated Economic Impacts, Short Oil Supply Outage 

(3 weeks) 

Lost Lost Lost

Sales Earnings Employment

Continental US 3,676.1 $ 1,035.6 $ 32,390 

Eastern US 2,497.7 $ 702.0 $ 23,344 

Western US 344.5 $ 99.6 $ 3,026 

Louisiana 68.2 $ 19.9 $ 831 

--- (million $) ---

Source: Richardson and Scott 2004. 

Table 2: Richardson/Scott Estimated Economic Impacts, Short Natural Gas Supply 

Outage (3 weeks) 

Lost Lost Lost

Sales Earnings Employment

Continental US 1,803.1 $ 455.2 $ 12,897 

Eastern US 1,257.3 $ 316.4 $ 9,049 

Western US 198.6 $ 48.4 $ 1,290 

Louisiana 57.4 $ 12.9 $ 491 

--- (million $) ---

Source: Richardson and Scott 2004. 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

86 

Table 1 shows that oil-related shocks could result in the loss of some 32,000 jobs 

nationally and over $1 billion in lost wages. Table 2 highlights that there is an estimated 

potential for a 13,000 job loss and close to a half-billion in lost wages resulting from 

natural gas–related outages associated with coastal erosion. 

While the economic impact methods used in the Richardson/Scott study are appropriate, 

the overall “shock” from the catastrophic outage could overstate the potential benefits of 

coastal restoration, since the source and duration of the outage from coastal erosion alone 

seems questionable. As will be seen in later analyses, there are numerous pipelines and 

alternative routes moving crude oil and natural gas from offshore regions to onshore 

refining and processing facilities. It would take a simultaneous outage of all of these 

pipeline segments to create the impacts envisioned in the study. It seems unlikely that 

every pipeline segment along the GOM would fail simultaneously in the manner 

envisioned in the study. 

However, recent experience in the 2005 hurricane season shows that catastrophic (and 

simultaneous) outages can occur. But in this instance, the outages are created by the 

catastrophic event, not coastal erosion. So again the impacts would be overestimated, 

since they are entirely attributable to coastal erosion and not the catastrophic event itself. 

Some “incremental” impact may be associated with coastal erosion in a catastrophic 

incident like a hurricane or tropical storm. Coastal erosion can have an incremental 

impact by making the restoration activities longer in duration and more expensive. 

Lastly, the Richardson/Scott study did not consider any ongoing infrastructure hardening 

investments, or private coastal restoration investments, that may have been made by 

industry to mitigate the possibilities of these impacts. If the cost of operating and 

maintaining these assets is increasing due to coastal exposure, this is an ongoing cost to 

transportation providers that, in turn, will be passed along to consumers in the form of 

higher rates. These higher rates divert consumption away from other goods and services 

and toward the maintenance of energy infrastructure. If this is the case, the estimates 

provided by Richardson and Scott could be biased downward. 

Research Overview, Methods, and Results 

In this paper, we set out to accomplish two objectives. First, we define an overall 

approach to estimate the benefits of coastal restoration activities on energy infrastructure. 

Second, we attempt to establish a framework for estimating the potential scope of the 

issue. 

The first step for a positive2

 valuation study on this issue is to define the types (or range) 

of impacts on energy infrastructure that could occur from coastal restoration. There are 

two general impacts that coastal erosion can have on energy infrastructure. First, there 

are the potential incremental impacts that a catastrophic event can have on energy 

 

2

 Positive economics is sometimes defined as the economics of "what is," whereas normative economics 

discusses "what ought to be." 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

87 

infrastructure. These impacts could be mitigated if coastal restoration activities were 

conducted, thus representing a potential benefit. It is important to note that only the 

incremental impacts should be considered. 

For instance, if a hurricane slams into the coast, resulting in three weeks of outages, an 

appropriate method of valuing the coastal erosion impact would be to separate the pure 

“hurricane-related” impacts from the additional delays created by coastal erosion. 

Differences in storm surge, created by the historic loss of coastal marsh and grass areas, 

could be used as a method of accounting for the incremental damage (i.e., difference in 

storm surge with and without certain coastal areas). However, to date, exact 

quantification of the impact that historic coastal erosion has had on storm surge levels has 

been difficult and debated, challenging the use of this approach for valuation purposes. 

Second, a number of ongoing impacts need to be considered that are exceptionally 

difficult to grasp. These include the everyday, ongoing increase in costs associated with 

greater operation and maintenance (O&M) expense because of coastal erosion. These 

costs arise because ability to service and maintain certain parts of an energy company’s 

infrastructure are more difficult given the changing geographic landscape. Alternatively 

(or in addition), these O&M increases could also represent increased additional costs 

related to either “hardening” coastal infrastructure or making erosion mitigation 

investments to protect infrastructure. Here, the appropriate analysis is the trade-off, or 

valuation between hardening and coastal restoration. 

Since coastal restoration has public benefits as well as the private benefits described 

above, decisions made on a private basis are unlikely to provide the optimal amount of 

coastal restoration. If we rely only on private restoration, we may miss a unique 

opportunity for maximizing coastal restoration investments. In most instances, there is 

no opportunity for firms to internalize these potential gains from public benefits. This is 

a classic case of an externality created by a public good. 

A number of steps need to be taken before estimating the economic benefits of coastal 

restoration: (1) identify the historic and projected degree of land loss in the coastal area, 

(2) identify the potential infrastructure that may be affected by coastal erosion, (3) 

identify the potential scope of impacts to these “at risk” assets, and (4) identify the types 

of costs associated with either a coastal erosion–created event or mitigation.3

 

Data on coastal erosion can be found in a study conducted by the National Wetland 

Research Center (NWRC) in Lafayette, Louisiana. The NWRC found that: 

• Louisiana lost approximately 1,900 square miles of coastal land from 1932 to 

2000. 

 

3

 This paper will not address an even more nuanced question of how changes in coastal erosion change the 

probability of damage occurring. Part of the answer to the question would involve some detailed 

engineering cost estimates on potential changes per infrastructure type. For instance, the changes in 

corrosion and potential change in the probability of failure for a given pipeline segment of a particular size 

(diameter). 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

88 

• Louisiana is projected to lose approximately 700 square miles between 2000 

and 2050 (absent restoration efforts). 

• Land loss rates from 1956 through 1978 were 39 square miles per year. 

• Land loss rates from 1990 through 2000 were 24 square miles per year. 

This land loss, from a geographical perspective, is presented in Figure 1. As seen from 

the figure, a large share of land has been lost or is projected to be lost over the next 40 

years. This figure also overlays the swamp and marsh areas that currently exist within 

the state. These swamp and marsh areas are also challenging environments for energy 

infrastructure development and operation, and it is quite possible that continued coastal 

erosion could subject these areas to further inundation and possible intrusion. 

Figure 1: Historic and Projected Land Loss 

Projected Land Loss (2000-2050)

Historical Land Loss (1932-2000)

Louisiana Swamps and Marshes

Coastal Lands

Source: Authors’ Construct; USGS 2007(c). 

The next step in the analysis is to examine how much infrastructure is located within 

these sensitive areas. Those assets in historic and projected land loss areas could 

potentially benefit from coastal restoration activities. Assets in marsh and swamp areas 

could benefit from coastal restoration through the mitigation of potential intrusion. The 

land loss areas identified in Figure 1 were overlaid with existing energy infrastructure 

along coastal Louisiana to identify potentially at-risk facilities. The results of this 

analysis are provided in Figure 2. 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

89 

Figure 2: Potential At-Risk Energy Infrastructure 

All At-Risk Energy Infrastructure

Refineries / Swamp and Marsh

Petrochemicals / Projected Land Loss (0.5 miles)

Gas Processing / Swamp and Marsh

Pipeline / Swamp and Marsh

Petrochemicals / Swamp and Marsh

Pipeline / Swamp and Marsh

Pipeline / Swamp and Marsh

Land Types

Historical Land Loss

(1932-2000)

Projected Land Loss

(2000-2050)

Louisiana Swamps

and Marshes

Source: Authors’ Construct; USGS, 2007(c); IHS Energy, 2004; Pennwell, 2004. 

Figure 2 shows a wide range of potentially at-risk energy infrastructure in the coastal 

areas of the state. There are two major refineries in this area, seven major petrochemical 

facilities, three gas processing facilities, and numerous pipeline segments. Many of the 

potentially at-risk pipelines in the area are responsible for moving a major share of 

natural gas produced in the GOM to consuming areas in the eastern half of the country, 

including New York, Philadelphia, and Washington, D.C.. 

A significant problem associated with the 2005 hurricane season was the impact of storm 

surge on coastal communities along the central GOM. This storm surge was 

indiscriminate in damaging both households and industry. Figure 3, for instance, 

provides two photographs, one during Hurricane Katrina and one immediately 

afterwards, showing the degree of storm surge and flooding at a major southern Louisiana 

petrochemical facility. 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

90 

Figure 3: Storm Surge and Flooding Post-Katrina at Petrochemical Facility 

Source: Photos courtesy of Air Products and Louisiana Chemical Association 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

91 

Conjectures during and since the 2005 hurricane season have blamed coastal erosion for 

aggravated storm surge levels (Stokstad 2005).4

 In other words, had some or all of the 

historic land loss not occurred, storm surge impacts would have been far less. Thus, 

increased storm surge exposure is another potential risk to energy infrastructure along the 

GOM. Figure 4 provides a map of storm surge along coastal Louisiana that occurred 

during 2005. 

Figure 4: Storm Surge Areas, Hurricanes Katrina and Rita 

Land Affected by Storm Surge

Katrina Storm Surge

Rita Storm Surge

Source: Authors’ Construct; FEMA 2007. 

The next step in the analysis is to overlay the storm surge areas to all existing energy 

infrastructure to get a feel for additional potential exposure risk. The map provided in 

Figure 5 shows the infrastructure exposed to various degrees of storm surge and flooding 

during the 2005 hurricane season. If storm surge is in fact exaggerated by coastal 

erosion, then a considerable range of energy infrastructure assets would receive some 

economic benefit from mitigation and/or restoration. Figure 6 combines all of the prior 

analyses into an overview of all potential at-risk categories. 

 

4

 While anecdotally one could conclude that increased storm surge created by coastal erosion increased the 

damage suffered by many types of physical infrastructure, a comprehensive analysis has not been done to 

date. 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

92 

Figure 5: Infrastructure in Hurricanes Katrina and Rita Inundation Zones 

All Infrastructure in Hurricane Surge Areas

Petrochemical (Katrina)

Petrochemical (Rita)

Refinery (Katrina)

Gas Processing (Katrina)

Pipelines (Katrina)

Pipelines (Rita)

Source: Authors’ Construct; USGS 2007(c); FEMA 2007; IHS Energy 2004; Pennwell 2004. 

Figure 6: Potential At-Risk Infrastructure 

All Infrastructure in Hurricane Surge Areas

Petrochemical (Katrina)

Petrochemical (Rita)

Refinery (Katrina)

Gas Processing (Katrina)

Pipelines (Katrina)

Pipelines (Rita)

Source: Authors’ Construct; USGS 2007(c); FEMA 2007; IHS Energy 2004; Pennwell 2004. 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

93 

The last step in the analysis is to examine other potential environmental impacts created 

by energy infrastructure, which in turn could be a function of coastal erosion and/or 

challenges associated with the operation of assets located in areas exposed to coastal 

erosion. Ruptures on existing pipelines in the coastal area were examined as a potential 

case in point. 

Figure 7 shows there were a large number of ruptures over the past decade that could 

have been caused, at least in part, by natural phenomena, “other,” or “unknown” reasons. 

While direct causality cannot and should not be assigned to coastal erosion, there is 

enough ambiguity in the nature of these ruptures that their relationship to coastal erosion 

merits further research. If in fact these ruptures were attributable to coastal erosion, the 

restoration and mitigation would provide additional environmental benefits, with 

economic value, that otherwise would go unrecognized. 

Figure 7: Causes of Coastal Pipeline Ruptures, Historical and Projected Land Loss 

Cause of Rupture

Criminal Intent

Equipment

Equipment Failure

Natural Phenomenon

Operator Error

Other

Transport Accident

Unknown

All At-Risk Land

(Hist. & Proj. 

Losses/Swamp/Marsh)

Source: Author’s Construct; USGS 2007(c); LOSCO 2007. 

The analysis presented in the prior figures shows a considerable range of assets that are 

potentially exposed to coastal erosion–created events. This approach should be the 

starting point in any valuation analysis of coastal restoration and energy infrastructure 

protection. The research, given its limited scope, did not move beyond the identification 

stage and so no conclusions can be drawn, other than that there is a considerable range of 

assets in the general coastal area that could be exposed to erosion-related problems. 

These assets are highly valued and critically important in the delivery of energy supplies 

to the entire country. Experiences after Hurricanes Katrina and Rita highlight this 

importance. Coastal restoration, therefore, appears to have the potential for some 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

94 

significant collateral benefits in supporting these assets. No definitive conclusions about 

these benefits, or their order of magnitude, can be derived at this time without further 

investigation and research. 

Conclusions 

Over the past several years, the relationship between energy production and infrastructure 

and coastal erosion has garnered significant attention, most of it negative and directed at 

pinning the blame for coastal erosion on energy industry activities. What is less 

recognized is that the energy sector has considerable assets along the coast, perhaps on 

the order of several billion if not hundreds of billions of dollars. It is in the best interest 

of these industries to protect these assets. The real challenge is identifying opportunities, 

through appropriate valuation techniques, of getting private and public coastal restoration 

activities aligned to maximize overall environmental benefits. The current regime would 

appear to suffer from a classic externalities problem that continues to go unaddressed. 

For instance, consider a situation where coastal erosion has forced a private firm to make 

a decision between investing in hardening a particular set of infrastructure investments or 

using coastal restoration to protect those assets. Further, assume that during the course of 

this valuation process, the physical hardening option is estimated to be slightly more 

affordable than the coastal restoration option. Clearly, a profit-maximizing firm will 

choose the least-cost option (holding other factors constant) and choose the physical 

hardening option over coastal restoration. However, if the additional public benefits were 

factored into this evaluation process, and the private firm could at least share in some of 

these potential benefits, an optimal economic solution to the problem could shift in favor 

of the coastal restoration option. 

The same valuation problem can occur in the public sector as well. Consider a public 

sector resource manager examining a variety of restoration projects that use habitat 

restoration, or some other natural resource–based measure, as the only criterion for 

project evaluation. This resource manager may choose one particular mitigation option 

over another that has higher overall economic value (due to energy infrastructure 

benefits) than the habitat-restoration approach only. If the resource manager were 

required to consider all benefits (including external economic benefits), it is likely that a 

different set of restoration choices may be developed. 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

95 

References

Davidson, Jon P., Walter E. Reed, and Paul M. Davis, 1997. Exploring Earth: An 

Introduction to Physical Geology. Upper Saddle River, NJ: Prentice Hall. 

Gonzalez, J.L., and T.E. Tornqvist. 2006. “Coastal Louisiana in crisis: subsidence or sea 

level rise.” EOS. Vol. 87, No. 45, November 7, 2006. 

IHS Energy. 2004. Manufacturing and Industrial Plant Database. 

Louisiana Office of the Governor. Louisiana Oil Spill Coordinator’s Office (LOSCO). 

2007. Environmental Baseline Inventory. 

Pennwell, Inc. 2004. Mapquest Database. 

Richardson, J.A. and L.C. Scott. 2004. The economic impacts of coastal erosion in 

Louisiana on state, regional and national economies. Louisiana Department of 

Natural Resources. April 2004. 

Stokstad, E. 2005. “Louisiana’s wetlands struggle for survival: New Focus.” Science. 

Vol. 310, No. 5752, November 25, 2005. 

U.S. Department of Energy. Energy Information Administration (EIA). 2007a. 

Petroleum Navigator. Internet website: http://www.eia.doe.gov/oil_gas/ 

petroleum/info_glance/petroleum.html 

U.S. Department of Energy. Energy Information Administration (EIA). 2007b. Natural 

Gas Navigator. Internet website: http://www.eia.doe.gov/oil_gas/ 

natural_gas/info_glance/natural_gas.html 

U.S. Department of Energy (US DOE). 2007. The strategic petroleum reserve. Internet 

website: http://pzl1.ed.ornl.gov/Sprpage.htm 

U.S. Department of Homeland Security. Federal Energy Management Agency. 2007. 

FEMA Flood Recovery Database (Katrina, Rita). 

U.S. Department of the Interior. Geological Survey. 2007a. A guide for teaching about 

coastal wetlands. Glossary. Internet website: http://www.nwrc.usgs.gov/ 

fringe/glossary.html 

U.S. Department of the Interior. Geological Survey. 2007b. Visual Glossary. Internet 

website: http://www2.nature.nps.gov/geology/usgsnps/project/ home.html 

U.S. Department of the Interior. Geological Survey. 2007c. Coastal Louisiana’s 

changing lands. Internet website: http://marine.usgs.gov/fact-sheets/ 

LAwetlands/lawetlands.html 
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96 

U.S. Department of the Interior. Geological Survey. 2007d. Subsidence and fault 

activation related to fluid energy production, Gulf Coast basin project. Internet 

website: http://coastal.er.usgs.gov/gc-subsidence/

U.S. Department of the Interior. Minerals Management Service (MMS). 2007. Mineral 

Commodity & Revenue Statistics. Internet website: 

http://www.mrm.mms.gov/Stats/statsrm.htm 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

97 

Chapter 6 – Economic Benefits of Coastal Restoration to the 

Marine Transportation Sector 

Di Jin 

Marine Policy Center 

Woods Hole Oceanographic Institution 

Woods Hole, MA 02543 

Introduction 

The United States is the largest trading nation in the world (WTO 2005). Total 

merchandise trade was valued at $2.41 trillion1

 in 2004 (Table 1). Ports are the primary 

gateway for international trade. Of all U.S. trade, ships carry close to 80 percent of the 

cargo by weight and close to 40 percent by value (Table 2). Each year, U.S. ports handle 

more than $800 billion in goods (Table 3). Marine transportation is an important sector in 

the national economy. 

A substantial literature examines (1) engineering and operational aspects of port 

development and management, (2) coastal ecology and environmental effects of air and 

water pollution (e.g., oil spills), and (3) erosion and coastal natural hazards. However, 

studies on the links between ports and the environment are sparse. We are unaware of 

any study on the benefits from coastal restoration to the marine transportation sector. 

In this chapter, we examine the potential benefits to shipping and ports from environmental 

improvements. Specifically, we identify direct and indirect links between environmental 

improvements and port operations and develop a framework for estimating the benefits from 

coastal restoration to the marine transportation sector. We will show that ports do benefit 

from improvements in the ecosystem. 

The remainder of the paper is organized as follows: section 2 presents an overview of the 

U.S. marine transportation sector; links between ports and the environment are discussed 

in section 3; a framework for estimating restoration benefits is described in section 4; and 

major findings of the study are summarized in section 5. 

U.S. Marine Transportation Sector 

According to U.S. waterborne foreign trade statistics, compiled by the Department of 

Transportation, the total value of cargo handled by ports in the United States was $841 

billion2

 in 2003. As shown in Table 3, most of the cargo (33 percent, $278 billion) 

 

1

 In this chapter, all values are in 2005 dollars unless specified otherwise. Total trade value is the sum of 

exports and imports. 

2

 Excluding ports in Puerto Rico and the Virgin Islands. 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

98 

passed through ports in California and Hawaii. Other dominant regions included the 

Northeast and the Gulf of Mexico regions, each handling 25 percent ($209 billion) and 19 

percent ($157 billion), respectively. The top five states engaged in waterborne foreign 

trade were California, New York, Texas, Washington, and Louisiana (Table 4). 

Out of a total of 326 ports nationwide, 10 of them handle 85 percent of all containerized 

ship-borne cargo, with the ports of Los Angeles and Long Beach accounting for nearly 40 

percent of all such cargo (U.S. Commission on Ocean Policy 2004). Table 5 presents a 

ranking of the top 30 ports in terms of cargo value. The ports of of Los Angeles, New 

York/New Jersey, and Long Beach each move over $100 billion of cargo annually. If we 

rank ports by cargo weight, two Gulf ports—South Louisiana and Houston—are on the 

top, each loading and unloading over 200 million short tons of cargo per year (Table 6). 

These ports play a dominant role in trade of agricultural products (e.g., grain), petroleum, 

and other industrial raw materials. 

International trade is carried by both U.S. and foreign-owned ships. The number and 

tonnage of U.S. merchant fleet by vessel types are shown in Table 7. In 2004, the U.S. 

merchant fleet consisted of over 1,000 vessels with a total over 45 million deadweight 

tons. 

Using IMPLAN software (MIG 2000) and U.S. national data, we calculated the water 

transportation sector’s output, employment, and related multipliers (Table 8). In 2003, 

the water transportation sector provided close to 60,000 jobs and generated $30 billion in 

gross revenues. The output value from the port and shipping sector was significantly 

higher than from other marine industry sectors such as commercial fishing and 

shipbuilding. The “Type II” multiplier for output for each industry sector measures the 

effect of changes in final demand (i.e., purchases by end users such as consumers or 

firms) for one industry on output in all other linked industries and on the income of 

people employed in those industries. For example, for each $1.00 of final demand for 

water transportation, $3.35 in industrial output and household income are generated in the 

United States. Employment multipliers are interpreted in much the same way. For 

example, each job in water transportation generates 11.14 jobs in the national economy. 

Note that the multiplier effect of the port and shipping sector is much larger than that of 

other marine industry sectors. 

The marine transportation sector has undergone substantial technological and 

organizational changes over the past three decades.3

 Until the 1980s, ports had been 

considered to have natural hinterlands. All shipment points closer to a given port than to 

any other port comprised the natural hinterland of the port. Port proximity and inland 

cost are no longer the deciding factors in the international shipper’s port selection criteria. 

With ocean carriers and inland carriers jointly providing through-service and point-topoint rates, we now have shipping markets featuring intermodal competition. With 

intermodal competition, shippers are able to select carriers that provide services at the 

lowest logistics cost (e.g., inventory, warehousing, and transportation) rather than at the 

lowest transportation cost. Ports expand their activities to include influence or control 

 

3

 For studies on port productivity and efficiency changes, see de Neufville and Tsunokawa (1981), Bendall 

and Stent (1988), and Park and De (2004). 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

99 

over the logistics network that lowers or minimizes a shipper’s logistics cost (Talley 

1988). Environmental factors have become increasingly important in affecting port 

operation and, in turn, logistics costs (see Juda and Burroughs 2004). 

Links between Ports and the Environment 

Ports are located in some of the most sensitive areas of the global ecosystem – estuaries 

and deep water lakes and rivers. Environmental effects associated with port operations 

include air emissions, water pollution, dredging, waste disposal, dust, and noise. There 

has been significant destruction of estuarine resources, wildlife, mangroves, and coral 

reefs worldwide in the vicinity of ports. Since the 1980s, environmental concerns have 

become an important factor in formulating port development and management decisions 

(Couper 1992). To ensure sustainable port development, ecological monitoring programs 

have been developed by many ports around the world to characterize environmental 

performance through appropriate monitoring and auditing. Typically, environmental 

auditing involves mapping of marine habitats, fishing areas, wetlands, zones of special 

scientific or cultural interest, recreational areas, and urban and industrial installations in a 

port region (Couper 1992; Wooldridge et al. 1999). 

In the United States, environmental mitigation has been used as a management tool capable 

of creating “win-win” situations for economic development interests and environmental 

resources managers. Ports that successfully integrate full consideration of environmental 

and resource impacts into the planning and construction of port development projects are 

likely to benefit from: (1) reduced permit delays and associated costs, (2) reduced 

uncertainty with respect to governmental approval of permits, and (3) increased public 

support for port development projects. In turn, environmental resource managers gain the 

cooperation of a significant set of developers and achieve “no net loss” of environmental 

resources4

 (Wessel and Hershman 1988). 

In addition, an ecosystem-based management approach has been introduced to ensure the 

viability of port areas as natural resources as well as economic engines. The U.S. EPA’s 

Green Ports program is an example of an existing mechanism that incorporates 

environmental stewardship into port operation practices. The Green Ports program has been 

implemented by numerous U.S. ports along the Pacific, Gulf of Mexico, Atlantic, and Great 

Lakes coasts (U.S. Commission on Ocean Policy 2004). 

In theory, a framework for socially optimal management of an estuary may be designed to 

maximize the net social benefits from multiple uses by different sectors in the coastal 

economy (e.g., shipping and fishing). Marine transportation is one sector linked to the other 

economic and ecological sectors in many different ways. As in many other cases, the 

challenge is to strike a balance between benefits from port operations and costs associated 

with environmental degradation. In the existing literature, the environmental effects 

associated with port operations are considered an externality. In other words, port 

 

4

For example, if wetlands are impaired or destroyed in one location, then equivalent wetlands must be created 

or restored elsewhere (Polasky 2002).
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

100 

operations are not affected by environmental quality. However, such treatment is 

incomplete, since the relationship between ports and the environmental is not unidirectional. 

Ports also benefit from improvements in environmental quality. 

There are multiple links between port operations and the ecosystem. We focus on how 

the ecosystem may affect port operations and how we might place a value on coastal 

restoration to the port and shipping sector. According to the U.S. Commission on Ocean 

Policy (2004), marine transportation may be significantly affected by changes in 

environmental and climate conditions, such as increased frequency or intensity of storms 

and changes in sea level. There are many historical examples of natural disasters (e.g., 

hurricanes, earthquakes, tsunamis, and droughts) affecting safe navigation and port 

operations. In 1994, the Houston Ship Channel was closed for several days when tropical 

rainfall caused flooding, dangerous currents, pipeline breaks and fires, and channel 

obstructions. In 2003, closures and limited operations occurred at major ports and shipping 

channels along the mid-Atlantic due to Hurricane Isabel. In 2005, the Port of New Orleans 

was closed for two weeks after Hurricane Katrina. Results from a study of the 1995 

earthquake in Kobe, Japan, suggest that the Port of Kobe suffered major long-term traffic 

loss despite the restoration of damaged physical facilities. Pre-disaster mitigation or 

prevention action provides the best option for dealing with risks associated with natural 

disasters (Chang 2000). 

In fact, improving environmental and ecological conditions in a port region may be 

viewed as an important component of the port’s overall risk management strategy. For 

example, wetlands provide a variety of valuable ecosystem services, such as flood 

protection and erosion control (Farber et al. 2006). Wetland restoration also enhances a 

port’s capability to resist disasters. According to Adger et al. (2005), resilient socialecological systems incorporate diverse mechanisms for living with and learning from 

change and unexpected shocks. Disaster management requires multilevel governance 

systems that can enhance the capacity to cope with uncertainty and surprise by mobilizing 

diverse sources of resilience. Here, resilience refers to the capacity of linked socialecological systems to absorb recurrent disturbances such as hurricanes or floods so as to 

retain essential structures, processes, and feedback. Hazards in coastal areas often become 

disasters through the erosion of resilience, driven by environmental change and by human 

action. A study by Conner et al. (1989) has shown that along the northern Gulf of 

Mexico, hurricane impacts are often severe and long-lasting in wetlands that have been 

modified by human impacts. 

Dredging navigational channels for both port expansion (to accommodate larger ships) 

and regular maintenance is highly controversial due to the potentially negative effects on 

the marine environment (Juda and Burroughs 2004). Soil erosion leads to increased 

sedimentation in downstream waters and, in turn, to more dredging in harbors and 

shipping channels. Many studies indicate that grass and other vegetation cover are highly 

effective for soil conservation (Fullen 1998; Mazda et al. 2002). Furthermore, studies on 

dredging (Sohngen and Rausch 2001; Peng et al. 2006) have established the link between 

erosion control in watersheds and dredging sediments in downstream harbors. These 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

101 

studies have shown that improved ecosystem management leads to a reduction in port 

dredging costs. 

A Framework for Estimating Restoration Benefits 

From discussions in the previous section, we outline a framework for estimating benefits 

from coastal restoration to the marine transportation sector. As shown in Figure 1, the total 

benefits of restoration consist of both direct and indirect benefits. Direct benefits from 

restoration projects include increased resilience against natural disaster events, as well as 

improvements in soil conservation and associated reduction in dredging. Indirect benefits 

from restoration efforts reflect the improvements in overall economic-ecological conditions 

of the port region and increased public support for sustainable port development. These 

beneficial effects translate into reductions in the total cost of port operations and, in turn, the 

overall cost of ocean shipping. 

Marlow (1976) and Shneerson (1977) have discussed the theoretical measurement of 

economic benefits from shipping services to a national economy. Any inefficiency in 

marine transport affects the prices of final products (Wood 1975). An increase in 

transportation cost causes welfare losses in both importing and exporting countries.5

 The 

empirical calculation of benefits from marine transportation is complex and requires 

considerable amounts of data on consumption, production, and trade of different goods in 

related countries. Costs associated with port operations constitute a portion of the total 

transportation cost. Damages to port facilities from natural disasters lead to higher port 

costs and in turn higher shipping costs. Thus, a precise measure of restoration benefits 

ought to consider broad effects throughout the economy. 

The specific methods we present in this chapter are partial analyses designed to highlight 

key links and develop preliminary valuation estimates with readily available data. In this 

section, we focus on the two direct benefits of restoration to ports as depicted in Figure 1. 

First, we quantify benefits from increased disaster resistance as follows: Suppose a 

wetland restoration project improves the effectiveness of disaster resistance of a portecological system. Combining information on disaster event probability, we can 

calculate the expected damage reductions (i.e., avoided costs), which are the benefits 

associated with the restoration project (Figure 2). As noted, ports may be closed after 

hurricanes. Wetlands provide a variety of valuable ecosystem services, such as natural 

flood control and shoreline stabilization. In this case, the effectiveness of disaster resistance 

may be measured as the reduction in the number of days of port closure. The expected 

benefit (B) is: 

B = ∆d ⋅ p ⋅ c

where ∆d is the reduction in the number of port closure days, p is the event probability, 

and c is the daily cost of port closure. The costs of port closure resulting from natural 

disasters may be substantial. From the annual data on cargo values in Table 5, we can 

 

5

 The change in transportation cost affects producers and consumers in both trading nations. Associated 

welfare changes may be measured by changes in consumer and producer surpluses in both markets 

(Shneerson 1977). 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

102 

calculate the average daily value for each port.6

 For example, on average, the Port of Los 

Angeles handles $354 million in cargo per day and the daily value for the Port of New 

Orleans is $56 million. A restored estuary, or more healthy estuarine ecosystem, could 

potentially reduce the impacts on ports of natural disasters and could shorten length of 

port closure caused by coastal flooding, storm surge, or heavy rain events. If the port 

closure that could be expected from such an event were shortened by one day, avoided 

damage may be sizable.7

 In addition to costs associated with delayed transport of cargo, 

natural disasters may also cause significant damages to port facilities. Damage to 

infrastructure for Louisiana’s public ports by Hurricane Katrina was estimated at $1.7 

billion (Table 9). 

Similarly, we may quantify restoration benefits in terms of avoided costs of maintenance 

dredging. This idea is illustrated in Figure 3. For a wetland restoration project, one can 

first estimate the reduction in soil erosion resulting from increased vegetation coverage. 

Next, reductions in the volume of sediments to be dredged are quantified. Finally, 

avoided dredging costs are calculated as a measure of restoration benefits. 

An excellent illustration of the above approach is the case study by Sohngen and Rausch 

(2001) on dredging Toledo Harbor, Ohio. Annual quantity of sediments dredged in the 

port area was 850,000 cubic yards, costing $2.2 million.8

 Some of the sediments were 

toxic, and special facilities were used for the disposal of contaminated sediments. The 

disposal cost was $4.1 million per year. The case study examined the economic benefits 

associated with a sediment reduction program for the upstream watershed (i.e., Maumee 

River basin). The sediment reduction program would lead to a 15% reduction in 

sedimentation rate and, in turn, a 15% reduction in dredging cost. The reduction in 

dredging volume in future years would result in an extended usage of existing disposal 

facilities and delayed construction of a new disposal facility for contaminated sediments. 

In addition, the new facility would be smaller and less costly than without the sediment 

reduction program. With the program, annual dredging and disposal costs would be $1.9 

million and $3.1 million, respectively. Thus, the total benefit associated with the 

sediment reduction program was $1.3 million per year. 

If we extend Sohngen and Rausch’s study to the national level, the resulting benefits may 

be considerable.9

 According to U.S. Army Corps of Engineers statistics for dredging cost 

in fiscal year 2005 (Table 10), at the national level, a total of 207 million cubic yards of 

sediments were dredged for harbor and channel maintenance at an average cost of $2.89 

per cubic yard (USACE 2006b). The total cost for maintenance dredging was $598 

million. Dredging as a result of Hurricane Katrina included an additional 1.3 million 

cubic yards at $4.29 per cubic yard (a total cost of $5.5 million). 

 

6

 Divide the annual value for each port by 365 days.

7

 Actual calculation of port closure cost may be more complex, since not all cargo delayed is lost. 

8

 For the case study, we cite original values (in 1995 dollars) reported in Sohngen and Rausch (2001). 

9

 A detailed analysis of dredging costs should also consider beneficial use of dredged materials. For studies 

on beneficial use of dredged materials in different port areas, see Wagner (2000), Marcus (2000), and 

Yozzo et al. (2004). 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

103 

Conclusions 

The United States is the world's largest trading nation. Ports are the primary gateway for 

international trade and handle more than $800 billion in goods annually. Marine 

transportation is an important sector in the national economy and provides over $30 

billion in output value and 60,000 jobs. Marine and estuarine ports are located in the 

most sensitive areas of the marine ecosystem. While ports may impact these areas, they 

also derive benefits from the proper functioning of marine and estuarine ecosystems. We 

have shown that port operations are likely to be affected by a number of marine and 

estuarine ecosystem conditions. For example, natural disasters such as hurricanes may 

force ports to close. Also, environmental degradation may lead to an increase in soil 

erosion, causing elevated levels of sedimentation in harbors and channels, which impedes 

ship navigation. 

There are significant economic benefits of coastal restoration to the marine transportation 

sector. We have presented a framework for estimating these benefits. Specifically, the 

benefits may be calculated as avoided costs of natural disasters as well as avoided costs 

of dredging. An estimation of the total national benefit will need to be developed based 

on analyses of major ports around the country and a clear understanding of the 

incremental effects of individual restoration projects on erosion and flood control in 

relevant port areas. 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

104 

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The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

107 

Table 1: Leading Exporters and Importers in World Merchandise Trade, 2004 

Rank Exporters Value Share Importers Value Share

1 Germany 939.6 10.0 United States 1,571.3 16.1 

2 United States 843.3 8.9 Germany 738.4 7.6

3 China 611.1 6.5 China 578.1 5.9 

4 Japan 582.8 6.2 France 479.4 4.9

5 France 462.2 4.9 United Kingdom 477.4 4.9 

6 Netherlands 368.9 3.9 Japan 468.2 4.8

7 Italy 359.6 3.8 Italy 361.6 3.7

8 United Kingdom 357.3 3.8 Netherlands 328.9 3.4 

9 Canada 326.0 3.5 Belgium 294.0 3.0 

10 Belgium 315.7 3.3 Canada 288.2 2.9 

Units: Value in billions of 2005 dollars and share in percentage. 

Source: WTO (2005). 

Table 2: U.S. International Merchandise Trade by Mode of Transportation, 2001 

 

Mode of Transportation Value 

Share 

Weight 

Share 

Water 38.4 77.7

Air 27.7 0.4

Truck 21.1 11.0

Rail 4.9 5.9

Pipeline 1.4 4.8

Other and Unknown 6.5 0.2

Total 100.0 100.0

Unit: Share in percentage. 

Source: USDOT (2003). 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

108 

Table 3: U.S. Waterborne Foreign Trade by Region, 2003 

Regions Import 

Value 

Export 

Value 

Total Value Total Value

Share 

California and the Pacific Islands 232,203 45,512 277,715 33.0

Northeast Atlantic 160,266 49,139 209,405 24.9

Gulf of Mexico 103,816 53,464 157,280 18.7

Southeast Atlantic 48,973 24,140 73,113 8.7

Northwest Pacific 52,491 20,411 72,903 8.7

Florida 29,817 17,504 47,321 5.6

Great Lakes 1,697 1,977 3,675 0.4

Total 629,262 212,149 841,411 100.0

Units: Value in millions of 2005 dollars and share in percentage. 

Notes: The regions are defined as follows. 

Northeast Atlantic (ME, NH, MA, RI, CT, NY*

, NJ, PA*, DE, MD, DC, and VA) 

Southeast Atlantic (NC, SC, and GA) 

Florida (FL) 

Gulf of Mexico (MS, AL, LA, and TX) 

California and the Pacific Islands (CA and HI) 

Northwest Pacific (OR, WA, and AK) 

Great Lakes (MN, MI, WI, IN, IL, OH, PA**, NY**) 

*

 Atlantic ports. 

** Great Lakes ports. 

Source: Author’s calculation based on data from USDOT (2006). 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

109 

Table 4: U.S. Waterborne Foreign Trade by State, 2003 

State Import Value Export Value Total Value 

California 230,279 45,342 275,621

New York 81,675 25,978 107,654

Texas 64,404 30,148 94,552

Washington 42,921 14,785 57,706

Louisiana 31,449 19,632 51,081

Florida 29,817 17,504 47,321

South Carolina 27,599 14,189 41,788

Virginia 22,686 13,670 36,355

Georgia 19,815 8,573 28,389

Maryland 21,487 6,028 27,514

Pennsylvania 14,690 1,491 16,181

Oregon 9,388 3,234 12,622

Puerto Rico 6,589 2,167 8,756

Mississippi 5,310 2,131 7,441

Massachusetts 5,469 766 6,236

Delaware 4,918 616 5,534

Virgin Islands 5,057 313 5,371

Alabama 2,653 1,553 4,206

New Jersey 3,416 182 3,598

Rhode Island 2,883 72 2,955

North Carolina 1,558 1,378 2,937

Alaska 183 2,392 2,575

Hawaii 1,924 170 2,094

Maine 1,255 296 1,551

Connecticut 1,298 79 1,377

Ohio 543 570 1,113

Michigan 400 471 871

Wisconsin 231 474 706

New Hampshire 608 76 685

Illinois 236 91 327

Minnesota 25 219 244

Indiana 143 31 174

District of Columbia 0 5 5

Total 640,909 214,630 855,539

Unit: Value in millions of 2005 dollars. 

Source: USDOT (2006).
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

110 

Table 5: Major U.S. Ports by Value of Cargo, 2003 

Rank Port Value 

1 Los Angeles, CA 129,374

2 New York/New Jersey 107,247

3 Long Beach, CA 101,615

4 Houston, TX 52,887

5 Charleston, SC 41,737

6 Hampton Roads, VA 34,911

7 Tacoma, WA 27,912

8 Baltimore, MD 27,514

9 Oakland, CA 26,653

10 Seattle, WA 24,462

11 Savannah, GA 22,630

12 New Orleans, LA 20,576

13 Miami, FL 17,607

14 Portland , OR 12,518

15 Jacksonville, FL 11,909

16 Port Everglades, FL 11,129

17 Philadelphia, PA 10,934

18 Newport, RI 10,933

19 Morgan City, LA 10,715

20 Corpus Christi, TX 10,451

21 Beaumont, TX 10,193

22 South Louisiana 9,287

23 Kahului, HI 7,769

24 Texas City, TX 6,926

25 Boston, MA 6,022

26 Port Arthur, TX 5,886

27 Brunswick, GA 5,758

28 Hueneme, CA 5,683

29 Wilmington , DE 5,534

30 Lake Charles, LA 5,504

Unit: Value in millions of 2005 dollars.

Source: AAPA (2006).
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

111 

Table 6: Major U.S. Ports by Weight of Cargo, 2004 

Rank Port Name Total Traffic 

1 South Louisiana 224,187,322

2 Houston, TX 202,047,327

3 New York/New Jersey 152,377,503

4 Beaumont, TX 91,697,948

5 Long Beach, CA 80,066,130

6 Corpus Christi, TX 78,924,757

7 New Orleans, LA 78,085,209

8 Huntington - Tristate 77,307,514

9 Texas City, TX 68,282,902

10 Baton Rouge, LA 57,082,823

11 Mobile, AL 56,211,796

12 Lake Charles, LA 54,768,322

13 Plaquemines, LA 54,404,720

14 Los Angeles, CA 51,931,730

15 Tampa, FL 48,289,134

16 Baltimore, MD 47,399,120

17 Valdez, AK 46,758,499

18 Duluth-Superior, MN and WI 45,392,619

19 Pittsburgh, PA 41,034,808

20 Philadelphia, PA 35,219,613

21 Norfolk Harbor, VA 34,166,269

22 Pascagoula, MS 34,099,989

23 Freeport, TX 33,908,024

24 St. Louis, MO and IL 33,386,972

25 Paulsboro, NJ 30,485,654

26 Portland, OR 29,995,641

27 Portland, ME 29,709,345

28 Savannah, GA 28,176,658

29 Port Arthur, TX 27,570,039

30 Tacoma, WA 26,282,033

Unit: Total traffic in short tons. 

Source: USACE (2006a). 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

112 

Table 7: U.S. Merchant Fleet, 2004 

Tankers Bulk 

Carriers 

Container 

Ships 

General Cargo 

Ships 

Passenger 

Ships 

Total 

Number 418 98 85 281 155 1,037

Tonnage 32,647 5,270 3,016 3,739 674 45,346

Unit: Tonnage is in thousands of deadweight tons (dwt). 

Note: Vessel statistics are based on country of domicile including ships of 1,000 gross 

tons and over. 

Source: ISL (2004). 

Table 8: U.S. Marine Industry Sector Output and Employment, 2003 

Industry Sectors NAIC 

Codes 

Output 

Value 

Type II 

Multipliers

Employment Type II 

Multipliers

Water Transportation 483* 31,959 3.35 58,491 11.14

Commercial Fishing 1141 3,658 3.00 97,127 1.58

Seafood Processing 3117 10,655 2.82 43,737 4.49

Ship Building 336611 15,889 3.35 89,847 3.96

Boat Building 336612 10,241 3.03 51,980 3.68

Unit: Output value in 2005 $U.S. millions. 

Note: NAIC 483 is the sector for ocean, costal, great lakes, and inland waters shipping 

Source: 2003 IMPLAN data (see MIG (2000) for IMPLAN software and data 

description). 

Table 9: Hurricane Katrina Damage Estimates for Louisiana’s Public Ports 

Port Damage Estimates

Port of New Orleans 1,600 

Port of South Louisiana 2 

Port of St. Bernard 40 

Port Fourchon 61 

Total 1,703 

Unit: Damage in millions of 2005 dollars. 

Source: AAPA (2005).
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

113 

Table 10: Dredging Costs for FY 2005 

Types of Dredging Value Percent Volume Percent Unit Cost

Maintenance Dredging 597,604 62.5 206,547 81.0 2.89

New Work Dredging 327,604 34.3 41,845 16.4 7.83

Emergency Dredging 25,780 2.7 5,406 2.1 4.77

Dredging for Hurricane Katrina 5,503 0.6 1,282 0.5 4.29

Total 956,491 100.0 255,080 100.0 3.75

Units: Value in thousands of 2005 dollars, volume in thousand cubic yards, and unit cost 

in dollars per cubic yard. 

Source: USACE (2006b). 

Figure 1: Benefits from Coastal Restoration to Marine Transportation 

Coastal Restoration

Direct benefits Indirect benefits

Reduction in

erosion

Increase in

resilience

Disaster events Long-term changes

Improved regional economy

and public support

Multiple uses

Total benefit
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

114 

 Figure 2: Benefit Estimation: Natural Disasters 

Figure 3: Benefit Estimation: Maintenance Dredging 

Wetland

restoration

Reduction in erosion 

Reduction in dredging 

Avoided costs

Benefits

Effectiveness of

disaster resistance

Wetland

restoration

Disaster

event probability

Avoided costs

Benefits
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

115 

Case Study: Soil Erosion in the Maumee River Basin and Dredging in Toledo 

Harbor 

Sohngen and Rausch (2001) described how to estimate the benefits of reduced dredging 

costs arising from lowering soil erosion upstream. In the Maumee River basin in 

northwestern Ohio, soil erosion from upstream land uses damages Toledo Harbor, into 

which the river drains. Annually, 850,000 cubic yards of sediment was dredged in the 

port area, costing $2.2 million. Some sediments were toxic, and special facilities were 

used for the disposal of contaminated sediments. The disposal cost was $4.1 million per 

year. The U.S. Army Corp of Engineers and the Natural Resource Conservation Service 

introduced conservation tillage across corn and soybean fields in the basin to reduce soil 

erosion. The program was expected to lead to a 15% reduction in sedimentation rate and, 

in turn, a 15% reduction in dredging costs. The reduction in dredging volume in future 

years would result in an extended usage of existing disposal facilities and delayed 

construction of a new disposal facility for contaminated sediments. In addition, the new 

facility would be smaller and less costly than without the sediment reduction program. 

With the program, annual dredging and disposal costs would be $1.9 million and $3.1 

million, respectively. Thus, the total benefit associated with the sediment reduction 

program was $1.3 million per year (see Table 11). 

Table 11: Annual Costs with and without Sediment Reduction 

(millions of 1995 dollars) 

Without Sediment 

Reduction 

With Sediment 

Reduction 

Dredging and transportation costs 2.2 1.9 

Disposal Costs 4.1 3.1 

Total Costs 6.3 5.0 

Reference

Sohngen, B. and J. Rausch. 2001. Case study of a market-based analysis: soil erosion in 

the Maumee River basin. Pages 102-110 in A. Cangelosi, ed. Revealing the 

Economic Value of Protecting the Great Lakes. Northeast-Midwest Institute and 

National Oceanic and Atmospheric Administration, Washington, DC. 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

116 

Chapter 7 – The Influence of Coastal Preservation and 

Restoration on Coastal Real Estate Values 

Judith T. Kildow, PhD 

Monterey Bay Aquarium Research Institute 

One of the most clear-cut findings in the experimental literature on 

environmental aesthetics is the consistent tendency for North 

American and European groups to prefer natural scenes over built 

views, especially when the latter lack vegetation or water features. 

Roger Ulrich (1983) 

Introduction 

After dredging out or filling in most of America’s estuaries for economic development 

over the past 50 years, there has been a policy shift to restore and save what is left of 

those fertile and unique coastal areas that scientists and engineers now tell us are some of 

our most valuable assets. Scientific evidence shows us that estuaries and wetlands are 

biologically productive areas, natural water filtration systems and buffers, and first line 

defenses against hurricanes and storm surges, protecting shoreline developments from 

costly damage. In addition, estuaries and oceans have purely aesthetic values. 

Knowing the value to society provided by estuaries is an important basis for justifying the 

costs involved in their restoration, since costs can run into the tens of millions of dollars 

for a single site, and especially since that restoration comes primarily from public funds. 

Who benefits from the restoration and how the benefits are distributed has important 

implications for public decisions. 

Estuaries are large and small, occupy urban as well as rural coastal settings, and many are 

in varying stages of deterioration. With such diversity, the costs of restoration can vary 

greatly. The beneficiaries can be large numbers of urban dwellers who benefit from 

urban redevelopments along restored harbor areas, or small numbers of fortunate coastal 

residents who have homes and businesses along the shore. 

Estuaries are inherently important to environmental and human health. Estuarine capacity 

to filter pollutants not only serves to provide a healthy environment for marine creatures 

to thrive, but it contributes to cleaner coastal waters for beach-going populations. This 

knowledge has produced new policy paradigms that encourage the restoration of polluted 

harbors as well as the reclaiming of coastal estuarine and watershed areas that were 

allowed to degrade in the past. 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

117 

As estuaries, wetlands, and other natural coastal assets have become better understood, 

their functions have become more appreciated. Scholars have attempted to value 

estuaries, wetlands, and other natural assets along the coasts for decades. However, 

much of the research has concentrated on estimating substitute market values for 

estuarine functions that serve society, such as the value of filtration capacity, shore 

buffering, and fish nurseries. The focus shifts in this study to understand how the 

presence of healthy estuaries affects the market values of economic activities, e.g., real 

estate sales, recreation, and fishing—an approach that has not been well studied or 

documented before. Certain activities directly benefiting from restored estuaries have 

received the most attention from scholars: (1) fisheries that depend on estuarine spawning 

grounds and (2) recreation, as increasing numbers of people seek to enjoy the outdoors 

through birdwatching, kayaking and other types of boating, and nature hikes. These 

activities are covered in other chapters. 

Other sectors of the coastal marketplace, such as real estate values, have received far less 

attention from scholars. This paper focuses on the economic effect of proximity and 

access to coasts and oceans on real estate and property values. There is much evidence in 

the literature that property on or near the shore has considerably higher value than 

property away from the shore, indicating that buyers pay a premium for residences near 

beaches and with water views. 

Water and Property 

For centuries, bodies of water have been population magnets. Environmental 

psychologists have attempted to explain this fascination. One prominent theory (Pitt 

1989) explains the appeal of water to humans as the desire to return to the natural state of 

existence. Others have suggested that water and water views hold attention and interest 

more effectively than urban scenes (Ulrich 1981). 

The added value from waterfront properties not only has implications for added wealth 

for the buyers and sellers of these properties, but it has value to local communities and 

states through accompanying real estate taxes and property transfer taxes in many states, 

such as Florida and California. Property values have a large impact on our economy, 

although the exact magnitude of that impact has not been well documented. For purposes 

of this research, it is important to understand what affects coastal property values and the 

extent to which healthy coastal estuaries are important parts of the equation. 

What follows is a literature survey; some cases from the literature; a brief presentation of 

monetary estimates of the relationships between estuaries, other water bodies, and 

property values; an assessment of the limitations of the studies found and cited; and 

suggestions for further research needed to more accurately link estuarine restoration to 

property values. 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

118 

A Survey of the Literature 

Determining the economic impact of estuarine restoration on property values is not a 

simple exercise. Searching the literature requires assumptions about which attributes of 

healthy estuaries increase people’s desire to live near or along them, and therefore, 

increase the demand for healthy estuaries. Some of the more obvious attributes are 

unpolluted waters, interesting wildlife to view, and ready access to recreational 

opportunities such as boating, kayaking, canoeing, etc. Economic evidence demonstrates 

that the aforementioned recreational activities have been increasing over the past decade, 

and contribute significantly to the U.S. economy (U.S. Department of the Interior and 

Department of Commerce (2000, 2005). One of the benefits of estuary restoration is 

improvement in water quality, which prompts the gradual return of the wildlife that once 

thrived there. Hence, one might conclude that healthy, restored estuaries that provide 

those amenities will be of interest to those who purchase coastal properties, and will have 

a positive influence on real estate values with proximity to them. When searching the 

literature for evidence of these links, I tested this assumption for both large and small 

estuaries, located in urban and rural locations. 

While many studies link air quality with property values (Poor et al. 2006)1

 the literature 

search turned up only a few that link water quality with property (Leggett and Bockstael 

2000). However, many studies estimated premium values2

 for properties with ocean 

views and waterfront locations, which provided circumstantial evidence. 

The literature survey revealed several categories of studies—those that provided links 

between estuaries and/or estuary/harbor restoration and property values, and studies 

linking other water bodies to property values. 

The three studies with direct links to estuaries/harbor environments used a combination 

of either hedonic pricing methods and/or contingent valuation/conjoint analysis surveys. 

These are: 

1. A hedonic property study3

 that compares housing prices in a well-defined, small 

area of homes along the Chesapeake Bay with varying degrees of water quality 

degradation (Leggett and Bockstael 2000); 

2. A hedonic property model that estimates the marginal value of water quality in 

the St Mary’s River Watershed of the Chesapeake Bay (Poor et al. 2007); and 

 

1

 From Chattopadhyay (1999); Palmquist and Israngkura (1999); and Zabel and Kiel (2000). 

2

 Premium value indicates the added value a property commands, based on its water-based amenities 

compared to a similar property without that amenity. 

3

 Hedonic Pricing Method assesses the value of an environmental characteristic by examining market 

transactions for similar goods with differing key features, to determine whether that feature contributes to 

the price of a specific good. In real estate markets this is most often the comparison of two homes of similar 

design and quality but located in different physical locations (e.g., waterfront versus non-waterfront). 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

119 

3. A study that combined two methods, hedonic methods and conjoint analysis 

(Braden et al. 2004). This study used housing market data and also measured the 

preferences of homeowners in both Lake County, Illinois, and in Waukegan, the 

county seat where the harbor restoration was the focus for the study. 4

 

The other category includes studies linking water amenities to property values in a 

variety of ways. These were included as surrogates from which analogies could be drawn 

for estuaries. These studies include: 

1. Comparison of property flood insurance rates based on proximity to flood plains 

reported as a surrogate for coastal properties buffered by estuaries. 

2. Studies estimating premium value of waterfront location or water views. 

Case Studies from the Literature 

Studies Using Hedonic and Conjoint Choice Methods to Determine the Importance 

of Water Quality to Property Prices 

A. Leggett and Bockstael (2000) provide evidence that people are willing to pay more for 

better water quality. The authors use hedonic techniques to show that water quality has a 

significant effect on property values along the Chesapeake Bay. This study demonstrates 

the potential benefits from an illustrative water quality improvement. Their assumption 

was that pollution sources might be unwanted neighbors, something other studies had 

ignored. “This paper takes advantage of a unique geographical environment, a lively 

housing market along an estuary with large variations in water quality, to show that 

improvements in water quality can have a positive and significant effect on property 

values” (Leggett and Bockstael 2000, p. 127).

Controlling for multiple types of landscape variables—including population density, 

proximity to major cities, pollution emitters, and a host of other variables—the authors 

found that the variable for coastal properties with identifiable importance for buyers was 

proximity to water, “having a positive and significant effect on price”..... “After 

accounting for omitted variable bias and after correcting for spatial autocorrelation, we 

still can conclude, but now with considerably more confidence, that waterfront 

homeowners have a positive willingness to pay for reductions in fecal coliform bacteria 

concentrations” (Leggett and Bockstael 2000, p.142). There are two major considerations 

when using water quality as the independent variable linking property values with healthy 

estuaries or other aquatic bodies. One is “perceived” quality that you can see or smell, 

such as turbidity, cloudiness, and eutrofied systems. The other is “evidence-based” 

quality such as fecal-coliform degradation, which is mostly invisible and where crucial 

information is essential to demonstrate quality. Presumably, both considerations of water 

quality information affect personal choice for buying properties. With water found to be 

 

4

 Conjoint Choice Analysis uses the ranking of potential characteristics (to include environmental 

attributes) by respondents to approximate the value of alternative goods, services, or assets. 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

120 

the most important consideration in assessing property value, the health effects of clean 

water were believed by the authors to be important considerations for buyers, and thus 

fecal coliform count linked to the property values was believed to be a strong indicator. 

To estimate their model, the authors used a strip of shoreline with definable divisions in 

Anne Arundel County, Maryland, on the western shore of the Chesapeake Bay, with 

reliable water quality monitoring. The data were drawn from 1,183 sales transactions of 

waterfront properties occurring only along navigable sections of tributaries to the main 

stem of the Chesapeake Bay, between July 1993 and August 1997.5

 The independent 

variable data included attributes of the homes and also the results of fecal coliform 

counts, monitored from Memorial Day to Labor Day, at 104 stations along the shoreline 

of the Bay.6

 

The authors found that of the 6,704 residential waterfront properties in Anne Arundel 

County, 494 had fecal coliform bacteria concentration values exceeding the EPA standard 

of 200 counts per 100 ml. The hypothetical improvement is one that would reduce fecal 

coliform counts at all waterfront properties to the state standard (EPA standard) of 200 

counts per 100 mL (Leggett and Bockstael 2000, p. 142). Improving water quality to the 

EPA/state standards for all 494 homes on or near waters that did not meet EPA standards, 

the authors estimate would have potential economic benefits of $12.15 million with a 

95% confidence interval of $3.789 million to $20.501 million (Leggett and Bockstael 

2000, p. 142). They also indicated their results were conservative because they did not 

reflect all of the benefits of water quality improvements to factors such as “benefits to 

owners of waterfront properties along tributaries without monitoring stations—about 750 

parcels; they ignored potential benefits to near-shore property owners,” etc. (Leggett and 

Bockstael 2000, p. 142). 

B. St. Mary’s River Watershed 

The Poor et al. (2007) study of the St. Mary’s River watershed is the second study where 

authors estimated the value of clean water bodies as revealed by home prices of nearby 

residences. The research focused on the St. Mary’s River watershed, a sub-watershed of 

the Chesapeake Bay on the western shore. This study provides estimates of marginal 

values of ecosystem indicators—total suspended solids and dissolved inorganic 

nitrogen—that can be directly linked to property values. The study area examines a 

peninsula surrounded by the Potomac and Patuxent rivers in a small county in southern 

Maryland where, according to the authors, citizens had complained about recent declines 

in water quality of the river. The uniqueness of this study is the use of both waterfront 

and non-waterfront properties for a hedonic property valuation to estimate the marginal 

prices of ambient water quality. The assumptions were that non-point run-off was 

responsible for much of the water quality decline and that much of that was the result of 

changing land uses. The purpose of this study was to demonstrate the “willingness to 

pay” of local homeowners to allow the river to return to health through the lens of house 

sale prices. The authors used total suspended solids and dissolved inorganic nitrogen as 

the water quality variables that were carefully monitored at 22 stations throughout the 

 

5

 The sales information came from the Maryland Tax Assessment database. 

6 Collected and analyzed by the Anne Arundel County Department of Health. 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

121 

watershed. They used a hedonic price model for 1,377 residential property sales 

occurring within the St. Mary’s River watershed over a period of four years between June 

1, 1999, and May 31, 2003. Using real estate data from several sources and prices 

converted to January 2003 constant dollars, the authors used geo-coded data to locate 

each property used in the study. Both waterfront properties (which make up 2% of the 

properties considered) and all other properties reveal statistically significant relationships 

between water quality measures and home price. Without going into the complexities of 

their work, their results indicated that a one unit (mg/L) increase in total suspended solids 

had a negative impact on the average housing price (204,823) within the watershed of 

$1,086. A 1-unit (mg/L) increase in dissolved inorganic nitrogen, a contributor to 

eutrophication, had a negative impact on the average housing price ($200,936) in the 

watershed of $17,642 (Poor et al. 2007). The ranges for the average water quality 

indicators across the monitoring stations with the sample are 8.918 mg/L to 12.851 mg/L 

for total suspended solids and .082 mg/L to .956 mg/L for dissolved inorganic nitrogen. 

Taken across all homes in the study region, these marginal values clearly account for 

millions of dollars that could be gained from water quality improvement. 

C. Waukegan Harbor 

People often forget that many commercial harbors lie within estuaries. Surveying the 

regeneration of urban harbor areas around the United States, one finds that harbor cleanup often goes hand in hand with new commercial and residential developments that 

ultimately raise the property values of formerly undesirable and rundown areas. A recent 

study (Braden et al. 2004) of Waukegan Harbor in Lake County, Illinois—a Superfund 

site—reflects the local and regional population’s attitudes about restoring their harbor; 

i.e., that positive things would happen if it were cleaned up. The study also uses a 

hedonic pricing technique with actual housing data to complement the attitude survey. 

While Waukegan Harbor is not an estuary, the benefits derived from restoration and 

clean-up in Waukegan Harbor are likely to be similar to those for similar harbors in 

estuaries. 

Waukegan Harbor was designated one of the Great Lakes Areas of Concern (AOC) in the 

1980s by the International Joint Commission (IJC) with serious contamination. EPA 

placed two sites within Waukegan Harbor on the National Priority List (NPL) under 

Superfund legislation in 1980 (U.S. EPA 1980) because of PCB contamination from 

industrial discharges between 1948 and 1971. The AOC designation indicated 

impairments to five beneficial uses: beach closures, degradation of phytoplankton and 

zooplankton populations, degradation of benthos, restrictions on dredging operations, and 

loss of fish and wildlife habitat. As a result, the surrounding communities and the state 

have been affected by major tax losses, according to economic data that has been 

generated over the past decade. 

Clean-up of the harbor began in the early 1990s, which led to “noteworthy improvements 

in the harbor’s environmental condition” (Braden et al. 2004). However, additional 

remedial action, estimated at $21 million, is still required to de-list the site Not only 

would this last step in the clean-up process eliminate the remaining “beneficial use 

impairments,” with their accompanying economic impacts, but it would relieve the 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

122 

community of its “stigma of contamination” and probably increase the desire for 

development and rejuvenation of the harbor area, which would have ripple effects 

throughout the area (Braden et al. 2004, p. 488). Without any calculations and research, 

one could surmise that the cost of the final clean-up, an estimated $21 million, would 

probably be more than recovered economically by the positive effects it would have on 

the community, or so the results of this study would indicate. “Overall, this study 

suggests that cleanup of the Waukegan Harbor AOC, including but not limited to 

sediment remediation, is likely to increase the value of residential properties in the City 

of Waukegan by an amount denominated in the hundreds of millions of dollars, and 

perhaps by significant amounts elsewhere in the region as well” (Braden et al, 2004, p. 

488). 

This study used both hedonic pricing methods and conjoint choice surveys, which 

revealed multiple dimensions of how residents chose housing. The authors describe four 

aspects of this study, which make it unique. First, they considered property values not 

just in the immediate vicinity of the harbor, but throughout the county. Here they tested 

the effect of a stigma, a Superfund site, to determine the geographic effect of this 

reputation. Second, this study combines survey and market data. They combined the 

flexibility of the survey approach and the real behavior and financial commitments of real 

property data. Third, instead of using an open-ended contingent valuation survey design, 

they adopted a conjoint choice format where individuals select between alternative 

versions of a particular good. Fourth, the survey component opened the door to 

determining future developments as well as apparent effects of past and present 

conditions. This allowed them to estimate potential effects of the clean-up of the harbor 

on property values, both from a market value and human attitude perspective. 

The authors (Braden et al. 2004) chose one group to query for their study, the 

homeowners. “They are the dominant voting population of most communities and are 

important in the formation of local public policies (Braden et al. 2004).” The thinking 

was that if homeowners’ interests were perceived to be well served by the clean-up in 

raising their property values, they might be more willing to support public investment in 

the restoration of their harbor. As taxpayers in the community, they are important 

stakeholders to help finance the clean-up through local tax collections (Braden et al. 

2004). 

The results of the study indicated that the clean-up of the harbor was perceived to be 

more valuable to those living in the city of Waukegan than to those living throughout the 

rest of the county. The authors found that the presence of other amenities such as parks, 

nature, etc. were of less importance than the actual clean-up of the harbor. For 

homeowners in the city of Waukegan, the authors estimated a willingness to pay for 

harbor clean-up of $400 million, or approximately 16 to 19 percent of all Waukegan 

property values. The reported “willingness to pay” throughout the rest of Lake County, 

where Waukegan is the county seat, amounted to approximately $7 to $12 billion, or 

between 15 percent and 26 percent of home values elsewhere in the county (Braden et al. 

2004). As is often the case, the willingness to pay increased with income—apart from 

the effects of income, Waukegan households, on average, would pay approximately 27 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

123 

percent more for full clean-up than non-Waukegan homeowners. This study reports that, 

of the other studies done for Great Lakes sites in the past, the average was about 15 

percent of existing property values within a radius of 5 to 6 miles (Braden et al. 2004). 

The authors find that the results for Waukegan Harbor were higher than those found by 

studies of three other Great Lakes areas (Calumet, Indiana; Hamilton, Ontario; and 

Ashtabula County, Ohio). According to the authors, Waukegan Harbor is unique, with a 

powerful community sense of stigma throughout the region from their proximity to a 

Superfund site. 

The implications of the Waukegan experience can be seen in estuaries. While careful 

research on property values has not been undertaken to value the impact of restoration in 

California’s Oakland Estuary, the initial results of that restoration speak for themselves: 

by unanimous vote (Heredia 2006), the city approved development plans for 31,000 

housing units near the estuary, 200,000 square feet of retail units, a 170-slip marina, 

parks, and promenades, with additional restored wetlands being constructed on Oakland’s 

shoreline and scheduled for completion by 2010. 

Studies Linking Other Water Bodies and Amenities to Property Values 

A. Linking Risk and Insurance Rates to Property Values

Estuaries often are cited as natural buffers that help prevent property loss along the shore 

in the face of strong storms. In other words, properties buffered by estuaries are probably 

at less risk for damage than those located directly along beaches and non-protected 

shorelines. If insurance rates correctly assess risk to property in flood zones, they should 

convey a savings in property insurance premiums for coastal homes that enjoy the benefit 

of estuarine buffers versus non-buffered coastal areas. 

Insurers are interested primarily in assessing the risk of a particular piece of coastal 

property from storm surges, hurricanes, and even tsunamis in selected areas, which can 

cause flooding at the very least, and undermine or even destroy properties at the most 

serious level. Estuaries and wetlands are well understood to be buffers and flood 

protectors for homes and commercial buildings and other physical infrastructure, so their 

value as the first line of defense for physical properties near the coast should be high. 

Knogge et al. (2004) estimate the value of indirect functional benefits of coastal wetlands 

for protection from coastal impacts of climate change to be between $3 million and $13 

million/km. It is difficult to know how the insurance industry estimates these values, 

because the formulae they use for their actuarial equations are proprietary. 

In a study by Bin et al. (2006), the authors find that location within a flood zone lowers 

the property value. The authors employed hedonic property price method to examine 

the effects of flood hazards on coastal property values in mainland Carteret County 

located along the Atlantic coast of eastern North Carolina. With the highest point in the 

entire county at 51 feet above sea level, most of the county is low-lying and prone to 

flooding. The authors controlled for most of the amenities that would influence the price 

of coastal properties, because without such controls floodplain location appears to have 

no effect on housing values. 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

124 

Their results showed that “flood insurance premiums convey risk information to potential 

buyers in the coastal housing market.” Results suggest that location within a floodplain 

lowers the average property’s value by 7.3 percent or $11,598. Furthermore, they found 

that the price discount for location within a higher risk area for flooding is significantly 

larger than the price discount for location within a lower risk area. Location within a 100-

year floodplain lowers the average property’s value by 7.8 percent, or $12,325, while 

location within a 500-year floodplain lowers average property value by 6.2 percent, or 

$9,849. They calculated the flood insurance premiums for the various flood zones and 

found that the capitalized values of the insurance premiums are comparable with the sales 

price differentials. This study utilized a total of 3,106 residential property sales records 

from September 2000 to September 2004. Sales prices were inflation-adjusted using the 

Consumer Price Index to report figures in September 2004 dollars. The average home 

sales price in the data set was $163,911. The homes were on average 24 years old with 

1,633 total square feet. Approximately 16 percent of the properties were classified as 

new (sold within a year from the date built). 

B. Estimated Premium Value of Waterfront Location or Water Views for a Range of 

Salt and Fresh Water Bodies (surrogates, assuming that estuaries are waterfront or 

nearly so) 

This category shifts the emphasis of the previous cases from the added property value 

derived from estuarine restoration to the value added to a property merely by being near 

water. This category does not help us determine the value of restoring an estuary or what 

people would be willing to pay for restoration. However, it demonstrates the importance 

of water (and implicit water quality) to property values, and gives us another piece of 

evidence concerning values. If one looks beyond the estuary to water bodies in general, 

studies consistently demonstrate that the price of a property with a view or location on 

water is much higher than those without those same amenities. What follows are 

thumbnail sketches of studies that provide examples of value added to properties from 

water-based amenities. 

The following variables were used in these studies, providing a framework for estimating 

premium values. Variables included: 

• Proximity to water. 

• Quality of view. 

• Price of housing and neighborhood. 

• Location: urban, suburban, or rural. 

• Availability: Communities with limited numbers of homes with water views 

command higher premiums than those communities with a higher percentage of 

homes with water views. 

• Using sales transactions as the base or tax assessments or both. 

• Residential real estate cycle and how premiums are affected. 

• Water quality elements of potential influence (Connor 2005). 

• Proximity to water recreational opportunities. 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

125 

1. A recent study by Nelson et al. (2005) surveyed available literature (1973–2002) on 

the influence of natural amenities as residential externalities affecting property 

ownership and values. None of the studies examined addressed estuaries or wetlands, 

but many studies addressed such amenities as lakes, oceans, and parks. Each study 

indicates a positive impact for water, ranging from a 90 percent increase in value for 

direct frontage for a single-family home on Lake Erie, to a 4–11 percent premium for 

a condominium with a lake view. This study reports on a broad range of premium 

values based on many of the variables mentioned above, describes different methods 

of measurement, and assesses effectiveness of the methods for applications. 

2. Bourassa, Hoesli, and Sun (2004) did a study of Auckland, Christchurch, and 

Wellington, New Zealand, residential sales for 1986 to 1996 and found that: (1) 

implicit prices of aesthetic externalities move with the real estate cycle, and (2) the 

percentage premiums for water views are greatest in Christchurch, which has the 

smallest percentage of properties with water views, and lowest in Wellington, which 

has the highest percentage of properties with views. 

3. Pompe and Rhinehart (1995) found that the quality of two beaches in South Carolina 

were a major influence on real estate values. Through the use of hedonic pricing 

methods, the authors estimated the values of wider beaches to vacant lot and singlefamily homes with or without water frontage; they also looked at factors that diminish 

the beach experience. 

4. Seiler et al. (2001) examined the influence of Lake Erie views on property values. 

Half of the samples of homes in this study have a clear water view while the other 

half, which consist of adjacent properties, do not. Lake Erie often provides an oceanlike view because of its size, and it generates waves large enough to surf. The study 

results show that having a lake view increases home value on average by $115,000, or 

by approximately 56 percent. 

5. In a rural area in the United Kingdom around the Forest of Dean in Gloucestershire, 

Garrod and Willis (1992) examined the property value effect of different types of 

natural open space. The nearby presence of a canal increased the value of the average 

house by 4.9 percent, while the proximity of at least 20 percent woodland cover 

raised it by 7.1 percent. Open water did not have an observable effect, and the 

presence of marshland reduced housing prices (Polis Project 2001). 

6. Coastal preservation also has been shown to have an impact on property values, even 

though development potential is often constrained along coastlines to protect 

significant natural features. The California Coastal Commission, established in 1972 

to protect the California coast, is one such vehicle to serve that purpose. Frech and 

Lafferty (1984) estimated that the Commission’s work raised the value of local 

housing in two ways: by preserving a positive externality (the coastline) that would 

otherwise be destroyed, and by reducing the amount of land available for housing. 

They found that in the zone closest to the coast, housing prices were 7.6 to 13.4 

percent higher ($2,882 to $5,040) than comparable homes more than 0.5 miles inland. 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

126 

In a separate study, Kniesel (1979) found a 7 to 21 percent increase in housing prices 

for properties 4.5 miles from the coast. 

7. In Maryland, the Critical Areas Commission limited residential development on land 

abutting the Chesapeake Bay in 1986. Prices of housing with water frontage in the 

critical area increased by 46 to 62 percent (Parsons 1992). Housing prices in the 

critical area without water frontage increased from 14 to 27 percent. Even as far as 3 

miles from the critical area, there was a 4 to 11 percent price increase (Polis Project 

2001). 

8. Several studies (Major and Lusht 2004; Benson, Hansen and Schwartz 2000; Polis 

Project 2001) analyzed the placement of buffers between the ocean and homes, 

indicating significant drops in price due to the distance, or apparent distance, from the 

ocean. Most studies of this type focus either on the quality of a view of the water or 

the proximity to the water (which can alter the quality of the view). In the former, a 

view can enhance the value of a home anywhere from 8 percent (e.g., in Fairfax 

County, Virginia) to 126 percent (e.g., in Bellingham, Washington), according to one 

method of analysis using county tax records (Rodriguez and Sirmans 1994). 

9. Major and Lusht (2004) found that proximity to the ocean has a different value from 

proximity to a bay in their study of Stone Harbor and Avalon sites in New Jersey. 

They used distance to water as the key variable assuming that convenience and views 

would be the same since both are contiguous beach communities, one facing a bay 

and the other facing the ocean. The authors also drew property values from sales 

transactions. In this study, beachfront proximity had a premium value of 207 percent 

compared to a property two blocks away. A bayfront location added 73.2 percent. 

10. Inland waterways also contribute to home values. Canals and waterways have been 

built into developments to give houses frontage on a body of water to boost the price. 

Some of these have the additional attributes of wildlife and/or availability of boating 

(Nelson et al. 2005). The price premium found in this study was approximately $175 

per frontage foot to sale price in the sample. While significant for the local market, it 

is relatively modest compared with the 142+ percent premiums for oceanfront and 

even lake proximity. This would make sense, however, in view of the more 

spectacular views and probably greater recreational opportunities available for these 

latter sites. 

11. Epp and Al-Ani (1979) found that water quality of streams had an effect on home 

prices. This study found that pH levels low enough to limit recreational use affected 

housing prices. Acidity from minerals and CO2 prevented recreation, and therefore, 

limited prices. 

Table 1: Summary of the literature findings7

 

7

 Feel free to contact the author at National Ocean Economics Program for more information. 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

127 

Study Water Body Variables 

Considered 

Base Price Value Added8

Bin et al. 

(2006) 

Atlantic Ocean 

NC (Carteret 

county) 

Flood zone Median price <7.3%> or <$11,598> 

Bourassa, 

Hoesli and Sun 

(2004) 

New Zealand Water views Median price % value is increased; 

greatest increase where 

supply of properties is 

low 

Braden et al. 

(2004) 

Lake Michigan 

(Waukegan 

Harbor) 

Restoration and 

Clean-up harbor 

(Superfund site) 

Median price Willingness to pay 16-

19% of property values 

Epp and Al-Ani 

(1979) 

Pennsylvania Water quality of 

streams 

Mean price pH levels affected 

housing prices 

Frech and 

Lafferty (1984) 

California Coastal preservation Median price 0-0.5 miles inland: 7.6%-

13.4% or 

$2,882-$5,040 

Garrod and 

Willis (1992) 

UK: 

Gloucestershire 

Natural open space Median price Canal: 4.9% 

Woodland cover: 7.1% 

Open water: 0% 

Marshland: negative 

Kniesel (1979) California Coastal preservation Median price 0-4.5 miles inland: 7.%-

21% 

Knogge et al. 

(2004) 

Estuaries Protection from 

coastal impacts of 

climate change 

Median price $3M-$13M/km 

Leggett and 

Bockstael 

(2000) 

Chesapeake Bay 

(Western Shore) 

Water quality 

improvement 

Median price $12.15 million on 494 

homes 

Major and 

Luscht (2004) 

New Jersey Proximity to ocean 

vs. bay 

Values from 

sales 

transactions 

Beachfront 207% higher 

than two blocks from 

ocean 

Bayfront 73.2% higher 

than two blocks from bay 

Nelson et al. 

(2005) 

Literature 

survey 

Lake Erie Proximity to water Median price Ranges from 90% direct 

frontage (single family) to 

4%-11% lake view 

(condo) 

Nelson et al. 

(2005) 

Arlington, TX Inland waterways 

and canals 

Premium on 

sales price 

$175 per frontage ft. 

Parsons (1992) Chesapeake Bay Proximity to water Median price With water frontage: 46-

62% 

Without water frontage: 

14-27% 

Polis Project 

(2001) 

Chesapeake Bay Proximity to water Median price 3 miles away: 4-11% 

Pompe and 

Rhinehart 

(1995) 

South Carolina Quality of beaches Real estate 

values 

Not specific 

Poor et al. 

(2007) 

St. Mary’s River 

(Chesapeake Bay) 

Water quality: total 

suspended solids; 

Water Quality: 

dissolved inorganic 

Median price TSS: <$1,086> 

N: <$17,642> 

 

8

 These values are in nominal dollars. 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

128 

Study Water Body Variables 

Considered 

Base Price Value Added8

nitrogen 

Rodriguez and 

Sirmans (1994) 

VA and WA Proximity to water Tax Records VA: 8% 

WA: 126% 

Seiler et al. 

(2001) 

Lake Erie View Median price 56 % or $115,000 

Suggestions for Further Research 

There is a lack of research to link estuarine restoration with property values, since only 

three studies were found that could be considered of direct interest. This field is ripe for 

study from multiple perspectives. Organized studies need to be conducted that track the 

value of properties that border or view estuaries and other relevant natural assets. 

Estuaries share the attributes of many of the water bodies examined in the studies 

reviewed here. Therefore, we would expect proximity to estuaries and improvement in 

estuarine environmental quality to have significant impacts on home values. 

Additionally, estuaries differ from these bodies in the type, abundance, and diversity of 

wildlife and plants that live near estuaries. Because estuaries are tidally influenced, the 

effects of tidal change—especially the presence of tidal flats at low tide—may have 

effects on estuarine home prices not considered in the studies above. 

Estuaries may also influence local home values through their capacity to (1) filter 

pollutants from run-off and the avoided costs of a filtration plant, (2) buffer built assets 

from storm damages and the avoided costs of armoring the shore, and (3) provide nursery 

spawning grounds for fish and wildlife of recreational and commercial interest. However, 

no published study of a particular site can link these indirect estimates to either individual 

or community-wide property values. 

For example, despite growing recognition of the importance of estuaries as buffers that 

limit property damage from predicted intensity and frequency of hurricanes and major 

storms, no published studies reflect how much value estuaries could add to coastal 

properties through lower insurance rates and avoided costs of damage. Only one study 

(Knogge et al. 2004) addresses the value of coastal wetlands in protecting shorelines 

from the impacts of sea-level rise. 

Insurers are interested in sea-level rise and climate change responses as they affect 

coastal properties.9

 There is a growing body of literature about this aspect of valuation, 

but more from the point of view of how rising sea levels will affect physical assets 

specifically or how they will affect and change the natural assets of estuaries and 

wetlands, rather than how those effects will influence real estate prices (Knogge et al. 

2004). 

 

9

 Presentation of C. Hedde at Disaster Round Table. National Academies, Washington DC, March 27, 2007.
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

129 

In addition, coastal wetlands and estuaries are proven community assets as pollutant 

filters (Knogge et al. 2004). As development replaces nature’s absorbent capacities with 

hard surfaces, estuaries become increasingly important in providing communities with 

clean water. The exact value to individual properties or community-wide is unknown. 

With increasing interest in wildlife viewing and birdwatching, healthy estuaries provide a 

strong economic base as a destination for tourists and local populations to enjoy the 

outdoors. Their economic value through direct price impact to properties in proximity to 

estuaries, or even via tax revenues to entire communities that feature estuaries, have not 

been assessed.

Harbors are another area much overlooked. Waukegan Harbor (Braden et al. 2004) is the 

only study of note that provides carefully compiled evidence of the attitudes of the 

property owners toward pollution abatement in their harbor. For the rest of the many U.S. 

harbors that have undergone major restoration over the past decades, only newspaper 

articles and anecdotal and observational evidence are available. Large commercial 

harbors with new developments follow or accompany pollution clean-up, raising property 

values significantly from before the clean-up. In Boston Harbor and San Francisco Bay, 

aesthetics, dissolved oxygen, and pathogen levels improved within a few years of 

pollution control efforts in those urban areas. In both of these estuaries, recreational 

fishing has been slow to improve because of the long-term persistence of toxic 

contamination. However, the experience with signature species has been mixed with 

some successes, particularly seals and right whales in Boston Harbor and sea lions in San 

Francisco Bay. These probably enhance property values along the shores. Future efforts, 

particularly in San Francisco Bay, are emphasizing habitat restoration. Assigning value to 

habitat restoration has often depended on characterizing the economic value of the natural 

ecosystem services provided by a healthy ecosystem (Connor 2005). The problem is that 

a strong research base linking property values to any of these assumptions is lacking. 

Research has not proceeded on these topics. 

The variables listed above need to be linked to these specific natural areas to determine 

how the particular attributes of estuaries and wetlands may affect differences when 

compared with ocean, lake, and river shorelines. Also to be considered should be the 

probability that views of a marine estuary will also provide long views of the ocean as 

well. 

Areas that could have negative price impacts are ripe for study as well. For example, 

building on the edge of an estuary may not be a sound plan, even if a premium price is 

asked for such properties. With sea level rising in many areas, and storm surges and 

hurricanes eroding them, estuaries must have room to reestablish themselves and move 

upland. Because human development at the edge of these areas compromises estuarine 

health,there may be an inverse relationship between the premiums of a home looking out 

on a productive natural coastal area from the edge, and the sustainability of the asset. 

In conclusion, the importance of linking the value of estuaries to real estate, both 

commercial and residential, should not be underestimated. As communities are asked to 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

130 

help pay for the restoration of harbors and estuaries, it is the property owners who most 

often must vote to authorize the funds. It is important that they understand the value of 

the restoration in order to cast their vote for the restoration, which often runs into the 

hundreds of millions of dollars. Yet the literature does not yet reflect the necessary 

evidence to draw any firm monetary conclusions about this relationship, except through 

the surrogate evidence of the premiums paid for waterfront properties. 

Nevertheless, several general conclusions can be drawn from the literature. First, water 

clarity and water quality are important factors in determining property values, as 

indicated in the three case studies reported earlier. Second, water—its proximity and the 

quality of the view—are important to buyers’ willingness to pay premium prices for 

properties, adding as much as 207 percent to the value of a property along the water. 

Finally, the restoration of estuaries provides natural amenities that have proven economic 

value, which probably affects the value of nearby properties and communities. The 

rejuvenation of America’s major harbors from water quality restorations is evidence of 

this. 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

131 

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Chapter 8 – The Economic Value of Coastal and Estuary 

Recreation 

Linwood Pendleton 

The Ocean Foundation 

Introduction 

Coastal areas support a wide variety of recreational activities (Table 1). Visitors come to 

the coast to swim, sunbathe, view wildlife (especially birds), photograph scenery, boat, 

fish, and dive. These activities take place within a narrow ribbon of space where land, 

and often freshwater, meet the sea. Bays and river inlets provide sheltered areas for 

aquatic activities, diverse and productive ecosystems, and easy access to ocean areas. 

Even ocean areas that are not technically estuarine often are influenced by nearby estuary 

conditions—many fish and wildlife species depend on estuaries as nurseries, and water 

quality within estuaries may strongly influence water quality in nearby ocean areas and 

beaches. 

Coastal tourism and recreation, combined, is one of the fastest growing segments of the 

US economy (Colgan 2004). Tourism, which includes overnight visits to coastal areas, 

generates substantial revenues for local economies. Measured as gross state product, 

tourism expenditures represent economic impacts that support local economies, including 

jobs and taxes. Tourism also contributes directly to the wellbeing of visitors. The value 

added of coastal recreation opportunities, beyond what tourists pay to visit the coast, 

reflects the net economic value of coastal tourism to the economy (see Chapter 1 for a 

discussion of the difference between economic impact and value). 

Like tourism, coastal recreation also generates substantial economic impact and value for 

the coastal zone. Coastal recreation includes participation in recreational activities at the 

coast by both overnight visitors (tourists) and day use visitors. For many Americans 

living in the coastal zone, day use access to coasts and estuaries is either low cost or 

essentially free. As a result, the economic importance of day use recreation goes 

uncounted in statistics regarding expenditures, revenues, and other measures of economic 

impact. That is not to say, however, that coastal recreation has a low economic value. 

On the contrary, a growing body of literature shows that coastal and estuary recreation 

generates economic value beyond what is spent in the marketplace. Furthermore, 

economic theory and research shows that the largest economic value often is generated 

by activities that cost the least. This phenomenon implies that people who live closest to 

the coast, and thus face the least travel costs to reach the coast, are likely to benefit most 

from coastal recreation. In many cases, the economic value of coastal recreation may 

equal or exceed the expenditures associated with these activities. 

Despite the economic importance of recreational activities, much coastal policy and 

planning takes place with little or no understanding of what these economic values are or 

how they might change because of policy action or inaction. As a result, projects that 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

141 

would enhance recreational access and value—say, habitat restoration that would lead to 

new or better opportunities to see shore birds—often are undervalued. Similarly, projects 

that may be detrimental to coastal recreation (e.g., private coastal development) may be 

overvalued because we do not fully consider the costs to recreational users. In this 

chapter, we create a foundation to better understand the economic value of coastal and 

estuary restoration. We review the fundamental concepts of recreational activity and 

value. Then we review the state of the art for what we know about these activities and 

values. Like the coasts and estuaries we consider, recreational activities and values vary 

tremendously from bay to bay, beach to beach, and wetland to wetland. We provide a 

comprehensive review of the literature on economic values and estimates of recreational 

activity by state. The chapter, however, is only a launching pad for those who want to do 

a better job of incorporating recreational values into planning and funding coastal and 

estuary restoration. We encourage readers to use this chapter to explore the many 

sources and links we provide here and at the National Ocean Economics Program website 

(www.oceaneconomics.org) to start to develop a clearer picture of the recreational values 

in their own coasts and estuaries. 

ONLINE ECONOMIC INFORMATION AND DATA FOR COASTAL RECREATION 

The National Ocean Economics Program (NOEP) is the first non-market values portal dedicated to 

compiling and organizing bibliographic information on non-market valuation studies specific to coasts and 

oceans (including the Great Lakes). This database includes over 150 studies, of which nearly 110 studies 

are based in the United States. NOEP’s database has a significant number of beach-related studies, but also 

includes other coastal and ocean assets. Studies in the NOEP include journal articles, technical reports, 

working papers, and book chapters. The studies are categorized in a manner that facilitates navigation of 

the literature by analysts, policymakers, and others interested in the non-market value of coastal and ocean 

resources. http://oceaneconomics.org/ 

The Environmental Valuation Reference Inventory (EVRI) is an international database of non-market 

studies that can be accessed in three different languages. EVRI allows the user to choose the good or

service valued and identifies studies with potential for benefits transfer (e.g., values from one study can be 

used to value an asset elsewhere with similar conditions). The EVRI contains concise and detailed 

information about the methods and approaches taken in existing valuation studies. http://www.evri.ca/

The Beneficial Use Values Database (BUVD) is a database of economic values for beneficial uses of water. 

It aims at providing information on the types of economic values specific to water-based amenities, 

including values of water for recreation, habitat, municipal, and industrial uses. The BUVD contains 

descriptions of beneficial use values and the studies from which they were taken. There are a total of 131 

studies conducted in the last 25 years, collected from a variety of sources, including scholarly journals, 

books, conference proceedings, government reports, and working paper series. About 25 percent of the 

studies are related specifically to coastal and marine resources. http://buvd.ucdavis.edu/ 

Since 1985, the Coastal and Ocean Resource Economics (CORE) Program at the National Oceanic and 

Atmospheric Administration (NOAA) has conducted marine-related socioeconomic research for a wide 

variety of applications and geographic areas. CORE projects include socioeconomic monitoring in the 

Florida Keys National Marine Sanctuary, a nationwide estimate of participation rates in marine-related

recreation activities (part of the National Survey on Recreation and the Environment), an extensive beach 

valuation effort in Southern California, and valuation of both artificial and natural reefs. The program has 

conducted inventories of outdoor recreation areas and facilities in coastal areas and valuations of marine 

resources for outdoor recreation use. http://marineeconomics.noaa.gov/
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

142 

The Economic Value of Coastal Recreation: What’s at Stake? 

To understand the potential economic value of coastal and estuary restoration, we need to 

understand the current economic value of recreation in these areas. Understanding this 

baseline is important for at least four reasons. 

1. The baseline gives us a better understanding of the potential magnitude of the 

economic value generated by coasts and estuaries. Is recreation a major economic 

component of the coastal economy? How does it compare with other, potentially 

less sustainable coastal uses? How many people rely on coasts and estuaries for 

fun and recreation? 

2. A baseline of values for coastal recreation gives us a better idea of how much 

value could be lost through coastal habitat destruction and environmental 

degradation in estuaries. Many activities that degrade coasts and preclude coastal 

restoration generate large economic impacts. When coastal development occurs, 

land and houses are sold, tax revenues are generated, and jobs are created. As a 

result, some environmentally damaging activities often are seen as economically 

superior to other more sustainable activities, including coastal recreation. Our 

baseline provides an upper bound of what we might lose if we lose the battle to 

keep our coasts healthy. 

3. It is important to remember that the current baseline reflects the economic value 

of coasts and estuaries, many of which are already degraded. As we describe later 

in this chapter, many studies clearly establish the link between recreation and the 

environmental quality of estuaries, beaches, and oceans. Restoration should cause 

this baseline of value to grow by improving the quality of recreational 

opportunities and even by improving the number and accessibility of coastal 

recreational opportunities. 

4. Every mile of coast and every acre of estuary is unique in its character, quality, 

and use. As a result, different states and regions of the country are endowed with 

very different kinds of coastal recreation opportunities. To the best of our ability, 

we organize our findings geographically—by state and by region. An 

understanding of the geography of coastal recreational value can help managers 

better distribute restoration funds around the country. Unfortunately, our 

knowledge of coastal recreation also varies across coastal states. By organizing 

our analysis geographically, we hope to highlight regions about which we know 

the most and identify areas for which we need more and better research. 

We use a three-step approach to build a baseline of knowledge about the economic value 

of current levels of coastal and estuary recreation in the United States. First, we review 

results from the National Survey of Recreation and the Environment (NSRE) to provide 

estimates of the number of people that participate in a variety of coastal activities in each 

of the 22 marine-influenced coastal states. Second, we review the peer-reviewed 

academic and gray literature on the economic value of coastal recreation. As we 

summarize this literature, we categorize values by the recreational activity for which 

values were estimated and the region in which they were estimated. It is important here 

to remember the distinction between economic impact and economic value. In this 

chapter, we focus exclusively on the economic value that is associated with coastal 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

143 

recreation—the net added value to society that these resources provide. We do not 

examine the economic impacts of recreation, but note that the articles we reference often 

provide information on related economic impacts as well. Readers are encouraged to 

visit the National Ocean Economics Program (www.oceaneconomics.org) to explore the 

economic impacts of recreational activities. Third, we attempt to estimate the potential 

total economic use value of coastal recreation for each state by combining activity 

estimates from the NSRE with economic value estimates, for the appropriate region, from 

the literature. 

Coastal and Estuary Recreation in the United States

The National Survey on Recreation and the Environment is the only comprehensive 

source for estimates of coastal recreation activity for the entire United States. Leeworthy 

and Wiley (2001) use the NSRE to estimate the number of participants and the number of 

days of participation for a variety of coastal and estuary activities in the United States. 

These estimates are derived from a nationwide survey of households. While site-specific 

studies may provide more accurate estimates of the number of users and participation 

days for specific locations, the NSRE provides the broadest range of activity estimates 

across the coastal United States and therefore forms the basis of our analysis. 

Unfortunately, Leeworthy and Wiley (2001) do not provide estimates for the Great 

Lakes, so we limit our analysis here to the marine states. The NSRE figures are only 

estimates and their accuracy varies from state to state depending on the size of the 

population and the intensity of coastal activity. The NSRE data we use also are limited in 

that we are unable to determine the origin of visitors. 

Table 1 shows estimated coastal recreational activity in terms of number of participants 

and participation rates for residents of the United States during a 12-month period in 

2001. Unless otherwise indicated, all activities take place on or in saltwater, including 

mixed fresh and saltwater areas in tidal portions of rivers and bays. Beach-going 

includes swimming, sunbathing, collecting seashells, walking, jogging, viewing birds or 

other wildlife, or any number of other activities that occur at the beach. This category is 

broad and should not be added to other more specific beach-related activities, to avoid 

double counting. Waterside activities include all activities listed above for waterside 

coastal areas that are not beaches. For our purposes, recreational fishing includes only 

saltwater and mixed saltwater/freshwater areas in rivers and bays. 

Coastal recreation is widespread in the United States. The coasts of the southeastern 

United States and California alone serve as destinations for tens of millions of Americans 

annually. During any given year, as many as one in 10 Americans will visit coastal 

Florida; just over 8 percent will visit California coasts and beaches. Every coastal state 

hosts more than 1 million coastal visitors each year. While the number of visitors to 

coastal areas in the United States is uniformly high, there is considerable heterogeneity in 

how often people go to the coast (a measure sometimes referred to as avidity, visits or 

activity days) and the activities they undertake while at the coast. One measure of coastal 

use is the number of activity days that are undertaken at coastal areas. The NSRE defines 

an activity day as “equal to one person doing an activity or visiting any setting for any 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

144 

part of a day” (Leeworthy and Wiley 2001, page 2). Because an individual may 

participate in more than one activity on any day, adding estimates for activity days across 

activity types could lead to double counting. Similarly, it is possible that an individual 

may participate in the same activity in more than one state on any day (consider a boater 

or birdwatcher visiting the Gulf of Maine).1 

In many presentations, and often in casual discussion, people confuse visitors with visits 

or activity days. For instance, we often hear that more 150 million people visit the 

beaches of southern California each year. Of course, that figure is impractically large. 

What we mean to say is that more than 150 million visits were made to southern 

California beaches. Understanding visitation, in terms of activity days, is important for a 

number of reasons. Visitation estimates are important determinants of access and 

capacity needs for coastal and estuary areas. Visitation estimates also determine many 

aspects of the economic activity associated with coastal recreation; recreational 

expenditures, hotel stays, and ramp fees, for instance, all depend on the number of 

activity days, not visitors, to an area. In the literature, estimates of the economic value of 

recreation are most commonly given in terms of value per activity day. After a brief 

discussion of economic value, we return to the issue of recreational activity. We will use 

estimates of activity days and the economic value estimates for recreational activity days 

to better understand the potential economic value of coastal recreation. 

 

1

 While Leeworthy et al. (2001) expect the number of participants and the number of activity days spent on 

coastal recreation to increase steadily over time, we use estimates of participation and activity days for the 

12-month survey period as our baseline estimate of recreational activity. 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

145 

Table 1: Coastal Recreation by State 

Participation Rate (% 

of national population) 

Participants 

(in state 

where 

activities took 

place) National Rank 

Florida 10.70 22,060,908 1 

California 8.71 17,654,215 2 

South Carolina 3.14 6,469,023 3 

New Jersey 3.02 6,224,769 4 

Texas 2.99 6,167,691 5 

North Carolina 2.70 5,576,629 6 

New York 2.67 5,503,395 7 

Massachusetts 2.38 4,904,006 8 

Maryland 2.38 4,901,728 9 

Virginia 2.37 4,878,313 10 

Hawaii 2.20 4,540,543 11 

Maine 1.82 3,753,337 12 

Washington 1.66 3,429,729 13 

Oregon 1.54 3,183,483 14 

Rhode Island 1.28 2,641,812 15 

Alabama 1.24 2,549,078 16 

Connecticut 1.11 2,294,362 17 

Georgia 1.10 2,262,763 18 

Delaware 1.05 2,168,108 19 

Louisiana 1.05 2,165,830 20 

New Hampshire 1.03 2,120,282 21 

Mississippi 0.87 1,801,442 22 

Alaska 0.84 1,725,078 23 

District of Columbia 0.13 258,559 24 

From Leeworthy and Wiley (2001).

The Economic Value of Coastal Recreation 

Building a Baseline of Economic Value 

The economic question to be answered in the analysis of any policy is, “How would 

economic values change because of this action?” For instance, we would want to know 

how the economic value of beach-going would change if coastal water quality were 

improved because of wetland restoration. To estimate the change in economic value, we 

first would need to know in detail what wetland restoration would entail and exactly how 

water quality would change because of wetland restoration. 

Because the devil is in the details, it is impossible to answer the general question, “What 

is the economic value of estuary restoration?” It all depends on how restoration changes 

the provision of ecosystem goods and services that people demand. By the same logic, it 

also is impossible to answer the question, “What is the recreational value of estuary 

restoration?” 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

146 

While it is not possible to provide general estimates of the recreational value of 

restoration, we can provide a baseline of these values. A baseline gives us an idea of the 

size of the economic pie that is coastal recreational value. Three important policy 

questions then follow from our understanding of the size of the economic pie. First, 

“How is the pie distributed around the country? Are there coastal and estuary areas that 

are particularly valuable for recreation?” Second, “How does our investment in coastal 

recreation compare to the economic value of this recreation?” Third, “How do our 

policies change the size of the pie?” 

Understanding and Estimating Recreational Values 

Coastal and marine recreation generates value for participants, revenues for local 

businesses that support these activities, and taxes for various levels of government. The 

economic impact of coastal recreation usually is assessed by examining how much 

money visitors contribute to the local economy through spending related to access, 

equipment, and goods and services (e.g., ice and bait). Commonly, the focus of marketbased studies is on gross expenditures, with fewer studies focusing on profits or taxes. 

The economic value of coastal recreation is more difficult to determine. Economic value 

represents the value visitors place on the coastal and estuary resources, beyond what they 

have to pay to access these resources. As discussed in Chapter 1, the economic value of 

recreation has two components: use value and non-use value. Use values represent the 

economic value associated with the active use of a coastal recreational resource; non-use 

values represent the willingness to pay, by society or an individual, to protect a coastal 

resource that may never be used by those who express this willingness to pay. Non-use 

values include the willingness to pay to know that the coast exists (existence value), the 

willingness to pay to guarantee the option to possibly visit the coast in the future (option 

value), and the willingness to pay to guarantee that future generations have the 

opportunity to visit the coast (bequest value). While the literature recognizes economic 

values that accrue to both users (use values) and non-users (non-use values), we focus 

only on those values enjoyed by visitors to the coast as part of their use of the coast. 

 

The economic use value of recreation can be visualized by considering the demand for 

recreational activity days (Figure 1). All things being equal, visitors who can enjoy 

access to the coast at lower costs (e.g., people who live near the coast or live in states 

with protected public access) are likely to visit the coast more frequently than those who 

face higher costs. Figure 1 shows how many visits one would take at different costs of 

access. Another way to think of this figure is to turn it upside-down. A visitor only 

travels to the coast if the value they place on the coast is equal to or greater than the cost 

of access. Figure 2 shows the same relationship as Figure 1, but now we can interpret the 

figure as a map of the willingness to pay for each additional trip as a function of the 

number of trips taken. This willingness to pay for each additional trip is known as the 

“marginal willingness” to pay for recreation. The visitor keeps taking additional trips to 

the coast as long as the value of that additional trip is greater than or equal to the cost of 

that trip. If a visitor could take only one trip each year, they would place a high value on 

this trip. As the visitor takes more trips, the value they place on each trip declines 

slightly (principle of “diminishing marginal returns”). When the marginal value of a trip 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

147 

is no longer greater than or equal to the cost of the trip, the visitor stays home or uses the 

day for some other type of activity. 

Figure 1: Activity Days as a Function of Accessing the Coast 

In Figure 2, Area A represents the cost of accessing the coast. This represents 

expenditures on the part of the visitor (e.g., for gas, parking, and possibly 

accommodations). These expenditures generate economic impact,2

 but they do not 

represent value to the visitor. Imagine that we prohibit access by the visitor to the coast. 

The visitor simply keeps the money they would have spent on the trip and spends it 

elsewhere. These expenditures are retained. The value to the visitor of the recreational 

opportunity is the economic value they would lose if the recreational opportunity were 

eliminated; i.e., the amount they would be willing to pay, above what they pay in 

expenditures, to protect their ability to visit the coast. Area B, known as the consumer’s 

surplus, represents conceptually the value of the recreational activity, beyond any 

expenditures. Economists use the area to estimate the value of the activity because the 

willingness to pay for each trip, while declining, is additive across trips. The enjoyment 

of the second trip is added to the enjoyment of the first. 

 

2

 When expenditures exceed the actual costs of providing services (i.e., there is a profit), the producer or 

retailer is said to enjoy a net benefit. This is a true benefit to society, but we do not cover producer benefits 

in this chapter. 

Cost of Access 

Activity Days (Visits)/year

ADi

Ci
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

148 

Figure 2: The Marginal Willingness to Pay for an Activity 

Figure 2 highlights two important issues associated with the value of recreational 

activities. First, consumers with lower costs of accessing the coast enjoy higher 

economic values from their coastal visits. As mentioned earlier, for many coastal 

recreational activities, the economic value of the resource may be large regardless of the 

level of spending associated with the activity. The published literature contains many 

examples where the economic values associated with coastal and marine resources 

exceed the market expenditures generated by these resources. Second, while we can 

estimate directly the number of visits taken to the coast and the costs of accessing the 

coast, we must deduce the size of the area under the demand curve. 

In the literature, two primary methods are used to estimate the economic use value 

(consumer surplus) of coastal recreation. Travel cost methods3

 are used to estimate the 

trade-offs visitors make between travel costs (time and out-of-pocket expenses) and 

recreational opportunities. Travel cost methods use real visitor behavior to estimate the 

economic value of coastal recreation (the value the coastal visitor places on a recreational 

trip beyond what they have to pay), but because the method requires considerable 

variation in the travel costs faced by visitors, the method works best when applied to both 

residents and non-resident visitors (those living outside the immediate area). The 

literature review tables, later in this chapter, highlight the many applications of travel cost 

methods to beach-going, recreational fishing, diving, snorkeling, and wildlife viewing. 

Authors also use contingent methods (including contingent valuation, contingent ranking, 

and stated preference choice methods) to estimate values for coastal recreational use. 

Contingent methods rely on surveys to elicit from visitors their willingness to pay to use, 

 

3

 Travel cost methods include single and multiple site travel cost models and a variety of site choice 

models, including random utility models. Cost of Access (Willingness to Pay/Activity Day 

Ci

(Willingess to Pay for person i) 

A 

B 

Ci Activity Days (Visits)/year 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

149 

protect, or avoid damage to coastal recreational resources or access. Both methods are 

used widely to estimate the value of coastal resources. 

Throughout the literature, economic values for recreation vary in terms of value type and 

units of value. There are two principal value types given in the literature—average value 

and marginal value. The (average use value)/(activity day) is equivalent to the consumer 

surplus (Area B) divided by the total number of trips taken over the course of a year or 

season. Marginal value, on the other hand, is the incremental value of one additional trip 

or activity day. Average values are always less than or equal to the marginal value of an 

activity day. In the summary of values from the literature below, we provide estimates of 

value/activity day and value/trip (both for individuals and households). Throughout our 

analysis, we focus primarily on value estimates for which we could deduce the 

value/activity day. 

Like all empirical statistical analyses, the validity of estimates from both methods varies 

with application and sample size. Valuation estimates from the literature are based on 

sample sizes that range from less than 100 to more than 1,000 observations. Some 

valuation estimates are derived from one-time surveys, and others rely on observations of 

repeated visits by panels of recreationists. In 1993, a Blue Ribbon Panel assembled by 

the National Oceanic and Atmospheric Administration developed criteria that ought to be 

met by contingent method studies in order to ensure the validity of economic valuation 

estimations using these methods (Arrow et al. 1993). These criteria, however, require 

expensive and extensive surveys and are rarely met in practice. No such criteria have 

been developed explicitly for the travel cost methods. 

Using Values from the Literature: Benefits Transfer and Value Ranges 

Benefits Transfer 

In a few cases, nationwide studies have been undertaken to estimate the economic value 

of an environmental service (e.g., Viscusi et al. 2004 or Arrow et al. 1993). Value 

estimates for coastal recreation, however, are available only for relatively isolated, local 

or semi-regional examples. We need to draw from this geographically well-specified 

literature to better understand the potential economic value of coastal and estuarine 

restoration at a more national level. 

Benefits transfer (or more appropriately value estimate transfer) generally refers to the 

practice of using value estimates from the literature for new policy applications. Benefit 

transfer techniques fall into two basic categories. In the first category, value estimates 

from the literature are applied to the new policy site application by adjusting for 

differences in quality or accessibility at the new location compared to the previous 

location(s). In the second category, the original valuation models are applied directly to 

the new policy application to generate new estimates of the potential economic value of 

the policy. In either case, the end result is usually a point estimate of value (i.e., one 

number) given with some margin of error. 
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150 

Generally, there is no clear agreement in the literature that the application of benefits 

transfer methods are accurate or appropriate (see Wilson and Hoehn 2006). First, 

benefits transfer can only be as accurate as the original value transferred. As mentioned 

above, determining the accuracy of any single study is difficult. Studies in the literature 

often fail to provide information about the details of the research methods, sample 

characteristics, and findings. Second, the personal characteristics of recreationists and 

the physical characteristics of the recreation sites at both the original site and the policy 

site are usually only incompletely known, making attempts to adjust values or re-apply 

models difficult. 

Benefits Ranges 

In this chapter, we use a more conservative approach to draw conclusions about the 

potential economic value of coastal and estuary recreation from the literature. First, we 

attempt to provide a nearly exhaustive review of the peer-reviewed (and, when possible, 

technical) literature on the estimated economic value of recreational activities along the 

coasts and estuaries of the United States. In doing so, we hope readers will develop a 

good understanding of the range and magnitude of value estimates. We organize these 

valuation studies by recreation type and region to demonstrate how value estimates vary 

across uses and geography. All ranges and values are given in year 2005 U.S. dollars. 

Estimating a Baseline of Value 

We develop a baseline of coastal recreational values by combining value estimates from 

the literature with regional and statewide estimates of user activity from the National 

Survey on Recreation and the Environment (NSRE). Throughout the rest of the paper, 

we present the value estimates from the literature and the user estimates from the NSRE 

at a state and regional level. For each region, we describe the level of use and the range 

of values associated with these activities, when estimated for that region or a nearby 

region. We also provide a range of potential value estimates for the region based on the 

literature and NSRE. We encourage readers to consider these ranges of estimates as “ball 

park” figures that highlight the potential magnitude of economic values. For each state or 

region, readers should use the data and literature presented to further explore and research 

the way in which these values are estimated. 

Coastal Recreation 

The NSRE estimates statewide participation for 19 categories of coastal recreation. Table 

2 provides a breakdown of activity days for each category of coastal and estuarine 

recreation, by state. Unless otherwise indicated, all activities take place on or in 

saltwater, including mixed freshwater/saltwater in tidal portions of rivers and bays. 

Of the 19 categories of recreation covered by the NSRE, the economic literature provides 

good data on the best economic value estimates for five recreational types: beach-going, 

recreational fishing, scuba diving, snorkeling, and bird and wildlife viewing. In all cases, 

tens of millions of activity days are devoted to coastal recreation. In this section, we 

examine the estimated economic values associated with these recreational activities and 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

151 

provide state-level estimates of the potential economic benefit of these coastal uses. As 

always, readers are encouraged to dig deeper into the literature to find estimates of value 

that are most appropriate for the coastal areas of interest. 

Beach-Going 

The economic literature provides more than 30 estimates of the value of beach-going in 

the United States. Each year, approximately 853 million days are devoted to beach-going 

in the United States (Leeworthy and Wiley 2001). Of course, a visitor can undertake 

many activities while at the beach, such as swimming, sunbathing, collecting seashells, 

walking, jogging, viewing birds or other wildlife, or any number of other activities. This 

category is broad and should not be added to other more specific beach-related activities, 

to avoid double counting. The NSRE lists separately swimming, surfing, birdwatching, 

wildlife viewing, and wind surfing. The NSRE also includes as a category waterside 

activities, which captures all activities listed above for waterside coastal areas that are not 

beaches. 
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Table 2: Number of Annual Activity Days (millions) for Beach-Related Recreation 

in the United States (1999–2000) 

Beach 

Visitation 

Visiting 

Waterside Swimming Surfing Windsurfing 

Far-Western U.S. 

Alaska 7.766 5.441 0.897 0 0 

Hawaii 101.149 3.781 92.708 26.909 * 

Western Continental U.S. 

California 151.429 20.683 94.573 22.633 * 

Oregon 13.789 2.309 5.161 * * 

Washington 19.309 4.236 4.89 * * 

Gulf-shore Southern U.S. 

Alabama 11.842 3.65 8.203 * * 

Florida (both coasts) 177.153 22.59 161.098 10.257 0.524 

Louisiana 4.042 7.05 4.59 * * 

Mississippi 8.679 1.317 6.739 * * 

Texas 35.239 3.975 29.59 * * 

Southeastern U.S. 

Georgia 8.483 4.115 9.678 * 0 

North Carolina 27.936 4.164 27.497 3.102 * 

South Carolina 33.302 2.811 29.239 * * 

Virginia 18.749 8.274 15.481 * * 

Northeastern U.S. 

Connecticut 14.065 2.408 12.774 0 * 

Delaware 12.877 * 9.765 * * 

District of Columbia * * * 0 0 

Maine 16.159 4.3 13.513 * * 

Maryland 18.696 5.894 18.351 * * 

Massachusetts 28.681 2.925 31.66 * * 

New Hampshire 8.126 1.985 8.374 * * 

New Jersey 40.881 4.575 37.433 * * 

New York 29.225 3.743 28.972 * * 

Rhode Island 17.865 3.31 19.68 * * 

Nationwide* 853 158 750 76 5.8 

Adapted from Leeworthy and Wiley (2001).* Nationwide totals differ from the sum of state totals due to

statistical aggregation. 

The literature provides value estimates for beach-going in 11 states (Table 3). Values, 

estimated using both travel cost and contingent valuation methods, range from a low of 

just $0.07/trip in Delaware, Maryland, and New Jersey to highs of well over $70/activity 

day in California and Florida. As mentioned before, beach values can vary in the 

literature for a number of reasons, including the methods used to estimate values, whether 

visitors were residents or non-residents, the number of visitors surveyed, and other 

statistical properties of the analysis. Beach value also can vary because the quality of the 

beach-going experience and the average number of trips taken per individual per year 

varies across the country. Because of the principle of diminishing returns, the average 

and marginal value of a beach day could be lower (all things being equal) in areas in 

which visitors may make many trips. 
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Table 3: Literature Review of Coastal Beach Visitation Studies for the United 

States 

Beach Visitation 

Author and Date 

Consumer 

Surplus/ Activity 

Day Study Methodology 

Far-Western U.S. 

Hawaii Moncur, 1975 $1.60 - $6.25 TC 

Western 

Continental U.S. 

California Dornsbusch et al. 1986 $11.99 TC 

California Dornsbusch et al. 1987 

$14.85 - $15.81 

/trip TC 

California Leeworthy et al. 1990 $1.72 - $8.04 CVM (four beaches) 

California Leeworthy and Wiley, 1993 

$12.19, $27.43, 

$77.61 TC (three beaches) 

California King, 2001 

$25.78 - $33.72 

/household/day TC (during high season) 

California Lew and Larson, 2005 $11.13/trip TC, RUM

Gulf-shore 

Southern U.S. 

Florida (both coasts) USACE, 1981 $3.69/trip TC 

Florida (both coasts) Curtis and Shows, 1982 $4.48/trip CVM 

Florida (both coasts) Curtis and Shows, 1984 $8.56/trip CVM 

Florida (both coasts) Bell, 1986 $3.12 CVM 

Florida (both coasts) Bell and Leeworthy, 1986 

$2.46(residents) - 

$2.73(tourists) CVM 

Florida (both coasts) Bell and Leeworthy, 1986 

$19.23(residents) - 

$55.11(tourists) TC 

Florida (both coasts) Bell and Leeworthy, 1990 $63.74 

TC (tourists; Saltwater 

Beach use) 

Florida (both coasts) Bell, 1992 $2.99 CVM (tourists) 

Florida (both coasts) Bell and Leeworthy, 1990 $73.84 TC (Saltwater Beach use) 

Florida (both coasts) USACE, 1993 $3.24/trip TC 

Florida (both coasts) Leeworthy and Wiley, 1994 

$22.28-$25.18 and 

$83.62-$92.67 TC (two beaches) 

Florida (both coasts) Leeworthy and Bowker, 1997 

$95.85 (winter) - 

$120.74 (summer) 

TC (beach use; nonresidents) 

Southeastern U.S. 

North Carolina Bin et al. 2004 revised 2005 

$11.98 - $84.49 

(mean) TC, RUM 

Northeastern U.S. 

Delaware Parsons et al. 1999 $0.07 - $12.70/trip* TC, RUM (6 beaches) 
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Beach Visitation 

Author and Date 

Consumer 

Surplus/ Activity 

Day Study Methodology 

Maine Huang and Poor, 2004 

$3.61 /household 

/day* CVM, DC (conjoint, fees)

Maryland Parsons et al. 1999 $0.07 - $12.70/trip* TC, RUM (6 beaches) 

Massachusetts Hanemann, 1978 $1.04 TC 

Massachusetts Binkley and Hanemann, 1978 

$7.29 

/household/trip CVM 

Massachusetts Meta Systems, 1985 $20.32 TC (Boston beaches) 

Massachusetts McConnell, 1992 $1.05 - $1.70 TC 

Massachusetts Kline and Swallow, 1998 $5.36 CVM, DC (fees) 

New Hampshire Huang and Poor, 2004 

$3.61 /household 

/day* CVM, DC (conjoint, fees)

New Jersey Leeworthy and Wiley, 1991 $31.45 TC 

New Jersey Parsons et al. 1999 $0.07 - $12.70/trip* TC, RUM (6 beaches) 

Rhode Island McConnell, 1977 $1.42 - $6.43 CVM (6 beaches) 

Rhode Island McConnell and Weaver, 1977 $5.74 CVM (working paper) 

Coastal States for which no estimates are available do not appear in this Table. 

Consumer Surplus values for one Activity Day unless otherwise noted. 

TC = Travel Cost Method; RUM = Random Utility Model; CVM = Contingent Valuation Method 

* Indicates loss due to beach closure 

 

To estimate the annual statewide value of beach-going, we multiply the activity day 

estimates from the NSRE by a low and high estimate of the economic use value per 

person per day derived from the literature. As mentioned before, we provide ranges for 

each major region of the country. For most regions we use a high value of $50/activity 

day. The exceptions are Hawaii, where only one study appears in the literature that 

estimates the value of a beach day, and the northeastern United States, where value 

estimates are consistently lower than in other parts of the country. The low value for 

Hawaii may be an artifact of the one study considered, but also could result from the fact 

that resident Hawaiians take many visits to the beach. 

The bulk of beach-going activity in the United States occurs in the year-round 

destinations of Florida, California, and Hawaii (Table 4). The number of activity days 

devoted specifically to beach-going far exceeds other types of waterside activities and 

closely mirrors the number of visitors that went to the coast to swim (except for the 

western United States and Alaska, where the proportion of swimmers was the lowest). 

Based on values from the literature and estimates of beach activity days from the NSRE, 

beach-going in the United States is likely to generate tens of billions of dollars in 

economic use value annually (Table 4). We estimate that the economic use value of 

beach recreation at California beaches lies between $1.5 billion and $7.5 billion annually. 

Similarly, we estimate the economic use value of beach recreation in Florida to be 

between $886 million and just under $9 billion annually. Elsewhere around the country, 

beach recreation generates more than $100 million in annual use value in 13 coastal 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

155 

states. The areas of highest value are concentrated in the western continental states, 

Texas, and the southeast and mid-Atlantic states. Strictly speaking, it is inappropriate to 

add these values across states, because a small fraction of activity days could have been 

undertaken at different states on the same day. If we assume that this potential for double 

counting is small, then we can estimate roughly that the value of beach recreation across 

the country is likely to be between a low of just under $6 billion and a high of nearly $30 

billion annually. 

Table 4: Estimated Annual Statewide Values of Beach-Going in the United States 

($US millions) 

Statewide Annual 

Visitation (millions of 

activity days) 

Total Statewide Value Estimates 

(rounded, millions $2005) 

LOW HIGH 

Far-Western U.S. $2/activity day $6/activity day 

Alaska 7.766 $16 $47 

Hawaii 101.149 $202 $607 

Western 

Continental U.S. $10/activity day $50/activity day 

California 151.429 $1,514 $7,571 

Oregon 13.789 $138 $689 

Washington 19.309 $193 $965 

Gulf-shore 

Southern U.S. $5/activity day $50/activity day 

Alabama 11.842 $59 $592 

Florida (both 

coasts) 177.153 $886 $8,858 

Louisiana 4.042 $20 $202 

Mississippi 8.679 $43 $434 

Texas 35.239 $176 $1,762 

Southeastern U.S. $20/activity day $50/activity day 

Georgia 8.483 $170 $424 

North Carolina 27.936 $559 $1,397 

South Carolina 33.302 $666 $1,665 

Virginia 18.749 $375 $937 

Northeastern U.S. $5/activity day $20/activity day

Connecticut 14.065 $70 $281 

Delaware 12.877 $64 $258 

District of 

Columbia * * * 

Maine 16.159 $81 $323 

Maryland 18.696 $93 $374 

Massachusetts 28.681 $143 $574 

New Hampshire 8.126 $41 $163 

New Jersey 40.881 $204 $818 

New York 29.225 $146 $585 

Rhode Island 17.865 $89 $357 
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156 

Recreational Fishing 

Recreational fishing also has been well-studied and numerous estimates of the use value 

of recreational angling are available in the literature, although most studies were 

conducted in the 1980s and early 1990s. Estimates of recreational fishing use values also 

are available through the Sportfishing Values Database (www.indecon.com/fish/) –a 

web-based database of value estimates and metadata for marine and freshwater 

sportfishing. We review 13 studies of marine recreational fishing in which estimates of 

the value of an activity day or trip are given (Table 5). In some cases original studies 

were not available, but values were provided in the Sportfishing Values Database. We 

indicate these articles by using the phrase “secondary data only” in the Methods column. 

Generally, estimates for the use value of a day of recreational fishing in the United States 

fall between $20 and $100 with high estimates of well over $145/activity day in Alaska 

(and higher estimates for the use value associated with trips). Value estimates from the 

Atlantic states also run consistently high. 

Table 5: Literature Review of Coastal Recreational Fishing Studies for the United 

States 

 Author and Date 

Consumer Surplus/ 

Activity Day Study Methodology 

Far-Western U.S. 

Alaska Jones and Stokes, 1987 $4.60 - $33.90 /trip 

TC, RUM (secondary data 

only; private boat, rental boat 

and shore, Halibut, King 

Salmon, Silver Salmon, other 

species) 

Alaska Wegge et al. 1988 $69.94/trip RUM (secondary data only) 

Alaska Hausman et al. 1995 $188.02/trip TC (residents) 

Alaska Hamel et al. 2000 $99.39 

TC, CVM (residents; Salmon, 

Halibut from private boat) 

Alaska Hamel et al. 2000 $119.62 

TC, CVM (residents and nonresidents; Salmon, Halibut 

from private boat) 

Alaska Hamel et al. 2000 $146.14 

TC, CVM (non-residents; 

Salmon, Halibut from charter 

boat) 

Western 

Continental U.S. 

California 

Huppert and Thomson, 

1984 $33.54/trip 

TC (both residents and nonresident; travel valued at 1/3 

wage rate) 

California Hanemann et al. 1986 $16.21 TC (shore fishing; boat owner) 

California Hanemann et al. 1986 $29.57 

TC (shore fishing; non-boat 

owner) 

California Wegge et al. 1986 $44.33/trip 

CVM (charter boat; Pacific 

Mackerel, Kelp Bass, 

Rockfish) 

California Wegge et al. 1986 

$24.33 - $43.34 

(trips < or = 1 day) 

TC, (charter boat; boat owner; 

residents and non-residents) 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

157 

 Author and Date 

Consumer Surplus/ 

Activity Day Study Methodology 

California Wegge et al. 1986 

$30.04 - $96.53 

(trips < or = 1 day) 

TC, (charter boat; non boat 

owner; residents and nonresidents) 

California Wegge et al. 1986 $29.55 

CVM (private boat, rental; 

residents and non-residents) 

California Wegge et al. 1986 $14.78 

CVM (private boat, shore 

fishing; residents and nonresidents) 

California Wegge et al. 1986 $59.10 

CVM (private boat; residents 

and non-residents) 

California Wegge et al. 1986 $35.30 

TC (private boat; owner; 

residents and non-residents) 

California Wegge et al. 1986 $29.10 

TC (private boat; non-owner; 

residents and non-residents) 

California Huppert, 1989 

$110.41, $242.54, 

$535.76 / trip 

TC, (residents; Salmon, 

Halibut; boat and shore) 

California 

Kling and Herriges, 

1995 

$10.84 - $21.35 

/undefined period 

Unknown methodology (Shore 

fishing; residents) 

California 

Kling and Herriges, 

1995 

$27.46-$44.45 

/undefined period 

Unknown methodology (Offshore fishing; residents) 

Oregon Row, R, 1985 $116.07/trip 

TC and RUM (secondary data 

only) 

Washington 

Cruthfield and Schelle, 

1978 $55.48 CVM (secondary data only) 

Washington Row, R, 1985 $100.52/trip 

TC and RUM (secondary data 

only) 

Gulf-shore 

Southern U.S. 

Florida (both 

coasts) Bell et al. 1982 $82.90 CVM (Residents) 

Florida (both 

coasts) Bell et al. 1982 $61.86 - $77.00 CVM (Non-Residents) 

Florida (both 

coasts) Leeworthy, 1990 $81.33/trip TC (secondary data only) 

Florida (both 

coasts) 

McConnell & Strand, 

1994 $113.03-$135.86 

TC and RUM (non-residents; 

secondary data only) 

Florida (Gulf 

coast) Bell, F.W., 1997 $66.70 

TC (Residential Status Not 

Specified) 

Florida (East 

coast) Bell, F.W., 1997 $100.64 

TC (Residential Status Not 

Specified) 

Texas 

Downing and Ozuna, 

1996 

$60.23-

$407.29/trip CVM (Residents) 

Southeastern U.S. 

Georgia 

McConnell & Strand, 

1994 $66.06-$70.12 

TC and RUM (non-residents; 

secondary data only) 

North Carolina Norton et al. 1983 $277.15/trip 

TC (residents; secondary data 

only) 

North Carolina 

McConnell & Strand, 

1994 $111.23-$114.81 

TC and RUM (non-residents; 

secondary data only) 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

158 

 Author and Date 

Consumer Surplus/ 

Activity Day Study Methodology 

South Carolina 

McConnell & Strand, 

1994 $113.03-$114.44 

TC and RUM (non-residents; 

secondary data only) 

South Carolina Bockstael et al. 1986 $97.92 CVM (secondary data only) 

Virginia Norton et al. 1983 $93.99/trip 

TC (residents; secondary data 

only; boat and shore) 

Virginia 

McConnell & Strand, 

1994 $64.01-$77.48 

TC and RUM (non-residents; 

secondary data only) 

Northeastern U.S. 

Connecticut Norton et al. 1983 $207.26/trip 

TC (residents; secondary data 

only) 

Delaware Norton et al. 1983 $407.29/trip 

TC (residents; secondary data 

only; shore fishing) 

Delaware 

McConnell & Strand, 

1994 $17.07-$18.51 

TC and RUM (non-residents; 

secondary data only) 

Maine Norton et al. 1983 $207.26/trip 

TC (residents; secondary data 

only) 

Maryland 

McConnell & Strand, 

1994 $44.67-$45.73 

TC and RUM (non-residents; 

secondary data only) 

Massachusetts Norton et al. 1983 $207.26/trip 

TC (residents; secondary data 

only) 

New Hampshire Norton et al. 1983 $207.26/trip 

TC (residents; secondary data 

only) 

New Jersey Norton et al. 1983 $407.29/trip 

TC (residents; secondary data 

only; shore fishing) 

New Jersey 

McConnell & Strand, 

1994 $54.03-$56.95 

TC and RUM (non-residents; 

secondary data only) 

New York Norton et al. 1983 $407.29/trip 

TC (residents; secondary data 

only; shore fishing) 

New York 

McConnell & Strand, 

1994 $96.35-$98.31 

TC and RUM (non-residents; 

secondary data only) 

Rhode Island Norton et al. 1983 $207.26/trip 

TC (residents; secondary data 

only) 

 

DE, FL, GA, MD, 

NC, NJ, NY, SC, 

VA McConnell et al. 1993 $215.85 

CVM (non-residents; 

secondary data only) 

Coastal States for which no estimates are available do not appear in this Table. 

Consumer Surplus values for one Activity Day unless otherwise noted. 

TC = Travel Cost Method; RUM = Random Utility Model; CVM = Contingent Valuation Method 

More than 21 million people fish at least once each year in the coastal United States. 

Combined, these anglers spend 259 million days fishing in marine and estuarine areas—

far fewer than the number of days devoted to beach-going and fewer than the number of 

days devoted to birdwatching and other types of wildlife viewing. Fishing is highly 

concentrated in Florida and California. Low estimates for the annual economic use value 

of recreational fishing range from several hundred million dollars for most states to 

several billion dollars for Florida (Table 6). High estimates of recreational fishing use 

value exceed $1 billion annually for many states. 
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159 

Table 6: Estimated Annual Statewide Values of Coastal and Estuary Recreational 

Fishing in the United States ($US millions) 

Statewide Annual 

Visitation 

(millions of 

activity days) 

Total Statewide Value Estimates (rounded, 

millions $2005) 

LOW HIGH 

Far-Western U.S. $30/activity day $145/activity day 

Alaska 10.588 $318 $1,535 

Hawaii 16.071 $482 $2,330 

Western Continental U.S. $25/activity day $100/activity day 

California 20.318 $508 $2,032 

Oregon 2.78 $70 $278 

Washington 4.4 $110 $440 

Gulf-shore Southern U.S. $60/activity day $100/activity day 

Alabama 4.217 $253 $422 

Florida (both coasts) 56.285 $3,377 $5,629 

Louisiana 12.486 $749 $1,249 

Mississippi 4.663 $280 $466 

Texas 16.425 $986 $1,643 

Southeastern U.S. $60/activity day $100/activity day 

Georgia 3.003 $180 $300 

North Carolina 10.381 $623 $1,038 

South Carolina 6.097 $366 $610 

Virginia 7.72 $463 $772 

Northeastern U.S. $15/activity day $100/activity day 

Connecticut 7.792 $117 $779 

Delaware 8.08 $121 $808 

District of Columbia * * * 

Maine 2.967 $45 $297 

Maryland 11.06 $166 $1,106 

Massachusetts 8.098 $121 $810 

New Hampshire 1.918 $29 $192 

New Jersey 14.687 $220 $1,469 

New York 14.523 $218 $1,452 

Rhode Island 4.806 $72 $481 

Birdwatching and Whale Watching 

Each year nearly 15 million people spend nearly 900 million days enjoying bird viewing 

along U.S. shores; more than 13 million people spend 341 million days watching other 

marine and coastal wildlife. Despite the popularity of bird and wildlife viewing, the 

literature has given only scant attention to the economic valuation of marine and 

estuarine wildlife viewing in the United States (although a substantially larger literature 

exists for international studies of the economic value of wildlife viewing). Where 

wildlife viewing has been studied for marine species in the United States, the values per 

activity day are usually high (Table 7). For instance, Colt (2001), based on a survey by 

McCollum and Miller (1994), estimated that in Alaska residents would have been willing 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

160 

to pay $240 more than actual expenditures for a day of watching sea birds ($133 when 

birdwatching was only a secondary reason for their visit to the coast) and $228 for whale 

watching ($208 when whale watching was a secondary reason for the visit). 

Table 7: Literature Review of Coastal and Marine Wildlife Viewing Studies for the 

United States 

 Author and Date 

Consumer Surplus/ 

Activity Day 

Study 

Methodology 

Far-Western U.S. 

Alaska 

McCollum and Miller, 

1994 in Colt 2001 

Seabirds: $133 - $240 

Whales: $208 - $228 Unreported 

Western Continental 

U.S. 

California Hall et al. 2002 $6.78/family visit 

CVM (tidepool 

visits) 

Gulf-shore Southern 

U.S. 

Florida (both coasts) 

Leeworthy and Bowker, 

1997 $108.35 TC (Florida Keys) 

Northeastern U.S. 

New York Johnston et al. 2002 $63.80 TC 

New England (whale 

watching) 

Hoagland and Meeks, 

2000 $62.50 - $70.40 TC 

Because of the small number of valuation estimates in the literature, we use a single pair 

of conservative low and high estimated consumer surplus values/activity day ($10 and 

$100) to calculate the upper and lower bounds of the potential economic value of 

birdwatching and wildlife viewing in the United States. Because of the large number of 

days devoted in some part to watching birds and other marine and coastal wildlife, the 

low estimate of the use value of these activities exceeds $100 million for most coastal 

states and reaches a high estimate of several billion dollars annually for many states 

(Table 8). 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

161 

Table 8: Estimated Annual Statewide Values of Marine Wildlife Viewing (based on 

birdwatching activity) in the United States ($US millions) 

Statewide Annual 

Visitation (millions of 

activity days) 

Total Statewide Value 

Estimates (rounded, millions 

$2005) 

LOW HIGH 

Far-Western U.S. 

Alaska 24.835 $248 $2,484 

Hawaii 21.492 $215 $2,149 

Western Continental U.S. 

California 65.762 $658 $6,576 

Oregon 11.051 $111 $1,105 

Washington 18.93 $189 $1,893 

Gulf-shore Southern U.S. 

Alabama 4.719 $47 $472 

Florida (both coasts) 77.952 $780 $7,795 

Louisiana 9.114 $91 $911 

Mississippi 7.248 $72 $725 

Texas 16.051 $161 $1,605 

Southeastern U.S. 

Georgia 6.029 $60 $603 

North Carolina 20.521 $205 $2,052 

South Carolina 20.945 $209 $2,095 

Virginia 16.997 $170 $1,700 

Northeastern U.S. 

Connecticut 15.192 $152 $1,519 

Delaware 14.027 $140 $1,403 

District of Columbia * * * 

Maine 19.982 $200 $1,998 

Maryland 19.76 $198 $1,976 

Massachusetts 26.102 $261 $2,610 

New Hampshire 8.63 $86 $863 

New Jersey 18.804 $188 $1,880 

New York 24.553 $246 $2,455 

Rhode Island 19.005 $190 $1,901 

Scuba Diving and Snorkeling 

Scuba diving activities are concentrated primarily in the warm water states of Florida and 

Hawaii, with roughly 5 million diving days spent in Florida and 4 million days spent in 

Hawaii annually. Diving also is popular in California, with nearly 300 million divers 

spending almost 1.4 million days participating in diving along the coast. While divers 

reside in all states of the union, and many dive locally (especially in New England, the 

Pacific Northwest, and Texas), the participation rates in these states are so low that the 

NSRE was unable to estimate activity days for states other than Florida, Hawaii, and 

California. 

The literature on the economic valuation of scuba diving and snorkeling is extensive 

(Table 9). Much of the estimates of economic use value available in the literature are for 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

162 

diving on existing and proposed artificial structures, including sunken ships and other 

types of artificial reefs (see Pendleton 2005 for a review). Valuation estimates are 

generally consistent across the many site types and geographical locations. We use a low 

estimate of $15/activity day and a high estimate of $50/activity day to estimate the value 

of scuba diving in Florida, Hawaii, and California. Compared to other coastal 

recreational activities, the state-level economic value of scuba diving is modest, although 

it is likely to be locally significant at many exceptional dive areas (e.g., Key Largo, 

Catalina Island, and much of Hawaii). Low estimates do not exceed $100 million 

annually for any of the three states considered. High estimates do not exceed $300 

million annually (Table 10). 

Table 9: Literature Review of Coastal Scuba Diving Studies for the United States 

 Author and Date 

Consumer Surplus/ 

Activity Day Study Methodology 

United States 

All US National Parks Kaval and Loomis, 2003 $34.25 

Western Continental 

U.S. 

California Leeworthy and Wiley, 2002 $13.78 

(Benefit transfer, 

Santa Barbara and 

Ventura Counties) 

California Leeworthy and Wiley, 2002 $41.35 - $42.95 

(Channel Islands 

National Marine 

Sanctuary) 

California Pendleton 2005 $110/day 

Ship diving on the 

Yukon 

Pacific Coast Kaval and Loomis, 2003 $55.66 

Gulf-shore Southern 

U.S. 

Gulf of Mexico Roberts et al. 1985 $350.49/year/diver 

CV (petroleum 

structures) 

Gulf of Mexico Stoll and Ditton, 2002 $121.20/trip 

(secondary source; 

artificial reef) 

Gulf of Mexico Stoll and Ditton, 2002 $157.20/trip 

(secondary source; 

natural reef) 

Florida Milon, 1988 

$30.02 - 

$44.22/year/diver 

CV (fishing and 

diving on 7 artificial 

reefs) 

Florida Milon, 1989 

$4.63 - 

$131.88/year/diver 

CV (fishing and 

diving on ships and 

steel debris) 

Florida Bell et al. 1998 $11.36 

TC (ships, reef balls, 

other structures) 

Florida Bell et al. 1998 

$3.62 - 

$4.40(residents); 

$6.51 - 

$7.96(visitors) 

CV (ships, reef balls, 

other structures) 

Florida Leeworthy et al. 2001 

$4.02(residents) - 

$16.16(nonresidents) (artificial reef) 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

163 

 Author and Date 

Consumer Surplus/ 

Activity Day Study Methodology 

Florida Johns et al. 2003 

$3.52(residents) - 

$14.47(visitors) 

CV (maintain 

existing artificial 

reefs) 

Texas Ditton and Baker, 1999 $49.53 - $83.48 

CV (diving on 

artificial reefs) 

Texas Ditton et al. 2001 $46.52 

CV (diving on 

artificial reefs) 

Northeastern U.S. 

Northeast Region Kaval and Loomis, 2003 $18.96 

Coastal States for which no estimates are available do not appear in this Table. 

Consumer Surplus values for one Activity Day unless otherwise noted. 

TC = Travel Cost Method; RUM = Random Utility Model; CVM = Contingent Valuation Method 

Table 10: Estimated Annual Statewide Values of Scuba Diving in the United States 

($US millions) 

Statewide Annual 

Visitation (millions of 

activity days) 

Total Statewide Value Estimates (rounded, 

millions $2005) 

LOW HIGH 

Far-Western U.S. 

Hawaii 4.251 $64 $213 

Western 

Continental U.S. 

California 1.383 $21 $69 

Gulf-shore Southern 

U.S. 

Florida (both coasts) 5.42 $81 $271 

Significant snorkeling activity, like scuba diving, also is limited to Florida, Hawaii, and 

California. The range of values for snorkeling is similar to those for scuba diving, 

probably owing in part to the relatively low cost of snorkeling compared to diving (Table 

11). Also possibly owing to this low cost, participation in snorkeling is between 3 and 6 

times higher than scuba diving. As a result of these higher levels of activity, the 

economic use value of snorkeling is likely to be equal to or greater than similar estimates 

for scuba diving. We use a lower estimate of $10/activity day and a high estimate of 

$50/activity day to estimate the potential economic use value of snorkeling. While the 

lower bound estimates for the economic use values of snorkeling for the three states are 

similar to scuba diving, the upper bound estimates are significantly higher, exceeding $1 

billion for Florida and Hawaii (Table 12). 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

164 

Table 11: Literature Review of Coastal Snorkeling Studies for the United States 

 Author and Date 

Consumer Surplus/ 

Activity Day Study Methodology 

United States 

All US National Parks Kaval and Loomis, 2003 32.08 

(resident and nonresident) 

Western Continental 

U.S. 

Pacific Coast Kaval and Loomis, 2003 $31.58 

Gulf-shore Southern 

U.S. 

Florida (both coasts) 

Leeworthy and Bowker, 

1997 $118.96 

(resident and nonresident) 

Florida (both coasts) Leeworthy et al. 2001 

$3.02(resident) - 

$8.37(non-resident) (artificial reef) 

Florida (both coasts) Park et al. 2002 $130.59/trip 

(resident and nonresident) 

Table 12: Estimated Annual Statewide Values of Snorkeling in the United States 

($US millions) 

Statewide Annual 

Visitation (millions 

of activity days) 

Total Statewide Value Estimates (rounded, 

millions $2005) 

LOW HIGH 

Far-Western U.S. 

Hawaii 24.158 $242 $1,208 

Western Continental U.S. 

California 3.818 $38 $191 

Gulf-shore Southern U.S. 

Florida (both coasts) 23.956 $240 $1,198 

Coastal Recreation Is Valuable. So What? 

The economic value of coastal recreation is indeed great. If we ignore the small effects 

of double counting for activities that take place in different states on the same day, we 

begin to get a picture of the economic use value of coastal recreation from a regional and 

national perspective. Table 13 provides a summary of regional and national values for 

beach-going, recreational fishing, wildlife viewing, scuba diving, and snorkeling. The 

value of beach-going, recreational fishing, and wildlife viewing are each greater than $4 

billion annually, and the value may be nearly $50 billion annually for wildlife viewing 

and nearly $30 billion for beach-going and recreational fishing. The possibility of double 

counting makes it inappropriate to add the values of all activities together. Nevertheless, 

if we recognize that there is likely to be little double counting for beach-going and 

recreational fishing, we can add these two activities together to see that the potential 

economic value of beach-going and angling combined are likely to be between $16 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

165 

billion and $56 billion. Adding the value of other activities to this total pushes the 

economic value of coastal recreation well beyond $20 billion to $60 billion. 

It is hard to compare the economic use value of coastal recreation to other numbers in the 

economy, because we rarely make the effort to calculate the use value of market goods 

and services. Estimating use values is time-consuming and difficult, even for market 

goods for which we have abundant market price and demand data. As a result, 

economists usually fall back on market data because they at least reveal the true 

willingness of society to pay for the last unit of a good or service, and therefore they 

provide a lower bound estimate of the value of these goods and services. Coastal 

recreation, on the other hand, often occurs largely in the absence of fully functioning 

markets. Coastal access often is free or made available at fixed prices (e.g., the cost of 

municipal beachside parking). Because there is no market for most types of coastal 

recreation, we cannot rely on market prices. 

But the question remains, is $20 billion to $60 billion in economic use value a lot? Let’s 

compare this figure to sectors for which we have market data. The total gross state 

product (GSP) in 2004 for all ocean sector goods and services recorded by the NOEP was 

$138 billion. Marine minerals generated $19.6 billion in GSP for 2004, and all marinerelated tourism and recreation generated $69.7 billion. 

Commercial fishing is a marine market sector so important that an entire government 

agency (NOAA’s National Marine Fisheries Service) is charged with its monitoring and 

management. In 2004, the top 10 commercial fish species had a landed value of just over 

$2 billion (National Ocean Economics Program), and the value of all reported landings 

for more than 416 species of fish and shellfish was $3.5 billion. So, yes, $20 billion to 

$60 billion is a lot of economic value. Unfortunately, the non-market nature of the value 

of recreation means that this economic value often is overlooked in coastal and estuarine 

policymaking. 

Table 13: Estimated Annual Value of Select Coastal Activities in the United States 

($ millions) 

 Beach Visitation 

Recreational 

Fishing 

Wildlife 

Viewing 

SCUBA 

Diving Snorkeling 

 Low High Low High Low High Low High Low High 

Far-Western 

U.S. $218 $653 $800 $3,866 $463 $4,633 * * * * 

Western 

Continental 

U.S. $1,845 $9,226 $687 $2,750 $957 $9,574 $21 $69 $38 $191 

Gulf-shore 

Southern 

U.S. $1,185 $11,848 $5,645 $9,408 $1,151 $11,508 $81 $271 $240 $1,198 

Southeastern 

U.S. $1,769 $4,424 $1,632 $2,720 $645 $6,449 * * * * 

Northeastern 

U.S. $933 $3,732 $1,109 $7,393 $1,661 $16,606 * * * * 

U.S. Total $5,950 $29,883 $9,873 $26,136 $4,877 $48,770 $102 $340 $278 $1,389 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

166 

Knowing the value of coastal and marine recreation can help Congress better determine 

how much the federal government should spend to protect, monitor, and enhance coastal 

and estuarine recreational activities. Unfortunately, government investment in coastal 

protection has been consistently low. In 2006, total federal spending on ocean-related 

activities was only $8.2 billion (NOEP). The budget for NOAA, the principal marine and 

coastal management agency, was just under $1.4 billion—only 24% of the low value of 

beach recreation and only 5% of the high value of beach-going, 5% of the high value of 

recreational fishing, and 3% of the high value of marine bird and wildlife viewing. Of 

course, federal spending on coastal recreation is only a small part of total government 

spending on ocean activities. The relative annual investment in coastal and estuarine 

recreation is likely to be a small fraction of a percent of its total value. 

While coastal recreation occurs in every coastal state, recreational value is concentrated 

in different regions (Figure 1). From a national perspective, beach going recreation 

generates the greatest value in the western continental states and Florida, recreational 

fishing is particularly valuable in the Gulf States and Florida, and wildlife viewing is 

most valuable in the northeastern states. Decisions about the distribution of funds to 

protect and enhance coastal recreation should take these value distributions into account. 

Recreational Use Value and Habitat Restoration 

Accounting for the economic use value of coastal and estuary recreation gives us our first 

nationwide glimpse at the potential value of habitat restoration for at least one user 

group—everyday people who enjoy the coast and coastal waters. Many types of coastal 

recreation depend on ecosystem and environmental conditions. For instance, recreational 

fishing success has been linked to environmental conditions (see Lipton and Hicks 2003; 

Lipton and Strand 1997). Beach values and attendance have been linked to fecal 

indicator bacteria (see for example Bockstael, Hanemann, and Kling 1987; Bockstael, 

McConnell, and Strand 1989; Freeman 1995; Hayes, Tyrrell, and Anderson 1992; 

Murray, Sohngen and Pendleton 2001; Smith, Zhang, and Palmquist 1997), birdwatchers 

and wildlife viewers are known to place a direct value on being able to see certain species 

(e.g., McCollum and Miller, 1994 in Colt 2001; Johnston et al. 2002; Hoagland and 

Meeks 2000). Even divers have been shown to prefer sites with higher fish abundances 

and coral diversity (e.g., Pendleton 1994). The values estimated here represent the 

current value of coastal recreation, under current environmental conditions which, in 

many cases, are quite degraded. Because many coastal recreational activities depend on 

environmental conditions, coastal restoration could increase the values presented in this 

chapter. 

Understanding the exact magnitude of economic improvement that could come from 

coastal restoration would require a detailed understanding of the proposed restoration 

with an equally detailed ability to predict how behavior, use, and values would change as 

a result of restoration. Nevertheless, we can use this baseline to place rough economic 

values on potential improvements in coastal and estuary habitats. For instance, if we 

could improve the value of beach-going opportunities in the western continental United 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

167 

States by a mere 1%, the annual economic value of that improvement would be between 

$18 million and $92 million annually. At a 3% discount rate (the rate mandated for use 

by the Office of Budget and Management, 2007 Discount Rates for OMB Circular No. A94) the capitalized value of that return would be between $600 million and $3 billion—

just for beach-going—just in California, Oregon, and Washington. Readers are 

encouraged to use the data and literature presented in this chapter to consider the 

potential economic value that could come from improved management of coastal and 

estuarine resources in their state and region, and nationwide. 

Table 14: Links Between Environmental Conditions and Coastal Recreation 

Activity Link to coastal environmental conditions 

Recreational Fishing Water quality (O2), nursery habitat, fish abundance 

Beach Going (swimming) Water quality (bacteria), harmful algal blooms

Bird and Wildlife Viewing Fish (for forage); bird and wildlife abundance, 

diversity, and rare species; habitat

SCUBA/Snorkeling Fish abundance, coral cover

CASE STUDY: Economic Value in the Sunshine State 

According to the NSRE data, Florida ranks first among the nation’s destinations for 

Americans who swim, fish, dive, and otherwise enjoy the state’s many beaches, coastal 

wetlands, and shores. Florida’s 770 miles of coastline4

 (NOAA 1975), including the 

Gulf, Atlantic, and Caribbean coasts, is the most visited in the nation, with almost one in 

10 Americans visiting the Florida coasts in 2000 (more than 22 million visitors overall) 

(Leeworthy and Wiley 2001) 

Visitors to Florida and local Floridians visit shores and beaches to swim, sunbathe, watch 

wildlife (especially birds), photograph scenery, boat, fish, and dive. The NSRE provides 

estimates for the number of participants and the number of days of participation for a 

variety of coastal activities in Florida. 

 

 

4

 There are many different ways to measure the useable coastline. NOAA’s 1975 figure may not agree with 

other measures of the Florida coast. 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

168 

Table 15: Annual Participation in Coastal Recreational Activities in Florida 

(1999/2000) 

Activities 

Participants (in state where 

activities took place, 

millions) 

Activity 

Days (millions) 

 

Beach-going 15.246 177.153 

Bird Watching 3.373 77.952 

Canoeing 0.019 n/a 

Fishing 4.698 56.285 

Hunting 0.072 * 

Kayaking 0.338 n/a 

Motorboating 3.337 46.624 

Other Wildlife 2.846 50.264 

Personal Watercraft 1.626 14.54 

Photography Scenery 3.92 96.591 

Rowing 0.153 n/a 

SCUBA 0.802 5.42 

Snorkeling 2.866 23.956 

Swimming 14.033 161.098 

Waterside 1.801 22.59 

Waterskiing 0.613 4.475 

* Too few to estimate 

N/A data not collected 

Of these many activities, we have attempted to estimate the potential statewide economic 

use value of beach-going, recreational fishing, bird and wildlife viewing, snorkeling, and 

scuba diving. Even our most conservative estimates find a value of more than $5 billion 

annually for coastal recreation in Florida 

Table 16: The Potential Range of Economic Use Values for the Florida Coast 

Activities Low Estimate High Estimate 

Beach-going $886 $8,858 

Bird and Wildlife Viewing $780 $7,795 

Recreational Fishing $3,377 $5,629 

Snorkeling $240 $1,198 

Scuba Diving $81 $271 

 

Total Potential Economic 

Use Value $5,364 $23,751 
The Economic and Market Value of Coasts and Estuaries: What’s At Stake?

169 

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