Martin Ashcroft reports on a first-of-its-kind economic study detailing the benefits of Everglades restoration, including a rise in job creation, real estate values and water quality.
Sustainability has been seen as a “good thing” for some time. Many have questioned, however, whether the price is worth paying. In the case of the Everglades, at least, what’s good for the environment is proving also to be good for the economy.
In October this year, the Everglades Foundation released the results of a comprehensive analysis of the financial return on investment generated by the restoration of the Everglades ecosystem. The study, Measuring the Economic Benefits of America’s Everglades Restoration: An Economic Evaluation of Ecosystem Services Affiliated with the World’s Largest Ecosystem, was conducted by Mather Economics, and predicts that restoration of the Everglades will produce an increase in economic benefits of approximately $46.5 billion, which could range up to $123.9 billion, based on an investment of only $11.5 billion.
"It is clear that Everglades restoration not only produces ecological benefits, but also generates a robust economic boost to our economy. For every dollar spent on Everglades restoration, we are getting four dollars back in the form of higher home values, increased tourism and stronger fishing, boating and tourism industries," said Kirk Fordham, CEO, Everglades Foundation. "When we invest in protecting and restoring the Everglades, we are also revving up a powerful job creation engine. Aside from the good paying jobs in construction, engineering and the sciences that come with restoration projects, we are boosting employment in a wide range of industries."
More than seven million people live in the Everglades watershed and depend on its natural systems for their livelihood. Florida’s agriculture, boating, tourism, real estate, recreational and commercial fishing industries all depend on a healthy Everglades ecosystem, which supports tens of thousands of jobs and contributes billions to the economy.
Unfortunately, the Everglades ecosystem is not in the best of health, due in part to the space program—odd as that might sound. A major cause of the decline of the Everglades is that the rocket engines made by Aerojet Corporation were too large to be trucked to Cape Canaveral by highway, so in the 1960s, a 20-mile long canal was cut across southern Miami-Dade County so that barges could ferry the massive engines north.
The C-111 canal, locally known as the Aerojet canal, also served as a major flood control device. The jet engine manufacturer is long gone, but the canal remains, diverting fresh water that once flowed west and shuttling water east into the Barnes Sound area of Florida Bay. "The canal is sucking what little fresh water there is in the southern Everglades right out," says Dr. Tom Van Lent, senior scientist, Everglades Foundation.
The mis-directed fresh water upsets the balanced salinity of Taylor Slough, devastating the delicate sea grass beds that are nurseries for young fish, shrimp and sponges and reducing the number of wading birds. Scientists say that 75 percent of the water that once flowed through Taylor Slough to Florida Bay is now sent into the C-111. "If you don't fix the problems created by the C-111, you don't fix Florida Bay. It's that simple," says Dr. Van Lent.
The first stage of the restoration project is to build a series of retention ponds to hold storm water rather than allowing it to flow to the sound. Two new pumps will push the water west into the Taylor Slough. From there, the water will flow naturally into Everglades National Park and, eventually, Florida Bay. A seepage barrier will be constructed along the canal. Levels in the southernmost canals will be raised by barely an inch a year for several years so the impact can be examined.
The Comprehensive Everglades Restoration Plan will involve the combination of many individual projects over the next few years to restore the Everglades to its natural state. Everglades CERP, if enacted as planned, will restore Everglades sheet flow. Restored sheet flow will provide additional fresh surface water and groundwater, meaning that water available for municipal and private use will be less saline, requiring less electricity to become usable and potable. A restored Everglades would therefore reduce the cost of desalinating increasingly brackish groundwater.
It is benefits like this that the Mather Economics study sets out to calculate. To do so, it divides the restoration project into six distinct categories, with a catch-all seventh.
· Groundwater purification and aquifer recharge
· Real estate
· Park visitation
· Open space
· Fishing
· Wildlife habitat and hunting
· Water quality, biodiversity, and carbon sequestration
Wherever estimates needed to be made, Mather took a conservative approach, using the best available data and economic methods. This explains its cautious estimate of a $46.5 billion increase in economic welfare, and its potential value of up to $123 billion. Assuming a total project cost of $11.5 billion, the return on investment at its most conservative level is still over $4 for every dollar invested.
The report estimates that groundwater purification will contribute at least $13 billion, and that real estate values will benefit by at least $16 billion. Wildlife habitat and hunting stands to benefit by $12.5 billion and fishing (commercial and recreational) by $2.5 billion.
Fishing is big business in the Everglades. To calculate the benefits of restoration, Mather used data on commercial catch per species for each of the relevant South Florida counties for the years 1986 through 2008. Earlier data was considered unreliable. Assuming that restoration would enhance commercial fish catch, because of increased sheet flow, Mather estimated the change by comparing current levels to peak levels in the late 1980s. Its conservative estimate is that a restored Everglades will provide 75 percent of the difference between current catch levels and catches in 1989, the first year in which there are reliable data.
Water also plays an important role in the determination of residential real estate values. Lakeside or seaside properties sell at a premium compared to properties located away from water. A home on a clear stream trades at a premium to a similar home on a polluted stream. Economists have developed techniques to quantify the incremental value of environmental attributes like this, and studies consistently show that water quality is something that people are willing to pay for. The magnitude of this effect is generally in the 0.5 percent to 7.0 percent range. The Mather study takes the lowest figure as its projection.
The report also concludes that Everglades restoration will have an incremental impact on employment, creating almost 450,000 additional jobs over 50 years, with residential construction and real estate services providing over half of those opportunities. Over 80,000 jobs are expected to be created in wildlife habitat and hunting, and over 40,000 in fishing. Tourism, including lodging, restaurants, transportation, retail and entertainment stands to gain almost 50,000 new jobs. The US Army Corps of Engineers also estimates there will be over 22,000 new short- to mid-term jobs created as a result of actual restoration projects.
But Mather is careful to point out that job creation is not an extra benefit, but merely another way of looking at the same benefits. “Most academic economists would prefer to discuss the sales of the output of the firms rather than the jobs used in production,” the report says, “but for some reason or another, policy makers, pundits and politicians seem to prefer the jobs numbers approach. For sure, jobs are easier to calculate and perhaps easier for lay people to appreciate. Our point here is to respond to that latter audience, but it would be a big mistake for anyone to interpret our discussion here as additive. The jobs are not in addition to the calculated benefits. They are an alternative way of visualizing the impact of Everglades restoration.”
The Comprehensive Everglades Restoration Plan is an ambitious project, to say the least. Equally impressive is the extent to which its social and economic benefits can be quantified. It makes one wonder how many smaller scale sustainability projects could be undertaken by industry, to the benefit of us all, if we let the accountants loose.
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Measuring the Economic Benefits of America’s Everglades Restoration: An Economic Evaluation of Ecosystem Services Affiliated with the World’s Largest Ecosystem, is available in its entirety at www.evergladesfoundation.org in the "Reports and Surveys" section of the website.
