Sustainable Economic Development in the Lake Champlain Basin
About This Chapter
Promote healthy and diverse economic activity and sustainable development principles within the Lake Champlain Basin while improving water quality and conserving the natural and cultural heritage resources on which the regional economy is based.
// In This Section //
The health of the economy of the Lake Champlain Basin is fundamentally dependent on the health of the aquatic and terrestrial ecosystems of the Basin. The soils, tributaries, wetlands, ponds, lakes, and ecological processes therein make up the very infrastructure of the Basin ecosystem and economy alike. Earlier chapters have described the management of nutrient loads, toxics, invasive species, fish, wildlife, and impacts from climate change primarily in terms of their ecological dimensions. Each of these topics also has an economic and societal impact, and the magnitude of each impact is largely determined by economic and societal forces. The condition of our ecosystems and the long-term viability of our economies and communities are interdependent.
The connection between a healthy lake basin and a healthy regional economy is perhaps most obvious where livelihoods depend directly on natural resources. The tourism market draws on the natural beauty and cultural heritage of the Champlain Valley and opportunities such as fishing, sailing, and swimming that fundamentally benefit from high-quality aquatic systems. This economic dependence on our ecological infrastructure is most often measured in jobs, tax revenues, and income earned. Industries such as agriculture and forestry have equally obvious ties to the sustainability of renewable resources in the Basin. Often overlooked, however, are the dependencies of all economic sectors on the wide range of ecosystem services provided by the Lake Champlain Basin. Ecosystem services encompass ecological, economic, and social benefits people obtain from ecosystems. For example, services such as nutrient cycling, primary production, waste assimilation, and freshwater supplies are the ecological engines of the Basin economy. Although more difficult to measure in the currency of jobs or income, the ecological structure and functions of the Basin are fundamental to the healthy function of the economy and ecosystem alike.
As both the benefits from and impacts on ecosystem services are often ignored in economic decisions, the genuine net benefits of economic activity can be unclear. An ecosystem services framework is increasingly being used to assess and plan for the sustainability of Basin economies. Most significantly, the Millennium Ecosystem Assessment (MEA) completed in 2005 provided a synthesis from more than 1,360 experts worldwide on the supporting, regulating, provisioning, and cultural services of ecosystems. Figure 1 highlights the four main categories of ecosystem services in relation to their contribution to various constituents of human well-being. Applying this assessment framework, the MEA found that fifteen of the twenty-four ecosystem services investigated worldwide were “… being degraded or used unsustainably, including fresh water, capture fisheries, air and water purification, and the regulation of regional and local climate, natural hazards, and pests.”
Ecosystem services framework adopted in Millennium Ecosystem Assessment.
Assessment of wetlands and freshwater systems are central to the body of work stemming from the MEA. The broad range of wetland services alone that are critical to human communities include provision of habitat for harvestable fish and plants, water supply, water purification, climate regulation, flood regulation, shoreline protection, and recreational opportunities. Research indicates that the total economic value of unconverted wetlands – including both the marketed and non-marketed economic benefits – is often greater than that of converted wetlands. However, wetlands are systematically undervalued and thus severely compromised worldwide. The MEA found that the degradation and loss of wetlands is more rapid than any other ecosystem (MEA 2005).
Among ongoing subglobal assessments of the MEA, the work most relevant to Lake Champlain is in the Northern Highlands Lake District of Wisconsin. Research led by the University of Wisconsin together with local stakeholder groups is assessing the status and trends of ecosystem services in the 5,300 sq. km (2,046 sq. mi) region, and analyzing policy options through detailed scenario analysis of human population growth, zoning and infrastructure development, impacts on aquatic ecosystem services, and economic trends from local and regional to national and international.
The ecosystem services framework is also central to various Lake Champlain Basin management initiatives. For instance, Lake Champlain is one of twenty-eight case study lakes in the Global Environmental Facility’s Lake Basin Management Initiative, highlighting impacts associated with shoreline effluent discharges, nonpoint source nutrients, and stormwater runoff. The recently released National Lakes Assessment (NLA) of the US Environmental Protection Agency (USEPA) takes a similar approach. For the Northern Appalachian ecoregion (including Lake Champlain) the main concerns included biological integrity, quality of lakeshore habitat, and level of euthrophication. Forty-five percent of lakes exhibited fair or poor biological condition relative to ecoregional reference conditions, while 57 percent of lakes were assessed at moderate to high levels of lakeshore disturbance. Twenty-six percent of lakes were considered oligotrophic, 54 percent mesotrophic, 17 percent eutrophic, and 3 percent hypereutrophic (US Environmental Protection Agency 2009).
Connecting ecosystem health to economic benefits through the assessment of ecosystem services is also gaining ground in US federal agencies (Cox and Searle 2009). The US Department of Agriculture has created a new office of Environmental Markets to provide guidance for implementing Section 2709 of The Food, Conservation, and Energy Act of 2008. This policy calls for the Secretary of Agriculture to “establish technical guidelines that outline science-based methods to measure the environmental services benefits from conservation and land management activities in order to facilitate the participation of farmers, ranchers, and forest landowners in emerging environmental services markets.” Also, the Ecosystem Services Research Program at the USEPA has initiated a coordinated research effort to “establish ecosystem services standards, indicators, and measurement protocols; advance valuation techniques; create institutional capacity for investment in natural capital; and to improve the ability to perform assessments across institutional, spatial, and temporal scales.”
Four Types of Ecosystem Services: Supporting, Regulating, Provisioning, and Cultural
Supporting services. The complex interactions between abiotic and biotic components of the Basin create the soil that grows our food and fiber, hydrological cycle that affects our weather and supplies our water, primary production that determines food webs and creates our fisheries, and the capacity to break down and reuse the waste byproducts of the economy. Overuse and degradation of these fundamental ecological processes can have considerable economic impact. For example, a 2009 review of the potential economic damages from eutrophication of US freshwater systems found impacts on recreational water usage, waterfront real estate value, and spending on recovery of threatened and endangered species and drinking water to total approximately $2.2 billion annually (Dodds et al 2009). Eutrophication and resulting algal blooms in Lake Champlain have measurable economic impacts from beach closures, increased water treatment costs, waterfront property devaluation, and fish kills. All of these examples negatively impact the water quality of the Lake, but also the accessibility of the Lake and, in turn, the local economy.
Regulating services in the Lake Champlain Basin include those indirectly affected by changes in supporting services, such as the impact of eutrophication on water purification. Lake Champlain provides drinking water for more than 30 percent of the Basin population, and the cost of additional water treatment at the municipal and household level due to water pollution is unknown. However, the influence of forest land cover on water filtration processes is a well-studied regulating function. An analysis of twenty-seven US water suppliers found that treatment costs for drinking water in watersheds covered with at least 60 percent forest cover were half the cost of watersheds with 30 percent forest cover and one-third the cost of treating water from watersheds with 10 percent forest cover (Postel et al 2005). Regulating services also include benefits, such as flood regulation, that are affected by land-use change. When a river is straightened or floodplain developed, the economic damages resulting from flood events can be significant. Damages from flooding in Vermont alone are estimated at $16 million per year. A dramatic example of the loss of this ecosystem service comes from the MEA synthesis of wetland services. Historically the forested riparian wetlands adjacent to the Mississippi River had the capacity to store about sixty days of river discharge, but with the removal of wetlands through canalization, construction of levees, and draining, the remaining wetlands have a storage capacity of fewer than twelve days discharge – an 80 percent reduction.
Provisioning services of the Lake Champlain Basin produce the many extracted resources of food, fiber, fuel, and water – important inputs to informal and formal sectors of the Basin economy. Resource extraction that is “off the books” includes activities such as home woodlots and gardens; hunting, fishing, and trapping; and private water wells – significant activities in rural economies. The value of agriculture, forest products, and water for consumption in the formal sectors have direct, measurable economic value from established industries in the Basin. For example, Basin agriculture supports hundreds of farms across a diversity of activities. An ecosystem services approach would evaluate the positive value of agricultural products and services produced from the land as well as the negative externalities imposed (and not borne on the private farm) on water quality and other ecosystem services. A full accounting would capture the net benefits of farming in the Basin and provide the data necessary for a more integrated approach to management. An analysis of a performance-based incentive program for reducing phosphorus pollution from farms in the Missisquoi river watershed found that about 40 percent of the specific farm actions (twenty-two of fifty-four) to reduce phosphorus loss were estimated to be profitable at a $25 per pound incentive payment level. Approximately 20 percent of actions were estimated to have zero cost to the farmer, with one action (reducing phosphorus fertilization) providing a savings to farmers (Winsten et al. 2007). The avoided cost of this pollution reduction to the Lake system has multiple values that could offset this public investment, not the least of which is reduced impact on the provisioning service of drinking water. More than 142,000 people in Vermont and New York were estimated to be served by municipal and community water supplies from Lake Champlain in 2005 (E. Royer, VT Rural Water Association 2010, unpub. data). The forest products industry is a major factor in the ecosystem services framework. Good logging practices, such as installation of temporary skidder bridges to protect stream banks from erosion, maintain the water quality downstream of the logging site. When properly managed, these types of projects simultaneously benefit the local economy while providing a service to the ecosystem in the form of protection of the resource.
Lastly, the cultural services of the Lake Champlain Basin include recreational, aesthetic, spiritual, and educational services. These have direct economic benefits as well as more difficult to measure contributions to human well-being. For example, visitors to Vermont spent an estimated $1.6 billion in 2007, supporting more than 37,000 jobs (about 12 percent of all jobs) and contributing more than $200 million in tax and fee revenues to the State (Economic and Policy Resources, Inc. 2008). Some sectors of the Vermont tourism economy, such as retail and dining, are estimated to be two to three times more dependent on visitor spending than the national average. A more detailed 2006 study of motivations for visiting Vermont found 21 percent of survey respondents cited boating and water activities, 45 percent participated in outdoor adventure activities, and 79 percent cited participating in viewing, cultural, and learning activities (Economic and Policy Resources, Inc. 2007).
A study released in 1996 for the first Opportunities for Action (OFA) reported that visitor spending in the vicinity of Lake Champlain (within three miles of the Lake) in the summer was estimated at $107 million (based on 1992 and 1993 summer surveys), and the direct and indirect effect of these visitor expenditures was $154 million in 1992 (Holmes and Artuso 1995). A recent survey of Basin residents regarding public priorities for managing Lake Champlain found that water clarity, beach closures, safe fish consumption, land-use pattern, and invasive species were all of significant concern, with stated preference for water clarity and public beaches having the highest priority (Smith et al 2009). The impact on property values alone from water pollution can be substantial. A 1996 study of Maine lakes found that a 1 meter improvement in water clarity changed lake property values from $11 to $200 per foot frontage (Michael et al 1996). The sustainability of the economy in the Adirondack region of New York relies heavily on tourism, much of which is recreation based. A recent study examined the tourism trade in the Adirondacks and found that more than $1 billion was generated in 2009, nearly all of which came from counties that are part of the Lake Champlain basin (Tourism Economics 2010). Almost $130 million in state and local taxes were generated by tourism in these four counties in 2009. Declines in accessibility of these natural resources will affect not only the environmental health of the region, but also the economy of the Adirondacks as well. As beaches close, fish consumption advisories persist, and algae blooms become engrained in the public’s experience with the Lake, what will be the long-term costs on Basin communities and culture? Lake Champlain beach closures hit record numbers in 2010, with pathogens such as E. coli exceeding limits acceptable for swimming on many hot July and August days. For example, August 4th water samples from eight of twelve monitoring sites in the Town of Colchester found E. coli levels to be three to thirteen times the Vermont standard of 77 CFU/100 mL. From June 14th to August 11th, eleven of seventeen monitoring days in Colchester (Monday and Wednesday mornings) found E. coli levels above the standard at one or more sites, resulting in beach closures on July 1st and 2nd, and August 5th, 6th, and 7th (view results).
Management programs have been put in place to support hundreds of water-quality projects throughout the Basin, ranging from securing river corridor easements, to paying farmers for cover cropping, to providing technical and financial assistance to reduce road-related erosion. The ecological, economic, and social benefits of these projects can be documented and incorporated into an overall ecosystem services assessment of the Basin. Economic benefits cited for the Lake Champlain phosphorus total maximum daily load (TMDL) plan in the Vermont Clean and Clear Action Plan include, “clean water to attract travel, tourism, and business; improved farm efficiency; reduced property and infrastructure damage from stream flooding; reduced town road maintenance costs; [and] reduced municipal wastewater operating costs at some plants.”
Nonuse (or intrinsic value) benefits also need to be considered as an economic component in the services that the Lake Champlain ecosystem can provide. An example of a nonuse value would be a parent’s desire for the water quality of Lake Champlain to be maintained as a natural legacy so that a child may be able to enjoy the Lake to the same extent that the parent can today. The child may not yet be able to appreciate the Lake to the same extent as the parent, but may be able to do so in the future. Many residents of the Basin feel deeply held philosophical or spiritual attachments to natural landscapes, scenic settings, and the life forms they include. These sentiments may foster more responsible personal behaviors and commitments to stewardship, reflecting the importance of these resources to individuals. Such intrinsic benefits have an economic value and a complementary ecosystem value that should be accounted for.
Adaptive management principles, as described in the Chapter 2 of OFA, can be applied to all aspects of managing Lake Champlain, including the economic vitality of the Basin. In the face of growing demands on Basin resources, a platform for forward-looking, adaptive policy and planning is needed more than ever. Nearly half of Vermont’s population lives in the Lake Champlain Basin and, in aggregate, the population of Basin counties continue to grow. The viability of the dairy industry will be determined by persistent economic and ecological constraints. Population growth, however, is mostly limited to more urban and suburban areas of the basin, and trends in residential land-use change, larger home size, and greater extent of impervious surfaces present new policy and management challenges. These impacts all need to be evaluated in terms of the water quality and concordant economic impact, including the economic services lost from the impacted landscape.
Role of the LCBP in an ecosystem services assessment of the Lake Champlain Basin
The LCBP and partners recognize the need for a full assessment of the economic, social, and ecological services the Lake Champlain watershed can provide. LCBP recognizes that this project will require coordination among many groups locally and regionally. Numerous Basin organizations that the LCBP coordinates with are interested in this topic, including nonprofit organizations, local and regional academic institutions, and federal, state, and provincial agencies. The economic benefits of projects funded by the LCBP will be assessed whenever feasible, and in addition to reporting on the benefit to the ecosystem, LCBP will attempt to connect the health of the economic system to the structure and function of the ecological system. The LCBP acknowledges the direct link between the economy and the water quality of Lake Champlain and will work to identify opportunities for action that can shape a complementary relationship between economic prosperity and environmental protection.
Cox, S. and B. Searle. 2009. The State of Ecosystem Services. Boston, Mass: The Bridgespan Group.
Dodds, W. K., W. W. Bouska, J. L. Eitzmann, T. J. Pilger, K. L. Pitts, A. J. Riley, J. T. Schloesser, and D. J. Thornbrugh. 2009. Eutrophication of US freshwaters: Analysis of potential economic damages. Environmental Science & Technology 43:12-19.
Economic and Policy Resources, Inc. 2007. Vermont Visitor Profiling Research. Montpelier: Vermont Department of Tourism and Marketing.
Economic and Policy Resources, Inc. 2008. A Benchmark Study of the Economic Impact of Visitor Expenditures on the Vermont Economy – 2007. Montpelier: Vermont Department of Tourism and Marketing.
Holmes, T. and A. Artuso. 1995. Preliminary economic analysis of the Draft Plan for the Lake Champlain Basin Program. Lake Champlain Basin Program Technical Report No. 12. USEPA, Boston, MA.
Micheal, H.J., K.J. Boyle and R. Bouchard. 1996. Water Quality Affects Property Prices: A case study of selected Maine lakes. Maine Agricultural and Forest Experiment Station Miscellaneous Report 398. University of Maine, Orono, ME.
Millennium Ecosystem Assessment. 2005. Ecosystems and Human Well-Being: Wetlands and Water (Synthesis). World Resources Institute, Washington, DC.
Postel, S. L., J. Thompson, and H. Barton. 2005. Watershed protection: Capturing the benefits of nature’s water supply services. Natural Resources Forum 29:98-108.
Smyth, R. L., M. C. Watzin, and R.E. Manning. 2009. Investigating public preferences for managing Lake Champlain using a choice experiment. Journal of Environmental Management 90(1): 615-623.
Tourism Economics. 2010. The Economic Impact of Tourism in New York State: Adirondacks Focus. Report to Empire State Development/NYS Dept. of Economic Development. 30 South Pearl Street, Albany, New York 12207.
US Environmental Protection Agency. 2009. National Lakes Assessment: A Collaborative Survey of the Nation’s Lakes. EPA 841-R-09-001. Washington, DC: USEPA, Office of Water and Office of Research and Development.
Winsten, J., C. Kerchner, C. Ingels, J. Rodecap, J. Tilley. 2008. Pilot-Testing Performance-Based Incentives for Agricultural Pollution Control. Winrock International and University of Vermont. Accessed: November 7, 2010.
- Strengthen the Lake Champlain Basin economy through investments in the management of nutrient loads, toxics, invasive species, fish, wildlife, and impacts from climate change as outlined in other OFA chapters.
- Measure the impact and efficiency of these investments through an ecosystem assessment for the Lake Champlain Basin, tying ecological action to economic outcomes.
- Engage Basin stakeholders in the development of forward-looking ecological impact and policy/management scenarios, including the assessment of climate change, nutrification, nuisance species, and toxics on the economy and society.
Associated Actions / Tasks
Click Icon Next to each Action to see the associated Tasks
- Completed Task
- Active Task
- Inactive Task
Expand 10.1) Conduct full cost studies of the effectiveness of various policy and management initiatives, including water-pricing policy, stormwater utilities, farm management incentives, and point and nonpoint source regulation in the Basin to date.
|Associated Tasks||ID #||Lead Partners||Updated||Status|
|Hold a workshop or series of workshops by the end of 2012 with regional and national experts in the field of ecosystem services and ecological economics to identify other organizations currently doing work that will complement an ecosystem services assessment for the Lake Champlain Basin and identify an approach to develop a complete ecosystem services assessment of the Lake Champlain Basin. View Task Comments||10.1.1||LCBP|
|Identify long-term economic benefits that will be generated through near-term investment in conservation and restoration of the ecological engine of the Basin economy. View Task Comments||10.1.2||LCBP|
|Identify funding sources (internally and externally) to complete an ecosystem services assessment of the Lake Champlain Basin by 2013. View Task Comments||10.1.3||LCBP|
|Analyze the impact of current federal, provincial, state, and municipal policies on the delivery and sustainability of ecosystem services in the Basin and identify the impact of these policies by 2014. View Task Comments||10.1.4||LCBP|
Expand 10.2) Develop a scenario analysis with broad stakeholder input to evaluate various policy and management initiatives.
|Associated Tasks||ID #||Lead Partners||Updated||Status|
|Hold a series of workshops through 2012 involving local and regional stakeholders to provide input on policy and management initiatives directed toward each of the four types of ecosystem services (Supporting, Regulating, Provisioning, Cultural). View Task Comments||10.2.1||LCBP|
|Identify the value of Lake frontage in the Lake Champlain Basin relative to improving or diminished water quality, in terms of economic and ecological value by 2013. View Task Comments||10.2.2||LCBP|
Expand 10.3) Develop adaptive management capacity to manage the anticipated impacts of climate change, particularly on the changing dynamics between hydrological processes and eutrophication.
|Associated Tasks||ID #||Lead Partners||Updated||Status|
|Identify impacts and indicators of climate change on the regional economy as related to agriculture, business (water quality related), forest products, and tourism by 2013. View Task Comments||10.3.1||LCBP|
|Subsequent to completion of 10.3.1, incorporate mitigation of climate change into an adaptive management framework for the Lake Champlain economy by 2015. View Task Comments||10.3.2||LCBP|
|Identify the long-term benefits of river restoration programs by 2013, given the expected increase in the severity and frequency of storm events. View Task Comments||10.3.3||LCBP|
|Associated Tasks||ID #||Lead Partners||Updated||Status|
|Identify ways in which an ecosystem services approach will target management actions for the Lake Champlain Basin by 2012. View Task Comments||10.4.1||LCBP|
|Identify a plan to complete an ecosystem services assessment of the Lake Champlain Basin by 2013. View Task Comments||10.4.2||LCBP|