MSU Agricultural, Food, and Resource Economics
In recent years the removal of dams that pose environmental hazards has been seen as a river restoration and management tool. The ecological benefits of removing dams, such as the restoration of water temperatures and fish passage, have been well documented. However, fewer studies have evaluated the economic benefits and impacts of removing dams.
This study uses the proposed removal of the Marion Dam in Osceola County Michigan as a case study to evaluate recreational fishing benefits and economic impacts associated with removing the dam. The major objective of this research study was to estimate the recreational fishing benefits and economic impacts of removing the Marion Dam and restoring the Middle Branch River (MBR) and Marion Mill Pond (MMP). Both recreational fishing benefits and economic impacts were evaluated at the county (Osceola), Muskegon River Watershed (MRW) and the state of Michigan regional levels. Recreational fishing benefits were estimated using the Michigan Angling Demand Model (MADM). Economic impacts were evaluated using IMPLAN an input-output modeling software.
The MADM predicted an increase in recreational fishing trips to Osceola County and the MRW of 2,051 and 1,390 total user days respectively. Analysis of a 16 mile change in the MBR from secondary quality to top quality resulted in a statewide increase in welfare of about $39,124 per year. However, the Net Present Value (NPV) of the recreational fishing benefits was estimated to be negative when the dam removal cost estimated at $4,287,500 was factored in. Although the dam removal cost outweighed the estimated recreational fishing benefits, this does not imply that the project is economically unjustifiable because recreational fishing benefits are only one of the many benefits associated with removing the dam. Other benefits such as enhanced property values, potential improvements in boating, swimming and non-use benefits were not estimated.
Impact analysis using IMPLAN showed a minor ongoing increase in the total industry income and output to Osceola County and the MRW as a result of increased recreational fishing trip expenditures. When recreational fishing expenditures go up the most impacted industry sectors were shown to be Eating and Drinking, General Merchandise Stores and Domestic Trade.
One time economic impacts of the proposed Marion dam removal and restoration of the MBR and MMP were estimated to result in some increases employment, value addition and output to the three regional economies. In particular, the project was estimated to create 55 annual part time and full time jobs, with 21 jobs coming from the MRW, 5 from Osceola County and the rest coming from outside the watershed. Some of the most impacted industry sectors due to the dam removal, river and pond restoration project were found to be Domestic Trade; New Utility Structures and Engineering-Architectural Services. Although the impact analysis results may predict increases in employment and income, it is important to note that such gains are usually offset by reductions elsewhere in the economy. Reductions and increases in employment and income are usually transfers in economic activity at the national level.