Valuation of Water Quality in Livestock Regions: An Application to Rural Watersheds in Iowa

Abstract

This paper investigates rural residents' perceptions of the risk to water quality from large confinement facilities and their willingness to pay to delay nitratecontamination from these facilities. Rural residents are concerned about the environmental impact of confinement facilities and are willing to pay as much as $82 annually to delay nitratecontamination in their water for 20 years. These contingent valuation results are consistent with the result obtained in similar studies that used hedonic valuation methods.Key Words: contingent valuation, livestock production, nitrate contamination, rural development, water quality Value-added agriculture in the form of increased livestock feeding is often touted as a viable development strategy for rural, agriculturally dependent areas. Economic impact studies have suggested that livestock expansion strategies have the potential of adding new jobs and incomes in rural areas (Hayes, Otto, and Lawrence, 1996). In the case of the pork industry, which is currently experiencing dramatic structural change, any major expansion is likely to be in the form of a large-scale confinement production. These operations can be as large as 3,500 sows and have feeding facilities for as many as 75,000 hogs per year. These large-scale facilities can produce abundant amounts of manure and odor, creating a nuisance for nearby residents. In addition, several highly publicized spills at facilities in Terraace M. Hurleyis an assistant professorattheUniversity of Rhode Island, Daniel Otto is a professor at Iowa State University, and Janice I-Ioltkamp is a visiting professor at Iowa State University. The authors would like to thank Catherine Kling, Joseph Herriges, and Peter Orazem for their comments.North Carolina and Iowa and recent reports indicating a higher potential for groundwater contamination in Iowa (Perry, 1996) have reinforced the concerns about the vulnerability of water resources to nitrate runoff from hog waste.Recent studies have attempted to quantify the external costs of large-scale livestock production with somewhat mixed results. Studies from North Carolina (Palmquist, Roka, and Vukina, 1997) and Michigan (Abeles-Allison and Connor, 1990) indicate adjacent property values were adversely affected, while results from Minnesota (Taff, Tiffany, and Weisberg, 1996) curiously indicate no adverse effect. Each of these studies uses a hedonic framework based on the market price of residential housing. These studies incorporate measures of proximity to livestock facilities into the hedonic price equation and test whether these proximity measures significantly improve the explanatory power of their models.The hedonic price methodology is useful in deriving the external costs or benefits associ-

An economic valuation of improved water quality in Opequon watershed

“…These authors also found that the likelihood of a respondent remaining in an area for another five years positively influenced the median WTP to delay nitrate contamination. Hurley, Otto and Holtkamp (1999) assert that the results obtained in this study are similar to those obtained using the hedonic pricing method.…”

“…Numerous studies have examined water quality issues using a variety of techniques including CV (Brox, Kumar and Stollery, 2003;Collins, Rosenberger and Fletcher, 2005;Eisen-Hecht and Kramer, 2002;Hurley, Otto, Holtkamp, 1999;Loomis et al, 2000;Stumborg, Baerenklau and Bishop, 2001;Whitehead, 2000) (Table 2.1).…”

“…A similar study using CV and estimating the benefits of improved water quality was conducted by Hurley, Otto and Holtkamp (1999). These authors investigated rural residents' perceptions of the risk to water quality from large confinement facilities in two small watersheds of Southern Iowa.…”

“…Hurly, Otto and Holtkamp (1999) and Stumborg, Baerenklau and Bishop (2001) found that being a male negatively influenced one's WTP. However, Collins, Rosenberger and Fletcher (2005) found that being a male positively influenced a respondent's WTP for a watershed improvement project.…”

Impact of Environmental Policies in the Hog‐Pork Sector on Trade and Market Welfare in North America

“…These minimum monetary values can be compared with various assessments of the costs associated with specific damages for specific regions. For example, Hurley et al (1999) found that rural residents of Iowa are willing to pay up to $82 annually to reduce contamination in their water for a period of 20 years. Results of Sukharomana (in Intarapapong 1999) indicated averting expenditures and willingness to pay of consumers to avoid nitrate contamination in groundwater of $9.12 and $6.12 per month per household.…”