United Slates
Environmental Protection
Agency
EPA841-N-12-004
Did You Know?
Maintaining the integrity of
natural biological and
physical systems provides
economic benefits through
ecosystem service provision.
Degradation of riparian
ecosystems can cause
negative economic impacts
far from the altered site.
Protecting healthy
watersheds reduces capital
costs to supply clean
drinking water and to treat
waste water.
Healthy
Watersheds
support healthy
economies!
Protecting Healthy
Watersheds...
--Lowers drinking water
treatment costs
--Avoids expensive
restoration activities
--Sustains revenue-
generating recreational
and tourism opportunities
--Minimizes vulnerability
and damage from natural
disasters
--Provides critical
ecosystem services at a
fraction of the cost for
engineered services
--Increases property value
premiums
--Supports millions of jobs
nationwide
--Ensures we leave a
foundation for a vibrant
economy for generations
to come
The Economic Benefits of
Protecting Healthy Watersheds
Protecting our nation's healthy watersheds makes economic sense
Healthy intact watersheds provide many ecosystem services that are necessary for our social and
economic well-being. These services include water filtration and storage, air filtration, carbon storage,
nutrient cycling, soil formation, recreation, food and timber. Many of these services have not been
monetized and therefore the economic contributions of healthy intact ecosystems are often under-valued
when making land use decisions. Ecosystem services provided by healthy watersheds are difficult to
replace and most often very expensive to engineer (see chart). An engineered ecosystem service
replacement may only provide a fraction of the services provided by highly functioning natural
systems.
Preventing impairments in healthy watersheds protects valuable ecosystem services that provide
economic benefits to society and prevent expensive replacement and restoration costs. Maintaining
riparian connectivity and natural processes in the landscape provide a supporting network for
ecological integrity, ensuring the sustainable and cost effective provision of clean water over time.
New water filtration plant
Watershed Conservation
Wastewater treatment
Forest buffers
Conventional wastewater
Wetlands construction
$8-10 billion
$8.56/lb Nitrogen
$3.10/lb Nitrogen
$3.24/1000 gallons
$0.47/1000 gallons
Capital and operating costs
to filter drinking water in
New York City
(2006 dollars)
Chesapeake Bay nitrogen
reduction
Average wastewater
treatment costs
Watershed protection is less expensive than building new "grey" infrastructure
Hanson, Craig et al. 2011. Forests for -water: exploring payments for -watershed services in the US south.
World Resources Institute Issue Brief, Issue 2, Ppl5.
How is monetary value assigned to an ecosystem service?
Environmentalists and economists frequently suggest that there would be a greater incentive for
environmental stewardship if ecosystem services were valued in a manner that reflects the large
contribution they have to our economy and society. Assigning a monetary value to a particular service
can be very complicated due to issues of scale and the complexity of ecological interactions that make
isolating the economic effects of one service difficult. Although challenging, valuation is seen as
essential for encouraging conservation. Economists have developed innovative methods that attempt to
quantify ecosystem services and the economic benefits of conservation.
Instead of developing values for individual landscape features, such as a wetland, a healthy stream
reach or headwaters, many economists have found that holistic valuation techniques that monetize a
range of services provided by a landscape to be a more effective communication tool. At times, value is
measured indirectly through payment for ecosystem services (PES) programs that compensate
landowners for conserving land so that others may benefit from the multitude of ecosystem services the
land supplies. Value can also be estimated by citizen's willingness to pay (WTP) to use or protect a
land area or ecosystem service.
Another common indirect valuation method is the estimation of avoided costs to society due to
protection activities. Cost avoidance scenarios are used to communicate the costs associated with losing
ecosystem services and replacing them. These scenarios are commonly used to show costs saved from
the prevention of flood damage or impairments that would occur if a floodplain was not intact.
www.epa.gov/healthywatersheds
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Page 2
The Economic Benefits of Protecting Healthy Watersheds
Floods cause an
average of $8
billion in damage
every year in the
United States
Protecting healthy watersheds avoids future costs and benefits communities
Investing in the maintenance of healthy watersheds can significantly lower costs associated with
water treatment and flooding. In a study of 27 US water suppliers, researchers found that
protecting forested watersheds used for drinking water sources can reduce capital, operational
and maintenance costs for drinking water treatment. They found that watersheds with greater
percentages of protected forest correlate to fewer water treatment expenditures (see table).
Retaining high quality natural green infrastructure minimizes property damage and clean-up costs
from flood damage and storm surges. Forested cover prevents runoff from moving rapidly across
the landscape and allows it to slowly infiltrate into the soil, reducing erosion and high flows. Intact
wetlands store and capture excess water. For example, wetlands surrounding the Boston area have
been estimated to prevent $42,111 of flood damage per acre of intact wetland. A healthy watershed
will reduce the area and impact of a flood, minimize the economic burden on public infrastructure,
reduce erosion and water treatment costs and can restore natural groundwater recharge.
Healthy watersheds that maintain protected riparian corridors are expected to be more resilient to
the anticipated effects of climate change. Expenses associated with recovery from extreme weather impacts increased by a
factor of six between 1997 and 2007. This rising trend is expected to continue. Floods now cause an average of $8 billion in
damage every year in the U.S. The most efficient way to avoid excessive future costs is to increase the flexibility of
ecosystems now so that they may function and retain resiliency under a wider range of climatic conditions. Riparian areas
. that are hydrologically connected to their landscape can
maintain their functionality, are more adaptable to change, and
better equipped to handle large storm events.
' Future costs associated with the loss of natural intact systems
and the services they provide may include constructing new
infrastructure to manage and treat more stormwater and
drinking water and greater clean-up costs from natural
disasters. Comparing future adaptation costs to current
short-term profits from land conversion can accurately reflect
the ecological and economic consequences of land use
decisions.
Treatment
Share of forested costs per 3,000
watershed
60%
50%
40%
30%
20%
10%
$29
$36
$46
$58
$74
$91
Average annual
treatment costs
$297,110
$369,380
$465,740
$586,190
$746,790
Cost increase over
60% forest cover
24%
57%
97%
151%
211%
$923,450
Percent forest cover and predicted water treatment costs based on 27 US water supply system, based on
treatment of 22 million gallons per day, the average daily production of water suppliers surveyed.
For more information, seePostel, Sandra L. and Barton H. Thompson. 2005. Watershed protection:
capturing the benefits of nature's -water supply services. Natural Resources Forum. Issue 29, Pp 98-108.
Economic and ecological benefits of conservation development
$1.40
$1.20
Commercial & Industrial
Farm/Forest/
Open Space
Residential
Conservation development preserves open space and maintains
landscape connectivity, while clustering development to the
least environmentally sensitive areas. Traditional development
requires intensive and costly additions of grey infrastructure to
connect new neighborhoods to road and utility networks. In a
review of 98 communities across 21 states, researchers found
that for every dollar received from residential development
revenues, a median of $1.16 was spent on providing services
to the new community by the local government (see figure).
Conservation development provides economic benefits to
communities because it consumes less land, needs fewer roads,
resources and utility infrastructure. Additionally, many studies
have shown that people are willing to pay a premium to live in
conservation developments; these premiums provide greater
revenues to local communities.
The median cost to provide public services to different land uses per dollar of revenue raised (n=98 communities)
Reprinted -with permission from Crompton, John L. 2007. "The impact of parks and open spaces on property taxes. "The Economic
Benefits of Land Conservation. Ed. Constance T.F.deBrun. The Trust for Public Land. Ppl-12.
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The Economic Benefits of Protecting Healthy Watersheds
Page 3
0
B
BICYCLING S1 77 BILLION
CAMPING $36 4 BILLION
FISHING S4 1 BILLION
HUNTING S2 2 BILLION
PADDLING $48 BILLION
Recreation and tourism
Recreation and tourism are billion-dollar
industries in the United States. According to the
American Sportfishing Association, there are
over 30 million anglers in the U.S., generating
over one million jobs and over $45 billion in
retail sales annually. Healthy intact ecosystems
are essential to the viability of both commercial
and recreational fishing. More people in the U.S.
fish (30 million) than play golf (24.2 million) or
play tennis (10.2 million).
In a 2003 study, the Outdoor Industry
Foundation found that the outdoor recreation
economy contributed $730 billion annually to
the economy, supported 6.5 million jobs and
generated $88 billion in state and federal tax
revenues. Wildlife watchers in The Chesapeake Bay region spend about $3 billion annually on trip-related expenses and
equipment; this estimate does not include job creation and multiplier effects from these activities. Rural areas near forest
land and other types of open space often depend on tourist spending to help support their local economies. Outdoor
recreation and eco-tourism are large economic forces whose foundation rely on the maintenance of healthy watersheds and
the protection of open space.
More people in the United States fish (30 million) than play golf (24.2 million)
or play tennis (10.2 million)
SNOW SPORTS $8.8 BILLION
TRAIL S11 2 BUION
WILDLIFE VIEWING $2.7 BILLION I
TOTAL S87.9 BILLION
Federal and state tax revenues generated by recreational activity
Outdoor Industry Foundation 2003
Property value premiums
People value living near healthy clean water. Studies from Maine and Minnesota show
that home values declined by tens of thousands of dollars with declines in water quality.
The aggregate effect of an increase in property values attributed to good water quality on a
single lake equates to millions of dollars per lake in these areas. Further, recent studies
around the country (e.g., in Colorado, Pennsylvania, Oregon, Maryland, Ohio and
Virginia) have shown increased property values and tax revenues from properties near
open space, green space, walking/biking trails, or riparian areas. Even in tight economic
times, a relatively higher premium is placed on properties with access to nature. For
example, a current study of five counties in southeastern Pennsylvania shows that open
space is attributed with adding $16.3 billion to the regional housing stock value. Clean and
healthy waterfronts boost property values and revenues for adjacent retail and commercial
businesses, too. Waterfront business properties are attractive to customers and have
greater property value premiums when they are near clean waters. Preserving healthy
watersheds and protecting open space while providing access to people has the potential to boost
local revenues while providing attractive amenities.
Quality of life and health benefits
The EPA and other public health organizations have long acknowledged the link between water
and air quality to human health. When people think of human health and the environment, they
often think of the negative health effects from an impacted environment, rather than the positive
impacts that a healthy environment can have on human well-being.
There are social and health benefits related to the proximity of people to nature, parks, walking
trails and biking trails—both in the form of physical exercise and mental stress relief. Forests
outside of urban areas significantly contribute to human health in urban areas. These health
benefits have the potential to provide significant cost savings in health expenditures. People who
exercise regularly and seek stress relief are generally healthier, have fewer insurance claims and
spend less time in hospitals, thus their societal health care costs are lower.
Forests outside
of urban areas
significantly
contribute to
human health in
urban areas...
reducing health
expenditures
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About Healthy
Watersheds
EPA's Healthy
Watersheds Initiative
(HWI) was developed to
protect the nation's
remaining healthy
watersheds, prevent them
from becoming impaired,
and accelerate our
restoration successes.
The HWI complements
existing EPA program
efforts by focusing on
protection of high quality
watersheds. These healthy
areas are identified
through holistic aquatic
ecosystem assessments.
Protection and restoration
priorities are developed
through these assessments
to strategically implement
protective actions that are
both economically and
ecologically beneficial.
We can't afford not
to protect our
nation's remaining
healthy watersheds!
If you would like to
receive a copy of a white
paper on the economic
benefits of protecting
healthy watersheds
or learn more about
Healthy Watersheds at
EPA,
Contact Laura Gabanski:
Gabanski.Lauratgiepa. gov
or
Visit our website
www.epa.gov/
healthywatersheds
The Economic Benefits of Protecting Healthy Watersheds
Page 4
People support protecting our nation's environment—it's good for the economy
Citizens across the United States have overwhelmingly voiced their support of environmental
protection: between 1994 and 2004 over 75% of conservation referenda on ballots were passed and
a 2011 Gallup poll shows that nearly 80% of people worry about pollution of lakes, rivers, streams
and drinking water.
The United States has spent on average $1 billion per year on stream restoration since!990. These
numbers are expected to rise as communities work to mitigate environmental problems. Restoration
efforts are less successful without a supporting ecological network of healthy watersheds. Protect-
ing highly functioning aquatic ecosystems is a cost-effective way to sustainably provide the multi-
tude of services required to meet society's needs. Studies show that the total economic value of
intact systems exceeds that of lands converted for intensive economic uses over time.
Understanding the contribution that healthy watersheds provide to local economies is an important
tool for land stewardship. Strengthening protection of high quality waters or diverting new
development from these sensitive areas can have a positive economic and social impact and
maintain these benefits for generations to come.
Selected Publications and Resources
Ecosystem services provided by conserving forest land
Forests, water and people: Drinking water supply and forest lands in the Northeast and Midwest United
States
http://na.fs.fed.us/watershed/fwp_preview.shtm
This analysis by the US Forest Service highlights the connection between forests and the protection of surface
drinking water quality.
Investing in protecting healthy watersheds avoids future costs
Forests for water: Exploring payments for watershed services in the U.S. South
http://www.wri.org/publication/forests-for-water
This World Resources Institute study from 2011 explores the use of landowner compensation to protect natural
resources and for avoided costs.
Green infrastructure: Smart conservation for the 21st century
Mark A. Benedict and Edward T. McMahon
http^/www.greeninfrastructure.net/sites/greeninfrastructure.net/files/G l_RR.pdf
This 2002 publication lays out the natural green infrastructure concept of protecting ecological hubs and corri-
dors and discusses how protecting these areas avoids future costs.
Revenues generated in recreation and tourism sectors from healthy watersheds
American Sportflshing Association
http://www.asafishing.org/
This organization provides links to several studies that explore the economic impact of the hunting and fishing
industries, which rely on healthy fish and wildlife habitats.
Outdoor Industry Association
http: //www. outdoorindustrv. org/national-economic-impact-reports .php
This website provides links to comprehensive economic reports on the impact that outdoor recreational activity
has on the economy.
Valuing ecosystem services
The World Conservation Union (IUCN) Value: Counting ecosystem services as infrastructure
http://www.iucn.org/what/tpas/greeneconomv/resources/documents/71136/Value-counting-ecosvstems-as-water-
infrastructure
This 2004 IUCN publication is a comprehensive look a how ecosystems provide valuable services and the
critical need for investment in protecting natural systems.
The Economic Benefits of Protecting Healthy Watersheds Fact Sheet is produced by the U.S. Environmental Protection Agency. Mention of commercial
products, publications, or web sites in this fact sheet does not constitute endorsement or recommendation for use by EPA or its contractors, and shall not
be used for advertising or product endorsement purposes. The discussion in this document is intended solely as guidance. Thus, it does not impose
legally binding requirements on EPA, States, or the regulated community. This guidance does not confer legal rights or impose legal obligations upon
any member of the public. This is a living document and may be revised periodically without public notice. EPA welcomes public input on this
document at any time.
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