Preferences for Timing of Wetland Loss Prevention in Louisiana

1. Preferences for Timing of Wetland Loss Prevention in Louisiana Ross Moore, Daniel Petrolia, and Tae-goun Kim Dept. of Agricultural Economics, Mississippi State University May 28, 2010

2. Motivation • Approximately 40 percent of the coastal wetlands of the lower 48 states is located in Louisiana • Coastal Louisiana lost 1,900 square miles from 1932 to 2000 • Has lost an average of 34 square mile per year for the last fifty years • Hurricanes Katrina and Rita destroyed more than 217 square miles of marsh in a single season. • By the year 2050 an additional 700 square miles is projected to be lost

4. Restoration Projects • Congress passed the Coastal Wetlands Planning, Protection and Restoration Act (CWPPRA) in 1990 • Designates approximately $60 million annually for work in Louisiana. • April of 2007 the Louisiana Governor signed Louisiana’s Comprehensive Master Plan for a Sustainable Coast • “A sustainable landscape is a prerequisite for both storm protection and ecological restoration.” – CPRA Master Plan

5. Objectives • Estimate the value that the public of Louisiana places on preventing the future loss of wetlands within their state • Identify motivating factors that have an effect on willingness to pay/accept: demographics, proximity to the coast, risk preferences and risk perceptions, time preference of money, climate change, confidence in government, believe responses will influence decisions, previous knowledge of coastal protection efforts.

6. Survey • Mail survey sent to 3,000 taxpaying households in Louisiana. • Stratified by county population • Survey design • Willingness to Pay/Willingness to Accept • Long Run/Short Run Proposal • Order of the two proposals • Response Rate: 681 surveys (22.7%)

7. Survey: Preference

8. Preference

9. Potential Benefits

10. Category 3 or Greater Hurricane Expectation

11. Actual Hurricane Frequency

12. Multinomial Logit Model Variables and Descriptions

13. Multinomial Logit Model Variables and Descriptions

14. Estimated Coefficients, Standard Errors, Average Marginal Effects, and Significance Levels for the Multinomial Logit Model.

15. Estimated Coefficients, Standard Errors, Average Marginal Effects, and Significance Levels for the Multinomial Logit Model.

16. Parametric and Turnbull Nominal (Annual) Willingness to Pay and Willingness to Accept Estimates

17. Net Present Value of Willingness to Pay for the Short Run Proposal

18. Net Present Value of Willingness to Accept for the Short Run Proposal

19. Present Value Estimates of Aggregate Welfare (millions of dollars) by discount rate

20. Summary of Results • Probability of choosing short run over no action: • Increases: • Income • White • Storm protection primary benefit • Environmental benefits primary concern • Had prior knowledge of protection efforts • Decreases: • No confidence in government • Received WTP payment mechanism

21. Summary of Results • The probability of choosing long run over no action • Increases: • Income • White • Storm protection primary benefit • Environment protection primary benefit • Climate change primary benefits • Prior knowledge of protection efforts • Decreases: • No confidence in government • Presented with long run first

22. Conclusions • Found respondents are highly willing to fund prevention of wetland loss • Overwhelming support for short run proposals over long run proposals • Protection from hurricane and storm damage is primary benefit driving support • Other factors: Government, Payment Mechanism, and Environmental Benefits • Problems • Low response rate • High welfare estimates

23. Thank you