Economic Benefits of Greenbelts and Parks in Anchorage

1. Economic Benefits of Greenbelts and Parks in Anchorage Steve Colt Institute of Social and Economic Research University of Alaska Anchorage “Celebrating Anchorage’s Natural Assets” 26 January 2007

2. Preview • Idea 1: Parks attract and retain Visitors (from outside Alaska) • Idea 2: Parks attract and retain residents • Idea 3: Greenbelts provide ecosystem services with high replacement costs • Idea 4: Economic benefits of parks are uncertain, but growing • Idea 5: A surprise…..stay tuned!

3. What on Earth is “Value” ? • Value is subjective • “There is no accounting for taste” • Value is determined partly by: • Circumstances (a gallon of water is more valuable in the desert) • Skills and interests (a piano is valuable to Beethoven) • Total value depends partly on number of people • Markets reveal value – where markets exist • Economists try to measure value

4. What benefits are we talking about? • Current Use • recreation • ecosystem services (habitat, stormwater filtration, air cleaning) • Future use • Non-use • option to use later, for your kids to use • existence

5. Idea 1: Anchorage parks attract and retain Visitors • (the term Visitor is used to refer to people traveling to Alaska from other states) • Tourism is Alaska’s most important export after oil and gas • Alaska is approaching 2 million Visitors per year, • Business travelers count, are especially important for Anchorage

6. Idea 1A: Anchorage is a gateway to Alaska national parks, and Alaska generally MOA 2005 CAFR p vi

7. Denali National Park = Huge Draw • Denali visitors: • Avg trip expenditure per party: $2,295 • Avg trip length: 13.6 days • Avg expenditure/day: $169 • Non-Denali visitors: • Avg trip expenditure per party: $1,054 • Avg trip length: 7.6 days • Avg expenditure/day: $139

8. Anchorage is a gateway to Alaska, but: • Anchorage is in a polite tug of war for Visitor dollars with: • Seward, Juneau, Kenai, Wasilla, Willow, Healy,… • And with: Seattle, Los Angeles, • and everywhere else that people come from

10. Capturing gateway value • Anchorage Visitor Profile – ACVB Summer 1997 Study • 1.0 million Visitors to ANC • Spend 3.9 nights in Anchorage, 11.1 nights in Alaska • 85% have attended or graduated from college • Average household income is $86,300 • Average age is 52 years old • Each spends $637 in Anchorage • Each spends $1,600 in Alaska

11. Capturing gateway value(estimates for today) • There are about 5 million Visitor-days spent in Anchorage • Anchorage summer Visitors spend at the rate of $200/person/day, or • $12.50 per person per hour (16-hr day) • That’s $1 billion of summer Visitor spending in Anchorage

12. Capturing the gateway value: • But, that $1 billion is only about 40% of the total Alaska spending of these people • Thought experiment: • 10% of the visitors stay in Anchorage for • One extra day, for a Coastal Trail day • This yields: • $26 million in additional visitor spending

13. Idea 1B: Anchorage is a world-class sports event destination • Special Olympics (2001): • 1,800 athletes + 8,000 other Visitors • $22 million in Visitor spending • Of which, $12 million was payroll – 400 jobs each lasting one year • source: ISER/Goldsmith & Larson 2002 • Our parks are our outdoor convention center.

14. Idea 2: Parks attract and retain residents • Residents are like permanent tourists • High-quality local parks keep residents in town • Ski in Anchorage….. • Or ski in Canada?

15. Residents trade off quality of life for other economic benefits • Employers may be able to get higher-quality work force for the same salary.. • Is there a skiing cardiac surgeon in the house??? • We have no systematic data on this effect

16. QOL is reflected (partly) in property values • “Hedonic” theory of market value says that value of greenbelt is capitalized into value of nearby houses • Anchorage has $20 billion of assessed value, of which about $16 billion is residential • Creekside property commands a 10-20% premium, consistent with national studies (eg Crompton 2005)

17. Property Values… • Thought experiment: • If there are 2,500 houses along creeks & greenbelts, • $300,000 value each • Then, there is ……. • $100 million of “green property value,” using the 15% premium • Note, this does not capture the benefits to “the rest of us”

18. Idea 3: Parks and greenbelts provide valuable ecosystem services with high replacement costs • Wetlands, aquifer protection • Wildlife habitat • Flood control • Improved air quality • I have no data for this one…..Sorry!

19. Idea 4:Benefits are uncertain, but growing • Value typically increases with each of these factors: • Income • Education • Number of people

20. Average annual growth rates • Real per capita income, 1960-2000 • World: 2.2% • Richest billion people: 2.7% • China: 4.3% • Real total income, 1960-2000 • World: 4.1% • Richest billion people: 3.8% • China: 6.0%

21. U.S. Educational Attainment • Share of adults with some college or more: • 1984: 39% of adults • 2001: 53%

22. Average annual growth rates • Summer Visitors to Alaska • 1989 - 2004: 6% • Cruise passengers to Alaska • 1989 – 2004: 12%

23. Recreation visits to AK National Parks avg annual growth = 7.6% Source: http://www2.nature.nps.gov/stats/

24. Growth: soft adventure…guided rafting on Chugach National Forest • 16% average annual growth for Six-mile River (1994-1998)

25. Idea 5: You don’t know what you’ve got… ‘Til it’s gone

26. Boston: Reclaiming a “park strip” Before: the Central Artery

27. Boston: Reclaiming a “park strip” During: The Big Dig

28. Boston: Reclaiming a “park strip” After:

29. And adding 1 mile of “coastal trail” The cost? $10 billion +

30. Celebrate while you can! This talk will be at:www.iser.uaa.alaska.edu ~The End