How Much are Maine Lakes Worth?

An impossible question to answer ? Surely, our 6000 scenic lakes are as woven into Maine's quality of life as they are into the landscape. One way to look at a part of this value is to estimate lakes' importance in our economy. Maine's lakes are the cleanest and least crowded in the eastern United States and forty million people live within a day's drive of them. The economic importance of Maine lakes exceeds the lure of tourist dollars, however. Clean lakes increase lakeshore property values, contribute to the economic status of entire communities, provide lower cost drinking water, and offer intrinsic, aesthetic value for recreation. Defining the value of lakes allows us to put the risk of degrading water quality and the cost of protecting our lakes in perspective. 

The information in the following summary is taken from the report "Great Ponds Play an Integral Part in Maine's Economy" by Dr. Kevin Boyle, Jennifer Scheutz and Dr. Jeffery Kahl (Jan., 1997).  Copies of this report area available for $5.00 from: Kim Junkins, Dept. Resource Economics and Policy, 5782 Winslow Hall, UMO, Orono, Me. 04469

The report looked at how lakes are used, and how much economic activity the use translates into.  The money people spend to use lakes (so called "direct expenditures" for things like gasoline, fishing tackle, and food.) gives rise to money being re-spent within communities, which creates additional sales, income and jobs ("indirect" expenditures for services such as marina attendants, supplies and services to maintain lake-related businesses). Economists can also estimate the difference between what people are wiling to pay to use lakes and what they actually spend ("net economic value"). This is a combination of peoples' satisfaction with their lake experience and the total value they place on the use. The high net economic value associated with uses of Maine's lakes draw nonresident users to Maine and is a measure of the enjoyment and pride Maine people take in their lakes. If water quality in Maine's lakes declined, the enjoyment of Maine residents and visitors, and the economic activity it creates, would be reduced. Improving water quality would have the opposite effects. Net economic values, therefore, are economic barometers that tell us what is happening to the quality of Maine's lakes.

What do people spend to use lakes every year?

*Maine's Great Ponds generate nearly 13 million recreation user days each year.

*Recreation generates $1.1 billion each year (15 % is money brought into Maine by nonresidents).

*Other uses of lake water (drinking water, youth camps, commercial uses) is worth $ 400 million.

*Public drinking water systems provide 93.5 million user days valued at over $141 million dollars. Seasonal drinking water supplies account for an additional 9.8 million user days.

Lake-front property owners also contribute to economic activity within the state through the taxes they pay and investments they make in their properties. These costs total $349 million in economic activity annually, with 25% coming from nonresident property owners.

Total Direct Expenditures for All Uses of Maine's Great Ponds. (July 1996 dollars)

Type of Use

Aggregate Annual Expenditures

	Residents	Nonresident	All Users
Recreation	$928,730,424	$158,652,660	$1,087,384,084
Other Uses1	$189,962,159	$23,070,497	$392,170,419
Lake-Front Properties	$262,468,444	$87,489,481	$349,957,925
Total Expenditures1	$1,381,162,028	$269,212,638	$1,829,512,429

Indirect Economic Value:

As money is spent and re-spent within the economy, additional income and jobs for Maine residents are supported. For example, the $1.1 billion in direct expenditures for recreation results in an additional $629 million of economic activity due to this "multiplier effect". The total economic activity surrounding Maine lakes ($2.8 billion) leads to over $1.2 billion in annual income for Maine residents and supports over 50,000 jobs. Of these, about 8,000 (roughly equal to the State's largest private employer, Bath Iron Works) are generated as a result of money brought into the state by nonresidents.

Net Economic Value:

In addition to the direct and indirect effects on Maine's economy, the total net economic value of Maine's Great Ponds is at least $6.7 billion dollars annually.

Total Net Economic Values Associated with Uses of Maine's Great Ponds (July 1996 dollars).

Type of Use

Aggregate Annual Net Economic Value

	Resident	Nonresident	Total
Recreation Uses	$173,823,970	$34,366,596	$208,190,567
Other Uses	$110,919,526	$4,036,700	$114,956,227
Lake-Front Properties	$4,803,876,456	$1,601,292,152	$6,405,168,608
Total Net Economic Values	$5,088,619,952	$1,639,695,448	$6,728,315,400

Eutrophication of Maine's lakes, the primary cause of diminished water clarity and the major threat to Maine's lakes, reduces the desirability of Great Ponds for all recreation activities. There are at least 189 lakes that have compromised water quality due to eutrophication. This is reflected by lower net economic values, lower use rates, and decreased direct and indirect sales. A simulation was conducted to investigate how a reduction in eutrophication would enhance net economic values and use rates, with consequent increases in expenditures and total economic impacts. The effects were computed from existing studies that have investigated the effect of lake eutrophication on net economic values.

Improvement of lakes with poor water clarity to the average summer minimum of unimpacted lakes would lead to an increase in net economic value over the current situation. The improvement in water clarity would be expected to increase recreation use rates by up to 13 percent (1.6 million user days) over the current estimate. Swimming and open-water fishing account for over 75 percent of the additional days of use. Reducing eutrophication would also increase direct expenditures by $107 million. Twenty-three percent ($24.7 million) of the increase in direct expenditures would be attributable to nonresidents (new money entering Maine's economy) of which $7 million (28 percent) are property taxes paid by nonresidents.

Perhaps more important is the reality that wholesale degradation of water quality is more likely than improvements. Because the relative effects of degrading water quality are greater than for improvement, we expect that failure to protect Maine's lakes will result in even greater losses than the figures cited above. Thus, state and community actions to protect water quality can have a significant pay off by maintaining and enhancing future tax revenues, employment and enjoyment of Maine's lakes. This is a core issue for the future of Maine's quality of life.

Appendix Information : Supporting Tables

Direct Expenditures for Recreation Uses of Maine's Great Ponds (July 1996 dollars).

Type of Use (Year Data collected)	Aggregate annual Expenditures
	All Users
Swimming Trips (1989)	$275,964,902
Open Water Fishing Trips (1994)	$77,069,297
Ice Fishing Trips (1994)	$18,305,768
Fishing Equipment (1988)	$59,425,736
Motorized and Nonmotorized Boating Trips (1989)	$163,282,827
Boating Equipment (1989)	$483,568,374
Waterfowl Hunting Trips (1989)	$3,902,098
Waterfowl Hunting Equipment (1989)	$5,865,082
Total Expenditures	$1,087,384,084

Direct Expenditures for Other Uses of Maine's Great Ponds. (July 1996 dollars)

(July 1996 Dollars)

Type of Use (year Data Collected)	Aggregate Annual Expenditures
	All Users
Residential Public Drinking Water (1995)	$141,274,383
Seasonal Private Drinking Water (1995)	$249,703
Commercial and Industrial Uses (1995)	$179,137,763
Attend Youth Camps (1995)	$45,358,919
Visit Youth Camps (1995)	$26,149,650
Total Expenditures2	$392,170,419