Economic Benefits of Economic Benefits of Greenbelts and Parks in Greenbelts and Parks in

AnchorageAnchorage

Steve ColtInstitute of Social and Economic

ResearchUniversity of Alaska Anchorage

“Celebrating Anchorage’s Natural Assets”

26 January 2007

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PreviewPreview• 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!

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What on Earth is “Value” ?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

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What benefits are we talking What benefits are we talking about?about?

• Current Userecreationecosystem services (habitat, stormwater filtration, air cleaning)

• Future use• Non-use

option to use later, for your kids to useexistence

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Idea 1: Anchorage parks attract Idea 1: Anchorage parks attract and retain Visitorsand 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

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Idea 1A: Anchorage is a gateway Idea 1A: Anchorage is a gateway to Alaska national parks, and to Alaska national parks, and

Alaska generallyAlaska generally

MOA 2005 CAFR p vi

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Denali National Park = Huge DrawDenali 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

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Anchorage is a gateway to Anchorage is a gateway to Alaska, but: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

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Capturing gateway Capturing gateway valuevalue

• Anchorage Visitor Profile – ACVB Summer 1997 Study

1.0 million Visitors to ANCSpend 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

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Capturing gateway valueCapturing gateway value(estimates for today)(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

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Capturing the gateway value: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 forOne extra day, for a Coastal Trail day

• This yields: • $26 million in additional visitor

spending

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Idea 1B: Anchorage is a world-Idea 1B: Anchorage is a world-class sports event destinationclass sports event destination

• Special Olympics (2001):1,800 athletes + 8,000 other Visitors$22 million in Visitor spendingOf which, $12 million was payroll – 400 jobs each lasting one yearsource: ISER/Goldsmith & Larson 2002

• Our parks are our

outdoor convention outdoor convention

centercenter.

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Idea 2: Parks attract and retain Idea 2: Parks attract and retain residentsresidents

• Residents are like permanent tourists

High-quality local parks keep residents in townSki in Anchorage…..Or ski in Canada?

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• 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

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QOL is reflected (partly) in QOL is reflected (partly) in property valuesproperty 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)

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Property Values…Property Values…

• Thought experiment:If there are 2,500 houses along creeks & greenbelts,$300,000 value eachThen, there is …….$100 million of “green property value,” using the 15% premium

• Note, this does not capture the benefits to “the rest of us”

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Idea 3: Parks and greenbelts Idea 3: Parks and greenbelts provide valuable ecosystem provide valuable ecosystem

services with high replacement services with high replacement costscosts

• Wetlands, aquifer protection• Wildlife habitat• Flood control• Improved air quality

• I have no data for this one…..Sorry!

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Idea 4:Idea 4:Benefits are uncertain, but Benefits are uncertain, but

growinggrowing

• Value typically increases with each of these factors:

IncomeEducationNumber of people

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Average annual growth ratesAverage annual growth rates• Real per capita income, 1960-2000

World: 2.2%Richest billion people: 2.7%China: 4.3%

• Real total income, 1960-2000World: 4.1%Richest billion people: 3.8%China: 6.0%

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U.S. Educational U.S. Educational AttainmentAttainment

Share of adults with some Share of adults with some college or more:college or more:

1984: 39% of adults1984: 39% of adults

2001: 53%2001: 53%

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Average annual growth ratesAverage annual growth rates• Summer Visitors to Alaska

1989 - 2004: 6%

• Cruise passengers to Alaska1989 – 2004: 12%

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000 air, highway, ferry

Cruise

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Recreation visits to AK National Recreation visits to AK National ParksParks

Source: http://www2.nature.nps.gov/stats/

avg annual growth = 7.6%

0

500,000

1,000,000

1,500,000

2,000,000

2,500,00019

79

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

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Growth: soft adventureGrowth: soft adventure…guided rafting on Chugach National …guided rafting on Chugach National

ForestForest

0

1000

2000

3000

4000

5000

6000

7000

8000

1994 1995 1996 1997 1998

Clie

nt

day

s

Sixmile

Granite/Portage

Kenai

Copper River

Year

16% average annual growth for Six-mile River (1994-1998)

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Idea 5:Idea 5:

You don’t know what you’ve got…

‘Til it’s gone

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Boston: Reclaiming a “park Boston: Reclaiming a “park strip”strip”

Before: the Before: the Central Central ArteryArtery

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Boston: Reclaiming a “park Boston: Reclaiming a “park strip”strip”

During: During: The Big The Big DigDig

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Boston: Reclaiming a “park Boston: Reclaiming a “park strip”strip”

After:After:

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And adding 1 mile of “coastal And adding 1 mile of “coastal trail”trail”

The cost?

$10 billion +

This talk will be at:This talk will be at:www.iser.uaa.alaska.eduwww.iser.uaa.alaska.edu

~The End

Celebrate Celebrate while you can!while you can!