Water quality has a significant impact on recreational value and waterfront prices

In his doctoral dissertation, Research Scientist Janne Artell of MTT Agrifood Research Finland studied the recreational value of natural bodies of water on the basis of actual market behaviour. He used extensive statistics collected on Finnish nature tourism as the base data for his research. The value of daily recreational use was calculated using the travel cost method. On the basis of the costs reported by respondents, the minimum value of a recreational experience was evaluated as EUR 6-8, while an evaluation based on distance yielded a value of EUR 19.

The study shows that water clarity has an impact on recreational activity at the national level.

"Increasing water clarity by a depth of one metre would increase recreational activity and create additional annual revenues of EUR 30-90 million from swimming and EUR 40-130 million from fishing," says Artell.

Up to One-Fifth of Waterfront Price Determined by Water Quality

The dissertation also studied the impact of water quality on the prices of unbuilt waterfront summer house plots sold in 2004. The surface water usability rating of that time was used to measure water quality. The rating uses a five-step quality ladder to describe the suitability of a body of water for recreational use.

"The rating is not entirely comparable to the current ecological classification of bodies of water, but it may be a better indicator of the actual quality experience during the transaction," Artell points out.

A waterfront plot by a body of water with an excellent water quality rating yielded a price approximately 20 per cent higher than one by a body of water with a rating of satisfactory. The impact of water quality on the prices of recreational waterfront plots is comparable to that of shore planning. In 2004, plots with shore plans were roughly 35 per cent more expensive than ones with no shore plan.

People Will Pay for Quality

The conservation of bodies of water also entails financial benefits. Finnish people think of their summer residences as long-term investments and are willing to pay for better water quality -- both in terms of higher prices and longer distances. In 2004, plots for summer houses were most often purchased near bodies of high-quality water.

The new ecological water quality indicator that guides water policy may not be a very good measure of the experience of water quality and recreational potential. Study of the old, recreation-weighted usability rating also indicated that subjective experiences of water quality only corresponded to reality in roughly half of all cases. For water policy to achieve the desired effect, quality indicators should better correspond with discernible changes in quality, or policy-makers should better understand the discrepancies between the indicator and subjective experience.

"Thus, a body of water in a relatively poor ecological condition can be well-suited for recreational use," Artell concludes.

Janne Artell, Master of Science (Agriculture and Forestry), will defend his doctoral dissertation "Recreation Value and Quality of Finnish Surface Waters -- Revealed Preferences, Individual Perceptions and Spatial Issues" at the University of Helsinki at noon on 15 November 2013 (Main Building, Auditorium XV, Unioninkatu 34). Professor Jeffrey Englin (Arizona State University) will serve as the opponent, with Professor Markku Ollikainen (University of Helsinki) acting as the custos.