The Situation
One of the highest profile uses of the contingent valuation method in water resources management involved the re-regulation of Glen Canyon dam. In the early 1980’s it
became clear that continued operation of the dam to provide peak-load power was adversely affecting the downstream ecosystem in the Grand Canyon, and significantly reducing the quality of recreational rafting. The valuation question of concern was how much recreational rafting was worth, compared to the market value of the peak-load power supply.
Application
The Bureau of Reclamation and National Park Service worked with a consulting firm to develop a contingent valuation survey to estimate how the value of rafting changed with different flows in the Grand Canyon. The study attempted to quantify how the value of rafting in the Grand Canyon would change with more even base flows, as compared to reduced flows during peak-power periods. The study found substantial economic values for rafting with increased water flows – $2 million per year.
As in the Mono Lake study, the impact of the contingent valuation analysis helped change perspectives about how economic tradeoffs should be discussed. Rather than recreation versus hydropower, the challenge was now to find a release pattern that increased the economic value of all uses of the river water.
Results
For a variety of reasons, more even flows were put into place while the final environmental impact studies were being prepared, and Congress formalized these flows when it passed the Grand Canyon Protection Act of 1992. Whatever the effects of the contingent valuation study on that decision, the study did represent one of the first federally-funded projects to estimate non-use values. It was also one of the first contingent valuation studies included as part of a federally funded economic analysis.
Additional Research
As it became clear that more than recreation was at stake in re-regulation of the dam, it became more obvious that citizens throughout the U.S., not just rafters, cared about how dam operations affected the natural resources of the Grand Canyon. In particular, people were concerned about threatened and endangered fish, native vegetation, and birds, which were all being adversely affected by "unnatural" water flows and a lack of high spring water flows. As a result, the Bureau of Reclamation funded a major contingent valuation study of households throughout the U.S. to estimate their willingness to pay for flow regimes that would protect the natural resources in the Grand Canyon.
The results showed strong support for a more natural flow regime. While it would be difficult to point to any one study as definitively affecting the management of the Glen Canyon dam, the public support illustrated through the contingent valuation study, and in other ways, resulted in substantial changes in the management of the dam. This included large spills during the spring of 1995 to emulate the natural high spring flows.