Study: Economic impact of improving Iowa water quality $30 million a year

What They're Thinking: Iowa State University economist Gabriel Lade answers questions about the first-in-Iowa study

Gabriel Lade, an Iowa State University assistant economics professor (Photo by ISU)
Gabriel Lade, an Iowa State University assistant economics professor (Photo by ISU)

Improving water quality in Iowa would increase recreational benefits to Iowans by about $30 million per year, according to a new study from Iowa State University’s Center for Agricultural and Rural Development.

The study, released Tuesday, is the first attempt in Iowa to quantify the economic impact of water quality, which impacts recreational opportunities, the costs of municipal water treatment and human and animal health.

The authors found Iowa’s public water supply systems have invested at least $1.8 million in nitrate treatment equipment since 2000 and many small cities cannot afford to meet federal drinking water standards for nitrates. Between 7 and 25 percent of Iowa’s private wells may have unhealthy nitrate levels, the study found.

Iowa is one of 12 states on the Gulf Hypoxia Task Force trying to reduce by 45 percent nitrate and phosphorus washing from Midwestern farm fields into the Mississippi River, where it contributes to an oxygen-deprived dead zone in the Gulf of Mexico.

The study does a statistical analysis of the economic value that could be generated if Iowa were to reach that 45 percent reduction in lakes. Gabriel Lade, an ISU assistant economics professor and one of the lead authors, answered The Gazette’s questions about the study.

Q: Are you the first to study this topic?

A: A lot of academic research is focused on benefits of reducing the Gulf Hypoxic Zone, but there also would be economic benefits of reducing nutrients here. I don’t think we’re the first in this (research) space, but we’re certainly the first in Iowa. We’d like to build a research program and push the literature forward.

Q: To get at the costs of nitrate reduction in public water supplies, did you combine both your case studies and cities’ applications for state funds to upgrade water treatment plants?


A: Yes. We looked for ways we could at least get some examples of real-world costs that municipalities were actually paying. The other source was we went out to interview three utilities struggling with nitrates in their facilities. It’s not a comprehensive number that we can hang our hat on for all of Iowa, but it’s to highlight that some of these costs can be substantial.

Q: A previous ISU survey showed 60 percent of Iowans had been to an Iowa lake in 2014. Did you build off that for your economic analysis of how much Iowans would pay for recreational improvements from better water quality?

A: The survey leveraged data of water quality, surveying Iowans themselves about where they go when they spend their weekends on the lake. People do make these trade-offs and travel further to go to a cleaner lake. We use statistical models to control for other amenities — Okoboji if you compare that to Saylorville, it’s really apples to oranges — then we still find a large implicit value on water quality.

Q: This report is coming out during the Iowa legislative session. Is that significant?

A: Mostly we just finished it up in January. If anything, we kind of missed the water quality bill (signed into law Jan. 31) Our goals is to put out timely, rigorous research. We hope to better inform the public about trade-offs about different agricultural processes.

Q: Do you expect feedback from the agriculture industry?

A: That’s to be seen. Agriculture provides a tremendous value to the state, the nation and the world, but that doesn’t mean this large-scale economic activity doesn’t come with a cost. Any good policy weighs the cost and benefits. I hope this contributes to the conversation.

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