The Houghton Lake Sewer Authority added a natural State-owned peatland 

 tertiary treatment system to its pond-seepage stabilization system facilities 

 to serve 6,000 full-time and 14,000 seasonal residents. Capital costs for the 

 system were $507,000; annual wetland operation and maintenance costs totaled 

 about $19,000. 



57. Thibodeau, F.R., and B.D. Ostro. 1981. An economic analysis of wetland 

 protection. The Journal of Environmental Management 12:19-30. 



This article estimates the economic values of the public benefits provided 

 by the swamps and marshes of the Charles River basin in Massachusetts. The 

 authors assess the hydrologic, aesthetic, and recreational benefits provided by 

 these extensive woodlands. The Charles River basin woodlands encompass 8,535 

 acres of marsh and wooded swamp in Suffolk, Norfolk, and Middlesex Counties in 

 Massachusetts; they compose three-fourths of all of the wetlands of Boston's 

 major watershed. 



The hydrologic functions performed by these woodlands include groundwater 

 recharge, flood control and abatement, and contaminant removal. The authors 

 estimate the capitalized value of the net social benefits provided by these three 

 functions to be over $150,000 per acre. Most of the value is provided by the 

 groundwater recharge function, however, and the groundwater recharge value does 

 not refer to a function actually performed by the wetlands. 



It is the maximal value that retrieval of the waters currently stored in 

 the aquifer would yield if society sunk wells into the aquifer and pumped the 

 waters at the recharge rate. However, the potential yield from the aquifer 

 cannot be valued in the same manner as the actual yield. 



The imputed values for other functions were developed from data and 

 research provided by the U.S. Army Corps of Engineers (flood prevention estimates 

 of $33,000 per acre for capitalized benefits) and the Environmental Protection 

 Agency and a private consulting firm (contaminant removal estimates of $16,960 

 per acre for capitalized benefits). The discount rate used to capitalize annual 

 per year benefits was 6% for the hydrologic functions (the discount rate used 

 to capitalize annual recreation benefits flows was, however, 8.75%). Thibodeau 

 and Ostro argue that the average value of the flood prevention function should 

 be used in calculating the per acre flood prevention benefits because the 

 wetlands are essentially an indivisible resource. 



The capitalized values of the per acre recreational and aesthetic benefits 

 lie between $2,145 per acre and $38,469 per acre. The lower number is based on 

 aesthetic and recreational (hunting and fishing) benefits, while the higher 

 number includes the estimated value of scientific study benefits. However, the 

 disparity in the numbers also reflects different techniques used to estimate the 

 recreational activity consumer surplus. For the smaller number, the recreation 

 related consumer surplus loss is calculated with a "willingness-to-pay" consumer 

 surplus estimate for a participation day; for the larger value, it is calculated 

 as the "will ingness-to-sell" consumer surplus estimate for a participation day 

 in the recreational activity. The various activities include small game hunting, 

 waterfowl hunting, trout fishing, warmwater fishing, and nature study. The U.S. 

 Fish and Wildlife Service supplied data on the number of participation days in 



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