Economic Analysis of Recreation Access at a Lake Facing Water Crisis due to Municipal Water Demand

Droughts and water demand for competing uses such as municipal supply, nature-based recreation, and fisheries have added challenges in lake management. Sustaining the benefit of nature-based recreation at public lakes requires understanding the economic significance of water resources used for nature-based recreation and its sensitivity to water levels. By using the case of Canton Lake, a municipal water source and regional recreation hotspot in Oklahoma, this study characterizes the economic value of recreation use under normal water conditions and attempts to project a lower bound estimate of the reduction in visitor welfare due to municipal drawdown or drought. This was achieved by combining on-site visitor survey data with a truncated negative binomial regression model to estimate the non-market value of recreation access at Canton. Aggregation of the benefit across the visitor population yielded $8.4 million in the total economic value of recreation access at Canton. Survey responses on contingent behavior indicated that the welfare impact of a potential reduction in water level due to municipal drawdown could be as high as $4.6 million. Findings suggest the importance of water level for visitation and the economic value of nature-based recreational use at a rural lake. It also highlights the enormity of the impact that managers may anticipate from a decline in visitation due to drawdown or drought. Stakeholders including conservation groups, lake managers, recreation user groups, and regional economic planners may find this information useful in advocating for conservation, negotiating water rights, and balancing between uses (i.e. consumption and nature conservation) at Canton and other similar lakes.