Estimating the economic costs of algal blooms in the Canadian Lake Erie Basin.

Over the past two decades there has been a re-emergence of regular harmful algal blooms in Lake Erie due to increasing phosphorus loading, mainly from non-point agricultural sources. The Canadian and United States governments have jointly agreed to reduce phosphorus loadings to the lake in order to control the extent and severity of the blooms. Citizens on both sides of the border face a number of economic costs, both market and non-market, as a result of the blooms. This study values these costs for the Canadian portion of the Lake Erie basin economy using standard economic approaches that are widely applied within the world of cost-benefit analysis. The results suggest that algal blooms will impose equivalent annual costs equal to $272 million in 2015 prices over a 30-year period if left unchecked. The largest market costs will be imposed on the tourism industry ($110 million in equivalent annual costs) and the largest non-market costs will be borne by recreational users and those who place inherent value on the lake's quality ($115 million in equivalent annual costs). Management action to reduce phosphorus loadings is found to be justified on economic grounds if the 30-year net present value of the reduction program is less than $1294 million (2015 Canadian dollars).