Algal blooms to cost Lake Erie tourism economy $110M: study

Results of an economic costs estimate suggest algal blooms will cost the Lake Erie economy $272 million a year over a 30-year period if left alone. 

The tourism sector will be the hardest hit, with a $110 million equivalent annual cost.

"We knew this problem was damaging," said report contributor Brad Bass. Bass is also the coordinator of environmental programs for Environment and Climate Change Canada.

"We had never before been able to estimate exactly what the damage was to the people affected by the problem most directly," said Bass. 

The study, Estimating the economic costs of algal blooms in the Canadian Lake Erie Basin, was published in the Harmful Algae journal (June 2019) as a collaboration between economists and Environment and Climate Change Canada. Bass's role was to put together the team of economists and answer their questions about the health of Lake Erie.

The team looked at six categories:

• Commercial fishing industry.
• Water consumers (treatment plants, industrial water users).
• Recreational users (boating, fishing, birdwatching, hunting and beach use).
• Tourism (hotels, restaurants and travel).
• Property owners.
• Non-users.

"These are the sectors that are directly affected if there is damage to the a lake, or to this lake specifically," said Bass.

In addition to looking at six categories, the report broke down the economic costs based on two scenarios — doing nothing (business as usual) or intervening through policy.

"[Business as usual] means we just allow things to continue as they're continuing now," said Bass. "Basically we don't intervene in the lake in any way to reduce algal blooms."

To calculate policy intervention economic costs, the authors made assumptions about how and when suggested policies would kick in. 

"[Policy] didn't eliminate the costs, but it had a drastic impact on reducing the economic impacts of the damage," said Bass. 

Cost to the tourism industry

According to the report, the tourism industry is the hardest hit by damage from algal blooms. 

"I didn't know if [tourism] would be number one, but I had a suspicion it would be high," said Bass about going into the study. "There are so many opportunities on tourism and a lot of areas that could be considered tourist areas, even moving 50 or 100 kilometres from the lake."

Over 30 years, the reports estimates the tourism industry's loss, with policy intervention, is cut to about $28 million. 

"It varies sector-by-sector but [policy intervention] is really a better option, a phenomenal option for the tourism sector," said Bass. "But it has benefits for all the sectors."

Other industry costs

In a business-as-usual case, the commercial fishing industry on Lake Erie would be looking at a $93 million loss over 30 years. With intervention, Bass said that would be cut by two-thirds to almost $34 million. 

For property owners, the report shows that there is an economic affect on properties up to 1.2 kilometres from the shoreline — which takes more than 24,000 residential properties into affect, with an average value of $242,000 in 2011. Doing nothing would result in a $712 million loss to the economy for these property owners. Policy intervention drops that value to $348 million. 

Annually, economic loss from recreational use could expect between a $6 and $21 million loss. 

Water users, which include farms, golf courses, industrial facilities and drinking water facilities saw "negligible" costs except when it came to drinking water facilities. There are five private drinking water treatment facilities pulling from Lake Erie, which have already reported a cost impact due to algal blooms.

A $4 million loss per year in this industry is estimated in the business-as-usual situation. 

What's next

Bass and the other authors completed their analysis and formulated this report in 2015. Since then, the data has been used as part of the Lake Erie Action Management Plan, released in 2018. 

"That's what we're all working towards, an implementation of that action plan," said Bass. "So we begin to see some real reductions in the phosphorous loads."

According to Bass, the estimates uses in the report are "conservative."

"There's a very good chance that the costs would be higher," said Bass, adding that the cost of not doing anything had never really been calculated.

"We felt it was important to tell people, to tell ourselves what the cost of the damage is," said Bass. "People who live near the lake are affected by the fact that this very large, iconic body of water could be severely damaged."