Water Quality Policy Implications and Funding Opportunities

I spent this summer with two other economics REU students looking at how water quality would affect the economy in a number of ways. I focused on funding opportunities for water quality improvement and the impact that water quality has on Chetek businesses.

We sent surveys to Menomonie and Chetek residents in order to determine whether they would be willing to pass a .1% tax increase that would go towards water quality improvement. From their responses, we found that residents were supportive of local and county sales tax increases. If a sales tax increase of .1% were to pass, Dunn County and Barron County would receive an additional $440,636 and $713,305 respectively in annual sales tax revenue. Similarly, if a county property tax increase of .1% were to pass, Dunn County and Barron County would receive an additional $935,045 and $1,025,568 respectively in annual property tax revenue. While these numbers may seem dauntingly large at first glance, the average resident in Dunn County would only have to pay an additional $10 annually for the sales tax increase and $155 annually for the property tax increase. In Barron County, the average resident would pay an additional $15.60 annually in sales tax and $135.60 annually in property tax. These numbers show that while the cost to the individual would be relatively low, the county would be able to generate a large amount of revenue that could be spent on water quality improvement efforts.

The TMDL plan established by the Red Cedar River Water Quality Partnership outlines various Best Management practices along with their cost and amount of phosphorus they would reduce. Money earned from additional tax revenue could go towards funding some of these practices. Conservation tillage, for example, would reduce phosphorus by 63,000 pounds a year and much of the cost would be able to be covered by these small tax increases. More than anything, this research helped show that local residents are willing to help fund initiatives to improve regional water quality.

Our research of Chetek businesses showed that water quality in the area greatly affects local businesses. If the water quality were to improve, the amount of sales revenue and employment during peak summer months would grow in most industries. In fact, sales revenue for retail stores was projected to increase by 185% by the local business owners. On the other hand, a decrease in water quality – marked by an increase in algae blooms – would have a strong negative impact on local businesses. Retail business owners projected that a decrease in water quality would decrease sales revenue by 168%. These numbers show that improved water quality wouldn’t just increase recreational enjoyment, but it would also create growth in the local economy.