Review of Kaufmann’s “Socioeconomic Value of the Delaware River Basin in Delaware, New Jersey, New York, and Pennsylvania,” by Matthew Rousu and Kyle DeShong.
The objective for this study is to determine of the value of all economic activity that the authors attribute to the Delaware River Basin in the year 2010.
While the authors determine the value of the economic activity in the Delaware River Basin, this isn’t indicating the economic impact. If the Basin suddenly disappeared, or decreased in quality, the money spent on skiing, for example, likely would not leave the United States. It probably would be spent on other recreation activities within the United States. The same is true for many (most) of the items on the list.
The authors rely on a large number of other estimates of individual economic impacts of various goods and services provided in the Delaware River Basin area, as they list on page 5. Given that many economic impact reports we cover have modest errors inflating the values, it is likely the total value they are estimating from these could also be inflated. Thus, the values reported are likely too high.
When compared to our “best practices,” list – How does this study do?
Things they do well:
2.) This study established that it pertains only to the Delaware River Basin by displaying a detailed map on page two of the areas included in the study
6.) The study describes the methods that were used to arrive at each conclusion.
7.) Within the report, the figures presented are often compared to that of past studies. This is likely due to the fact that one of the stated goals of the report is to, “update economic analyses for the Delaware River and Bay.”
Things they do not do well:
1.) This study states both the monetary and the jobs impact of the Delaware River Basin. This could confuse readers into thinking there is a monetary impact in addition to a jobs impact.
3.) On page 13, the authors state that the report “attempts to quantify the highest multiobjective value of water in toto for …” The authors therefore, are implicitly calculating the value of the Basin as if the entire Basin didn’t exist. These numbers are not relevant when discussing modest quality increases or decreases. Further, this isn’t calculating the economic impact of the Basin. It’s the total value of activities that take place within the area, which is different. The economic impact of the Basin would be much, much lower. (It would require a separate study to determine, however.)
5.) It is not stated in the report whether or not there were any outside reviewers prior to the publishing of the study.
8.) The funding of the study (if any) is not clearly disclosed in the report.
· The study states that the Delaware River Basin is responsible for $25 billion dollars in economic activity, but this should not be confused with the economic impact created. If the Basin ceased to exist, most of the money would stay within the four states studied, or at least within the United States. It appears the goal of this paper was to estimate the highest value possible.
· The value is likely an overestimate, as the estimates come from a large number of other surveys and economic value assessments. Given our observations that studies more will provide overestimates of values more often than underestimate values, the values reported are likely inflated.