The Economic Costs of Algal Blooms: Great Lakes Evidence and Research Priorities

Over the past two decades there has been a re-emergence of harmful and nuisance algal blooms in Lake Erie and, to a lesser extent, Lake Ontario due mainly to increasing phosphorus loadings from non-point agricultural sources. Citizens on both sides of the Canada-U.S. border face economic costs due to these blooms. This presentation will draw upon two studies undertaken to evaluate these costs for the province of Ontario using standard economic approaches. These studies suggest that algal blooms impose considerable costs today (hundreds of millions of dollars annually) and that these costs will grow if blooms are left unchecked. The studies also consider the amount by which costs might fall if policy measures were taken to control phosphorus loadings, providing an economic basis for assessing the desirability of control. The presentation will also consider the broader questions around this kind of analysis, which is increasingly looked to by decision makers as an aid to policy development. These broader issues include the state of the socio-economic data available to undertake cost evaluations, the suitability of economic analysis as an aid to decision-making around freshwater quality and the main barriers to greater application of the approach.