Challenges and Opportunities for Nonmarket Valuation of Water Among the Anishinaabe Nations of the Great Lakes Basin


Lake Superior

In Brief

Most people are not accustomed to putting dollar values on environmental services. US federal agencies, however, are required to assess the impacts of economically significant policies as measured by their benefits and costs to society. Nonmarket valuation grew out the failure of neoclassical economics to value impacts not priced in markets; it describes the process used to estimate the economic value of nonmarket goods and services. Few nonmarket valuation studies have been conducted among indigenous communities because of differences between indigenous and Western belief systems, an inability to use certain valuation techniques, and difficulties obtaining information and respondent pools for surveys. As a result, indigenous values for environmental resources run the risk of being ignored in some policy decisions. This overview considers the theoretical and methodological issues facing the nonmarket valuation of water quality in Anishinaabe communities and suggests solutions for future studies.


Key Concepts

  • Nonmarket values for water resources are used for guiding governmental policy, but existing techniques are not regularly applicable or used in collaboration with indigenous peoples.
  • The Anishinaabe people constitute 163 sovereign nations, primarily located in the Great Lakes’ watershed, for whom water is a sacred, holistically valued resource.
  • There are values for water resources, particularly those related to cultural identity, which cannot be captured by nonmarket valuation.
  • While nonmarket valuation techniques that use property values for eliciting values will not work for the Anishinaabe, techniques that rely on travel costs to recreational, historical, and cultural heritage sites or stated preferences methods may be useful for guiding policy.
  • Small, on-site surveys, developed using extensive pre-testing and in collaboration with stakeholders, are suggested to overcome the shortcomings and challenges facing nonmarket valuation in Anishinaabe communities.

Introduction

Water provides services essential to livelihoods, leisure, ecosystem functions, community, and cultural and personal identity. Although some of these services are traded in markets, like potable water, most are not, ­and are thus likely to be allocated in a manner that does not afford the greatest possible benefit to society.1 To aid environmental policy decisions, and subsequently improve social welfare, economists have developed methods, collectively known as nonmarket valuation, for monetizing the benefits people receive from environmental resources. Nonmarket values are regularly used by national and subnational government entities, as well as by international organizations and in judicial proceedings.2 Few nonmarket valuation studies, however, have been conducted among indigenous peoples, so estimates of economic benefits that they derive from environmental resources are often not available to decision makers.3

The dearth of nonmarket values for indigenous communities is in part due to differences between indigenous and Western-based belief systems. Nonmarket valuation, developed within Western belief systems, is rooted in the assumption that individuals make choices to maximize their happiness (i.e., Utilitarianism), which depends, in part, on the wellbeing of other people, animals, and ecosystems. Contexts in which this framework does not apply exist in every society, but ethnographic and linguistic evidence suggests they are more common in indigenous cultures.3-5 The challenge to economists is to identify instances when nonmarket valuation can be effectively used to elicit indigenous values and where alternative methods are more appropriate. This paper considers the potential use of nonmarket valuation methods within Anishinaabe communities of the Great Lakes Basin, with an emphasis on water quality benefits. Many of the issues discussed below are also relevant to other US and Canadian indigenous peoples, but given the immense heterogeneity in beliefs and practices among these groups, we concentrate on the Anishinaabe, which, despite their cultural differences, hold sufficiently similar beliefs and shared experiences for the purposes of this assessment.

Anishinaabe Nations

The Anishinaabe are culturally related indigenous peoples primarily located in the Great Lakes region, including the Algonquin, Odawa, Ojibwe, Oji-Cree, Potawatomi, and Saulteaux peoples. Oral histories, corroborated by freshwater archeology, describe the Anishinaabe as the descendants of caribou hunters who inhabited land now beneath Lake Huron over 7,000 years ago.6 Beginning 1,500 year ago, ancestors of the Anishinaabe began a centuries-long western migrating from the Atlantic coast.6 Archeological evidence traces Anishinaabe presence in the Great Lakes to 1200 BCE.6 Today there are 48 federally recognized sovereign nations situated on the Great Lakes coastline, another 115 within the watershed. By maintaining a contiguous relationship with the coastline for such an extended period, scientists and citizens of these nations have a culturally dependent and sustaining relationship with land and water through seasonal harvest and maintenance activities.7 Water-based activities include subsistence and commercial fishing, wild-rice agriculture, and shoreline recreation. Although comprehensive data are unavailable, Kappen et al. report an annual substance-harvest of >19,000 pounds of fish from the Great Lakes.8 Similarly, Hudson et al. report that 245 Great Lakes commercial fishing licenses are issued annually by US indigenous nations.9

For the Anishinaabe, water is sacred and essential for all life on earth.10-12 Water itself is considered to have a right to a quality existence. These rights are viewed in a relational context with other living and non-living parts of the earth, where the overall balance, rather than the use of individual components, is of paramount importance. Basic geoscience information related to water (nibi) is embedded in the Anishinaabemowin language. For example, the morpheme “bii” appears in words focused on the use of water. A leaf, used by plants to store and process energy through water, is “niibiish.” This, and other linguistic evidence supports the representation of water as part of a holistic ecosystem and, therefore, focusing on individual aspects of nature is seen as shortsighted.13

In the US, federal agencies are required to consider the impacts of actions affecting the public and the environment, yet little attention has been given to indigenous relationships with land and water and how their perceptions and values for management differ from other user groups.14,15 In 2008, the Chiefs of Ontario drafted a “Water Declaration of the Anshinabek, Mushkegowuk and Onkwehonwe,” which emphasized the caretaking role of indigenous people with regard to the environment and decision making and the failure of government led solutions thus far to solve water related problems.11

Economic Values

What is the value of visiting a Great Lake beach or of improved wetland biodiversity? Most people are not accustomed to putting dollar values on environmental services. In markets for typical goods and services, such as bottled water, exchanges between sellers and buyers—based on sellers’ production costs and buyers’ willingness to pay—result in observable sales prices. A sales price is not equivalent to the economic value of a good or service, but when coupled with additional market information it can be used to determine value. Market information does not exist for many environmental services; thus, even though they provide considerable benefits, like an enjoyable day at the beach or sense of satisfaction knowing that a wetland is ecologically healthy, their values cannot be readily established.

Nonmarket valuation describes the process economists use to estimate the economic value for goods and services not sold in markets. Some people object to nonmarket valuation on moral grounds or consider it inappropriate for certain cultural contexts, the main opposition being that the estimated values are anthropocentric and fail to account for biocentric or ecosystem needs (i.e., it prioritizes humans over other species).16 Yet, if no values are estimated, environmental services run the risk of not being considered in the policy decisions.

Economists view environmental resources as having use and non-use values. Use values refer to the benefits derived from the active use of environmental resources; they are further divided into direct use values (i.e., benefits from the direct consumption of a resource), indirect use values (i.e., benefits received tangentially from a resource), and option values (i.e., benefits received from ensuring a resource is available for future direct and indirect uses). Non-use values are independent of these uses and refer to the benefits derived from preservation and existence, where preservation values pertain to the benefit associated with bequeathing resources to future generations and existence values the benefit associated with the knowledge that a resource exists. In this taxonomy, known as the Total Economic Value (TEV) framework, each benefit category is assumed to have distinct impacts on wellbeing, although, in practice, they are often difficult to separate.

Several tools are available to monetize the direct and indirect use value described in the TEV framework, which can be broadly classified as revealed preference or stated preference approaches. Revealed preference methods infer values from observed choices made within labor, housing, and product markets, while stated preference methods infer values from choices made within hypothetical markets presented in surveys. Economic values in both approaches are reflected in people’s willingness-to-pay (or willingness-to-accept) for a change in an environmental resource.

 

Kayak, Boundary Waters Canoe Area, MN, 7/2016. Credit: Tracy Boyer.

In effect, the amount of income that a person would exchange for a change in an environmental resource while maintaining their overall level of satisfaction serves as a monetary measure of a person’s welfare.

Nonmarket valuation is grounded in rational choice theory wherein people make decisions to maximize their wellbeing. Consequently, nonmarket valuation depends on a set of assumptions about peoples’ preferences for environmental resources; most notably, the existence of stable well-defined preferences, the substitutability between environmental services and income, non-satiation (i.e., having more of a service enhances wellbeing), and transitivity (i.e., there are no preference cycles). In many instances, there is also an implicit assumption of some form of property right over an environmental resource.4

Challenges to Valuation: Theoretical Issues

The extant literature identifies several theoretical issues with conducting nonmarket valuation in indigenous communities.4,5 We provide an overview of these issues, then, in the next section, concentrate on the technical concerns associated with nonmarket valuation methods as applied to water quality. A key theoretical concern is the lack of substitutability for some environmental services. Adamowicz et al. define classes of services where substitution is either taboo (i.e., sacrosanct and nonnegotiable) or is somehow restricted by the type or scope of trade-offs that can occur.4 Economic values for an environmental service cannot be estimated if substitution between the service and other sources of welfare, like income, is prohibited by social norms. When substitution is restricted, economic values can be estimated but the process is complicated by the need for additional information about the relevant constraints. The Anishinaabe ontological perspective, and the centrality of water to livelihood activities, suggest there are instances when, due to limited substitutability, nonmarket valuation is an ineffective and inappropriate tool for evaluating water resource management decisions.

Several related theoretical issues also hinder the use of nonmarket valuation in indigenous contexts. Indigenous views of governance, property rights over environmental resources, and intra-communal resource sharing may at times violate the underlying assumptions required for nonmarket valuation.4 The assumption that people have well-defined preferences over complex and uncertain environmental policy options has been increasingly scrutinized within the stated preference literature.17-20 Critics argue that preferences for such policies can only be formed through a process of social learning and negotiation—a process that is absent from standard valuation methods. This issue is especially pertinent to studies conducted in indigenous communities, where beliefs about environmental management policy are, relative to nonindigenous communities, determined collectively.

Challenges to Valuation: Methodological Issues

We identify methodological issues facing the nonmarket valuation of water quality changes to Anishinaabe communities. For revealed preferences, we consider the hedonic property, travel cost, production function, and averting behavior methods. We also consider discrete choice experiments, the preferred format for most stated preference surveys.22

Queen of the Woods and Water, painting by David Shananaquet. Credit: Margaret Noodin.

Hedonic Property Method

The hedonic property method uses observed sales prices of residential housing properties, or occasionally sales prices of undeveloped land, to estimate the value property owners place on nearby environmental amenities. Given sales price data and information on the structural, neighborhood, and environmental characteristics of each home, it is possible to isolate how an environmental characteristic is related to a change in the property value. This estimated relationship is used to recover a willingness-to-pay value.23 Recent applications of the hedonic method find a positive relationship between property values and water quality, although the effect is mostly confined to waterfront and near-waterfront homes.24-27 Hedonic studies are typically conducted in urban and peri-urban areas; they are less common in rural areas due to insufficient numbers of property sales.

The General Allotment Act of 1887, also known as the Dawes Act, allocated tribal lands to its members, with the intention of abolishing reservations and promoting the assimilation of indigenous people into non-indigenous society.28 Since this time, land tenure on indigenous reservations has mostly fallen into two categories: trust land and fee lands. Titles to trust lands are held by the US federal government, with either indigenous nations or persons holding the beneficial interest. Titles to fee lands are held by their owner, who may be indigenous or nonindigenous. Among Anishinaabe nations, there are considerable differences in the relative amounts of trust and fee land, where, for example, the Lac Courte Oreilles Reservation is nearly all trust land while the Bad River Reservation is almost 50% fee land.29

This land tenure system largely precludes use of the hedonic property method. For many Anishinaabe communities, there are not enough property transactions on tribal lands for a hedonic analysis. Even where property transactions are more common (i.e., the sale of fee lands or private land adjacent to tribal lands), there are likely too few transactions, or the market may not be sufficiently competitive, to recover valid willingness-to-pay values for ambient water quality. Furthermore, the participation of non-indigenous people in these property markets means that estimated willingness-to-pay values do not uniquely reflect indigenous values.

Travel Cost Method

Travel cost studies estimate direct use values associated with recreational, historical, and cultural heritage sites. The costs incurred to visit a site (e.g., travel expenditures, access fees, time costs) provide information about its value that can be used, given a sufficiently large sample, to estimate willingness-to-pay. There are broadly two types of travel cost analyses. Single-site studies model the number of trips taken to a particular site over a fixed period; they are well suited to estimating total use value and assessing how changes in access fees affect visitors’ welfare. Multi-site studies model the choice of one site from a set of possible alternatives and are suited for valuing changes in site characteristics, such as water quality, angler’s catch rate, biodiversity, and forest typologies.30-34

Existing procedures for conducting travel cost analyses can be readily applied to sites of import to the Anishinaabe. Single-site models would be appropriate for valuing the adverse impacts from closing a park, beach, or lake due to unsafe water quality – such as a harmful algal bloom (HAB) event. Nearshore HABs, owing largely to excess nutrient loads and warmer temperatures, are now common in many water bodies of the Western Great Lakes region, including Lake Eire, Saginaw Bay, and Green Bay.35

Eutrophic Wetland near Green Bay, WI, 11/2018. Credit: Tracy Boyer.

The southern shore of Lake Superior has also experienced historically large algal blooms in recent years, although toxins have not been found in hazardous concentrations.36 Multi-site models would be appropriate for valuing changes in water quality where there are notable differences in ambient water conditions between alternative sites.

For single- and multi-site analyses, researchers need to evaluate how modeling assumptions and key parameters differ between indigenous and non-indigenous populations. Anishinaabe people, for example, may have less choice among alternative sites because of an inability to travel or an unwillingness to leave the space their tribes have inhabited for thousands of years. The two populations are also likely to differ in regard to time and vehicle costs, travel party size, and the prevalence of multi-destination and multi-purpose visitations. Careful design of travel-cost survey instruments based on focus groups, one-on-one interviews, and pretesting can address these issues. Researchers will also need to identify an appropriate sampling procedure; in particular, determining whether it is better to use an exclusively indigenous sample, thus ignoring non-indigenous visitors, or to use a stratified sampling approach that would allow for comparisons between indigenous and non-indigenous respondents.

Chibinesiban, Jim Northrup, looking at the abundant manoomin (wild rice) on the surface of Perch Lake, Minnesota, August/2015. Credit: Margaret Noodin. Credit: Ivy Vainio.

Production Function Method

Production functions are used to value nonmarket environmental resources that are inputs to the production of a marketed good or service. When nonmarket inputs (e.g., water quality, forest cover) are important components of the production process, willingness-to-pay values can be inferred from the contribution they make to the value of the marketed commodity. Production functions have been used to value the contribution of mangrove forests to fisheries, forest cover to potable water, and water quality to crop yields.37-39 For Anishinaabe communities, production functions could be used to value water quality’s contribution to commercial wild rice and fish harvests, where the former is susceptible to reductions in water clarity associated with eutrophication or sediment loading.40 It is often difficult, however, to estimate quantitative links between productivity and water quality, particularly for fisheries because of the natural fluctuations in fish stocks due to changes in currents, predator species abundance, and disease. The production function method should not be used unless clear links between productivity and water quality can be established. This method is also unable to value water quality’s contribution to subsistence wild rice and fish production, which is not sold in a market but consumed by the community. Subsistence production comprises a considerable share of the total harvests of commercial Anishinaabe harvesters in addition to household harvest.

Averting Behavior Method

Actions undertaken to mitigate the adverse effects of exposure to degraded environmental resources are known as averting behaviors. These behaviors are associated with expenditures and time costs that reveal information about willingness-to-pay to replace an environmental good. Averting expenditures represent a lower-bound estimate of the benefits that would accompany remediation of an environmental resource since it values only the use value of a good such as clean drinking water. For water quality, the averting behavior method is applicable mainly to potable water supply, where households may purchase bottled water, install water softeners, or boil water to avoid adverse effects from tap or private well water (e.g., health risks, mineral deposits). Numerous studies use the averting behavior method to value improved potable water quality, but, to the best of our knowledge, no such studies have been conducted in US or Canadian indigenous communities.41-44 Existing survey frameworks and data analysis procedures could be readily applied to value water supply in Anishinaabe communities. Studies could target communities with frequent water quality issues. Drinking water advisories and poor drinking water quality pose a continued risk in many Canadian First Nations communities.11 In Michigan, Minnesota, and Wisconsin, community water systems in areas designated as Indian Country average more Safe Drinking Water Act violations than systems of similar size elsewhere, although the proportion of systems with serious health-related violations is comparable (calculation based on information available at the US Environmental Protection Agency’s Enforcement and Compliance History Online (ECHO) database).

Discrete Choice Experiments

Discrete choice experiments are used to elicit preferences in the absence of observed behavioral data. Unlike revealed preference methods, discrete choice experiments can elicit bequest and existence values because researchers have full control over the choices people face. Survey respondents are presented with one or more choice scenarios, where they are asked to select their preferred policy from a set of hypothetical policy alternatives.45 For each scenario, respondents face tradeoffs between various policy attributes. Economists assume they select the policy that maximizes wellbeing, which permits the estimation of willingness-to-pay values for each attribute (e.g., increased water clarity, reduced risk of a HAB event). Discrete choice experiments are highly flexible; they have been applied within a wide range of ecological, cultural, and socioeconomic contexts. Numerous studies have used discrete choice experiments to value improvements in water quality, including several conducted in the Western Great Lakes region.46-49 Occasionally, choice experiments have been used to estimate the nonmarket values of US and Canadian indigenous populations. Haener et al. and González-Cabán et al. elicit preference for hunting site attributes in Saskatchewan and wildfire mitigation strategies in Montana, respectively.14,50 The former study finds substantial differences in preferences between indigenous and non-indigenous populations, but the latter does not. Duffield et al. evaluate preferences for river restoration among members of the Penobscot Nation.3 They found that respondents, on average, were willing to accept a one-time dollar compensation to forgo river restoration.

Choice experiments offer a viable method for valuing water quality changes in Anishinaabe communities, but their limited application to indigenous settings means that additional research is needed to determine under what circumstances they are appropriate. However, choice experiments can be adapted to elicit preferences from the perspective of members’ beliefs about what the community values as a whole. Choice experiments also have the advantage of being able to measure use and non-use (which includes bequest or existence values). Survey instruments using this method will require thorough testing to ensure their validity; namely, with regards to the crucial issues of consequentiality, incentive compatibility, appropriateness of payment mechanism, and attribute levels. The role of social preference formation will also require further study given the importance of water resources to the Anishinaabe cultural identity.

Opportunities for Valuation

The challenges described above have led some researchers to reject the use of nonmarket valuation within indigenous communities, as have incidences where nonmarket valuation was misused to the detriment of indigenous populations.5 This literature has proposed alternative evaluation tools that circumvent many of the theoretical and methodological obstacles with estimating willingness-to-pay and account for place-based cultural values.5,51,52 We applaud these efforts but contend there is still a need for conventional nonmarket valuation to aid the water resource decisions of Anishinaabe tribal leadership and nonindigenous policy makers. Nonmarket valuation will not be an appropriate tool in some instances, and it will often underestimate the benefits of water resource to indigenous communities; however, when it can be effectively modified and employed, it is useful and meaningful to quantify how changes in water quality affect wellbeing.

Anishinaabe nations, as sovereign entities, have ultimate authority in managing water resources. Researchers must work closely with tribal leadership and natural resource experts to identity water quality issues where nonmarket valuation can inform management decisions.53 The preceding sections suggest several solutions to the challenges of conducting nonmarket valuation in Anishinaabe communities. First, travel cost and discrete choice studies offer the most practical means of nonmarket valuation in Anishinaabe communities, but, in both cases, additional research is needed to ensure their validity. Second, survey instruments require thorough pretesting via focus groups and one-on-one interviews to safeguard against culturally inappropriate and ineffectual survey designs. Third, there is need for studies focusing exclusively on the economic values the Anishinaabe place on water quality, as well as for studies using stratified samples that allow for comparisons between indigenous and non-indigenous respondents. Finally, among the water quality issues affecting Anishinaabe communities, nonmarket valuation may be most suited to HABs, water-based recreation, wild rice production, and potable water supply. As noted above, these values would only form a lower bound estimate of environmental resource benefits, with many cultural or spiritual values being intangible or non-separable from other values and thus difficult to quantify.

Researchers will likely have difficulties obtaining a random sample of respondents in Anishinaabe communities. Small convenience samples are the most feasible approach, although random samples may be possible with the assistance of tribal leadership. Market based research firms typically do not have enough indigenous members in their research panels to estimate nonmarket values. Regardless of the sampling method, it will be essential to develop survey instruments that are appropriate to the cultural and environmental context.

Untitled birchbark art by Michael Zimmerman Jr. Credit: Margaret Noodin.

The solution to this challenge is to partner with Anishinaabe tribal leadership, natural resource experts, and community organizations. Baird et al. found for their surveys of water governance in Canadian First Nations that the inclusion of community partners in all aspects of the survey process enhanced the legitimacy of the process.53 Furthermore, community participation facilitated the research by empowering the community and increasing the likelihood results would be used for water management. Current state-of-the-art in stated preference surveys also emphasizes extensive use of focus groups and one-on-one interviews to ensure not only that the survey is understandable, but that respondents feel their choices are consequential.22 Working with community partners, and obtaining approval from tribes’ research ethics boards, will ensure a study’s usefulness to the community while also enhancing the survey’s consequentiality and improving results.

 

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Table 1: Classification of total economic value of water

*Non-use values are only obtainable through stated preference techniques such as discrete choice experiments

** For indigenous groups, subsistence fishing, hunting, and gathering activities have cultural importance not captured in direct use benefits. Some of these benefits are captured by bequest or existence values, but they cannot be separated from use-values. Ecosystem support and cultural benefits are also interlinked.