A Social Welfare Analysis of Congestion and Water Quality of Great Salt Pond, Black Island, Rhode Island

Great Salt Pond on Block Island, Rhode Island is a favorite site for recreational boaters in New England. However, overcrowding causes congestion and water pollution problems during summer. The Department of Environmental Management has closed the Pond to shellfishing every summer since 1986. Residents feels that recreational boaters are to blame and should take responsibility for controlling the problems. Recreational boaters, on the other hand, feel that they have already paid enough in docking and shellfishing license fees. The use of Pond is a source of conflict between these two groups. This research uses the contingent valuation method to derive the demand functions for the uncrowdedness and water quality of the Pond. Consumer surplus associated with current quality levels, a measure of social welfare, can be evaluated using these demand functions. Theoretically, a complete simultaneous equation system might be established which describes the behavior of four groups that influence or are influenced by the Pond: recreational boaters, local residents, local business owners, and government agencies. However, due to insufficient data, this model could not be estimated. Instead, independent models were estimated for boaters and residents, and approximate relationships were derived for business owners and government agencies. Four different policies were analyzed using the model of the four groups. Each policy is concerned with the number of boats allowed in the Pond during a weekend. Congestion and water quality of the Pond are both affected by the number of boats staying in the Pond during a fixed period. Each policy results in different changes to the environmental qualities of the Pond. As a result, consumer surplus changes and the analysis thereby permits a comparison of policies. The first policy is to adopt the National Shellfish Sanitation requirement of 106ft3 of water per boat. It implies a limit of 430 boats in the Pond. The second policy, based on hydrographic study, would limit the number of boats to 712. The third policy is not to limit the number of boats but to prohibit sewage discharge into the Pond. The fourth policy is the current policy of no limits on boats or discharges. The analytical results reveal that the best policy of the four is to build a pumpout station and sewage treatment facility, prohibit sewage discharge but put no constraints on the number of boats allowed in the Pond. Although the congestion level of boats in the Pond will increase, the consumer and producer surplus gains from improved water quality outweigh the loss. Furthermore, sales tax revenues exceed the cost of the new facility. The second best policy is that of limiting the number of boats allowed in the Pond during each weekend to 712. By this restriction, the environmental quality of the Pond can be maintained at acceptable levels without excessive sacrifice of business profits or sales tax revenues