Economic valuation of improved water quality in Pennsylvania through abandoned mine drainage reclamation
Abstract
Abandoned mines leave a legacy of untreated environmental hazards from an era without established regulations to ensure responsible stewardship of environmental resources. Abandoned mine drainage (AMD) occurs when water is polluted by passing through exposed mines, turning the water acidic and devoid of aquatic life. Pennsylvania has the largest inventory of abandoned coal mines, with remediation costs estimated at $5 billion. Treating AMD through actively adding material to balance the pH levels or constricting wetlands and ponds to remove contaminants effectively improves water quality downstream.
This research has three objectives informing the economic value of AMD remediation. First, the project will calculate the impact of AMD treatment on nearby housing values. Second, the project will estimate the impact of AMD treatment on recreation demand by analyzing Location-Based Service mobility data from cell phone locations. Third, the project will engage stakeholders to elicit feedback on the research design and disseminate the results.The empirical analysis will use a difference-in-differences approach, comparing changes in housing values before and after AMD treatment, with upstream homes serving as the control group for downstream homes. This established method reliably estimates the causal impact of water quality improvements and advances the economic understanding of AMD remediation.
Incorporating recreation demand provides a richer assessment of economic value since housing values only capture the benefits of proximate communities and ignore how improved water quality can attract visitors from outside areas. The project will simulate policy scenarios showing the economic benefits of improved water quality through AMD treatment across Pennsylvania. The calculated economic values will help stakeholders such as watershed associations make the case for funding and AMD remediation projects. More generally, the research will illustrate the economic value of clean water resources.
