Economic impacts of water quality programs in the Lake Okeechobee Watershed of Florida

For the past 20 yr, Florida has attempted to control phosphorus runoff from dairy manure into Lake Okeechobee. The elevated phosphorus levels in runoff water entering the lake has resulted in eutrophic conditions that threaten lake uses, including recreational and municipal water supplies. The lake watershed is also an important milkshed for southeastern Florida. In the 1980s, three water quality programs were implemented by Florida state agencies in the bake Okeechobee basin in order to reduce phosphorus loads into the lake. This paper presents estimates of the economic impacts of the three water quality programs on the economy of Okeechobee County and the regional area during the period 1987 to 1993. Direct impacts of the water quality program include a 26% reduction in dairy cows and a 17% reduction in milk production in the affected area. Dairies that remained in production spent an average $1.14/cwt (net of approximately 30% cost share) on both mandatory and optional components. This additional private cost was more than offset by the 13% mean increase in milk production that was experienced as a result of the investments. The total economic impacts of the water quality programs included a 4% ($18 million) decline in income and a 4% (492 full-time equivalents) decline in jobs.