Cooperative provision of erosion protection: An empirical analysis of the Lake Erie shore

Abstract

Officials involved in coastal erosion management have a wide set of policy options at their disposal. A subjective evaluation of each management option would estimate the benefits received by different groups of coastal users, establish the cost of the policy option, and formulate an optimal method to finance the policy. This article presents an example of this management approach via an empirical analysis of group formation among private property owners of the Ohio portion of the Lake Erie shore. A hedonic price model of erosion protection benefits is presented. An erosion protection cost function associated with a standard erosion control device is developed from the literature and expert opinion. Using benefit estimates for a sample of 228 homeowners and the cost function, the net benefits from belonging to a cooperative group are calculated under average cost and marginal cost allocation rules. Compared with “going it alone, “ it is found that group formation under an average cost allocation rule increases modestly the number of households for which protection is economically viable, while a marginal cost allocation rule results in a more substantial increase.