The Economic Value of Allocating Water to Post-Mining Lakes in East Germany

This paper reports a contingent valuation study to value the economic benefits of a post-mining lake-district in East Germany. Lusatia Region faces serious water scarcity problems as the closure of mining pits in 1990 led to the termination of groundwater discharge into rivers. The water conflict centres around traditional water users whose water demand is no longer met and the rehabilitation of mining pits in form of a new lake-district. Current water allocation policy for the Elbe catchment places lowest priority on filling mining pits with river water, even though freshwater is essential for good lake water quality. Commissioned by the government, this study aims to determine the non-market benefits that would be generated by good water quality in the lake-district in order to re-assess the distribution of water among all water users in the Elbe catchment. Our findings show that the annual non-market benefits of the lake-district is significant and lies between 10.4 and 16.2 million euros. Apart from recreational benefits, people also obtain non-use values for the lake-district. Furthermore, two challenges for CV became apparent: fuzzy future benefits (potential improvement to the regional economy) significantly influenced WTP estimates, and WTP stated by users interviewed on site and at home varied significantly.