University of Wisconsin - Extension

Removing the dam could cause a $23 million loss in property values, study shows.

It's hard enough to put a value on Wisconsin lakes and rivers. But how do communities put a value on a dam that allows a lake to remain economically viable? And how do they estimate economic losses of a lake after its dam has been removed?

Tackling these questions in a nine-month study were UW-Extension community resource development agents Joe Moskal and Steve Grabow; Steve Deller, community development economist; and Dave Marcouiller, natural resource economist.

Specifically, they studied the economic and environmental impacts of removing Rock County's Indianford Dam, which creates the 10,400-acre Lake Koshkonong. The dam needs repairs, and the Wisconsin Department of Natural Resources has directed Rock County to either repair or remove it.

Most of the lake and tax base is in Jefferson County, and Rock wants Jefferson to share repair and maintenance costs. Together, the two counties commissioned the study, Moskal said.

"Dam removal is a national issue," said Moskal. "And dams are deteriorating throughout Wisconsin. Counties and municipalities need help to deal with situations that, because of the related costs and environmental issues, can become highly charged."

Combined with the connecting Rock River, Lake Koshkonong is of significant economic importance to surrounding communities.

"Removal of the dam will cause water levels on the current Lake Koshkonong to decline by approximately three feet during a normal summer flow condition," said Grabow.

According to the study, a three-foot decline in Lake Koshkonong water levels will negatively affect local property values by roughly $23 million.

"Results suggest that local units of government could initially lose about $470,000 in annual property tax revenues," said Moskal.

A three-foot decline in the lake level would also negatively affect businesses that rely on the lake for their customer base such as restaurants, taverns and campgrounds and firms that cater to motor boating.

"The impact of dam removal on local retail businesses would amount to an estimated annual loss of $5.25 million in gross retail sales that support roughly 200 jobs," Grabow said. "The impact of dam removal on real estate and service-sector businesses would amount to a decline of roughly $9 million in gross sales that support an estimated 150 total jobs."

Grabow said that the study attempted to estimate:

• The economic value of tourism from both retaining and removing the dam
• The potential market value change from dam removal on property fronting Lake Koshkonong
• What the lake ecosystem would look like if the dam were removed.

The study relied on property tax assessments and equalized values, Moskal said. It analyzed dam removal impacts on property values of residential parcels within a half mile of Lake Koshkonong and fiscal impacts on local businesses that rely on lake-based recreation.

Moskal said that Rock and Jefferson counties jointly commissioned the study to understand the policy implications and to explore the potential for cooperation between the two counties.

The effort is a good example of campus and county-based faculty combining process and research skills to meet the expectations of our clientele, Moskal said.

"Counties and municipalities need help to deal with situations that, because of the related economic and environmental issues, can become highly charged."--Joe Moskal, UWEX community resource development agent.