The Economics of Lakes

Ecosystem Services Provided by Lakes

An ecosystem is a complex and dynamic system made up of plants, animals, microorganisms, and their nonliving environment. They provide beneficial services to humans completely free of charge. These services are collectively referred to as “ecosystem services” and they include everything from the food we eat to the pastimes we enjoy. The term ecosystem service was first pioneered by the Millenium Ecosystem Assessment board in 2005 and since then, the concept of ecosystem services as well as placing a value on these services has been the interdisciplinary focus of ecologists and economists alike. In fact, the estimated annual value of ecosystem services globally amounts to an astonishing $33 trillion dollars or 1.8x the global GNP.

Ecosystem services can be grouped into three broad categories. Within each of these categories, myriad ecosystem services are provided to us.


Provisioning ecosystem services refer to things nature provides that are used directly by humans. With respect to provisioning ecosystem services, lakes:

  • Provide food
  • Supply water
  • Provide hydropower and more

Regulating services moderate natural phenomena. In lakes, this means:

  • Sequestration of carbon
  • Flood control
  • Water purification
  • Erosion regulation and more

Cultural ecosystem services relate to the cultural and spiritual needs of humans. Here, lakes:

  • Facilitate recreational past-times like fishing, boating, and swimming
  • Provide a beautiful landscape aesthetic
  • Are spiritual bodies for many cultures and more

There are also supporting ecosystem services that involve the natural cycles that nature needs to function. An example specific to lakes includes the water cycle.

The Economic Side of Lakes

In addition to the services lakes offer to us for free, there are also more direct economic benefits they provide. From commercial fisheries to tourism to facilitating trade, lakes play an important role in several of our economic pillars.

They also have the ability to directly influence residential property prices. Several studies have produced corroborating results to show that water health is an impactful driver of a region’s economic well-being.

Study 1: Ohio

A study in Ohio found that properties that are adjacent to harmful algal blooms, which occur when too many nutrients (typically due to runoff from fertilizer) enter our lakes, loose 22% of their value with property losses on one particular lake amounting to over $51 million.

Study 2: The Adirondack's

A study in the Adirondack region of New York state found that the presence of loons, which are an “indicator species” in that their absence can be indicative of poor lake health, is positively correlated with lakefront property values.

Study 3: New Hampshire

A study in New Hampshire showed that even a one-meter change in water clarity can substantially impact property values.

Lakes provide us with services completely free of charge as well as other services with direct commercial value and they support lakefront property values. In this way, our health, well-being, and economic viability are directly related to the health of our lakes. However, due to development, pollution, and other human activity, our lakes are currently under threat. Urgent action is needed to ensure that our lakes remain healthy and intact for generations to come.

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