Alaska’s Environmental Assets

1. Alaska’s Environmental Assets 5 March 2008

2. Overview • Economic importance – today – of healthy Alaska ecosystems • Environmental assets and ecosystem services • Value and the “twin scissors” • Implications of global growth

3. Economic Importance:What is it? • Economic Significance: Jobs and Income from a specified set of economic activities • Net Economic Value: An attempt to measure people’s willingness to pay for things like fishing, over and above what they do pay.

4. Willingness to Pay:What is it? • An attempt to measure what people would actually do if confronted with the choice • Not some economist’s idea of what something “ought” to be worth

5. Example: WTPValue of Alaska Sport Fish • ISER Results (1993): • People actually paid: $550 million • People were willing to pay an additional $186 million to fish • $186 million is the net economic value of the sport fishery • This is what the State of AK could, in theory, collect in additional fishing license fees

6. Summary of Findings: Jobs (circa 2001)

7. Commercial Fishing (circa 2001) • 19,928 Direct FTE jobs • 14,000 Indirect jobs from economic multiplier effects • Indirect jobs: people who make or repair fishing nets or sell gasoline • Induced jobs: people whose jobs depend on the fishers’ purchasing power • 1.0 billion total income • Net Value (of fish in the water): $192-360 million/yr

8. Sport Fishing (circa 2001) • 6,635 Direct Alaska Jobs • 2,600 Indirect / Induced • $233 million total income • $632 total expenditure in AK • $215 additional willingness to pay (this is net economic value of the fish in the water)

9. Subsistence (circa 2001) • Total cash expenditures on inputs $96.5 million/yr • These $$ support 1,978 total jobs • $61 million total cash income to providers of commercial inputs • Net WTP for subsistence ranges between: • Zero ($4/lb replacement value less cash and labor input) and • $1.7 Billion /yr (EVOS studies)

10. Tourism (nonresidents bringing $$ into AK economy) (circa 2007) • $1.6 billion+ of total expenditures generates • 19,000 direct jobs / 28,000 total jobs • $750 million total income • Net WTP for experience = unknown

11. Summary of Findings: Net Economic Value ($ million)

12. Environmental Assets and Ecosystem Services

13. Econ 101: What is an Asset? • Anything that generates a flow of services • your car provides transportation • your house provides shelter • your human capital provides a job, income, and a rewarding career • your portfolio will (someday!) provide a stream of retirement income • No services provided? • No asset

14. Why is an undisturbed environment an asset? • It generates a flow of ecosystem services • renewable commodities (fish, timber) • basic life support services (nutrient cycling, climate regulation) • habitat • recreation experiences • beauty, solace, inspiration • Remember: no services? • No asset! simulations: http://www.vets.ucar.edu/vg/CCM2T170/precip.shtml

15. Ecosystem Services... • Are a re-branding and re-packaging of an old list • Are the brainchild of a smart, savvy Stanford professor named Gretchen Daily • Humans should value nature much as we value any other economic or cultural asset – based on flow of future services

16. So What? • First, “Mark Klassen’s Dilemma” www.valkyradventures.com

17. Total value depends on: • Number of people receiving the service • Value received per person • There is tension, already, between these two

18. Value per person depends on • subjective tastes • “There is no accounting for taste” • But also on: • Circumstances and scarcity (water in the desert vs. water in Ketchikan) • Skills and interests (piano, to Beethoven) • Income

19. The going price (willingness to pay) for nature’s services depends on the “Twin Scissors”of supply and demand(Alfred Marshall) S WTP D quantity

20. Supply side: • Alaska may be “abundant” to us, but increasingly scarce to everyone else • Land: They ain’t making any more of it • 50%+ of global population lives in cities http://www.alaskab4udie.com/

21. Demand side • Population

22. Average annual growth rates • Real per capita income, 1960-2000 • World: 2.2% • Richest billion people: 2.7% • China: 4.3% • Real total income, 1960-2000 • World: 4.1% • Richest billion people: 3.8% • China: 6.0%

23. Educational attainment • Share of U.S. adults with some college or more: • 1984: 39% of adults • 2001: 53%

24. Average annual growth rates • Summer Visitors to Alaska • 1989 - 2004: 6% • Cruise passengers to Alaska • 1989 – 2004: 12%

25. Recreation visits to AK National Parks avg annual growth = 7.6% Source: http://www2.nature.nps.gov/stats/

26. Average annual growth rates • Visitors to all Alaska national parks • 1980 - 2004: 7.6% • Visitors to pre-ANILCA parks[1960-62] – [2002-04] • Glacier Bay: 15% • Denali: 7% • Katmai: 12% • All three together: 9%

27. Recreation visits by park

28. Case Study: Seward Economy(ISER 2001) • Seward wage and salary employment grew at 3.7% per yr between 1980 and 2000, vs. 2.6% for entire State.

29. Implications • Treat the environment as the asset that it is • Invest in complements and “green infrastructure” • Double-decker buses for the Denali Park Road • More bear-viewing locations • Tourism zoning

30. Implications • “Skate to where the puck is going”*:Make decisions with future growth in mind • Maintain the ecosystem services that are most scarce; these have highest potential future economic value *attributed to Wayne Gretzky aka “The Great One.”

31. Joni Mitchell theory: preservation is easier than restoration ‘Til it’s gone You don’t know what you’ve got…

32. Boston: Reclaiming a “park strip” Before: Central Artery During: The Big Dig

33. Boston: Reclaiming a “park strip” After:Rose Kennedy Greenway And the cost?? $10 billion

34. Alaska’s Environmental Assetswww.iser.uaa.alaska.edusteve.colt@uaa.alaska.edu 5 March 2008