Economic Benefits of Native Fish Preservation

1. Economic Benefits of Native Fish Preservation Dr. John Duffield UCUT Columbia Basin Non-native Invasive Fish Species Symposium Spokane, WA November 18, 2013

2. General objectives of benefit estimation • Inform policy and natural resource management decisions by incorporating nonmarket values – • Level the playing field by putting nonmarket services (such as fish and wildlife) on the same economic footing as commercial resources • Note: economists can be the fish’s friend • Some cases where nonmarket valuation made a difference: Missouri R. instream flow, Kootenai Falls hydro , Salt Caves on the Klamath, Bristol Bay, Elwah, Glen Canyon Dam ROD, NRDA)

3. Accounting frameworks, Criteria • Regional economics – economic impact in the market, jobs, income (narrow focus on a given locality or region) • Benefit-Cost – is society as a whole better off by this policy, decision or investment? Includes both market and nonmarket costs and benefits • Distributive – who benefits, who looses • Ethical – what is right

4. Integrating economic and ecological models • Biophysical model is prerequisite for economics • Problem is to trace through the effect of a policy or a decision on ecological and related economic marginal changes – measuring the “delta’s” • Taxonomy of economic values includes direct uses (e.g. recreation, viewing) and so-called “passive use” or indirect use related to existence or bequest motives: “existence value”

5. Connections between ecosystem structure and function, services, policies and values (source, NAS 2005) Adapted from NAS (2005)

7. U.S. Regulatory Guidance on Types of Approved Methods • Approved methods based on 43 CFR include: • Revealed preference methods: market, appraisal, factor income, travel cost, hedonic price, random utility model • Stated preference methods: contingent valuation, conjoint analysis, random utility model • Benefit transfer: unit day value method • Equivalency Methods: HEA, REA, conjoint analysis • “Other valuation methodologies that measure compensable value in accordance with the public’s willingness to pay, in a cost-effective manner, are acceptable methodologies to determine compensable values ..” (43 CFR 11.83 (e)(3))

9. Some minimum data needs for economic analysis of invasives • Biophysical model of policy/decision impact on ecosystems and fish populations • Cost of policy/management action • Value of foregone use of non-native, if applicable • Benefits of the policy/management increment in native fish population or survival probability

10. Some prior studies of direct use related to valuing native fish • Bull trout critical habitat analysis • Bull trout v. lake trout in Flathead lake and River system • Climate change effects on cutthroat trout in W. MT • Bristol Bay watershed analysis – economic baseline

11. Related prior studies of passive use or total valuation for fisheries • Glen Canyon Dam impacts on the Grand Canyon of the Colorado 1988-1995, 2011 - present – humpback chub, sediment conservation, LTEMP • Fishery restoration on the Elwah 1990, ongoing – dam removal • Penobscot Tribe fish consumption advisory 1990s – dioxin • Klamath Non-use Valuation Study 2012– dam removal • Montana instream flow trust fund studies 1990, 2005 - arctic grayling, Yellowstone cutthroat

12. Conclusions – round one • Fishery economics requires a prerequisite – a solid model of the “biophysical production function” • Direct use values for restoration or protection of some native fisheries/species may be in the tens of millions of dollars • Passive use values for these same fisheries may be larger by an order of magnitude or more but are more difficult to estimate • Prior economic research on the impacts of non-native invasive fish species is quite limited

13. Outline of cases • Application 1: Protection of species through instream flows • Application 2: Estimating Benefits associated with protection of bull trout • Application 3: Estimating benefits associated with dam removal to benefit native fish • Application 4: Estimation of direct use value of native fish in the Upper Flathead System

14. Application 1: A Cash & Contingent Valuation Experiment to Value Fisheries Protection

15. Study Objectives 1. Replicate 1990 EPA-funded study 2. Extension of earlier work: - increase response rate - add certainty follow-up - add dichotomous choice treatment - marketing analysis

16. Comparison of Study Methods

17. Treatments

18. “Every dollar contributed to this fund will go to increasing streamflows in Montana trout streams though the purchase of water rights on Watkins Creek, a rainbow and cutthroat tributary of the Madison River, and Sweetgrass Creek, a stream that will benefit recruitment of brown trout in the Yellowstone River.” Resource description 2005

19. Cash donation question – payment card 2005 How much are you willing to donate to the Montana Streamflow Fund to help purchase water rights for instream flow on these streams? (Please check one) __ $10 __ $25 __ $50 __$100 __ $250 $ ____ other __ $0, I would choose not to make a donation at this time

20. Hypothetical donation – Payment Card 2005 If you were asked today, how much would you be willing to donate to the Montana Streamflow fund to help purchase water rights for instream flows on these streams? (Please check one) __ $10 __ $25 __ $50 __$100 __$250 $____ other __ $0, I would choose not to make a donation at this time

21. Respondent Characteristics 2005: Resident Versus Nonresident PC

22. 1990 & 2005 Raw Mean Donation – PC(constant 2005 dollars)

23. Angler attitudes & preferences

24. Means of Respondent Characteristics by Nonresident Subsample

25. Plot of Percent “yes” for DC, and PC Percent Indicates Amount or Greater

26. WTP Mean and Median Based on Log-logistic Model. (SE’s 1000 bootstraps.)

27. Cumulative donations by treatment

28. Application 2: Estimating the Benefits of Bull Trout Protection

29. Relative Difficulty of Benefit Estimation • Cost side estimation • What are the RPM's? • What are changes to project outputs, inputs • What is the cost (usually market parameter)? • Benefit side Estimation • What are the RPM's • What are changes to project inputs, outputs • Effect of RPM's on environmental services (fisheries, water quality, soils, etc.) • What is the benefit (market and nonmarket parameters)? Bull Trout Economic Analysis

30. Benefits of Bull Trout Protection

31. Benefits: Available Methodology Bull Trout Economic Analysis

32. Benefits - Examples • Direct use • Economic Literature for Sport Fisheries • Indirect use • Salem Watershed Study, Big Hole & Bitterroot Instream Flow Study, Salmon Valuation Literature • Existence Value • TNC- Montana trust fund for ESA recovery of Arctic Grayling & Yellowstone Cutthroat • Total Valuation • Salish/Kootenai Bull Trout Restoration • AVISTA Projects Bull Trout Economic Analysis

33. Methods for Estimating Bull Trout Angling Direct Use Benefits • Assume recovery to historic bull trout fishery use levels • Use creel data on current, or recent, bull trout fishery and apply to other critical habitat waters Bull Trout Economic Analysis

34. Total Bull Trout Reported Caught by Montana Fisherman Log Participants: 1965-1985 Bull Trout Economic Analysis

35. Assumptions for Fishery Benefit Estimates • Population of anglers selecting for BT is proportional to BT share of catch • Angler logs assumed to give representative sample of catch • Recovered BT fishery in western MT would look like the 1965 BT fishery • Assumes the recovered MT levels on angler days/km and days/hectare can be applied to ID, OR, and WA • ISSUES: Average year of recovery, rate of recovery, growth rate in value/ use of BT fishery Bull Trout Economic Analysis

36. Estimated Angler Days for Recovered BT Sport Fishery Bull Trout Economic Analysis

37. Estimated Annual Value* of Recovered Bull Trout Fishery *Remains to be discounted back from assumed year of recovery. Bull Trout Economic Analysis

38. Method for Estimating Angling Direct Use • Use creel data to identify historical bull trout-related fishing pressure on CH waters (Lake Billy Chinook, Swan Lake, Flathead Lk.) • Identify the number of such recovered waters • Value fishing days at $50 - $100 for new trips and ~$17 for substituted trips Bull Trout Economic Analysis

39. Creel Data for Current Bull Trout Fisheries * Estimated Spawners Bull Trout Economic Analysis

40. Creel Data for Current Bull Trout Fisheries (2) Bull Trout Economic Analysis

41. Implication of Historical Use Estimate (1) 1000 days/yr (2) 2500 days/yr Bull Trout Economic Analysis

42. Issues in Benefit Estimates • When is recovery of the fishery to occur. • What share of recovery is attributable to Section 7, post Dec. 2002 • Actual benefit associated with transition from a de facto catch-and-release fishery to a targeted catch-and-release fishery • Consistency of benefit definition with cost definition Bull Trout Economic Analysis

43. General Magnitude of Other Potential Benefit Categories • Indirect Benefits • Avoided drinking water treatment costs examples: Salem Watershed, Seeley Lake • Water quality (colder & cleaner) examples: headwaters of Klamath effect on Upper Klamath Lake, avoided control costs from meeting standards • Hydrograph changes (higher summer flows) examples: irrigation and instream flow benefits • Other species in PNW: examples: avoided costs in salmon recovery, improved sport fisheries for other species Bull Trout Economic Analysis

44. General Magnitude of Benefits- Existence • Actual WTP to trust fund for instream flows for Arctic Grayling and Yellowstone Cutthroat • ~$2.50 for nonresident anglers • ~$1.00 for resident angler sample • Assuming WTP for bull trout is greater or equal than for grayling and cutthroat implies: • $17 - $29 million PV for basin population for BT existence value Bull Trout Economic Analysis

45. General Magnitude of Benefit - Evidence from Corporate Decisions • AVISTA - Bull trout-related expenditures, ~3 million / year or $4,500/mw capacity • Revealed preference of supply price/minimum WTP for fishery services • Application to the basin's 9,000 mw hydro capacity implies ~ $40 million/year in benefits Bull Trout Economic Analysis

46. General Magnitude of Benefit - Evidence from Tribal Government Decisions • Total Valuation Estimate - Confederated Salish and Kooteni Tribes Bull Trout Recovery Plan • minimum of $10 million discretionary funds allocated to Jocko River bull trout recovery. • $54 to $103 per capita per year Bull Trout Economic Analysis

47. General Magnitude of Benefits- Evidence from Government Decisions • Annual and cumulative spending on bull trout recovery by BPA and the Northwest Power Planning Council. Bull Trout Economic Analysis

48. Application 3: Valuing Dam Removal to Protect Native Fish—Klamath River

49. Klamath River

50. Klamath River Issues Formerly 4th largest producer of western US salmon Home to endangered and culturally important sucker and bull trout species Has a unique and outstanding recreational whitewater reach Agricultural water withdrawals compete with both fish species and recreation Dams block free passage of migratory fish species