Role of Nonmarket Economic

Values in Benefit-Cost Analysis

of Public Forest Management

Cindy Sorg Swanson and John B. Loomis
	





  

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Abstract
1 Introduction

1 Economic Objectives Of Federal Land Management

3 What Is Formal Benefit-Cost Analysis?

4 Conceptual Foundation of Benefit-Cost Analysis

5 Net Benefits, Accounting Stance, and Jobs

5 Measurement Of Economic Efficiency Benefits

6 Consumer Surplus as Real Income

6 Why Actual Expenditures Are Not a Measure of Net Benefits

6 Benefits to the Producer

7 Benefits of Environmental Improvement to Recreational Visitors

7 Comparing Value of Changes

9 Valuation Of Marketed Natural Resources

10 Common Methodological Approaches

11 Valuation of Timber

12 Valuation of Minerals

12 Valuation of Water

13 Valuation Of Nonmarketed Natural Resources

13 Why Nonmarket Valuation?

14 Methods For Estimating Recreation Demand and Benefits

15 Use of the Two Methods by Federal and State Agencies

16 Empirical Measurement of Recreation Benefits in the Pacific Northwest

17 Current Situation

17 Translating Recreational Activities Into Recreation Opportunity Spectrum

Equivalents

20 Future Forecast of Recreation Demand and Supply

22 Recreational Benefits Under Various Land Management Options

22 Forest Plan Implementation

24 Continuation of Current Land Allocations

25 Option 7: Forest Plans With Designated Conservation Areas

25 Option 1: Forest Plans With Late Successional Old Growth and Owl Additions

25 Option 1 With a Recreation Emphasis

27 Option and Existence Values Under the Option Alternatives

29 Conclusions

29 Metric Equivalents

29 Literature Cited

Contents
 
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Benefits of

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1 The use of trade or firm names in this publication is for

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U.S. Department of Agriculture of any product or service.

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Forest Plan

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2

 LS/OG1 is late successional/old growth: category 1, which

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fragmented parcels of old growth that have ecological importance to some species

22
Figure 3-Combined recreation acres for Forest Service and Bureau of Land Management lands by recreation opportunity spectrum category: P = primitive, SPNW = semiprimitive nonmotorized, SPM =

semiprimitive motorized, RN = roaded natural, RM = roaded motorized.

Figure 4-Recreation benefits, by option, on Forest Service and Bureau of Land Management lands

combined.

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Figure 5-Combined total recreation benefits on Forest Service and Bureau of Land Management land by

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24
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Option 1: Forest Plans

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Option 1 With a

Recreation Emphasis

25
Table 4-Recreation opportunity spectrum allocation of acres for various conservation area designations

  	
 


Land category Current successional/OG1a successional/OG2b conservation areac addition

Primitive 3,093,901 67,626 16,791 992,817 809,371

Semiprimitive nonmotorized 1,290,123 382,769 99,468 689,063 232,985Semiprimitive motorized 1,266,117 244,091 130,705 263,205 77,872Roaded natural 6,969,300 1,762,746 555,098 1,987,505 520,544Roaded modified 6,025,114 1,844,530 732,060 2,508,970 434,670Rural/urban 84,650 7,650 3,655 6,447 3,512Total 18,729,205

a Late successional/old growth: first category includes relatively large areas containing ecologically significant old growth.b Late successional/old growth: second category includes smaller, more fragmented, ecologically significant old growth.

 c Designated conservation areas: large areas sized and spaced across the landscape to provide owl habitat.

26
Option and

Existence Values

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Alternatives

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Table 5-Indicators of option, existence, and bequest economic values for reserve areas

Study Resource valued Value CommentsUSDI (1990) Recreation in spotted $210 million/year for all users Recreation demand associated with 7.0

 owl reserves million acres of old-growth forests in PNW

Walsh and others (1990) Scenic quality of mixed old- $47/Colorado house-hold, 1 year 13.6 million acres of Colorado mixed old

 growth stands growth stands. 27 percent of value is

associated with use.

Rubin and others (1990) Northern spotted owl habitat $1.5 billion/year Value to U.S. households

 protection of protecting northern spotted owl habitat:

$21/WA household$37/OR household$21/CA household$15/U.S. household

Hagen and others Northern spotted owl habitat $48 to $190/household in PNW 81 percent of U.S. households favor protection(1991) protection of old-growth and northern spotted owlsLoomis (1989) Recreation value of Loss of $1.7 million recreation Loss of fisheries due to timber harvest of

 salmon/steelhead, Siuslaw NF benefits over 30 years 86,700 acres

Olsen and others (1991) Salmon/steelhead existence Regional existence = $42 million/year 56 percent of regional households are nonusers,

 values for doubling Columbia Regional option value = $18 million/year but would be willing to pay $27/year to double River fish runs Regional user value = $111 million/year fish runs in Columbia River basin

Johnson Steelhead in-stream flows and Low catch rate, use $9.00/day Moderate John Day Riverand Adams (1988) fishing success catch rate, use $11.00/day High catch

 rate, use $14.00/day

28
Figure 6-Recreation and existence values on Forest Service and Bureau of Land Management lands

combined, by option.

	

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32


Swanson, Cindy Sorg; Loomis John B. 1996. Role of nonmarket economic values in

benefit-cost analysis of public forest management options. Gen. Tech. Rep. PNW-GTR-361.

Portland, OR: U.S. Department of Agriculture, Forest Service, Pacific Northwest Research

Station. 32 p.

Recreation in the Pacific Northwest is a valuable resource. A method is described that translates

recreation on USDA Forest Service and U.S. Department of the Interior Bureau of Land Management lands in northern California, western Oregon, and western Washington into economic

value. By assigning recreation to land use type (using the Forest Service recreation opportunity

spectrum classification), the economic value associated with various land use changes can be

identified. Results indicated that those land use changes resulting in more nonroaded recreational opportunities provide the greatest economic benefits. This is encouraging given the move

toward ecosystem management that many agencies are making, because more nonroaded

opportunities will become available. The paper also considers values associated with maintaining

old-growth and wildlife and fisheries resources regardless of current or future recreation

use-existence values.

Keywords: Recreation, nonmarket economic values, benefit-cost.

The Forest Service of the U.S. Department of

Agriculture is dedicated to the principle of

multiple use management of the Nation’s forest

resources for sustained yields of wood, water,

forage, wildlife, and recreation. Through forestry

research, cooperation with the States and private

forest owners, and management of the National

Forests and National Grasslands, it strives-as

directed by Congress-to provide increasingly

greater service to a growing Nation.

The United States Department of Agriculture (USDA)

prohibits discrimination in its programs on the basis of

race, color, national origin, sex, religion, age, disability,

political beliefs, and marital or familial status. (Not all

prohibited bases apply to all programs.) Persons with

disabilities who require alternative means of communication of program information (Braille, large print, audiotape,

etc.) should contact the USDA Office of Communications

at (202) 720-2791.

To file a complaint, write the Secretary of Agriculture,

U.S. Department of Agriculture, Washington, DC

20250, or call (202) 720-7327 (voice), or (202)

720-1127 (TDD). USDA is an equal employment

opportunity employer.

Pacific Northwest Research Station 333 S.W. First Avenue

P.O. Box 3890 Portland, Oregon 97208-3890
U.S. Department of Agriculture

Pacific Northwest Research Station

333 S.W. First Avenue

P.O. Box 3890

Portland, Oregon 97208-3890

Official Business

Penalty for Private Use, $300

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