### ESTIMATING THE TOTAL VALUE OF FOREST QUALITY IN HIGH-ELEVATION SPRUCE-FIR FORESTS
Michelle Haefele, Randall A. Kramer, and Thomas Holmes*

ABSTRACT 

### Theprotection of forestresources is cu"entlyone of the most importantpolicy issues in the U.S:I'his paper reports the results ofa study to determine the nonmarket benefits of protecting forest quality in the southern Appalachian Mountains.The contingent valuation methodis usedto estimatethe totalvalue of forest quality. Two willingness topay questionformats (discrete choice andpaymentcard) are compared; results indicate that there is a significant difference between them. Other results are: 1) there issubstantial willingness to pay to protectforest quality; and2) most forest protection benefits refleatonuse values.

INTRODUCTION
One ofthe most highly visible items onthe natural resource policy agenda in the United States is the management and protection offorest resources. Much ofthe public debate concerns the management ofold growth forests inAlaska andthe PacificNorthwest, as well as the role ofthe U.S. in affecting the use of primary forests in the tropics. In addition to controversy aboutbalancingtheuse offorests for timber and nontimber production, many are concerned about damages to forest resources. While the recent National Acidic Precipitation Assessment Program (NAPAP) report (Barnard et al., 1989) was inconclusive, many scientists are convinced that ozone, acidprecipitation, and otherpollutants are damaging forest resources inparts ofthe United States (de Steiguer et al. 1990). Furthermore, periodic outbreaks ofpests, suchas the gypsymoth inthe Northeast, have significant impacts on the publics perception offorest quality.
One important forest ecosystem undergoing rapid change due to environmental conditions is the sprucefir ecosystem in the Appalachian Mountains, which is located primarily onpublic lands. Preventing or reversing excessive forest mortality can be expected to have significant costs. Although spruce-fir forests in the Appalachians currentlyprovide little inthe way of commercial ormarket commodities, theyprovide significant nonmarket values including recreation, scenic beauty, andbiodiversity protection. Therefore, economic analysis whichtakes into accountboth market and nonmarket values is required to facilitate informed investment decision-making about publicly owned forests (Kramer et al., 1990).
This study evaluates public preferences toward efforts to reduce further decline in forest quality in the southern halfofthe Appalachian Mountains. More specifically, the purposes ofthis study are: 1) to measure changes inrecreational and nonuse values whichmayresult from protecting forest quality from further deterioration; and 2) to assess the available evaluation methods andrecommend refinements for improvedmeasurementofforest qualitybenefits.

SPRUCE-FIR FORESTS
The spruce-fir forest type inthe southern Appalachian Mountains occurs as a series ofisland-like stands, occupying the highest peaks (between 4,400 and 6,684 feet) in North Carolina, Tennessee, and Virginia. The major tree species in these forests are red spruce (Picearubens) and Fraser fir (Abies fraseri). The spruce-fir ecosystem includes a numberofendemic and rare plants and animals. A marked increase in mortality inthe spruce-fir forests ofthe southern Appalachian Mountains has been observed inrecent years. Twenty-five percent ofthe spruce-fir area is classified as having severe mortality (that is, greater than 70 percent ofthe standing trees dead) (Dull, et al., 1988).

• Michelle Haefele is a graduate student at Colorado State University, Fort Collins, CO; in May 1991 she was a graduate research assistant at Duke University, Durham, North Carolina. Randall Kramer is an Associate Professor, Center for Resource and Environmental Policy, Duke University, Durham, North Carolina. Thomas Holmes is a ResearchForester, SoutheasternForestExperiment Station, ResearchTriangle Park, North Carolina. The authors appreciate comments from Evan Mercer and Dixie Reeves on earlier drafts. 

### 91 

# -Although the spruce-fir forests were important tourist locations as early as the mid 1800s, much ofthe high elevation forests remained virtually inaccessible until they began to be logged around the tum ofthe century (Pyle and Schafale, 1988). Timberharvesting continueduntil approximately 1925. Disturbance from logging and associated wildfires has reduced these forests to ten percent oftheir original area (Dull et al., 1988). The establishment ofthe Great Smoky Mountains National Parkin 1934 ended the logging and fires and preserved a large part ofthe forest areas. The pattern oflogging and burning is the ftrst ofthree major human-induced disturbances which have altered the ecology ofthe spruce-fir forests (Richter et al., 

### 1989). The second wave ofhuman-induced forest disturbance is associated with an infestation ofthe balsam woolly adelgid introduced accidently from Europe about 1900. Initially introduced in the Northeast, this pest was first detected in the southern Appalachians in 1957. The balsam woolly adelgid attacks onlythe mature Fraser flr. A survey ofFraser fir regeneration at Mt. Mitchell, North Carolina, conducted over the period 1966 to 1978 indicates that the species seems to be able to produce viable seeds before severe infestation; therefore, Fraser 

### flr will probably remain in the southern Appalachians (Witter and Ragenovich, 1986). Red spruce are resistant to the insect, but can be indirectly affected by fir mortality as they are shallowrooted and may need the buffering ofthe ftr trees to prevent blowdown. Airpollution is believed to be the cause ofthe third wave ofanthropogenic forest disturbance. Air pollution injury is suspected ofreducing the resistance ofFraser fir to the balsam woolly adelgid infestation (Gamer et al., 1989). Acidic precipitation is also suspected ofcontributing to the decline ofthe spruce

### fir forests, by altering the resistance ofred spruce to winter injury (Barnard et al., 1989) andbyreducing red spruce growth rates (Chappelka et al., 1985). All of the high elevation forests in the eastern United States are exposed to potentially harmful levels ofozone and cloud water acidity. The long-term effects ofthis exposure are as yet unknown (Barnard et al., 1989).



### METHODS
This studyuses the contingent valuation (CV) method to estimate both use and nonuse values ofthe sprucefrr forest ecosystem. The contingent valuation method uses simulated markets to determine willingness to pay for environmental amenities and otherpublic goods. Although widely applied to the study ofnonmarket goods, the contingent valuation method has received

92 relatively little attention as a means ofestimating damage to forests. Exceptions include two studies of airpollution damage to southern California forests by Peterson et al. (1987) and by 

### Crocker(1985), and one study ofpine beetle damage in the Colorado Rockies by Walsh et al. (1990).
To determine benefits from improvements in forest quality, a survey instrument was developed atthe School ofForestry and Environmental Studies at Duke University. The instrument was refined through a series offocus groups comprised of

### 133 graduate students. Seven focus groups were used to test different question formats and alternative presentations ofvisual information. The sampling frame for the survey consisted ofall households living within a 

### 500 mile radius ofAsheville, North Carolina. Asheville was selected as the geographical center ofthe sampling frame because it is centrally located within the southern Appalachians and is a frequent destination ofvacationers visiting the mountains. The Blue Ridge Parkway, for example, passes within a few miles ofAshevilles city limits. A 500 mile radius around Asheville approximates one days driving time, and includes most recreators and potential recreators. A socioeconomic survey of visitors to the Great Smoky Mountains National Park showed that 61 percent ofvisitors entering the park lived in Tennessee, North Carolina, or adjacent states (Peine and Renfro, 1988). The actual sampling frame was all households in telephone directories in zip codes contained wholly or partially.within the 500 mile radius. Each zip code was sampledproportionallyto its population. A sample of1,300 was drawn, ofwhich 100 were used for the pretest. Thepretestversion ofthe survey instrument was mailed to 100 households in January, 1991. 

### Twentyone percent ofthe surveys were returned, with only one postcard follow-up mailing. Based on pretest results and comments from several survey experts, the final survey was revised and sent to 1,200 households in March, 1991. The format ofthe survey and the implementation procedures closely followed Dillmans (1978) recommendations.
A briefdescription ofthe southern Appalachian spruce-fir forests (and the recent decline) was included in the cover letter. This description was expanded upon in the introduction to the survey. A map ofthe area was included to show where these forests occur. The first portion ofthe survey sought to establish the respondents prior knowledge ofthe area and the decline ofthe spruce-fir forests. The second section elicited some travel cost data from those who had

### visited the area and asked how familiar respondents are with the southern Appalachians. The third section ofthe questionnaire contained a description ofthe forest damage. Three levels offorest quality were illustratedusing colorphotographs taken at Mt. Mitchell, North Carolina. The proportions ofthe remaining forests in each category were shownusing a pie chart. The suspected causes ofthe damage and possible controlmeasures were also described. Severalpaymentvehicles were tested in the focus groups and in a mail pretest. The mail pretest used a voluntary contribution to a special fund. This seemed to cause some confusion, and a common reason for zero bids was that ''the government shouldpay."An 

### increase in taxes was finally chosen as the payment method since it is familiar to most people and the use oftax revenues is a common way ofproviding public goods. The contingent valuation questions were placed on a page facing the description ofthepublic good (forest protection). Two questions were asked: 1) How much would youbewilling to payforprotectionprograms along roads and trails (about one-third ofthe remaining forests); and 2) Howmuch would yoube willing to payto protect all ofthe remaining forests. The exact wording ofthe contingentvaluation questions is given in the appendix. Previous studies have used several different answer formats for CV questions. For example: open ended responses, payment cards, and ''take-it-or-leave-it" formats (Mitchell and Carson, 1989). Although the ''take-it-or-leave-it"format, also known as discrete choice, is increasingly popular among researchers, few studies have comparedthis elicitation method with the payment card format in an experimental context. Therefore, in order to test for differences across formats, we presented the payment card to halfofour sample and discrete choice to the other half. Thepayment levels for the discrete choice questions were developed after responses to the mail pretest (which used a payment card only) were received. Pretest bids ranged from zero to $500. We selected ten payment levels within this range, which included most ofthe bids givenbythe pretest respondents. Sixty 

### respondents were assigned to each level. The same payment level was used in both questions.
We also included a question in which we asked respondents to partition their bids among three types ofvalues: 1) use values; 2) bequest or vicarious consumption values; and 3) existence or intrinsic values. One question explored reasons for zero bids. The final section ofthe survey asked about respondents'participation in outdoor recreation, their involvement in "environmental behavior," and the usual socioeconomic characteristics.



### RESULTS
A total offour mailings were sent to the potential respondents. The first mailing was the initial contact with the respondents. The second mailing was a follow-up postcard which reminded the respondents to return the survey. The next two mailings contained letters which tried to reinforce the importance ofeach respondents answers and the social importance ofthe entire study. The last two mailings also contained a replacement questionnaire. The mean willingness to pay for the two different levels ofprotection are shown in Table 1. 

### The responses are broken out for two groups corresponding to the two different question formats (payment cardversus discrete choice). As can be seen, respondents are willing to pay about $18 to 59 to protectthe remaining undamaged forests along roads and trails (about one third ofthe higher quality forests), and about $20 to 99 to protect 

### all ofthe remaining high quality forests. The question format does not appear to affect response rates; 51 percent ofthe respondents returned completeddiscrete choice surveys, while 53 percentof the payment card surveys were returned. The respondents were asked to partition theirbids according to use value, bequest value, and existence value. We recognize that there is debate in the literature about the cognitive abiity ofindividuals to disaggregate total value in this way, butwe thought it wouldbeuseful to explore the relative contributions of each ofthese categories to total value. The results are shown in Table 2. As can be seen, existence value makes up about halfofthe total bid for both versions. The second largest category is bequest value. Use value makes up only about 9 to 13 percent ofthe total willingness to pay for forest protection.

CONCLUSIONS This study has explored the benefits associated with protecting remnant spruce-fir forests in the southern Appalachians. Results indicate that the contingent valuation method coupled with visual information is an effective way ofmeasuring preferences for forest quality. This assessment is based on response rates and the apparent ability ofrespondents to distinguish between protection levels. Further analysis ofthe data set is needed to determine the effect ofthe two

93 

# ..different CV question formats used in the survey and to compare value estimates from the CV and travel cost methods.
Itis clearthat there is a substantial willingness to pay for protecting forest quality. Most ofthese benefits are related to nonuse values. From a policy perspective, this suggests that it would not be appropriate to finance forest qualityprotectionprograms entirelyfrom user fees, since many ofthe benefits are realized by nonusers. However, we recognize that the method used in this studyto partition values is somewhat simplistic and does not attempt to control for other public goods in each individuals basket ofgoods and services. Separability in environmental valuation is an issue needing further scrutiny. In addition, further analysis will explore differences in willingness to pay between forest users and nonusers, as well as the differences betweenthe two different levels of protection.

REFERENCES Barnard, J.E.; 

### Lucier, AA.; Johnson, A.H.; Brooks,

R.T.; Kamosky, D.F.; DuM, P.H. 1989. Changes in forest health and productivity in the United States of America: State-of-Science/Technology Report 16. Washington, DC: National Acid Precipitation Assessment Program. Chappelka, A.H.; Chevone B.I.; Seiler, J.R. 1985.

Growthresponse ofred spruce seedlings to acidic precipitation and ozone: preliminary results. In: Proceedings ofthe south wide forest disease workshop. Raleigh, NC: Department ofPlant Pathology, North Carolina State University. 

### Crocker, T.D. 1985. On the value ofthe condition of

a forest stock. Land Economics 

### 61(3):244-254. de Steiguer, J.E.; Pye J.M.; Love, C.S. 1990. Air

pollution damage to U.S. forests: A survey of perceptions and estimates by scientists. Journal of Forestry

### 88(8):17-22. Dillman, DA. 1978. Mail and telephone surveys: The

total design method. New York, NY: John Wiley and Sons, Inc. Dull, C.W.; Ward, J.D.; Brown, H.D.; Ryan, G.W.;

Clerke, W.H.; Walker, R.J. 1988. Evaluation of



### 94 spruce and frr mortality in the southern Appalachian Mountains. USDA Forest Service Protection Report R8-PR 13. Gamer, J.H.B.; Pagano, T.; Cowling, E.B. 1989. An

evaluation ofthe role ofozone, acid deposition, and other airborne pollutants in the forests ofeastern North America. USDA Forest Service Gen. Tech. Rep. SE-59. Kramer, Randall A.; Healy, Robert; Mendelsohn,

Robert. 1990. Forest valuation. Paper prepared for World Bank forest policy study. Washington, DC. Mitchell, Robert C.; Carson, R.T. 1989. Using

surveys to value public goods: The contingent valuation method. Washington, DC: Resources for the Future. Peine, J.D.; Renfro, J.R. 1988. Visitor use patterns at

Great Smoky Mountains National Park. U.S. Department ofthe Interior, National Park Service, Research/Resources Management Report SER-90. Southeast Regional Office, Atlanta, GA. Peterson, D.C.; Rowe, R.D.; 

### Schulze, W.D.; Russell,

G.W.; Boyce, R.R.; Elliot, S.R.; Hurd, B. 1987. Valuation ofvisual forest damages from ozone. Draft: 

### USEPA Cooperative Agreement 

### #CR812054- 02. Pyle, C.; Schafale, M.P. 1988. Land use history of

three spruce-fir forest sites in southernAppalachia. J. Forest History 

### 32:4-21. Richter, D.D.; Ring, 

### K.S.; Witter, JA

.. 1989.

Moisture and nutrient status ofextremely acid umbrepts in the Black Mountains ofNorth Carolina. Soil Sci. 

### Soc. Am. J. 

### 53:1222-1228. Walsh, R.G.; Bjonback, R.D.; Aiken, RA.; Rosenthal,

D.H. 1990. Estimating the public benefits of protecting forest quality. Journal ofEnvironmental Management 

### 30:175-189. Witter, JA.; Ragenovich, I.R. 1986. Regeneration of

Fraser fir at Mt. Mitchell, North Carolina, after depredations by the balsam woolly adelgid. Forest Science 

### 32(3):585-594. 

# -APPENDIX Contingent Valuation Questions Used in Survey Suppose the only way to provide for these tree protectionprograms is to start a special conservation fund financed by increased taxes. Althoughmost ofthe southern Appalachian spruce-fir forests are like those shown inphoto without these Qrograms most ofthe forests will eventually decline to the level seen in photo C. The whole forested area is at risk from the insect and po1lution aarnaf,!;e.

Version 1: Pavment Card Format
13. Whatis the mostmoneyyouwouldpayeach vear to provideprotectionprograms for spruce-fir forests along roads and trails in the southern Appalachian Mountains (which is about one-third ofthe remaining forest areas)? (Circle one amount.) $0 $4 $6 

### $8 $10 $15 $20 $25 $30 $40 $50 $75 $100 $125 $150 $175 $200 $250 $300 $350 $400 $450 $500 other



### 14. \Vhat is the mostmoney you wouldpayeach yeartoprovide protectionprograms for all ofthe remaining spruce-fir forests in the southern Appalachian Mountains? (Circle one amount.) $0 $2 $4 

### $6 $8 $10 $15 $20 $25 $30 $40 $50 $75 $100 $125 $150 $175 $200 $250 other$

__ $300 $350 $400 $450 $500

Version 2· Discrete Choice Format 

### 13. Would you pay eachyear to provideprotectionprograms for spruce-fir forests along roads and trails in the southern Appalachian Mountains (about one-third ofthe remaining forest areas)? 

### 0 NO 

### 0 YES



### 14. Would you pay eachvearto provideprotectionprograms for 

### !ill ofthe remaining spruce-fir forests inthe southernAppalachianMountains? 

### 0 NO YES



### 95 

# -96 Table 1. Annual Willingness to Pay Per Household for Protection of Forest Quality.

Forests along roads and trails
All of the remaining forests Payment Card Version

$18.08

$20.86

Table 2. Value Components of Total Willingness to Pay

Type ofValue
Use Bequest
Existence Payment Card Version

8.2%
29.6%
58.5% Discrete Choice Version

$59.22

$99.57

Discrete Choice

Version

12.8%
29.8%
55.9% 

# -