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Abstract Haynes, Richard W.; Bolon, NatalieA.; Hormaechea, DanielT. 1992.The economic impact ontheforest sector of critical habitat delineation for salmonin the

Columbiaand Snake River basin. Gen.Tech. Rep.PNW-GTR-307.Portland,OR:

U.S. Department of Agriculture, ForestService, Pacific Northwest ResearchStation.

33 p.

Economic implicationsof critical habitatdesignation (CHD)for salmon inthe Columbia

River basinwere estimatedin advanceof actual designation and recovery plandevelopment. Economic impacts on Pacific Northwest, Intermountain, and NorthernRegion

NationalForests’range, recreation,timber, and mineral programsinthe Columbia and

Snake River basinwere analyzed.Two caseswere considered: a worst case, where

CHD resultsin a totalreductionin the anadromous portions of the various programs,

anda mitigatedcase, where all or part of the loss is mitigated. Results were analyzed

over the 10-yearForest planningperiod under 4- and 9- percent interestrates. The

recreationandtimber programsshowedvalues greater than costs for CHD mitigation,

while the rangeprogramdid not.The minerals program initially seemed to fall intothe

same situationas range, but limitedinformation in the analysis for mineralsmade this

judgment subjective.

Keywords: Critical habitat designation, policy analysis, salmon, economic impacts,

NationalForests.
Contents 1

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Introduction

Definitionof Critical Habitat

Area of Analysis

Methods

DataCollectionProcess

Assumptions

Weaknesses of Approach

Results

Range

Recreation

Timber

Minerals

Implicationsfor ForestServicePrograms

Implications for NMFS

Conclusions

Acknowledgments

LiteratureCited

Appendix 1

Data Collection Forms

Appendix 2

RangeData

Appendix 3

Recreation Data

Appendix 4

Timber Data

Appendix 5

MineralData
Introduction

Definitionof

Critical Habitat

The NationalMarineFisheriesService (NMFS), in anticipationof the listingof various

salmon runs inthe ColumbiaandSnake River basinas endangered under the EndangeredSpecies Act (ESA; 1973), is attempting to assess the biologicand economic

implications of critical habitat designation (CHD) for salmon.1The economic assessment covers nine major areas of direct economic impacts: (1) flood control; (2) irrigated

agriculture; (3) hydropower production; (4) transportationand navigation; (5) recreation;

(6) salmonfisheries-commercial,sport, treaty and nontreaty, subsistence, and hatchery; (7) land management: (8) municipaland industrialwater use; and (9) nonsalmon

wildlife andfish andriparianwildlife. This assessment focuses on the direct net economic

costsof ESA actionsconcerningSnake River sockeye (Oncorhynchusnerka (Walbaum))

and chinook (0.tshawytscha (Walbaum)) salmon.

The advanced(prior to recovery plan) availability of economic data is a new concept

for NMFS and ESA. Economicdata normally are compiled after the formulation of the

recovery planand designationas critical habitat. Evenwith this approach, another

economic assessmentfocusing on economic cost-effectivenessis likely once final

identificationof critical habitat has beenmade.

The USDAForestServiceisthe sole land management agency involvedinthe economic

assessment. The NMFS has askedthe ForestServiceto provide natural resourcedata

relatedto timber, livestockgrazing, recreation, andminerals as they pertainto National

Forest System (NFS) lands.The objective of this report is to providethat information

andassess thecoststothe NFSof CHD beyond protection already affordedinthe Forest

plans.2 These plansservedas the base case inthis analysis and already includedsignificant measurestaken to protect salmon habitat prior to CHD; in identifying incremental

costs associatedwith CHD,total costs therefore will be understated.The analysis was

performedregionally,with national effectsmentionedwhere measurable. Itwas assumed

that no reductionin habitatwould occur for any salmon-bearing Forestwatershed

downriver from Hells CanyonDam inthe Snake River system.

Criticalhabitat areas are those designatedascritical by the Secretary of Commercefor

the survivaland recovery of listedspecies. Becauseuse of the term has legal implications, the ForestService limits its useto only those habitats officially determined as

critical by the Secretary of Commerce.

For the preliminary (prior to recovery plan) effort of identrfyingthe direct net economic

costs of critical habitat, the area of considerationwas "ridgeto ridge"for the mainstem

andtributariesand includedspawning, rearing, and migratory habitats.

1

These particularrunsare the Snake Riversockeye and springand

fall chinook runs inthe Columbiaand Snake River basin.

2

Forestplansare a productof a continuous land management

planning processthat addresseschanging resource demands made

on the supply of renewable resources and minerals.Every decade

the ForestSewice,with public input,updatesand amends Forest

plansto ensurethat adequate resourceswill be availablefor future

generations These plansare usedto providethe Administrationand

Congresswith accurateprogram and budgetinformationand to

guide program implementationonthe groundfor each National

Forest.

1
Area of Analysis

Inthis analysis, we dealt only with National Forest lands that are largely in river head

water regions.We did not deal with privatelands. We generalizedsome NMFS concerns3

to fit the National Forests involved because not all species of salmon occur on all

involvedForests, and it is generally only river headwatersthat occur on ForestService

managedland. Concernsaboutthespring-summerchinook andfall chinook salmonwere

combinedand consideredonly below HellsCanyon Dam.There is a lack of biological

informationavailable for the area above HellsCanyonDamto C.J. StrikeDam.Various

concerns about sockeye salmon runs were analyzedfor recreationalimpactsonly inthe

Sawtooth National Forest.

The analysis focused ontwo cases: aworst case scenario, inwhichthe ForestService

is forced to restrictactivitiesinall areas inthe Columbiaand Snake River basincontaining anadromous fish habitat,anda secondcase, inwhich various mitigationactivities

wholly or partially restoreForestService programs. Most of our discussionfocuses on

the secondor mitigatedcase, with less emphasis ontheworst case scenariowhere

habiiatprotectiononthevarious National Forests results in atotal reductionof timber,

range, recreation,and mineralprograms in anadromous fish-relateddrainages.

Ten NationalForests inOregon and Idaho (Forest Service Regions 1,4, and 6 [defined

below]) are includedinthe analysis.The area considered isthat portionof the Snake

River basinupto and includingalltributaries below HellsCanyon Dam onthe Snake

River (see fig.1).The analysis does not includeany NFS drainages above Hells Canyon Dam. The areas includedare:

NorthernRocky Mountains (Region 1)-

BitterrootNational Forest 4 (Clearwater River drainage)

Cleanrvater NationalForest (Clearwater River drainage)

Nez Perce NationalForest (Clearwater,SalmonRiver drainages)

BoiseNational Forest(SalmonRiver drainage)

Challis National Forest (SalmonRiver drainage)

PayetteNational Forest (Salmon,Snake River drainages)

Salmon National Forest (SalmonRiver drainage)

SawtoothNationalForest (SalmonRiver drainage)

UmatillaNational Forest Vucannon River drainage)

Wallowa-WhitmanNationalForest (GrandeRonde River drainage)

IntermountainRegion (Region4)- --

Pacific Northwest Region(Region6)-

Personalcommunication.1992.Daniel Huppert,associate

professor; David Fluharty, research associate professor; and Libby

Kenney, research assistant, University of Washington, Schoolof

Manne Affairs, HF-05,3707 BrooklynAvenue NE., Seattle, WA

98195.

4TheBitterroot NF has only designatedwilderness in the Columbia

and Snake Rver basin Designationas cntrcal habitatis assumedto

have no impacton wilderness uses.

2

Methods

DataCollectionProcess

Datawere collected from individualforests by a workgroup composedof bothPlanning

and FishandWildlifeStaff from Forestsand RegionalOffices inthe Snake River basin.

Thevarious assumptionsand definitions of terms for gatheringdata are given inappendix 1.

5 Output levelsfor other thanfish resourceswere heldat Forest plan implementation levels (basecase). The worst case and mitigatedcase, as describedearlier,formed

benchmark net direct cost estimatesto the NFS due to CHD.

Theforests listedabove provideddata under theformat found inthe data collection

sheets in appendix 1. The datawere summarizedfor range (see appendix 2, table5,

which later was revised by using regional leveldata, tables 3 and 4), recreation (appendix 3, tables 13and 14),timber (appendix 4, table 16), and minerals (appendix5, table

18).As Forest plansformedthe basisfor the analysis uponwhich CHD would be

imposedand because Forest plan outputs are measuredover a 10-year planning

period, thedatainthis analysis are decade based. Forestswere to assumethat the

Forest planswould befully implemented(thisassumptionwas later modifiedfor range),

that all project activitieswould comply with Forest planstandards and guides, andthat

the "ColumbiaRiver Basin: Anadromous FishHabitat Management Policy and Implementation Guide"6 would be implemented throughout the Snake River basin.

Detailed analysis methodologyfor each resourceoccurs inthe section"Results," below,

and in appendix tables.

Assumptions Useof Forest plans ---Several assumptions were made inthis analysis. Forests were

to analyze salmon habitat for Forest watershedsas defined intheir Forest plans. Those

drainagesfor which Forest plansspecify a reduction in habitat capabiltty were to be

identified.All salmon-bearingForest watersheds below HellsCanyon Dam intheSnake

River drainagewere considered, excludingForest watershedsthat historically did not

have documentationof the proposedor listedsalmon. The riparian standards and

guidelines ineachForest planandthe "Columbia River Basin: AnadromousFishHabitat

Management Policy and ImplementationGuide" (seefootnote 6) would befully implemented. Under ESA, Section 7 (consultationprovisions), the burdenof proof of no

impact of landmanagement activitieson habitat lies solely onthe Agency. We assumed,

based onthe dataprovided,that substantialfunding increaseswould be required to

meet Forest standardsandguides for range. Cost savingsfrom any reductions inthe

timber programwas assumed to exist becausetimber is fully funded andany reductions

will result incost savings. This was not the casefor the range, recreation,and minerals

The dataoriginally were gathered under two options. OptionA, for

range, recreation, timber, and minerals,hasthe least cost deviation

(tothe Government)from Forest plan implementation to meetthe

objectiveof no reduction in habitat. Costsfor that portionof the

programremaining economically feasible plus any costsassociated

with portionsthat are no longer feasible in anadromousfish-related

drainagesafter CHDare shown Option B hasthe least cost (to

Government)for total mitigationof salmon habitat. Datawere

collectedunder this latter option for ttmber only, as full mittgationof

range, recreation, and minerals was notfelt possibleor data were not

avarlable.Dueto inconsistencies in thedata betweenthe two options,

options A and B were assimilated intoone data set, which is carried

forward throughoutthe analysisas the mitigatedcase for timber.

6 U.S. Departmentof Agriculture, ForestService. 1991. Columbia

River Basin: anadromous fish habitat managementpolicy and implementationguide. 30 p. Onfile with: Gordon Haugen, inter-regional

fisheries coordinator, P.O. Box 3623, Portland,OR 972083623.

4
programswhere due to underfunding,cost savings were assumedtobe used for the

remaininganadromousand nonanadromousportionsof the programs. Investments to

restoreor improve salmon habitat capability were not considered.

As mentioned above, the analyses presentedhereinaccordancewith Forest plansare

decade (1990-2000) based. The opportunity cost foregone or worst case scenariofor

range, recreation,timber, and mineralsoccur annuallythroughout the decade. Inthe

range analysis, however, updating the Forestallotment management plansthroughthe

NationalEnvironmental Policy Act (NEPA; 1969) process hasto be accelerated to occur

within the first 4 years of the decade. The rangeimprovementcosts, the loss of animal

unit months7 and additional administrative funding costs would occur throughout the

decade. (It needsto be notedherethat many actual mitigation costs are borne by the

permittee, not the ForestService.) Oncespecific affectedallotment areas are identified,

more accurate range improvement cost data can be estimated, part of which may be

borne by the ForestService. Suchcosts may include a specific amount of milesof fence

to be built and maintainedas well as the number of additional rangeriders necessary.

The datafor the recreational analysiswere originally reportedin recreationalvisitor days

then convertedto activity days, basedon 4 hours of recreational effort a day. The value

of the lost activity days resultingfrom asalmon listingwas determinedby usingResource

Planning Act (RPA;1974) net consumer surplus prices (see appendix 3,table 10). The

RPA coldwater fishingvalue includesanadromous fishing, because conflictingevidence

betweenthis andactual coldwater fishingvalues as well as a lack of sufficientrecent

empirical studiesdid not allow adifferenceto beestablished(USDA Forest Service 1990).

Inone case, the PayetteNationalForest, it was felt that no recreationalopportunities

would be lost but that increasedlaw enforcement and educationwould be necessary.

This would include keepingpeople off the banksand out of thestreames at critical times

and placesto reducesoil erosionand harassment during spawning and migration, yearroundeducational programs inschools, andsignage and interpretivesites for general

educationon salmon. We have not includedcosts associatedwithincreaseddemand for

fish viewing andthe projected site development caused by such. We assumedthat on

the averagetheseactivitieswould be needed by the other Forestsas well, andthis is

reflectedin the analysis (see appendix 3,tables 13 and 14). TheWallowa-Whitman

NationalForestwith additional recreational visitor days may have a greder need than

the Payette National Forest, but this is probablyoffset by the Clemater National

Forest, which hasfewer visitor days and probablywill needless.

The categories of recreation affectedon those Forests showing activity losses arenoted

in appendix 3, table 11. A second recreationalanalysis was done, becaukefor the

Sawtooth National Forest,the IdahoDepartment of Fishand Game (IDF&G) was able

to supply recreationaluse dataonthe activity hoursthat they felt would be lost as a

result of the salmon listing (see appendix 3, table 12). This latter analysis assumedthat

all sockeye salmon-related recreational losseswere from coldwater fishingonly and did 

not include other recreationalcategories (seeappendix 3,table 14).Also, their recreational

use data were collectedunder a different methodology thanthat usedby the NFS.

7

An animal unit month isthe amountof forage requiredto sustain

oneanimal unitfor 1 month An animalunitisone mature cow of

approximately 1,OOO pounds,or equivalent.

5
Other assumptions-other assumptionsincludedestimates of real market clearing

pricesfor range, recreationand minerals, interest rates, and various measures of

indirecteconomic activity. The range, recreation,and mineralpriceswere taken from

the 1990 RPA program (USDA ForestService 1990) and include real priceappreciation

rates (net of inflation) of 0.6,0.3, and 2.0 percent per year, respectively.These rates

alsowere includedinthis analysisto reflect increasing scarcity throughout the decade.

Real priceappreciation of 3.2percent per year andthe values for timber were estimated

by usingthe same methodology as was usedfoc the 1990RPATimber Assessment and

Program(Haynes1990),only modified to includethe reductionsinthe timber programs

of the various NationalForests (see Timber" inthe section "Results"). Interestrate

assumptions of 4 and 9 percentwere required by NMFS.

There are several weaknesses to the approach usedinthis analysis. The first is lack of

clear delineation of the critical habitat and the delineation of activities and programs in

the basinthat would needto be adjustedto meet recovery planstandards. Limitations

specific to the Forest planningprocessincludedlimitingthe analysisto only those

watersheds with identifiednegativeimpactsto fish, the potentialdiscrepancy between

activitiesand standards identified in Forest plansfrom actual implementation(the roleof

monitoring, inventory, administrativeoversight), Forest planemphasison programmatic

data rather than site-specific informatbn,and inconsistenciesinForest plansamong

Regionsand Forests.

Although not necessarilya limitation, many Forest plandecisions acknowledged costs of

managingfor salmonhabitatand madeadjustmentsinthe landallocations (that is, allowable sale quantity or animal unit month reductions in riparian areas) inthe current Forest

plans.Such decisionswill reducethe cost estimates presentedinthe section'Results."

One real limitation is that this analysisdid not include(nor was it intendedto) all land

ownerships within the various river basins: for example,the analysis includesthe landin

the headwaters of, say, the Grande RondeRiver butdoes not consider the economic

costs associated with privateagriculturalandranchingactivities along the various

privatelyowned river valleys where intensegrazingoccurs. Privatecosts associated

with CHD andthat effect on NFS programs were not included.

Severallimitationswere imposedby the various meansof accountingfor economic

impacts.8

There was aninconsistency,for example, betweencasting methoddogies:consumer surplus vs. surrogate valuefor preparing NEPA documents. Cost-effectiveness

criteriawere not a consideration inthis preliminary economic analysis. Indirect costsor

8

Willingness-to pay values are used becauseof value for increased

(marginal)consumption of natural resourcegoods.Whereas

willingness-to-accept values are probably more appropiate for

measuring welfare adjustment due to decrementsin rebOurce

supplies,willingness-to-accept and willingness-topay values will

converge lor homogeneousundifferentiatedproducts. Most recreational activities derived horn natural resourceswill not meetthe strict

test necessary for willingness-to-accept and willingness-to-pay

values to beconsidered equivalent. Although we recognizethis

theoreticaltruthfor valuation,for ESA-imposed changes in resource

recreationaluses,t he only available measuresof value for assessing

social welfare and economic impacts due to changes in recreational

resource useare willingness-topay vaiues

Weaknesses

of Approach

6
Results

Range

regional economic impactswere addressedfor timber, range, and recreation.The

analysis for mineralswas the weakest. Finally, the methodology for determining casts

ssociated with critical habitat management and mining activitieswere not well defined.

Results are shown for the two cases described earlier: the worst case scenario, inwhich

the Forest Service isforced to restrict activities inall areas of the Columbia andSnake

River basin containinganadromousfish habitat and a secondcase, inwhich various

mitigationactivities wholly or partially restore ForestService programs. Given the relatively small magnitude of lasses in the mitigatedcases, national effects probablywould

occur only with the lass of timber; loss of other resourcesgenerally would cause only

regional effects. In addiiion, timber isthe only resource having a model availablefor

measuringthe national impacts with any degree of reliability.

The results for each resource are shown invarious tables (as referenced) inthe appendices. The total net cast in present value terms of these various reductions for the next

decade can besummarizedin common units as follows:

Analysis

Presentvalue

Range Timber Recreation Minerals9

Million 1990 dollars

Worst case:

4 percent 10.3 480.8 2030.4 72.8

9 percent 8.1 380.4 1603.7 56.9

4 percent 19.3 1.8 15.2-19.1 87.3

9 percent 15.7 1.4 12.0-15.1 68.2

With mitigation:

Detailedpresentvalue resultsare discussed belowandare shown in appendices1 through

5. Rangeand minerd losseswere estimated, but once impacts for specific areas are

completedthroughthe NEPA process,specific reductions may be better known.

Two range analyses were considered, a worst case and a mitigatedcase. For the latter,

the three regions each providedfour types of range cost data (see appendix 2, table 3):

(1) the incrementalcast to attainfull Forest plan implementation, (2) the increw in cost

due to acceleratingthe allotment management plans, (3) range improvement costs, and

(4) the cost due to last animal unit month output.

Current Forest plans provide overall directionfor the range management programs but

are not funded at levels allowingfull implementation. To account for this, the difference

betweenthe current level of funding and thst neededto achieve specifiedForest plan

levels was incorporated.Inadditionthe plans are too generalto carry out range management for CHD, thus the NFS must develop allotment management planswithin 4 years

to meetthetimeframecommitted to at the salmon summit conference.Thetotal estimated

cast of updating the affectedallotment management plans in accordancewith NEPA

specificationsthereforewas included(see appendix 2. table 4). The original collected

range data appear in appendix 2, table 5,to give readers an idea of how many animal

9Worst case estimates are conservative as they include only placer

mine losses.

7
Recreation

unit months andallotment management plans in anadromous fish-related drainages

there are and how many of the plans needupdating. Becausethese planswould have

to be completedregardless of CHD, it isthe difference between completing the plans

in4years as compared to 10 that is the true cost of CHD to the ForestService. For

consistency with other rangecosts, thetotal cost to speed the allotment management

planningprocesswas annualizedand usedon a per-animal-unit-monthbasis (see

appendix 2, table 4). The other costs include increasedrange improvementsand an

estimateof the animal unit months that would be lost asa result of CHD (see appendix

2, table 3). Range improvements might includeremedialfencing, water structures, and

so forth not includedinForest plans. It was estimatedthat a 25-percent reductionin

anadromous fish-related animal unit months would occur.10 Toassess this loss, a

weighted-averagefair market rental value takenfromthe 1990 RPA was used (USDA

Forest Service1990).Thefinal case looksat the opportunity cost if all animal unit months

allocatedto anadromousdrainages inthe Forestswere lost; a weighted-average RPA

fair market rentalvalue per animal unit monthfor ForestService Regions 1,4,and 6

was used (see appendix 2, table 9).

It shouldbe notedthat the estimated fair market rentalvalue is considerably morethan

the actual fee charged by the NFS ($1.97 per animal unit month) for grazing on National

Forest land. This fee is set by Presidential Executiveorder, not by the NFS. The fair

market rentalvalue reflects costs tothe Federal Government but not toprivateparties

who use NFS landsfor grazing.When coupledwith administrative costs,thefair market

rentalvalue is a reasonable estimateof net direct costsfor range,

Appendix 2, tables 6 and 7, show the presentvalue resultsover the decade by total for

eachregionand type of cost at 4 and 9 percent, respectively. Region-suppliedestimates

show that the cost of achievingForest plan implementationlevel, speedingupthe allotment management planningprocess, makingadditional rangeimprovements, and losing

61,675animal unit months will be $19.3 millionOver the next decade (at 4 percent interest). Intheworst case, if all animalunit months indrainages considered anadromous are 

lost (246,700)for the next decade, the cost would be $10.3 million(at 4 percent).Figures

for interest at 9 percent can be seen inappendix 2, tables6and 7.

This analysis does not show any of the cost impactsthat will be borne by private

individualsor companies as a result of the salmon listing. Increasedcosts surrounding

mitigationto meet habitat requirementscould includemore range riders,fencing,

maintenance, and other range-associatedcosts, some of which may be borneby the

Forest Service.

Three recreationcases were considered.The forests eachsuppliedtheir estimatedloss

inrecreational visitor days for anadromousfish (see appendix3, table 13).Two Forests,

the Sawtoothand Umatilla, foresaw unmitigablerecreationallosses. Consumer surplus

nettedfrom the RPA recreational pricesfor nonmotorizedand motorizedboatingand

coldwaterfishingwere usedto estimatethe net direct economic costs for each activity

lost.To these lossewere added increasedlaw enforcement and educationalcosts as

describedearlier for all Forests.We basedthis onthe estimates providedby the

PayetteNational Forest. The assumption herewas that each Forestwould needon

10 Personalcommunication.1992. Ray Hall, director, Rangeand

WatershedManagement, Intermountain Region, 324-25th Street,

Ogden, UT 84401.

8
Timber

average, 2.5 personyears per year at the GS-9 levelfor increased law enforcement, as

well as $7,000for education (1992 dollars). The same analysiswas runwiththe Idaho

Departmentof Fishand Game recreational use datafor the SawtoothNationalForest

as described earlier (see appendix 3,table 14).The final case looks at the opportunity

cost if all Forests'recreationrelatingto anadromous fish is lost; anaverageRPA

coldwater fishingvalue for ForestService Regions 1, 4, and 6was used(see appendix

3, table 15).

Appendix 3,table 14, givesasummary of resultsfor the two NFS recreationanalyses.

GivenForest-supplied estimates, the recreationcosts, including41,400 total lost activity

days (13,800 recreationalvisitor days) and additionallaw enforcement andeducation,

will be $1 5.2 millionover the next decade (at 4 percent interest).The Idaho Department

of FishandGamedata (see appendix 3, table 13),which includes the assumptionthat

allsockeye salmon-related recreation on the SawtoothNational Forest would be lost,

uses coldwaterfishing consumer surplusvalues and leadsto a cost of $19.1 million (at

4 percent) and46,130total activity days lost. Inthe worst case scenario, if all recreation

relatedto anadromous fish (2.1 millionrecreationalvisitor days) is lost for the next

decade, itwould cost $2 billion (at 4 percent). Figures for interest at 9percent can be

seen in appendix 3,table 14.

Market impacts of changes inthe National Forest timber sale program were estimated 

by usingthetimber assessment market model, or TAMM. 11 All assumptions in the

analysis reflectcurrent Forest Service plans and views of macroeconomic activity,

supply behavior on private timberlands, anddemand behavior inbothproduct andfactor

markets. The datafromtable 16(appendix 4) suggest that ina worst case scenariothe

NationalForest harvest levelswouldfall by nearly 300 millionboard feet per year. In

TAMM, we assumedthat this impact would bespread across two different traditional

timber regions:the east sideof the Pacific Northwest andthe Rocky Mountains.The

reductions in NationalForestharvest flows are shown below:

l 1TAMM is describedinAdams and Haynes (1980) and Haynes and

Adams (1985). Ingeneral,projections from TAMM reflectan

economic contextwhere supply and demandare balanced.The

projectionsusedherereflect harvestlevels adjusted for both the

InteragencyScientific Committeereport (ISC 1990) and t he

injunctionissued by Judge Dwyer in May 1991.

9
Changein Reduction in

Regionandyear Total harvest total harvest NFSharvest Stumpage price

PacificNorthwest

east side:

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

Rocky Mountains: 

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2,167

2,284

2,252

2,311

2,308

2,289

2,277

2,237

2,209

2,324

3,713

3,783

3,824

3,974

3,998

4,024

4,043

4,034

4,050

4,277

1,705

1,903

1,899

1,933

1,956

1,957

1,962

1,928

1,922

1,971

3,614

3,663

3,696

3,789

3,828

3,841

3,858

3,834

3,860

3,979

112

112

112

112

112

112

112

112

112

112

189

189

189

189

189

189

193

193

193

193

329.28

270.90

251.77

268.57

250.17

236.37

224.33

219.67

203.99

251.46

72.85

88.54

94.28

137.05

125.16

134.75

136.25

147.79

139.87

219.33

We assumedthat pricearbitragetakes placeinthese two regionsandthat priceswould

converge acrossthevarious Forestsin eachtimber region. This is notthe same as

sayingthat prices arethe same everywhere, because species, quality, and other

differencesleadto localpricedifferences.

If Forestplansarefully implemented and additional mitigationactivities identifiedby each

National Forest are carriedout, thenthe loss drops to 18.36 millionboardfeet. Mitigation

generallyincludeschangesinsaleand roaddesignand location. Becausethetimber program isfully fundedto Forest planlevels,whentheallowablesale quantity is reduced, cost

savings occurs. Basedon PayetteNational Forest data, this was assumedto occur at

$147thousand per millionboardfeet. Thissavings offsetssome of thecosts of mitigation.

Appendix 4, table 17, gives a summary of resultsfor the two cases: worst and mitigated.

Without any mitigation, and assuming that notimber program exists inanadromousfishrelated areas, the net loss is $481 million Over the decade (at 4 percent). With mitigation

and cost savings,the net loss drops to $1.8 million. Includedinthis latter figure are

additionalmonitoringcosts of $1500 per million boardfeet (basedon estimates provided

by the PayetteNationalForest) for mitigationof harvest impactsOver andabove current

Forest plan levels. Figuresfor interest at 9percent can beseen inappendix 4, table 17.

10
Minerals Mineralactivities taking place on Federal lands potentidly affected by CHD include hard

rock mining, placer mining, the possibledevelopment of existing claims, and stakingof

new claims. The NFS role inmanagingmineralactivitieson Federal lands is primarily

through its permit authority over access to minesites. Mineralclaims are for the most

part privately owned. Although numerousclaims exist on Federal lands, many are of

insufficient valueto develop inthefuture. If a claimant declaredan intention to develop

a mineralclaim, the NFS might be placedin a positionof denyinga permit basedon its

responsibility to protect critical habitat.This is difficutt to predictand not accountedfor in

this analysis.The most direct impact of mineral activlty onthe NationalForest landsthat

could affect salmon critical habitat isfrom placer mining. Net direct economic impacts

can beconsideredthe loss of productionof mineralsfrom these mines. Even though

these impactsare largely borneby privatepermittees,a potentialhalt in placer mining

activity can beestimated.

The variability of the mineralresourceand lack of easily obtainedinformationmadeit

the leastwell defined of the resourcemethodologies.Evenso, the Forests were ableto

obtain productiondatafor estimatingthe cost of lost placer miningassociated with CHD

(seeappendix 5, table 18).The RPA pricefor the right to extract mineralsper troy ounce

of goldwas used (USDAForestService 1990).The mitigation costs includedan increase

in biological evaluations,coordination,monitoring, and compliance efforts and have been

estimated by summing current Forest mineral programfunding levels.'2

Appendix 5, table 19,gives a summary of results for the mineralanalysis.The Forestsuppliedestimates show a cost of around $87.3 million over the next decade (at 4 percent

interest). Intheworst case scenario, the shut down of all miningin anadromousdrainages for the next decadewas not determinable;however, the lost placer miningcan

serve as a conservativeestimate, at $72.8 million(at 4 percent). Figures for interest at

9 percent can beseen inappendix 5, table 19.

This analysis does not show anyof the cost impacts that will be borne by private

individualsor companies as a result of the salmonlisting. Increasedcosts surrounding

mitigationto meet habitat requirements could includepossibleincreasesinstructures,

labor, andoperationalcosts of the mines. For situations where mitigation is not attainable, buyouts may occur. If minebuyoutsoccur, ForestService costs could differ

tremendously.

Implicationsfor Forest

ServicePrograms

Atthough ramifications of the resultsare not requiredby NMFS or the EconomicTechnical Committee, it is usefulto summarize some implications for ForestService programs.

One implication independent of resourceareaisthe extent to whichthe Forest Service

in its planning process anticipates a number of mitigation activities inthe Forest plans.

One disadvantageisthat this hidesthe true mitigationcost and may shift muchof those

costs to the ForestService.There also is concernthat the Regionsand Forestshave

neither funding nor staff to fully implement these plans,thereby complicatingmeasurement of mitigation costs.

Local, regional,and national significance-Thescales of these impactsdiffer dependingonthe geographic scalethey areviewed from. Incommunitiesdependent on these

NationalForests,wherethe bulk of job losseswill occur, economic impactswill be

12Personalcommunication. 1992. LynnSprague,director,Minerals

and Geology Management, USDA ForestSenrice,Auditors Building,

201 14thStreet,S.W.,Washington, DC20250

11
perceived as enormous. At the regional levels, other than stumpage prices or the lack

of accessto popular recreationalareas, the impacts are less noticeable. At the National

level, these impacts have asmall impact onlumber prices (lessthan1percent inthe near

term). Theeconomic impactsof listingthe ColumbiaandSnake River salmonarefocused

almost entirely onthe Forestsand dependent communitiesthat are directly affected.

Range-The small lossesandthe relatively large mitigationcosts associatedwith reductions inthe range programwill again bringintoquestion the efficiency of the Forest

Service range program.

Employment impactsassociatedwith the 246.7 thousand anadromousfish-related

animal unit months lostthroughthe worst casescenario amount to 74jobs across all

Forests.f3Thesejob lossesaremostly ranchers.With mitigation, only 25 percent of these

animal unit monthswill be lost (see footnote9),reducingthe lossto 61,675 animal unit

monthsand 19jobs per year.

Income impacts from the lost animal unit months inthe worst case amount to $740,100,

while the mitigated case shows reducedimpactsof $185,025.

Recreation-Lossof recreationis minor, other than inthe SawtoothNational Forest,

and is nota pertinentcost. Increased administrative costswill bethe relevantand major

cost resulting fromthe salmon listing.

Employment impactsassociatedwiththe loss of all anadromousfish-relatedrecreational

visitor days under theworst casescenario amountto 4,383jobs lost across all Forests.

With mitigation, only 13,800recreationalvisitor dayswill belost resultingin29 job

losses, most of those in Region4.

Incomeimpactsfromthe lost recreationalvisitor days inthe worst case amount to $58.3

million,while the mitigatedcase shows reduced impaqsof $420,000.

Timber-Dealingwith only net direct costs does not answer the most commonly asked

questionaboutchanges inthe Forest Servicetimber program; that is, “What isthe job

impact of such changes?” Briefly,for the worst casethese direct and indirectjob

impacts14 can besummarizedas being between94 and 925jobs inthe Pacific Northwest, east side, and between205 and2,046jobs inthe Rocky Mountains, dependingon

the extentthat increasesin privateharvests affectreductionon publictimberland.Some

job losseswould come in communitieswith noalternative manufacturing sector and

consequently wouldfundamentally alter those communities.Finally, there is littleprivate

timber inthese specific areas that could help mitigatethe loss inFederal harvest.With

mitigation, the allowablesale quantity is reduced by 18.36 millionboardfeet, thereby

resultingin 195 job losses per year, mostly inRegions 1 and4.

Income impactsfrom lost timber due to CHD amount to $148.2 millioninthe worst case,

while mitigation reduces this to $10 million.

12

l3 All range and recreationemployment and income impactsare

basedon the Umatilla NationalForestemploymentand income

multipliers.The range multipliersare 03jobs and $0.003millionper

thousandanimal unitmonths.The dispersedrecreationmultipliersare

2.1 jobs and $0 020 millionperthousand recreationalvisitor days.

14Thevarious employment and income multiplienwere taken from

limber Sale ProgramInformationReporting System datafor Regions

4 and 6 and rangedfrom 9.5 to 11 5 jobs for employment and

$433,000 to $569,OOO in income permillion board feet harvested.
Another measureof interest isthe impact of allowablesale quantlty reductionson

timber-basedrevenues. The concernisthat timber harvest is an important source of

Federalrevenueto many counties. Underthe worst case scenario, the upwardchanges

in stumpage prices in bothregionsactually increaseFederalrevenues, especially inthe

Rocky Mountains wherethey are expectedto risean average of $195 millionper year

duringthe next decade.

Minerals-Loss of placer mining seems tobethe major issueinthe mineralscase, as

gold cardes a high valuerelativeto other mineralsandthe productionis better quantified. 

Other mining impacts borne by the ForestServiceare assumedto be accountedfor in

the mitigationcosts reported; however, most of the cost will be borne by permittees.

Employmentand incomeimpactsassociated with the loss of all anadromousfish-related

miningis not currently known, as muttipliersdeterminingthem are not available.

Implicationsfor NMFS For consistencyamong reportsfrom the ninesectors experiencingdirect economic

impactsfrom CHD, NMFSrequestedresultsdisplayedinannualizedvalues. Tables 1

and2 reflectannualized values originating from tables inthe appendices. Mitigation

costs do not reflectany programcost savings, exceptfor timber. Any effort, time, and

money saveddue to CHD inthe range, recreation, and mineralprograms is assumedto

bereallocatedtothe remainder of the anadromousdrainage (that is, the 75 percentof

the animal unit monthsnot lost) and nonanadromousdrainages becauseof traditional

underfundingof the programs relativetothe work load.This is less the casefor timber

where, ingeneral,forests arefundedto meet Forest plan riparianstandards and guidelines. We assumedthat reductionsinthetimber programwould result in cost savings of

$147 thousand per millionboardfeet (basedondata from the PayetteNationalForest).

Lostvalues are computedby applying RPA market clearing pricesto the quantity of lost

resourcesexceptfor recreationwhere willingness to pay is used. Consumer surplus

measuresfor range, recreation,and mineralswere computedas the area abovethe

marketclearing price as describedinthe RPA (USDA ForestService 1990).The difference betweenmarket clearing priceandmarket clearing price plus consumer surplus

(that is, consumer surplus) was appliedto the quantity of lost resources. We choseto

estimateconsumer surplusfor timber markets as the sum of changes inallregional

stumpagemarketsfor changes in ForestServiceharvest inthe Rocky Mountains.

Dueto project time anddata constraints, to obtainingconsistency among resources,

and inkeepingwith economic analysis (not an engineering cost stance), appraisals of

replacementcostswere not analyzed. Coststo privateindividualsbecause of the

reductions inthe NFSprogramsalsowere not considered.

Conclusions If the ForestServiceimplements its Forest plans,thanthe impact of CHD is minor

exceptfor the rangeand mineralprograms. For range,the issue is botha lack of

fundingto implement the plans and the needfor mitigationmeasures. For minerals,

there is noway to mitigate placer miningfor no reductionin salmon habitat. Other

miningactivitiescan be mitigated,and Forest mineral programbudgetswill need

additional fundingto monitor and assurecompliance.

Froman economic perspective,this analysis shows that the benefits of protecting

critical habitat outweighthe costsfor recreationand most likely minerals. The case is

less clear for timber, and inthe case of range, the costs of mitigationapparently outweigh the benefits of the program.

13
Table 1-NMFS annualized costsat 4 percent

Mitigation Consumer

Resource costs Costsavings Lost value Total surplus

Range 2,065 0 317 2,382 161

Recreation:

NFS 1,122 0 756 1,878 756

IdahoDepartment

of FishandGame 1,122 0 1,227 2,349 1,227

Timber 973 -3,191 2,440 222 47,800

Minerals 1,787 0 8,974 10,761 8,973

Table +NMFS annualized costsat 9 percent

Mitigation Consumer

Resource costs Cost savings Lost value Total surplus

Range 2,123 0 315 2,438 160

Recreation:

NFS 1,120 0 754 1,874 754

Idaho Department

of Fishand Game 1,120 0 1,225 2,345 1,225

Timber 955 -3,129 2,393 219 35,900

Minerais 1,766 0 8,869 10,635 8,868

14
Acknowledgments We thank Judy Mikowski,forestry technician, PortlandForestrySciences Laboratory,

for formattingandeditingtheappendixtables; DonNelson, deputy director, Ecology,

Range,Watershed, and Air Program, Pacific Northwest Region, for supplyingspecific

rangedata; DaveFluharty, researchassociate professor, University of Washington, for

thoughtful critiqueandtechnical comments; andGordon Haugen, inter-regional fisheries

coordinator.

Literature Cited Adams, D.M.; Haynes, R.W. 1980.The 1980softwood timber assessment market

model: structure, projections, and policy simulations. ForestScience Monograph22.

62 p.

EndangeredSpeciesAct. Act of December 28,1973. 87 Stat. 884, asamended;

16U.S.C. 1531-1536,1538-1540

Forest and RangelandRenewable ResourcesPlanningAct. Act of Aug. 17,1974.

88Stat. 476,as amended; 16U.S.C. 1600-1614.

Haynes, R.W. 1990.An analysis of thetimber situationinthe UnitedStates: 1989-2040.

Gen. Tech. Rep. RM-199. Fort Collins, CO: U.S. Department of Agriculture, Forest

Service, Rocky MountainForest and RangeExperimentStation. 286 p.

Haynes, R.W.; Adams, D.M. 1985.Simulations of the effects of alternativeassumptions on demand-supply determinants onthetimber situationinthe UnitedStates.

Washington DC: U.S. Departmentof Agriculture, ForestService, Forest Resources

EconomicsResearch. 113 p.

InteragencyScientific Committee. 1990. A conservationstrategy for the northern

spottedowl. Portland,OR: U.S. Departmentof Agriculture, Forest Service. 427 p.

National EnvironmentalPolicyAct of 1969.Act of January 1, 1970. 83 Stat. 852;

42 U.S.C. 4321,4331-4335, 4341-4347.

U.S. Department of Agriculture, ForestService. 1990. Resourcepricing and valuation proceduresfor the recommended 1990RPA program. Washington, DC. 33 p.

15
SNAKE RIVER SALMON HABITAT

ALTERNATIVE OPTIONS AND ASSUMPTIONS

FOR

ECONOMIC ANALYSIS

Page 1

( 1/28/92)

BASE ALTERNATIVE

Forest Plan implementation with full mitigation (no reduction i n habitat i n any specific area from the date of

Forest Plan implementation.) The Forests will analyze two options and provide data tables for each.

Option A o Least cost (to Government) deviation from Forest Plan implementation to meet the objective of

no reduction i n habitat.

Option BL’o Least cost (to Government) for total mitigation of salmon habitat. Output level for other than

fish resources held a t Forest Plan levels.

ASSUMPTIONS:

o Forest will analyze salmon habitat for Forest watersheds as defined in Forest Plan.

Identify those drainages which Forest Plans specified reduction in habitat capability.

o All salmon bearing Forest watersheds below Hells Canyon Dam i n the Snake River Drainage will be

considered i n this analysis,

documentation of pro?osed o r listed salmon.

Excludes Forest watershed which historically did not have

o Meet Forest Plan Riparian Standards & Guidelines and Columbia River Basin Anadromous Fish

Policy and Implementation Guide.

o Best Management Practices (ie,, Forest Plans) will provide adequate protection for non-salmon

bearing Forest watersheds.

o Investments to restore or improve habitat capability will not be considered a t this time.

L’ For timber resource only.