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| **IEAB** | **Independent Economic****Analysis Board** | Emery N. Castle, Chair Joel R. Hamilton,      Vice-chair      Kenneth C. Boire      Daniel D. Huppert | Lon L. Peters      Jack A. Richards      Anthony D. Scott      Paul C. Sorenson |
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**Lessons from Existing Studies of the Economics****of Fish and Wildlife Recovery Measures in the Northwest****___________________________________________________________________**

A report from the Independent Economic Analysis Boardto the Northwest Power Planning CouncilJuly 1997

Purpose

The Northwest Power Planning Council requested that the Independent EconomicAnalysis Board (IEAB) provide a summary and review of six existing economicstudies of fish recovery policies and measures. The IEAB has preparedconclusions, recommendations, and findings regarding these studies, which areintended to help the Council in (a) its decisions regarding the funding ofspecific projects in FY98 and beyond, (b) the cost-effectiveness decisionsrequired by the 1996 "Gorton Amendment" to the Northwest Power Act,and (c) its broader policy deliberations. This task has also helped ensure thatthe IEAB has a basic understanding of the major studies on the economics of fishrecovery actions, and can use that information to help formulate its advice tothe Council.

The six studies varied in their scopes, objectives, methods, and conclusions.

(1) The earliest of the studies was done for Bonneville Power Administrationby Resources for the Future (RFF). [ Paulsen, C.M., et al. (1993).] This 1993study focused on the cost-effectiveness of 120 propagation alternatives forachieving sub-basin goals above Bonneville Dam. RFF combined several largemodels to simulate and evaluate the costs and biological effects of thealternatives studied. (2) The most comprehensive study, done jointly by theCorps of Engineers, Bonneville, and the Bureau of Reclamation, is the ColumbiaRiver System Operation Review (SOR) [ Bonneville Power Administration, et al.(1995).] . The SOR evaluated the cost-effectiveness and economic benefits ofseveral system operation strategies. (3) A study done by Daniel Huppert and DaveFluharty for the National Marine Fisheries Service focused on thecost-effectiveness of the March 1994 proposed recovery plan for three SnakeRiver stocks. [ Huppert, D.D. et al. (1996).] Like the SOR, this study took acomprehensive approach to evaluating the economic effects, but relied primarilyon the results of other studies for the estimates of costs and effects. (4)Another study of the Snake River stocks was done for the Power Planning Councilby the Environmental Defense Fund (EDF). [ Willey, Z. and A. Diamant (1995).]EDF focused on 26 alternative approaches to increasing water particle traveltime in the Snake River system. (5) In 1996, Harza Northwest did a study for theCorps of Engineers evaluating the cost-effectiveness of alternative strategiesfor the recovery of Snake River spring and fall chinook. [ Harza Northwest(1996).] (6) Finally, ECONorthwest, under contract to the Confederated Tribes ofthe Umatilla Indian Reservation, criticized the SOR methodology and evaluatedthe Umatilla proposal for reallocation of water to fish. [ ECONorthwest (1995).]

In addition to conclusions, recommendations, and major findings, attachmentsto this report include narrative summaries of the studies, tables and chartssummarizing the studies and their results, and answers to a set of basicquestions, which helped organize our reviews of the studies.

Conclusions of Existing Studies

1. There is a notable lack of consensus among the studies concerning thebiological effectiveness of different techniques of fish management. Inaddition, there is substantial variation among the studies as to what measure ofbiological effectiveness should be used. Notably, none of the studies relied ona biological framework consistent with that recommended by the IndependentScientific Group (ISG) in 1996. Until there is some degree of consensus on theseissues, it will not be possible to develop generally acceptable measures ofcost-effectiveness.

2. There is variation among the studies regarding the estimated costs ofspecific recovery measures. A good example of this can be drawn from the EDF andHarza studies of changes in system operations, specifically a seasonal drawdownof the Snake River system. [ This is Option 5B in the SOR.] EDF concluded thatthe cost of a seasonal drawdown would be about $325 million in present valueover the life of the project($1994). [ Willey, Z. and A. Diamant (1995), TableA-4.] Although strict comparisons are difficult, Harza concluded that the sameoption would cost about $130 million annually ($1996). [ Harza Northwest (1996),Table 8-5, Four Pool Drawdown.] There are many reasons for this difference,including (a) the date chosen for the "constant dollar" base, (b) the"base case" against which the specific alternative is compared, (c)the discount rate used for reducing future costs to the present, and (d) thespecific assumptions for a variety of economic cost levels, for example, whetherreplacement power is obtained from market sources or a specific generationresource. Adjustments would be possible to make the studies more comparable.Generally speaking, economists agree on appropriate techniques for estimatingsuch costs, although there are exceptions (for example, treatment of subsidiesand existence values). Even so, assumptions are always required when suchestimates are made. Standardized assumptions could remove or reduce majorsources of variation among studies of this type.

3. In addition to differences in estimated costs, there is variation acrossstudies regarding the ranking, or relative cost-effectiveness, of similarmeasures. For example, EDF finds flow augmentation up to one million acre-feet (MAF)from the upper Snake River to be more cost-effective than a four-dam, naturalriver drawdown on the Snake, when the biological objective is reductions inwater particle travel time (WPTT). [ The EDF finding assumes replacement powercosts using purchases from the power grid, a 4.5 month flow target, and no"WPTT decay rate" (see Table A-2, page A-3).] On the other hand, Harzafinds the four-pool, natural river drawdown to be more cost-effective than oneMAF of flow augmentation, when the biological objective is measured perone-percent gain in "salmon survival". [ The Harza finding is fromFigure 1-6, page 1-8.] Thus, existing conclusions regarding cost-effectivenessappear to be sensitive to the choice of a measure of biological effectiveness.

4. Based on these studies, some changes in river operations are generally lesscost-effective than other activities, such as transportation of fish, changes inpassage efficiency, reducing the consumptive use of water for irrigation, andeven returns to river operations in effect years before the study was conducted.For example, EDF found that changes in land use by irrigated agriculture wouldprobably be much more cost-effective than changes in river operations, such asdrawdowns. [ See Table A-4, for example, which compares 14 measures, including12 addressing changes in operations.] Harza found that transportation is morecost-effective than a variety of changes in hydro operations and structures,although Harza recognized the significant degree of uncertainty about theeffectiveness of transportation. [ See the results summarized in section 1 ofthe Harza study.]

Recommendations of the IEAB

1. The Council should give high priority to obtaining more reliable measuresof achieving biological objectives associated with alternative managementmethods. Biological goals should have some reasonable prospect of being turnedinto indexes suitable for cost-effectiveness analysis. Without such indexes,cost-effectiveness analysis cannot be used (a) to inform decisions regarding theallocation of limited budgets, (b) to improve accountability for the use ofscarce public funds, or (c) to improve decision-making over time throughadaptive management that seeks the best use of scarce resources. Initiallybiological scientists could be asked to rank measures based on their evaluationof the best information available. Although this will not be adequate forcost-effectiveness analysis, it would be an improvement over current conditions.The Council should encourage the IEAB to work cooperatively with the biologicalscientists on the ISG and the Independent Scientific Advisory Board to developbiological information amenable to economic analysis.

2. The Council should encourage use of a "base case" tied tocurrent operations (e.g., 1997 conditions projected over time) as a referencepoint for analytical purposes, both economic and biological. The Council shouldalso encourage and, where possible, require biological and cost-effectivenessanalysis of changes in both directions from the base case in allactivities (for example, more and less firm power production, more or lessspill, more or less transport, larger and smaller harvests, and more and fewerhatchery-produced fish). This would yield more comprehensive analysis than isavailable from the studies reviewed here.

3. Reliable cost-effectiveness analysis is very difficult to do well. Thevariations in results across existing studies support the need for a consistentand unbiased examination of both projected and actual costs. The Council shouldauthorize the IEAB to establish guidelines that will encourage greatercomparability among future economic studies. This will include establishingprinciples and procedures for dealing with such subjects as discount rates,existence values, and subsidies. For example, based on the SOR analysis (seeparagraph 9 below), "value in use" (harvest and recreation) is notsufficient to justify existing expenditures on fish mitigation. However, thereis another possible economic justification for mitigation and recovery actions,called "existence value", which refers to the worth to an individualof knowing that the fish (or some other characteristics of the environment)exist, even if the individual does not derive value from commercial harvest orrecreational consumption. Estimating existence values is, however, a verydifficult enterprise.

4. The wide range in estimated costs of measures when "normalized"to a particular biological benefit, combined with the likelihood of a budgetconstraint for the foreseeable future, implies that economic analysis willbecome more important over time, and that the Council should give seriousconsideration to the costs of all proposed measures.

Major Findings of Existing Studies

1. In some cases, a single measure of the projected biological benefit can beachieved by measures with widely divergent cost estimates. For example, EDFestimates that water particle travel time can be reduced by 26 hours either by savingabout $14 million (net present value) or by spending $196 million,compared with 1992 actual operations. [ See Table A-4. The estimated cost ofacquiring 500,000 acres of irrigated land and associated water rights inperpetuity would be $14 million lower than the cost of 1992 actual operations,and the estimated cost of constructing Rosevear Gulch Dam on a tributary of theSnake River would be $196 million more than the cost of 1992 operations. Bothyield identical reductions in water particle travel time.] That is,opportunities exist to make economic decisions that will likely save consumersand producers unnecessary costs. This information should be taken into accountwhen redesigning the Fish and Wildlife Program or making specificrecommendations to BPA (or Congress) for funding. Graphs are attached to thissummary that demonstrate in a simple manner the extremely wide range ofestimated costs for a particular measure of biological effectiveness.

2. Various measures of "biological effectiveness" have been used ineconomic studies, including water particle travel time (EDF), the value ofcommercial and recreational harvest (SOR), the number of returning adults (Harza),fish-passage efficiency (Harza), simulations of downstream mortality (RFF),harvest goals (RFF), escapement goals (RFF), and increases in the likelihood ofjuvenile survival (Harza).

3. Economists often rely on assumptions when making estimates andprojections. A good example of this is the cost of replacement power forhydroelectric output that could be lost due to changes in operations to protectfish. Two generally used approaches (purchases of power from a market andconstruction of new sources of generation in the Northwest) can yieldsignificantly different results (EDF).

4. The attached graphs illustrate that the cost-effectiveness results aresensitive to the measure of biological effectiveness that is chosen. Forexample, Minimum Operating Pool (MOP) appears to be relatively cost-effective inthe EDF study when implemented at John Day and the biological goal is reductionsin water particle travel time (WPTT), but relatively cost-ineffective inthe Harza study when implemented at all Snake River projects and the biologicalgoal is an overall contribution to survival. This points to the need for acomprehensive study that takes an agreed-upon set of measures that are underconsideration, and applies economic analysis consistently across all measuresand affected economic sectors.

5. Different observers choose different "base cases" giveninterpretations of legal requirements, political expectations, or otherlimitations. For example, Harza calculated costs compared with the 1995Biological Opinion, EDF and the SOR compared costs with 1992 actual operations(as captured in SOR Option SOS2C), Huppert and Fluharty chose the 1993 operatingcondition in the river, RFF compared proposals made in the late 1980s, andECONorthwest argued, in part, from rights established by Treaty in 1855. Theestimated economic cost is then a function of comparisons with the preferred"base case", and it is not surprising that estimates vary widelybecause, in part, the "base cases" are not the same. A completeeconomic analysis of incremental changes should examine the cost-effectivenessof both doing more and doing less of each type of activity. This will becomeincreasingly important if the budget constraint continues to tighten.

6. In some areas, we still face potentially significant uncertainty in theestimates of economic effects. For example, the economic cost of future changesin power production will depend critically on the evolution of markets in thatsector, which cannot be reliably predicted at this point. EDF recognized thisuncertainty by estimating costs assuming replacement both by the construction ofnew combustion turbines (CTs) and by greater amounts of buying and selling powerin the market.

7. The studies optimize and determine cost-effectiveness within differentconstraints. For example, the EDF study asks what is cost-effective givena subbasin, its ecology, and the goals set by individual planners for thatsubbasin; this study examines many options within a subbasin, includingpropagation, habitat, and passage. In contrast, the SOR analysis asks what iscost-effective among alternatives for reconfiguring the operation of theColumbia/Snake River system, but excludes possible changes harvest management orhabitat. The result is that the conclusions of the various studies dependcritically on the structure of the question initially posed.

8. The market value of greater numbers of fish, when considered alone,cannot justify either existing or proposed levels of expenditure on recoveryactions. For example, the SOR calculates cost-benefit ratios using thecommercial harvest plus the recreational value of sport fishing as the measureof "benefit". The SOR�s "preferred alternative" returns$36 million of commercial and recreational value at a system cost of $147million, for a cost-benefit ratio of just over four. [ The commercial and sportvalues are taken from Table 4-13, page 4-36 of the SOR, calculated as theaverage of the "low" and "high" values. The system costs aretaken from Table 5-1, page 5-3, column 11. The value in column 3 on page 5-3under the Preferred Alternative appears to be a typographical error, whencompared with the estimates in Table 4-13.] Commercial and recreational harvestis an example of a "use value" or "value in use".

Bibliography

Studies Reviewed

Bonneville Power Administration, U.S. Army Corps of Engineers, U.S.Department of the Interior Bureau of Reclamation (1995), "Columbia RiverSystem Operation Review, Final Environmental Impact Statement, Appendix O:Economic and Social Impact" (reviewed by Jack Richards).

Diamant, A. and Z. Willey (1995). "Water for Salmon: An EconomicAnalysis of Salmon Recovery Alternatives in the Lower Snake and ColumbiaRivers" (reviewed by Dan Huppert).

Harza Northwest, Inc. (1996). "Salmon Decision Analysis, Lower SnakeRiver Feasibility Study, Final Report" (reviewed by Ken Boire).

Huppert, D.D. et al. (1996). "Economics of Snake River Salmon Recovery:A Report to the National Marine Fisheries Service" (reviewed by AnthonyScott).

Paulsen, C.M., et al. (1993). "Above Bonneville Passage and PropagationCost Effectiveness Analysis", Resources for the Future for the BonnevillePower Administration (reviewed by Joel Hamilton).

Niemi, E., et al. (1995). "Economic Consequences of ManagementStrategies for the Columbia and Snake Rivers" (reviewed by Paul Sorenson).

Additional Recommended Studies

Hamilton, J. et al. (1996). "Cost of Using Water from the Snake RiverBasin To Augment Flows for Endangered Salmon".

Independent Scientific Group (1996), "Return to the River: Restorationof Salmonid Fishes in the Columbia River Ecosystem".

Attachments

1. Fundamental Questions

2. Study Summaries (prepared by individual members of the IEAB)

3. Tabulation of Comparison of Study Characteristics

4. Graphs of Cost-Effectiveness Results (EDF and Harza)

Fundamental Questions

This attachment lists some questions that the IEAB considers fundamental foran understanding of the comparative value of the existing studies ofcost-effectiveness for policy-makers, and provides brief answers. Thesequestions provide more detail than the summary report.

1. What is the scope of the biological analysis (e.g., an examination ofalternative measures confined to one river basin, versus a review oftransportation techniques on the mainstem river)?

� Existing studies vary widely in the scope of their geographical andbiological analysis. Huppert reviewed the costs of a Recovery Plan; the SOR-EISconsidered alternative configurations of the Columbia and Snake Riverhydroelectric system; the RFF study examines alternative actions within specificsubbasins. On the other hand, the ISG report (1996) questions many of theassumptions about biological effectiveness, which means that the conclusions ofthese studies on cost-effectiveness should also be questioned.

2. How comprehensive is the economic analysis (e.g., a study that exploresthe direct and indirect economic effects, including opportunity costs properlydefined, versus a study that only adds up expected project costs)?

� Some studies are extremely comprehensive in their attention to variouseconomic sectors and the opportunity costs of proposed actions; other studiesare not sufficiently documented to permit a clear assessment of their value topolicy-makers.

3. Was the biological component of the study a simulation exercise or basedon empirical data?

� In almost all cases, computer models and assumptions were used to estimatethe biological impacts of proposed measures. Little hard empirical data isapparently available regarding the benefits of any particular actions. Measuresof "biological benefit" range from a simple calculation of the valueof commercial and sport fisheries to an assignment of essentially infinite"existence values" to restored fish populations.

4. What measures of biological effectiveness have been used?

� Water particle travel time, mortality and population estimates, and sizeof potential commercial harvest have all been used. In addition, assertions ofexistence values have been made, with and without attempts at quantification.

5. Do the studies implement acceptable economic accounting standards?

� In most cases, economists studying recovery actions or proposals haveattempted to estimate the total economic cost (including both direct andopportunity costs) of proposed measures, consistent with generally acceptedstandards.

6. Was the study aimed at producing an explicit test of cost-effectiveness?

� In some cases, tabulations of the cost-effectiveness of particularmeasures permit a comparison of the economic costs of achieving a particularbiological goal, or of implementing a proposed Recovery Plan. However, somestudies do not attempt such an explicit comparison, and any comparison ofresults must recognize the assumptions required to produce the estimates ofcost-effectiveness.

7. How does the study treat fundamental (but sometimes practically difficult)economic concepts, such as opportunity costs, subsidies, uncertainty, andexistence value?

� Opportunity costs have been comprehensively (but variously) addressed forall economic sectors potentially affected by recovery measures. Subsidies,uncertainty, and the potential for existence values of the protected specieshave generally not been addressed in the reviewed studies, and requireadditional thought.

8. Does any study provide clear guidance for policy-makers? Conversely, areany studies useless to policy-makers and thus to be avoided?

� Studies that advocate for particular measures and attempt to minimize thelogical or legal validity of estimates of economic costs should be avoided. Somestudies, on the other hand, provide frameworks within which additional analysisof the cost-effectiveness of alternative proposed measures could be performed.

9. What lessons are possible for the Council�s deliberations regardingFY98?

� The existing studies cannot be applied in their current form to assist theCouncil in making funding decisions for FY98. Given the limited time to developrecommendations for FY98, the IEAB recommends that the Council concentrate thisyear on (a) the use of competitive bidding to award funds wherever possible, (b)contract reforms that will shift a reasonable level of risk and responsibilityto the entities being funded by the region�s ratepayers through BPA andsupport improved decision-making in the future, (c) direction to the ISG andISAB to address the fundamental areas of biological uncertainty and bringrecommendations back to the Council, (d) shortening and clarifying the list ofpotential measures of biological effectiveness, and (e) directing and workingwith the IEAB to establish a framework for cost-effectiveness analysis that canbe applied to annual funding decisions in future years as well as more broadlyto the entire Fish and Wildlife Program. Items (a) and (b) can be implementedthrough decisions made this summer, whereas the remainder will require a longertime horizon.

10. Do the studies support or contradict each other, or can they even becompared?

� Based on the existing studies, the estimated economic costs of changes tothe region�s hydropower system are clearly higher than the costs affecting anyother sector of the regional economy. However, this conclusion rests on theassumptions made in the various studies, which in some cases may proveunreasonable with further examination.

11. How should economic analysis address or manage the need to"bundle" or combine measures that have complex biologicalinteractions?

� Simulation exercises are possible that suggest the biological impacts ofcombinations of measures. However, these exercises are driven by assumptionsthat may or may not be valid.

12. What lessons can be learned regarding the sequence of measures?

� It is reasonable to assume that some amount of "learning bydoing" will be possible, and that more economical adaptations toconstraints on existing activities will be found, the longer the affectedparties have to respond. The real challenge for environmental policy-makers willbe to encourage (or even require) similar adaptations on the part of thosedirectly managing the environmental resources. One task for the IEAB could be toreview the track record of adaptive management, to find ways to encourage moreefficient management of limited resources over time.

13. Can or should a cost-benefit analysis be conducted in addition to acost-effectiveness analysis? If so, where does cost-benefit analysis appear tohave a role?

� Cost-benefit analysis is possible where clear dollar values can beattached to the biological results. For example, the SOR-EIS ranks proposedsystem operations in terms of their value measured by additional commercial andsport fisheries. However, this approach is of limited applicability in the caseof endangered species.

14. What areas of economic effect remain subject to considerable uncertainty?

� Given the imminent restructuring of regional power markets, the economiccost of changes to the operation of the hydropower system may changedramatically over time, and may vary more widely from year to year.

15. For a given objective, can we conclude that certain measures are clearnot cost-effective?

� Based on existing studies, which are imperfect, two conclusions appearclear. First, drawdowns of Snake River reservoirs are more expensive by far thanother passage alternatives. Second, certain proposed levels of flow augmentationare also clearly significantly more expensive than others.

16. Do existing studies provide any guidance if the Council moves to an"ecosystem approach", as proposed by the ISAB?

� Generally speaking, no. The RFF analysis may be an exception, because ofits emphasis on habitat. In addition, some parts of the existing studies mayprovide some useful information in the context of an ecosystem approach, butnone addresses the economic effects of such an approach comprehensively.

17. What fundamental economic questions remain unanswered?

� Areas for useful research would include (a) the economic impacts ofshifting from existing definitions of property rights in the natural resourcesto other definitions, (b) the costs and benefits of establishing markets forwater rights where none currently exist, and (c) measures of the existence valueof the protected species.

**Study Title:**Salmon Decision Analysis Lower Snake FeasibilityStudy: Final Report****

**Authors:** Harza Northwest, Inc.**Date:** October 1996**Reviewer:** Ken Boire

**Report Purpose** - The purpose of this October 1996 report prepared byHARZA Northwest Inc. for the Walla Walla District Corps of Engineers, was todevelop a decision analysis process regarding the feasibility of salmon recoverymeasures, including reservoir drawdown, on the lower Snake River. The reportapplies only to Snake River spring/summer chinook. The scope is limited tooptions for improving the hydropower system, so harvest and habitat are notincluded in the fifteen major "tools" given consideration. The"tools" include: surface bypasses and collectors, sluices, baffledspillways, extended length screens, spillway improvements, turbine improvements,fish guidance curtains, juvenile bypass improvements, spill, barges and trucks,storage, dam removal, drawdown, minimum operating pools, sound repulsion.

**Report Summary** - The report looks at three major juvenile migrationpaths, *transportation* and *in river,*and a third that combineselements into a *mixed path*. The process presented in the report relies onfirst seeking the best answer in biological terms and then follows this with anevaluation of what the report calls benefits, costs, and risk. The second partof the analysis contains elements of a cost effectiveness analysis. In the firstpart of the report, evaluation based on biological objectives is given apriority because according to the report options that take the longest time toimplement produce "cost savings" over those that can be implementedquickly, and this is said to make no sense if the goal is to reduce extinction.This is a basic position taken in the report, but this reviewer does not agreewith the logic.

The report presents a decision tree incorporating arbitrary thresholds todecide which migration path is best. The path selected (transportation or inriver, or a mix) is the one which consistently returns 30% more adults than theother. The selected path is given a second threshold test to see if it canreturn enough salmon to reverse population declines. The threshold isestablished as a minimum smolt-to-adult return rate (SAR) of 1.5%. So if a pathreturns 30% more adults than another, and can produce a SAR of 1.5% it ispreferred. Other paths leading to drawdown, or a mix of *in river* and *transportation*,are identified for SAR thresholds of .0.7%, 0.9%, and 1.2%. Thresholds arearbitrary, and cost is ignored in the decision tree.

After attempting to test the decision tree model, the report moves into acost effectiveness approach. For the sake of a cost effectiveness example, thereport assumes the decision tree has selected a *mixed path*, and presents"tools" consistent with a *mixed path* to increase survival andmeet the 1.5% SAR. It is proposed the tools would be compared by use of costeffectiveness analysis which inputs goals of 80% Fish Passage Efficiency (FPE),and 95% juvenile survival, at each project. Output is shown as annual cost pereach 1% gain in salmon survival provided by each of the tools (shown for 12 ofthe 15), but the cost effectiveness idea is not developed to the point ofsupporting a preferred plan. Cost per one percent gain in salmon survival rangefrom a high of $5 million for flow augmentation (1MAF), to a low of $0.1 millionfor a sound repulsion system.

The report concludes biological information regarding SAR for in river andtransport paths, is insufficient to allow use of the decision tree. DecisionAnalysis is said to provide a useful framework, but complexity of the optionsand variability of data is not likely to allow Decision Analysis to provide aclear and simple answer as to which path to choose. Cost and incrementalsurvival for various tools is shown, but the report does not use, or recommend,cost effectiveness outside of, or separate from the Decision Analysis framework.

**What Kind of Economic Study is Done? -**Economic costs associated withthe various options are examined in Appendix C of the report. The basis foreconomic cost is the National Economic Development (NED) approach, and is takenfrom studies done for the SOR, and Phase 1 System Configuration Study (SCS). Thediscount rate is 7.75%. Current system operation is the basis from which changesare measured, and is different from the SOR Preferred Alternative in that JohnDay MOP, and all of the cost associated with John Day MOP, are excluded.

For purposes of demonstrating economic costs of a full*transportation*strategy, it is assumed the hydro system will be returned to a system operationsimilar to operation prior to implementation of the 1980 Northwest Power Act.

A cost effectiveness example is given for the *transportation* sub-path.Survival is related to annual cost, and a least cost frontier is illustrated inFigure 10-3.

In a more complete presentation for all paths, Appendix B, Risk Assessment,presents incremental benefits (% change in juvenile Snake River spring chinooksurvival) for 29 different measures, actions, or tools. The report shows surfacecollectors at Lower Granite/Little Goose (LG-LG), w/ *transportation*, and90% FGE, is at the top of the list for incremental benefits, see page B-7. Costdata in the report supports that this would be the cost effective choice, butthe report does not take the analysis to a conclusion.

**What Measures of Effectiveness are Assessed? -** Within the DecisionAnalysis framework, branches in the decision tree are based on SAR, and TIRvalues. Within the portions of the report which discuss economics and costeffectiveness, percent survival of spring chinook above Lower Granite pool tothe estuary, is the measure of effectiveness. Other stocks are ignored. TheCRiSP 1.5 Model is used with low and average water conditions so results cannotbe viewed as expected annual values. The report does not attempt to measurenon-biological effects such as associated economic benefits, or cultural orsocial effects.

**What Areas of Economic Opportunity Cost Are Assessed? -**Areas assessedinclude project implementation, power, reservoir recreation, navigation, andwater supply.

� **Reservoir Recreation**- Reservoir recreation is not in accord withthe NED concept as it does not adequately account for alternative recreationopportunities. The result is to show economic cost of "lost"recreation is greater than cost associated with losses in navigation orhydropower. In one case recreation "losses" are shown to be greaterthan the implementation cost of a natural river.

� **Hydropower** - This report relies on the analysis in the SOR EIS,and is out of date in that energy and capacity prices have fallen. Powerreplacement cost is based on gas fired turbines, or Intertie supply. Addition ofgas turbines to replace a loss of average hydro energy actually adds some firmcapacity to the system and it is not clear how this has been evaluated.

**�****Implementation Cost** - In this report, implementation costsare converted to equivalent annual values, so those furthest off into the futurehave smaller present values. Ordinarily this effect would be countered by asimilar present worth adjustment on the benefit side of a benefit cost analysisbut this report is oriented towards a cost effectiveness analysis so benefitsare absent. One way to adjust for this would be to express equivalent annualcost effectiveness in terms of cost per fish. Since impacts on fish would alsobe off in the future, the decision maker would be aware of the cost and theeffect.

**�****Navigation -**Alternative cost of transportation is used asa basis for estimating economic cost. Effect of increased transportation cost onquantities shipped does not appear to have been accounted for.

**What Major Conclusions Were Reached, If Any? -**The report concludes,at present, information regarding SAR and TIR is insufficient to allow use ofthe Decision Analysis model. Complexity of options, combined with variability ofbiological data, suggests Decision Analysis is not likely to provide a clear andsimple answer as to which path to choose

**What are the Most Relevant Policy Aspects of the Study, and What are thePrincipal Policy Dimensions? -**As a conclusion**,**Decision Pathanalysis is not supported as an analytic solution fitting the requirements forapplication of cost effectiveness criteria. Parts of the report, however,highlight presentation of incremental effects of various measures, andillustrate a possible basis for developing a cost effectiveness analysis basedon cost per % survival, or cost per fish. The cost effectiveness procedure inthe report is not fully developed, as measures are presented as bundles nothaving undergone incremental evaluation themselves, and costs have not beenassigned though they appear to be available within the report.

Though not stated in the report, a principal policy implication is thatDecision Path Analysis should not be pursued, and attention should be given toprocedures which match identifiable, separable measures with specificincremental effects.

**What were the Important Cost and Effectiveness Estimates Produced by theStudy?**

Application of the CRiSP 1.5 Model resulted in estimation of incrementaleffects on spring chinook, for 29 different measures (Table B-2, page B-7).Application of CRiSP demonstrates effects for low and average water conditionsinstead of annualized flows, so results could change with a more completeapplication.

**Did The Study Have Any Appreciable Impact on Policy Decisions? -**Failureof the Decision Analysis Model to formulate a salmon recovery plan emphasizedweakness of the model where cost effectiveness is a requirement.

**Reviewer�s Overall Impression** - After reviewing the report, mythoughts focus on the following areas:

**�** According to the report, *in river* juvenile survival is nowat 43%, and the maximum potential is 56%. Given this, *in river*strategiesmay not be able to match effectiveness offered by other tools, at any cost.

**�** Figures 11-1, 11-2, and 11-3 indicate**that *transported*fish do better.

**�** Table B-2 shows insight into relative merits of some paths.Surface collectors at LG - LG w / *transport*, provides highest incrementalsurvival.

**�** Figures 1-6 and 7-6 show annual cost per 1% gain in survival. *Inriver* strategies are more costly.

� Cost effectiveness measures need to recognize stocks other than thetarget species will benefit. Methodology should allow for crediting each measurefor benefiting other stocks. A credit based on alternative cost may beappropriate as incremental cost data will be available.

� Bundling of measures should be avoided so as to allow each separablemeasure to be evaluated on it�s own merits.

� Evaluation of separable measures should identify those which can beconsidered first added, and those which depend on other measures being addedbefore them.

**Study Title:**Above Bonneville Passage & Propagation CostEffectiveness Analysis

**Authors:**Resources for the Future**Date:**January 1993**Reviewer:**Joel Hamilton

**Geographical Applicability:** The study addressed 26 sub-basins of theColumbia and Snake systems above Bonneville Dam.

**Problem Analyzed:** The study was an attempt to demonstrate thefeasibility of using cost/ effectiveness analysis to study the propagation andpassage alternatives for meeting salmon and steelhead harvest and escapementgoals set by fisheries planners for the 26 sub-basins.

**Principal Techniques:** The study methodology links 4 models. TheSystems Analysis Model (SAM) is used to show storage, flow and hydropowerresponses to basin water conditions. The Columbia River Salmon Passage Model (CRiSP)isused to model downstream migration mortality, given the flows from the SAMmodel, for all possible combinations of propagation and passage alternatives. ADeterministic Life Cycle Model (DLCM) is used to account for numbers of fish ofeach stock, age, and subbasin, and to test whether these numbers meet sub-basinharvest and escapement goals. Finally a System-Wide Optimization Model was usedto find the least cost set of recovery actions from among the set of actionsthat meet the subbasin goals.

**Summary of Results:** The study concluded that the levels of harvest andescapement called for in many of the subbasin plans could not be achieved withthe passage and propagation alternatives considered, so the report concludedthat the planners had set unrealistically high goals.

They conclude that the "current" mainstem flows representative ofconditions in the mid- 1970s to the early 1980s, are generally morecost-effective than the augmented flows proposed in 1991 by the Northwest PowerPlanning Council under the Phase II amendments to the Fish and Wildlife Program.They note that this rests not only on the estimates of hydropower costs, butalso on the assumptions about biological effectiveness dam fish bypasses, andthe fish transportation program. Hence they "argue forcefully for acomprehensive biological research program on the relationship between flows anddownstream survival".

It is useful to remember that this study was the earliest of the six reviewedby the IEAB, so it was breaking new ground. To produce a tractable model, RFFdrastically reduced the number of alternative actions considered, and the numberof alternative levels of these actions. Fully implementing model that addressesthe range of alternatives currently under discussion, the interactions amongthese alternatives, and the uncertainty about the biological effectiveness ofsome of these alternatives, would be an intimidating task.

**Study Title:**Economics of Snake River Salmon Recovery: A Report tothe National Marine Fisheries Service

**Authors:**Daniel D. Huppert and David L. Fluharty with Eric E. Doyleand Amjoun Benyounes**Date:** October 1996**Reviewer:** Anthony Scott

**Brief summary:** This study estimates the costs and other economicconsequences of an NMFS team�s proposals for recovery of three endangeredSnake-River salmon species. The team's proposals had addressed each stage inSnake River salmon's life history: spawning, rearing, downstream migration,ocean maturation, fishing, and migration upstream. Of these, this study findsthe costs of life history: spawning, rearing, downstream migration, oceanmaturation, fishing, and migration upstream. Of these, this study finds thecosts of improvements in : upstream habitats, migration down through reservoirs,dams and mainstream Columbia; fishing regulation; and migration up. The costsare those of reduced hydropower (around $200 m. yearly) and reduced earnings infarming, forestry, fishing plus four other categories( adding up to around $ 100m. yearly.) Details are provided for each. Hydropower costs of alternativereservoir-level and drawdown plans are compared. Otherwise no alternatives areexamined. Emphasis is laid on future cost reductions as managers and operatorsgain experience. Also includes estimates of benefits from salmon recovery.

**Type of study:** Several recent agency Snake studies proposed sets ofmeasures to ensure salmon survival. Taking the agencies' measures, the presentauthors do their best to identify a single program, for economic study. Theylook for "incremental" costs: those beyond the expense of existing,present, measures. Their answer: in the neighborhood of $250 million per year.

**What measures of effectiveness are assessed?** The study outlines, atseveral places, three different ways of using measures of cost and benefit ofsalmon-recovery measures:

a. Safe Minimum Standard (Bishop) : Study the costs or net costs ofpreservation action and let society decide whether preservation is worth thiscost.

b. Cost effectiveness of outlays in order to guide design of mix of recoverymeasures.

c. Benefit-cost analysis.

Discussion: Centering on p. 2-16, the authors consider which of these ways ofusing estimates of cost and benefit they are working toward. All three face twooverwhelming difficulties: the physical effectiveness of a measure is veryuncertain, and the assessment of effectiveness as dollar benefits is even moreuncertain. The authors conclude that only the first use, to try measuring thenet costs of a given vector or mix of recovery measures is feasible. That iswhat their report does.

**What is the scope of the fish recovery issues addressed?** They use astheir given mix of fish recovery measures all seven elements in the March 1995NMFS Proposed Recovery Plan for three Snake River salmon stocks. These addressimprovement of each stage from spawning to up-migration.

a. Snake tributary habitat improvement (federal plus private lands.)

b. Issues: choice of baseline for increment of improvement; selection ofprojects: all from US Geological Survey & EPA models of river reaches --- nofield studies performed.

c. Mainstream modifications, primarily flow augmentation selected by 1995Biological Opinion.

d. Issues: choice of baseline conditions; choice among many flow-augmentationscenarios; choice among structure changes of fish passage facilities.

e. Harvest measures, primarily buy-back.

f. Issues: buy-back not really a fish-recovery measure.

g. Hatcheries.

h. Issues: effectiveness and genetic side-effects: "serious questionsabout the net costs of artificial propagation can be raised."

i. Enforcement (primarily education and patrolling.)

j. Institutional (primarily for coordinated analysis and modeling.)

k. Research and data ( primarily for flow-augmentation efforts.)

**What areas of opportunity cost are assessed?**

a. Tributary habitat: Mitigation and lost output of grazing, forest practicesand recreation. (p. 3-4)

b. Flow augmentation: mainly lost hydropower ( purchased energy) and

c. higher flood damage; also lost recreation (might be ameliorated),irrigation

d. and water-supply benefits.

e. Harvest measures: nominally lost catches, but actually mostly buy-back, a

f. redistributive expense.

g. Hatcheries: artificial propagation may eventually reduce value of runs;

h. otherwise no significant opportunity cost over baseline.

i. enforcement: no opportunity cost.

j. institutional: no opportunity cost.

k. research and data: no opportunity costs.

Summary: Most opportunity costs arise from (a) tributary habitat and (b)mainstream flow augmentation measures. (d) Hatcheries may also cause long-runloss of fishery values. There are other, cash, costs for additional personnel orfor construction.

**Conclusions:**

� Much of total cost is hydropower opportunity cost.

� Of this total cost, only about $100 million is for habitat and othermeasures.

� Of this, about $30 million is for buy-back (not a restoration measure.)

� These are all annual. The hydropower opportunity costs would be permanent;

� some of the others would fall with research and mitigation.

� Wide range of total cost of all seven measures, from $ 250 to $ 390million per year. The wideness results from unknown future decision to selecteither a blend of "flow augmentation" measures or a set of reservoirlevel draw-downs.

**Some strengths and weaknesses:**

� Strength: the authors investigate many alternatives yet keep expositionshort and clear.

� Attention to trend: authors predict that if the whole package goes ahead,many costs will decline with experience ( trial and error in hydropowermanagement), and because they will not recur after initial installation.

� Attention to uncertainty: frequently, authors usefully mention that thetotal costs being estimated are for a package of uncertain content and unknowneffectiveness. This is a different problem from mere lack of cost data.

� Omission: although authors do not make clear what decision procedure willactually be followed in choosing between alternative flow regimes, it may besuggested that their study might have had influence if it had emphasizedeconomic values to be kept in mind when sub-optimizing large"survival" decision.

� Learning by doing and sensitivity information: the authors might have laidgreater on imperative need for information on effectiveness. Not forcost-cutting but for more effective survival program (Holling.) Authors' datasuggests the large research and modeling budget is mostly to be aimed at cuttingthe hydropower opportunity costs of existing program. I got the impression thatthe Corps and Bonneville intend to model power effects of hypotheticalalternatives. It seems the program needs more observation of fish-survivaleffects of experimental alterations of water-level and drawdown regimes.

**Principle policy dimensions?**

It seems that the policy being followed did not really require this study. Ifit had been a condition that the cost measurement be confined to actual"cash" outlays that NMFS, other agencies or the government would haveto pay for, then the study could be used for auditing: to make sure that theintended program of measures kept within the funds available. But as it was toinclude opportunity costs, many uncompensated and impacting well beyondgovernment, the study could not be used for this auditing purpose. (I suppose itmight be used to publicize the extent of the campaign to save the fish. ) As theauthors suggest, their study's cost items are well-defined to play a role in apossible cost-effectiveness study of the mix of measures. But cost-effectivenesshas not guided agency spending so far. Consequently refinement of and experiencewith the survival program has not produced data on the beneficial effects ofcertain groups, vectors or mixes of costly measures. Clearly, for this economicstudy to have had a "policy dimension" would first have required thatbiologists and engineering experts have better-specified policy goals for theirday-to-day river management and for their studies. With these, large-scalebiological trial-and-error or sensitivity research could be productive of datathat would contribute to cost-effectiveness calculations.

**Study Title:**Water for Salmon: An Economic Analysis ofSalmon Recovery Alternatives in the Lower Snake and Columbia Rivers.

**Authors**: Environmental Defense Fund (Adam Diamant and Zach Willey)**Date:**April 1995**Reviewer:**Daniel Huppert

**Nature of the Report** This report is the product of a contractbetween the Environmental Defense Fund and the Northwest Power Planning Council.It analyzes the cost-effectiveness of measures to aid Snake river salmonrecovery based on data and information contained in existing reports. Thisreport briefly summarizes the types of salmon recovery measures beingconsidered; it outlines the analytic methods used to evaluate thecost-effectiveness of each measure; it explains the EDF analysis of reservoirdrawdowns on the Snake River, the analysis of proposed new storage dams in theupper Snake River basin, and the analysis of several water marketing and flowaugmentation programs; it provides a concise summary of results; and itconcludes with some recommendations to the NPPC. The report is written in aconcise, clear manner and is well laid out with an Executive Summary.

**Type of Study** - This is a cost-effectiveness analysis oftwenty-six (26) alternative Columbia river hydroelectric power system projectconfigurations which may promote the recovery of endangered Snake River salmonpopulations. The analysis focuses on 15 reservoir drawdown configurations, 6 newwater storage projects in the Snake River Basin, and 5"non-structural" water management measures. All of these options aredrawn from existing project proposals or analyses, and the report is basedlargely upon secondary information from (1) the System Operation Review (SOR) ofthe Columbia River Hydroelectric Power System conducted by the U.S. Army Corpsof Engineers, Bonneville Power Administration, and U.S. Bureau of Reclamation,(2) the System Configuration Study (SCS) conducted by the Corps of Engineers,(3) a report by Bookman-Edmonston Engineering prepared for BPA in 1994, and (4)a US Bureau of Reclamation/Army Corps of Engineers report on Snake River BasinStorage projects. Bringing some cohesion to the analytical approach is theauthors� own detailed assumptions concerning the distribution of costs overproject lives and use of a spreadsheet model of regional hydropower productionand delivery (obtained from BPA) to evaluate hydropower costs and salmonenhancement benefits for every project alternative. The authors claim theiranalysis to be superior to those of the SCS and Storage project reports becausethey use 50-year hydrologic model consistently to evaluate both costs andbenefits.

**Measure of Project Effectiveness** - The reduced water particletravel time from Lower Granite dam reservoir to below Bonneville dam (reckonedin hours) is selected as a measure of effectiveness. For any given draw down,water storage, or flow augmentation project, the expected flow of water throughthe system is modeled through a 50-year hydrological record, and the change inwater particle travel time is calculated using equations explained in the text.The authors calculate a present value of reduced water particle travel time overeach project�s lifetime, calling this a measure of "benefits", andusing alternatively a 0% or 10% as a "decay rate" of benefits withtime. On p. 38 it is declared that this "decay rate is biological innature" and is not equivalent to an economic discount rate. It is used toreflect the urgency with which salmon recovery measures are needed. [Maybe thiscould be interpreted as a reflection of biologists� impatience with delay inrecovery planning.] Using the decay rate as one would an interest rate, theauthors calculate an annualized, or "levelized", travel time change.

**The Economic Analysis** is limited to a thorough examination ofdirect project costs and opportunity costs associated with each projectconfiguration. The cost estimates are developed for the following categories:(a) construction costs associated with reservoir draw downs, new storageprojects, and irrigation system changes; (b) annual operation, maintenance, andpump power costs; (c) interest during construction; (d) hydroelectric powerimpacts (negative and positive) associated with draw downs, flow augmentation,and shifting of water releases to assist salmon downstream migration; (e)municipal and industrial water supply impacts; (f) decreased farm incomeassociated with land fallowing and/or dry year leasing of water rights whichreduces consumptive us of water in the upper Snake River basin, permittingrelease of water to increase flow; (g) flood damages; (h) impacts to shallowdraft navigation (barges); (i) recreation impacts; and (j) costs of truckinglogs around Dworshak reservoir. The categories and methods of cost assessmentare similar to and often drawn from the SOR, SCS and related reports. Theauthors apparently improve upon the previous cost and effectiveness analyses forSnake River storage projects by modeling the effects over the 50-yearhydrological record rather than evaluating effects for an "averageyear".

Much of the cost analysis follows methods already understood and welldocumented in the SOR and SCS analyses. Two exceptions are worth noting -- thehydropower costs of draw downs and the net farm income loss associated with flowaugmentation at Lower Granite dam. The hydropower costs are based uponreplacement cost estimates used in the draft SOR analysis (e.g. 37mills/kWh forgas combustion turbines), which are significantly higher than cost estimates inthe final SOR analysis (which uses a cost of 26.3 mills/kWh for generation bycombustion turbines). The EDF report was finalized before the SOR was completed.Hence, the amended estimates were not available to EDF.

The evaluation of land fallowing and dry year leasing apparently includes newanalysis, although it derives from Huffaker, Whittlesey, and Wandshneider�s"Institutional Feasibility of Contingent Water Marketing to IncreaseMigratory Flows for Salmon on the Upper Snake River (Natural Resources Journal,Vol. 33, Summer 1993). For the land fallowing option, EDF assumes that 500,000acres of land are purchased and taken out of production in order to release 1MAF of water every year. In the dry year leasing option EDF calculates thedeficit of flow at Lower Granite Dam relative to flow targets set by NMFS. Theyassume that sufficient water rights are leased to meet the flow target � withthe proviso that no more than 1 MAF is leased in any given year. EDF models thewater augmentation needs for each year of the hydrologic record, then determineshow much water is needed during either a 2-month spring period or the 4.5 monthApril 16 - August 31 period. Then the water is "dispatched" during the2-month or 4.5-month period to best meet flow objectives, the consequences forwater particle travel time is calculated, and the hydropower production andvalues associated with this water are estimated. Using a 0% decay rate for TTbenefits, for the 2-month flow augmentation period, EDF estimates that the netcost (farm income loss minus hydropower value gain) would be $212,000 per hourof travel time increase. For the 4.5 month period, EDF estimates the cost as-$44,000/hour (i.e., a net economic gain).

**Cost-effectiveness**is defined as a project�s costs divided byits benefits. Costs are measured as annualized net present value of the streamof costs associated with a project. Benefits are defined as the levelizedpresent value of the number of hours of reduced water particle travel time overthe project�s life. The authors apply a discount rate to water particle traveltime reductions which they term a "decay rate". The decay is supposedto reflect the relative value of delayed improvements in smolt survival duringdownstream migration. The authors recognize that a ratio of project cost toreduced water particle travel time is an incomplete decision criterion �especially when a project with a high cost-effectiveness ratio has a smalloverall impact on the smolt travel time. To more fully inform the decisionmakers, the authors provide actual hours of reduced travel time, economic costs,and cost-effectiveness ratios for each project.

**Base Case** All costs and benefits are measured relative to theSystem Operation Review option SOS2C which reflects the operation of the FederalColumbia River Power System with interim flow improvements adopted in responseto the listing of Snake River salmon under the Endangered Species Act.

**Sensitivity analysis** covers four separate variables: (1) twodifferent river flow augmentation period or drawdown periods are analyzed --April 16 - June 15 and April 16 - August 31, (2) two real discount rates areused in calculating present values and annualized equivalent costs � 3% and8%, (3) the "replacement cost" of electric power is based upon eitherconstruction of combined cycle gas combustion turbines (37 mil/kwh) or purchaseson the power grid, and (4) two travel time "decay" rates are used --0% and 10%. The first three of these are common to other regional economicanalyses associated with the Columbia River basin. The last is apparently uniqueto the EDF analysis.

**Conclusions**

The major conclusions are displayed as histograms and tables showing thecosts, cost-effectiveness, and travel time reductions for each recovery measure.These are summarized below, choosing the results calculated for an interest rateof 8%, a travel time decay rate of 0%, and using power sales to estimatehydropower costs/benefits (rather than using combustion turbines to make up forhydropower losses).

**Summary of EDF Cost-Effectiveness Analysis. From Tables A-1 and A-2.**
Recovery ProjectTwo Month Flow      Period4-1/2 Month Flow      PeriodTT decrease (hours)Cost/Hr ($1,000)TT decrease (hours)Cost/Hr ($1,000)1Dry year leasing (up to 1 MAF)18- $43231-$4452Basinwide land fallowing (500k acres)27$21231-$44333� Drawdown of 4 Snake R dams (using      MacClean report cost estimate)59$1835118$10264Galloway Dam storage project7$232913$11835John Day dam operated at MOP37$312524$1271633� Snake R 4 dam drawdown (ACE cost      estimates)21$385075$1674743� Draw downs49$439998$1988833� Draw down, Lower Granite dam (MacClean      cost estimate)21$457842$2252952� Draw downs, 4 dams.48$597495$239510Natural River draw down, 4 dams53$5993114$2920
**Strengths and Weaknesses**

The report has several strengths. It evaluates a wide variety ofhydroelectric system projects consistently using a common method tied to the50-year hydrologic record. While most other reports on Columbia River salmonrecovery also adhere to this approach, not all extend the 50-year simulationanalysis to the upper basin storage projects. Further, the report leads decisionmakers to think hard about selection of salmon recovery projects based upon boththe project cost and the project�s contribution to some measurable aspect ofsalmon survival in the river.

Complex relationships between hydrologic variables, such as water particletravel time, and biological variables, such as migration rate and survival ratefor salmon smolts, has lead other scientific teams to caution that this measuremay not reflect accurately increased salmon smolt survival. For example, smoltsare not simply carried down stream like neutrally buoyant particles at averagerates of flow. Smolts behave in ways that, to some extent, determine their rateof travel. Second, specific mortality factors such as (a) nitrogensupersaturation at dam sites, (b) concentration of predators in dam forebays andtailwaters, and (c) the effects of passage through dam turbines, smolt passagefacilities, and/or Corps of Engineers barges are largely unaffected by traveltime per se. Nevertheless, the search for a single "biologicalbenefit" measure is a difficult one which the authors have resolved in amanner consistent with the thinking of many regional fish and wildlife agencybiologists. Still, it is not clear that the magnitude of travel timeimprovements expected with the projects examined will be a significant factor inthe recovery of Snake River salmon. A decision analysis must have much betterguidance than this.

I found some aspects of the land fallowing cost analysis to be puzzling. Itis unclear, for example, why the cost-effectiveness of fallowing 500 thousandacres shifts from $212,000/hour to -$44,000/hour when the flow augmentationseason is extended from 2 to 4.5 months. Since the amount of land fallowed isunchanged, the expected costs to the farm sector should be independent of theflow augmentation period length. Hence, the decreased cost per hour must comefrom increased travel time reduction when the flow augmentation period isextended or from an increase in the value of hydropower produced by theadditional water. Neither of these is explained in detail within the report. Onewould expect less flow rate increase for a given water volume when the flowseason is extended. Hence, the travel time should drop less on average when theflow season is extended to 4.5 months. If power were more valuable in thesummer, when sold to California during a higher power demand season, that coulddecrease the cost per hour of travel time reduction. But, the model explanationin Chap. IV suggests that all power sales are valued initially at 21 mils/kWhwith price dropping for larger sales.

Overall, the report covers most of the important hydropower system changesbeing proposed for Snake River salmon recovery. Like other reports prepared foragencies in the region (including my own) it does not provide decision makerswith a realistic notion of the magnitude of salmon recovery realized per milliondollars committed to recovery. Also, like other reports, it does not develop avision of how salmon-related actions affect the economy of the Columbia basin,nor of the relative socio-economic importance of the fragments of salmonpopulations that could be affected by these measures. It is perhaps a result ofthe manner in which the debate over salmon recovery has been engaged � oneproject at a time to address one specific salmon population decline.

We are lacking an overview of the regional economic importance of theresources and structures linked to salmon survival, and we are consequentlyunable to address the core issue of what makes a reasonable trade-off betweensalmon preservation and economic development. This issue may be imbedded in theNorthwest Power Planning Council�s need to give fish and wildlife equalconsideration to that of power. What constitutes an "equal"consideration? This issue is clearly connected to the Independent ScientificGroup�s declaration that ecosystem policy decisions "include trade-offsbetween salmon and important regional social and economic factors". (Returnto the River, p. 7) Rather than engaging in more cost-effectiveness analysisthat uses specific, but necessarily narrow and partial measures of salmonenhancement in comparison to estimated costs of specific projects, we mightconsider developing a document that reviews the conceptual foundations ofregional tradeoffs between salmon enhancement and other economic uses. Thiscould lead both the NPPC and other analysts to ask the more important questions.

**Study Title:**Economic Consequences of Management Strategies for theColumbia and Snake Rivers

**Authors:**ECO Northwest (Ernie Niemi, Ed MacMullan and Ed Whitelaw)**Date:** July 1995**Reviewer:** Paul Sorensen

**Report Purpose -** The Confederated Tribes of the Umatilla IndianReservation (CTUIR) is proposing a strategy for managing the rivers that"restores tribal member�s access to resources guaranteed by the treaty(of 1855)". These proposals include two phases:

1. Phase 1: Immediate drawdown of John Day reservoir and three reservoirs onthe Snake River to minimum operation level and Lower Granite to 710 feet,

2. Phase 2: By 2000, drawdown of Snake River reservoirs to natural riverelevations and by 2005 drawdown of John Day reservoir to natural river.

The**Economic Consequences of Management Strategies for the Columbia andSnake Rivers** was prepared by ECONorthwest for CTUIR in July 1995 to discussthe proposed strategy. The report advances two separate but interconnectedanalyses:

1. Critique of the methodology employed in the SOR DEIS

2. Estimate of the economic consequences of the CTUIR�s water allocationproposal

**Report Summary**

The two analyses are reviewed below.

**1. Critique of SOR DEIS Methodology -** The framework for the critiqueconsists of stages of impact, including:

� Stage 1: Society acts to devote additional water to anadromous fish andrestricts activities that would degrade fish habitat.

� Stage 2: the change in policy sends signals to four groups (group 1 areindustries that benefit from water restrictions; group 2 are industries thatincur costs when water is restricted; group 3 includes those who seefish/habitat as elements in the quality of life; group 4 are those who placeintrinsic value on fish/habitat).

� Stage 3: The economy responds to the signals.

� Stage 4: The economy reaches its long-run equilibrium

The authors suggest that there are several important analytical issues inassessing the economic impacts of policy alternatives and that these issues arenot dealt with properly in the SOR DEIS:

1. Weigh each alternative from a With-Without Perspective - critiques the SORDEIS procedures as Before-After and promoting "a seriously biased defenseof the status quo" (Page 7).

2. Incorporate the With-versus-Without perspective into the definition of anybase case - the authors would establish a base case that either meets theminimum legal requirements (which are not defined in the report) or(alternatively and preferably) set the base case for conditions that precludeviolation of the 1980 Northwest Power Planning Act. The authors argue that anyother base case automatically assumes that existing activities (called illegalactivities that harm fish and degrade habitat) with respect to fish/habitat arelegal.

3. Specify property rights and responsibilities clearly - the authorspostulate that the value that is set on the resource "may" depend onwho is assigned ownership rights. "Conventional analyses of the past havetended to ignore the possibility that the value of a resource depends on whoowns the resource. There remains much research to be done to clarify therelationship between ownership and value, but, until it is completed, analysts,at a minimum, should acknowledge the possibility that conventional analyses mayunderestimate the values of endangered species" Page 11 The authors opinethat Native Americans may have superior rights and that irrigators may haveinferior (or secondary) property rights. [The assertion that factors such asownership et al. should be considered even though there is no meaningful way tomeasure relative importance is a frequent but insupportable refrain in thisreport].

4. Examine all the economic impacts, including impacts related to the region�squality of life - the authors argue that PNW area residents receive a"second" paycheck from the quality of life in the area and that fishsurvival in the Columbia/Snake River is linked to this paycheck. They critiqueBPA�s focus on non-resident anglers in recreation benefit analysis done forthe SOR DEIS. They postulate that some people will relocate to the PNW if theimpacted fish populations are strong.

5. Provide a full accounting of all major subsidies and externalities thatdistort prices - the authors assert that BPA customers do not pay the explicitcost of the dams (subsidized debt) nor the implicit cost (externalities and lossof fish). In addition, the authors argue that agriculture and forestry alsoreceive substantial subsidies. They state that these subsidies should be treatedin the SOR DEIS analysis and that BPA wrongly excludes them. Without treatmentof subsidies, the report is "disingenuous, seriously misleading and grosslybiased" (page 17)

6. Define geographical areas consistent with the theory and reality of thelinkages among metropolitan and nonmetropolitan areas - the authors dislike theSOR DEIS definition of subregions and declare that rural subregions should belinked with the nearest metropolitan region due to economic integration.

7. Demonstrate the dynamic character of the economy - the authors state thatSOR DEIS suffers from "dumb-person bias" because the analysis does notallow people to change after imposition of changes in policies and economics. Inparticular, the authors state that the I-O model used in the SOR DEIS"yields a worst case, static estimate of the adverse, initial impacts ofeach alternative on the regional economy" (page 22). Instead, the SOR DEISshould include a dynamic view of the economy. In latter sections of the report,the authors argue that the "water-intensive" industries areunimportant to the PNW economy.

8. Address the principles of sustainability - the authors stress that theconcerns of future generations should be included. This implies that theassessment of substitutes should be undertaken for current users of the Riverswhile taking into account that the Native American religious value of the salmonhas no substitute. They deride the SOR DEIS for not taking sustainability intoaccount.

9. Do not assume that quantity means quality - the SOR DEIS focuses tooheavily on the resource-extraction industries and too little on tourism. Theyargue that economists rely too heavily on data and that impacts which are noteasily or cannot be modeled get short shrift.

ECONorthwest argues that the water-management agencies should explicitlydiscuss these issues and "compensate for these tendencies that may bias theevaluation of the alternatives" (Page 25)

**Discussion of Water-intensive industries -** ECONorthwest defineswater-intensive industries to include firms that are electricity-intensive(DSIs, pulp and paper, irrigated agriculture, primary metals, chemicalindustries, lumber and wood processing). The authors state that these industriesare subsidized, account for a small portion of the PNW economy and will continueto decline as a share of employment and income despite management policies ofthe Columbia River. Due to a host of factors (e.g., labor-saving efforts,international competition and soil erosion) these industries are assessed tohave questionable future sustainability.

This summary analysis fits into the framework for a dynamic model and setsthe stage for ECONorthwest�s statement that these firms will cease to exist orare utterly unimportant in either the existing or future PNW economy. Inaddition, these industries are said to be heavily subsidized and generatesubstantial externalities. This is ECONorthwest�s argument which they quantifywith a disclaimer that the numbers "are illustrations, not precise,comprehensive estimates" (page 42). The subsidies are, however, quantifiedto illustrate the magnitude of the damage:

1. Depletion of the Columbia - $150-300 million per year

2. Subsidized electricity - $46 million/year

3. Sediment-related damage - $143 million/year

1. Unauthorized irrigation - $35 million/year

2. Subsidized irrigation facilities - $592 million/year.

3. Transportation subsidies - undetermined

4. Government payments - $336 million in 1994

There is no attempt to verify any of the numbers used in this analysis.

**2. Economic Consequences of CTUIR�s proposal**

The impact on agriculture is evaluated within the context of subsidies. Theauthors basically conclude that the loss of income to farmers is far less thanthe combined subsidies/externalities gained/generated by farmers. In addition,the authors conclude that the farmer�s loss of subsidies is a wealth transferback to the taxpayers and after removal of subsidies only those farmers willcontinue that have positive net revenues after all costs.

Regarding the impacts on waterborne transportation, the authors argue thatwhile the value of the subsidy to barges is unknown, the subsidy could bere-applied to trucks and railroad system and this would apparently solve anyaccess/transportation problems.

Regarding the value to commercial and recreational fisheries, the authorspostulate the following:

1. Total fish population will increase to between 5 and 10 million fish underthe CTUIR strategy. There is apparently no uncertainty regarding these numbers.

2. Commercial fishing will generate $36 to $37 million in net output,assuming that harvesting costs are 10% of revenues as was allegedly the caseunder Indian in-river set net fisheries. ECONorthwest "assume that theregion is capable of finding a way to manage the commercial fisheryefficiently" (page 55)

3. Recreational fishing will generate $18.7 to $189.1 million in fishingexpenditures (assuming 5 to 10 million fish respectively) and about the sameamount in consumer surplus.

Regarding quality of life, ECONorthwest argues that surveys have shown thatquality of the environment is more important than the economy as a major reasonfor moving into Oregon. The assumption is that stronger returns of salmon islinked in the respondents minds with quality of life. They stretch the argumentto conclude that improved fish runs (of the impacted runs) could induce greaterpopulation migration.

Finally, the authors argue that the salmon have an intrinsic value:"Countless statements of the religious, cultural, and biological importanceof salmon represent economic values that appear to be large. These values aredifficult to measure, but they are no less important for this. ***One shouldnot ignore them simply because analysts have failed to develop adequate toolsfor measuring them***." (emphasis added - Page 67)

**What Kind of Economic Study is Done? -**This is a provocative reportthat is high on theory but very low on quantification. It is an advocacy piecethat is extremely subjective and intended to stage the best case for salmonrestoration.

**What Measures of Effectiveness are Assessed? -**There is little ofvalue in the measures of effectiveness because little attention was given toquantification.

**What Major Conclusions Were Reached, If Any? -**The major conclusionare:

1. all activities that harm salmon/habitat are illegal

2. all firms that use water are unimportant to the economy

3. the value from restored runs is extremely high

4. the certainty of salmon restoration is not questioned

**Reviewers Overall Impression -** I was not impressed with the reportbecause it makes no attempt to address the complicated issues of multiple useson the river system. Instead, it is an advocacy report with unhelpfulaccusations directed against water users (especially agriculture). The reportdoes very little to further the debate on how best to address the impacts ofsalmon restoration.

**Study Title:**Columbia River System Operation Review: FinalEnvironomental Impact Statement Appendix O: Economic and Social Impact

**Authors:** Bureau of Reclamation, Corps of Engineers and BonnevillePower Administration**Date:** November 1995**Reviewer:** Jack Richards
**Type of Study**
The System Operation Review (SOR), Appendix O, is the Final EnvironmentalImpact Statement prepared by three Federal Agencies; Bureau of Reclamation,Corps of Engineers and Bonneville Power Administration with assistance fromnumerous other government agencies, Indian Tribes and private organizations. TheSOR process, however, began in 1990 prior to ESA listing of Snake River stocks.Its purpose is to analyze future operations of the Columbia River system andriver use issues. Analysis of power production, irrigation, navigation, floodcontrol, recreation, fish and wildlife habitat, and municipal and industrialwater supplies are included in the SOR process. The study analyzes the impactsof alternative system operation strategies (SOS) relative to national economicdevelopment, regional economic impacts, social impacts and environmentalimpacts.

Sixteen work groups were organized to manage the SOR study and to analyze theenvironmental, economic and social impacts. The Economic Analysis Group, thatwas responsible for the socio-economic analyses and for Appendix O, consisted of18 core members from the three sponsoring agencies and 38 others. Anyoneinterested was encouraged to participate in the work group meetings.
**Goal**
The goal of the SOR is to achieve a coordinated system operation strategy forthe river that better meets the needs of all river users.

Appendix O addresses only the economic and social effects of alternativesystem operating strategies for managing the Columbia River system.
**Scope**
During the screening phase a total of 90 system operation alternatives wereconsidered. A total of 13 alternatives were considered in the final EIS. Six ofthe 13 alternatives considered are unchanged from the draft EIS, one is arevision of an original strategy and six are straties added in the final EIS.Many of the alternatives evaluated in the final EIS emphasize fish recoveryissues. Some of the SOS's could not be implemented now and in some cases designchanges would require several years to complete. The most important SOS'srelative to fish recovery are summarized in the final section of this review.
**Other Fish Recovery Emphasis**
Appendix C related to Anadromous Fish and Juvenile Fish Transportation.
**Measures of Effectiveness Assessed**
The opportunity costs of all other water-based products (power, floodcontrol, irrigation, M & I pumping, navigation) are compared to the benefitsto anadromous fish and recreation. Each SOS is compared to the base case (SOS2c).

The costs of each SOS (estimated dollar value) is compared to theeffectiveness or benefits (in terms of fish harvested) that accrue to anadromousfish and recreation. This provides a measure of the effectiveness ofexpenditures and opportunity costs to the number of fish harvested. Since valuesof fish harvest are also developed elsewhere in the report, it seems that it isonly a simple matter to convert the available data to a cost-benefit analysis.Consequently, the results reported in this study go beyond cost-effectivenessesmeasures. Nonetheless, the benefit-cost comparison may suggest such a minimumreturn to expenditures that cost-effectiveness measures may be preferred. Onlyin the case of ESA species, however, are managers justified in usingcost-effectiveness measures when information is available for a benefit-costcomparison. This study of system operation strategies seems to confuse therequirements of endangered species with the broader goal of optimizing systemoperation.
**Areas of Economic Opportunity Costs Assessed**
All major ares of opportunity costs (to fish resources) are addressed in thisstudy since all watew-based uses are carefully analyzed to extent thatinformation is available, and in some cases could be developed as part of theSOS process. Many of the competing water uses are discussed separately in otherappendices (Appendix C - Anadromous Fish; E - Flood Control; F -Irrigation/Municipal and Industrial Water Supply; H - Navigation: I - Power: J -Recreation; K- Resident Fish; N - Wildlife). Each Appendix presents a detaileddescription of the work group's analysis of alternatives.

Anadromous Fish: Economic and social impacts related to commercial,recreational, and tribal harvests are included. Low and high value estimatedwere included for commercial and sport catch.

Resident Fish and Wildlife: From an economic perspective, the monetary valueof the resident fish and wildlife is captured in the recreation analysis. Thesevalues were determined for different SOS's.

Wildlife: Brief discussion related to recreational use.

Flood Control: Economic and social impacts related to changes in annualdamages from flooding.

Irrigation and water supply: Economic and social impacts are related tochanges in net farm income. Up to six reservoirs would experience lowered poolsunder alternative SOS's considered. Impacts on municipal and industrial waterusers were also evaluated.

Navigation: Economic and social impacts related to changes in sthe cost oftransportiang commodities. Both deep and shallow draft navigation impacts alongwith Dworshak log transport impacts were evaluated.

Power: Economic impacts related to changes in rates; impacts of rates onpower demand; net system costs; and changes in consumer surplus are evaluated.Substantial changes were made in power evaluation between the DEIS and FEIS dueto increased competitiveness of the power system during that time. During the1990's, the wholesale market for electricity has broadened to become much moreof a West Coast rather than a Pacific Northwest regional market. Deregulation ofnatural gas is seen as indicative of trends that are to be expected for powermarkets.

Recreation: Economic and social impacts related to the economic value ofrecreation activity are evaluated. Both direct and indirect economic values areestimated where indirect effects are the impacts on local economic activity.

Water Quality: Economic and social impacts related to impacts on waterquality.
**What Important Cost Effectiveness Estimates Produced by the Study?**
Although cost-effectiveness information was developed in terms of the costsof each SOS relative to changes in fish harvest, the information is available tosimply use a cost-benefit analysis if current or past market prices are utilizedto estimate benefits.

**Did the Study Have Any Appreciable Impacts on Policy Decisions?**

The impacts of this study on future policy direction remains to be seen.Managers will almost certainly utilize this information in policy decisions, butthe extent that it will be used in unknown.

The goal of this study is to achieve a coordinated system operation strategyfor the river that better meets the needs of all river users. Given the supportprovided to this study by the three lead agencies and the assistance provided byother cooperating entities, the study can be expected to impact policydecisions.
**What Does the Study Contribute to Policy Dimensions?**
This study attempts to coordinate the complex management of the ColumbiaRiver system and to analyze the impacts of alternative operating strategies ondifferent users of the river. Much important information relating to social,economic and environmental impacts have been developed through this process.

Regional economic impacts were estimated for each of the System OperationStrategies. These were developed from the estimates of direct economic impacts.The most common indicators of changes in regional economic activity areadjustments in employment and earnings where were measured from the input-outputmodels in this study.
**Were the Assumptions Realistic?**
Numerous assumptions were made as the study proceeded. Some of these are morerealistic than others, but most resulted from practical limitations relative totime and cost. Some examples of these assumptions are:

The biological fish models and the economic analysis assume a fixed ratioover time of the number of fish harvested and the number of fish that escapeharvest to spawn.

Water rights were considered an inviolable institutional constraint.Consequently, the analytical assumption was that current water availability willremain the same under all operating strategies.

Numerous similar assumptions were necessary to simplify the analyticalprocess. Clearly the assumptions made must be carefully related to theanalytical results in all cases. For example, the above assumption of a fixedratio between harvest and spawning is typical, but represent long run expectedvalues that may not be consistent with management decisions typically reflectingan annual analysis and in-season adjustments. It may also be useful to reduceharvest to increase spawning to improve productivity. Furthermore, theeffectiveness of any given level of spawning escapement can vary with changes inhabitat conditions of a particular year. This example is only intended todemonstrate that use of the results summarized in Appendix O, obviously, wouldhave to be carefully related to the assumptions utilized in the estimates.
**Conclusions Reached, If Any**
Conclusions were reached regarding the costs and benefits associated with thedifferent SOS's. However, this study involved the use, to varying extents, ofseveral extensive models (IMPLAN, Columbia River Salmon Passage Model, EmpiricalLife Cycle Model, HYDROSIM, Stochastic Life-Cycle Model) plus estimatesdeveloped as part of the study (e.g. recreation survey). It is difficult toassess the value of any of the conclusions reached unless the reader accepts thevalidity of all of the models utilized in the study. This complex process maylimit the usefulness of this information for management decisions since managersmay be reluctant to base decisions on information that they do not fullycomprehend.

The estimated values are probably reasonable, but they often must be acceptedon face value due to the limitations imposed on the reader who is not likely tobe familiar with all of the complex models utilized in the study.

In spite of any limitations the reader faces in assessing the validity ofmany of the estimates, there is a vast amount of economic, social, and technicaldata presented that can serve as base information needed for fishery management.
**Summary of SOS�s with Major Benefit to Anadromous Fish**
SOS 2d 1994-98 Biological Opinion -- This strategy was added after the draftEIS analyzes the 1994-98 Biological Opion operation that includes flowaugmentation on the Columbia, flow targets at McNary and Lower Granite, specificvolume releases from Dworshak, Brownlee, and the Upper Snake, meeting sturgeonflows 3 out of 10 years, and operating lower Snake projects at MOP and John Dayat MIP.

SOS 5b Natural River Opeation draws down the four lower Snake River projectsto near river bed levels for four and one-half months during the spring andsummer salmon migration period, by assuming new low level outlets areconstructed at each project.

SOS 5C Permanent Natural River Operation -- This strategy was added since thedraft EIS. It would operate the four lower Snake River projects at near riverbed levels year round.

SOS 6b Fixed Drawdown Operation draws down the four lower Snake Riverprojects to near spillway crest levels for four and one-half months during thespring and summer salmon migration period.

SOS 6d Lower Granite Drawdown Operation draws down Lower Granite project onlyto near spillway crest level for four and one-half months.

SOS 9a Detailed Fishery Operation Plan is also an added alternative. Thisalternative includes flow targets at The Dalles based on the previous year'send-of-year storage content, specific volumes of releases for the Snake River,the drawdown of Lower Snake River projects to near spillway crest level for fourand one-half months, specified spill percentages, and no fish transportation.

SOS 9b Adaptive Management. This is also an added alternative thatestablishes flow targets at McNary and Lower Granite based on runoff forecasts,with specific volumes of releases to meet Lower Granite flow targets andspecific spill percentages at run-of-river projects.

SOS 9c Balanced Impacts Operation This is an added alternative that drawsdown the four lower Snake River projects near spillway crest levels for two andone-half months during the spring salmon migration period. Flow augmentation andother fishery enhancement requirements are included in this alternative.

SOS PA Preferred Alternative represents the operation proposed by NMFS andUSFWS in the Biological Opinions for 1995 and future years; this SOS operatesthe storage projects to meet flood control rule curves in the fall and winter inorder to meet spring and summer flow targets for Lower Granite and McNary, andincludes summer draft limits for the storage projects.
**Summary of Studies of the Economics of Salmon RecoveryActions**StudyGeographySpeciesScope of MeasuresOverall ApproachType(s) of Economic AnalysisType of Biological Analysis or ObjectiveHarza Northwest, for the Corps of Engineers      (1996)Lower Snake RiverSpring/      Summer chinookHydropower only; no consideration of other      components of the eco-systemComparison of three "system paths":      transportation, in-river movement of fish, and "mixed"; 15      projects compared Measures selected that meet arbitrary      thresholds for returning adults, fish-passage efficiency, and juvenile      survival; CRiSP v1.5 to determine biological effectiveness; Decision Tree      used to evaluate alternative pathsDiamant and Willey, EDF for the Council (1995)Snake River (Upper and Lower)Endanger-      ed Snake River salmonAlternative configurations (26) of Snake River      projects, including various drawdown options, new storage, and purchase of      water rightsCost-effectiveness of various project      configurations, measured in dollars/hour of reduced travel time; total      travel time reductions for each configurationDirect project and opportunity costs:      construction, O&M, power, water supply, irrigated agriculture, flood      control, navigation, and recreationMeasure of benefit across all proposed      configurations is reduced water particle travel time (WPTT)Niemi, et al., ECONorth-      west for Umatilla Confederation (1995)Snake River and John Day ReservoirSnake RiverVarious drawdown scenariosDefines "value" in terms of ownership      of resources; argues that Native Americans have superior ownership rights      over fish, stemming from 1855 TreatyPostulates consumer surplus related to the      region's quality of the environment; emphasizes roles of subsidies and      ability of economic actors to respond to relative price changesEssentially no independent analysis; proposed      drawdown strategies are assumed to yield 5-10 million fishBPA, COE and BOR, Appendix O of the SOR-EIS      (1995)Columbia River SystemColumbia and Snake RiverAlternative system operating strategies for the      Columbia/Snake system (19, including drawdowns)Estimates of opportunity costs of power, flood      control, irrigation, water supply, navigation, compared with dollar value      of fish harvestCost-effectiveness analysis (although      cost-benefit analysis is possible, given a dollar value of harvest)Model-driven estimates of biological benefits      under different operating scenarios; benefits measured solely in terms of      the value of commercial and sport fisheriesPaulsen, et al. Resources for the Future, for      BPA (1993)26 subbasins above Bonneville Dam79 chinook and steelhead stocks above Bonneville      Dam120 propagation alternatives, including      hatcheries, habitat changes, . . .; 8 passage strategies; 5 terminal      harvest ratesLinkage of 4 models (SAM for flows, CRiSP for      mortality, DLCM for population estimates, and SWOM for cost minimization)System-Wide Optimization Model (SWOM)      determined least cost set of recovery actions within set of measures      meeting subbasin goalsSimulation of downstream mortality for      combinations of measures; testing of population sizes against harvest and      escapement goals by subbasin (CBFWA 1990)Huppert et al. (1996)Snake RiverThree Snake River stocksNMFS Proposed Recovery Plan (1995)Economic analysis of those measures proposed in      the Recovery PlanCost-effectiveness, based on opportunity costs      of proposed measuresNo independent analysis; study relies on the      Recovery Plan for estimates of effectiveness**Summary of Studies of the Economics of Salmon RecoveryActions (Cont.)**StudyMajor ConclusionsMajor WeaknessesMajor StrengthsApplications to Future Policy ChoicesHarza Northwest, for the Corps of Engineers      (1996)Ratio of costs of most- and least-effective      measures is 50 to 1; biological information is insufficient to use a      decision-tree approach; transportation combined with pre-fish flow      operations is cheapest; drawdowns are generally most expensiveMarginal benefit of additional measures aimed      at in-river survival may be low, given current configuration; surface      collectors with transport may be most cost-effectiveOverstates cost of lost recreation; subsidies      to agriculture ignored; power analysis outdated by changes in market      conditions; elasticity impacts on transportation not accounted for;      analysis not comprehensive biologically or economicallySuggestion of a cost-effectiveness measure:      incremental benefits expressed as "cost per % survival"Decision Path analysis as presented does not      support cost-effectiveness analysis; marginal analysis may point in new      directions; drawdowns probably do not fit with budget constraints;      possible avoidance of rehabilitation to Snake River dams after 2000Diamant and Willey, EDF for the Council (1995)Estimated changes in net farm income suggest      opportunities for "gains from trade" (i.e., payments to farmers      to release water); dry-year leasing and basin-wide fallowing are the most      cost-effective actions; future reductions in WPTT should be discountedRatio of most- to least-cost-effective measure      may be as high as 28 to 1; drawdown alternatives are generally not      cost-effective, yield the largest reductions in WPTT, but also take the      longest to implementPower cost estimates outdated by market      changes; assumes WPTT is correlated with biological success; some results      counter-intuitive and unexplainedExamines both Upper and Lower SnakeLimited applicability, due to narrow scope of      analysis and definition of index of biological benefitNiemi, et al., ECONorthwest for Umatilla      Confederation (1995)Many, if not most industries using water in the      Northwest are subsidized, relatively unimportant economically, and will      eventually prove unsustainable; Native American fisheries are sustainableElimination of subsidies means that irrigated      agriculture can be shrunk at relatively modest cost; subsidies to barging      could be applied to trucking instead; drawdowns will support growth in      commercial and recreational fisheriesEstimates of subsidies to existing industries,      and economic costs generally, are not documented or explainedFrom an NED perspective, subsidies should be      taken into account; however it is not clear that NED is the most      appropriate basis for Northwest decision-making, given the expectation      that Northwest residents will pay for these programsLimited, due to clear "advocacy"      nature of the work; does not offer a broad perspective in terms of biology      and is not documented in terms of economicsBPA, COE and BOR, Appendix O of the SOR-EIS      (1995)Compared with Corps' 1993 Flow      Improvement EIS, and using harvest as measure of biological benefit, some      configurations are arguably less expensive than "current      operations"Assumes existing institutional constraints,      such as distribution of water rightsComprehensive economic analysis based on      opportunity costs in affected sectorsPossibility that SOR-EIS could be broadened to      encompass more proposed measuresPaulsen, et al. Resources for the Future, for      BPA (1993)Subbasin goals (set in 1990) were unrealistic,      and could not be achieved by the set of passage and propagation      alternatives considered; mainstem flows of 1989-91 were more      cost-effective than the 1991 Phase II proposal of the CouncilGenetic risk reduction conflicts with subbasin      escapement and terminal harvest objectives; planners' preferred actions      emphasize more propagation and cost more than the cost-effective set of      actionsDeterministic modeling ignores risk,      variability of results over time, and uncertainty associated with data and      inputs; insufficient documentation of nature of economic costs included;      apparent exclusion of irrigation, land use, recreation, navigationSimulation permits testing of biological      interactions among proposed measures, although subject to lots of      assumptionsLimited in its existing form, due to exclusions      of various economic sectors (e.g., harvest) and number of simplifying      assumptions, but potentially significant, given application of      cost-effectiveness methodology and comprehensive modeling approachHuppert et al. (1996)About 2/3 of the cost of the Plan is associated      with changes to the hydropower system; total costs vary widely depending      on assumptions regarding combinations of measuresEconomic benefits of enhanced harvests (or      "use value" generally) are not sufficient to justify the costs      of recovery actions; estimates of "existence value" may also not      be sufficient to justify existing expendituresScope of analysis was limited by definition to      those measures proposed in the Recovery Plan, so conclusions are not      comprehensiveMany alternatives examined; reminder of      "learning by doing"; uncertainty recognized; solutions not bound      by existing institutional constraints; explicit recognition of assumptionsPotential for application of the approach more      broadly than the 1995 Recovery Plan, but would require much more extensive      analysis
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