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|                                                                    | Artificial Production Review Economics Analysis Phase I
July 8, 2002  |  Council document IEAB 2002-1

**Comments received**
- Bonneville Power Administration  (220k          PDF)
- Clatsop Economic Development Council  (30k PDF)
- U.S. Fish and Wildlife Service  (30k          PDF)  and  IEAB response to          USFWS  (15k PDF)

**Report**
- Part 1 - Research approach, findings, and          recommendations  (30k PDF)
- Part 2 - Summary information for          eight artificial production programs  (170k PDF)

**Summary (as letter from IEAB to Chairman Cassidy)**

Dear Chairman Cassidy:

I am pleased to provide the Independent Economic Analysis Board's Phase      I study of hatchery cost effectiveness. As you will recall, our main      objective was to establish a basis for assessing the cost-effectiveness      for artificial production projects proposed to the Council. To accomplish      this, we developed an analytical framework for the economic cost      assessment, held a workshop with hatchery program managers (August 2001),      collected and compiled budget cost information from eight projects, and      selected three hatchery performance measures as indicators of      effectiveness: fish released, adult returns, and adults harvested. In the      process of collecting and interpreting this data we corresponded with a      number of hatchery program personnel from the States of Washington,      Oregon, Idaho, the US Fish and Wildlife Service, Grant County Public      Utility District, and the Yakima and Nez Perce tribes.

Overall, we found that the cost data for such an analysis were      reasonably well documented and available. Some performance data (fish      released, fish returned, and fish harvested) were also available, with the      fish release data being the most complete. The adult return/harvest rates      are estimated from tag release-return data, which are not available for      all stocks released. Despite the gaps in hatchery return estimates, we are      optimistic that an expanded version of this study could provide a      reasonable basis for cost-effectiveness analysis of artificial production      proposals. Based on the information assembled to date, the costs per      release varied among the eight projects from $0.14 for Spring Creek      hatchery fall chinook to $2.60 for Nez Perce spring and fall chinook. The      costs per returning adult varied from $12 for Priest Rapids fall chinook      to $1,615 for Winthrop hatchery spring chinook to $3,707 for Nez Perce      hatchery chinook. The costs per adult fish harvested varied from $14 for      Clatsop County Economic Development Council coho releases in Youngs Bay,      to $23 for Priest Rapids fall chinook, to $68,031 for Entiat hatchery      spring chinook. We find that the costs per harvested fish are strongly      influenced by specific survival rate factors and harvest patterns. These      relationships can provide useful guidance in assessing the      cost-effectiveness of both current hatchery operations and proposals for      new projects.

The major remaining gap concerns performance measures for restoration      or supplementation hatcheries, which aim to boost the rebuilding rate for      naturally-spawning fish stocks that have under-utilized spawning habitat.      We would need to consult further with the APAC and hatchery managers in      order to establish appropriate performance criteria for such projects.

We propose that the Council consider a Phase II of this analysis which      would (a) incorporate a wider range of projects in order to support a      statistical analysis of cost-effectiveness, (b) develop an effectiveness      measure for restoration hatcheries, and (c) provide some application of      the resulting cost-effectiveness assessment to specific NPPC sponsored      projects. The cost would be around $150,000 and would involve an outside      research organization under guidance and review of the IEAB.

Sincerely,

Daniel D. Huppert      Chair, Independent Economic Analysis Board

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