Nonmarket Economic Impacts of Forest

Insect Pests: A Literature Review

Randall S. Rosenberger Eric L. Smith

United States

Department

of Agriculture

Forest Service

Pacific Southwest

Research Station

General Technical Report

PSW-GTR-164-www Wickman and Renton 1975

Payne and others 1973 Economic analysis of the gypsy moth

problem in the Northeast: II. Applied to residential property

Evaluating damage

Walsh and Olienyk 1981 Recreation demand effects of mountain pine beetledamage to the quality of forest recreation resources in the Colorado Front Range

caused to a campground by Douglas-fir tussock moth

Walsh and others 1989b Recreationaldemand for trees in National Forests

Loomis and Walsh 1988 Net economic benefitsof recreation as a function of tree stand density

Walsh and others 1981a Value of trees onresidential property with mountain pine beetleand spruce budworm in the Colorado Front Range

control program in New Hampshire: a contingent valuation case study Miller and Lindsay 1993 Willingness to pay for a state gypsy moth

Haefele and others 1992 Estimating the total value of

forest quality in high-elevation spruce-fir forests

Michalson 1975 Economic impact of

mountain pine beetle on outdoor recreation

Walsh and others 1990 Estimating the public benefits of protecting forest quality Moeller and others 1977 Economic analysis of the gypsy moth problem in the Northeast: III. Impacts on homeowners and managers of recreation areas Leuschner and Young 1978 Estimating the south- ern pine beetle’s impact on reservoir campsites Jakus and Smith 1991 Measuring use and nonuse values for landscape amenities: a contingent behavior analysis for gypsy moth control Holmes and Kramer 1996 Contingent valuation of ecosystem health

Walsh and others 1981b Appraised market value of treeson residential property with mountain pine beetle and

spruce budworm damage in the Colorado Front Range
Abstract

Rosenberger, Randall S.; Smith, Eric L. 1997. Nonmarket economic impacts of forest insect

pests: a literature review. Gen. Tech. Rep. PSW-GTR-164-www. Albany, CA: Pacific

Southwest Research Station, Forest Service, U.S. Department of Agriculture; 38 p.

This report summarizes the results of research on the nonmarket economic impacts of

forest insect pests. The majority of the research reports are journal articles or fulfillment of

three USDA Forest Service research contracts. This report also reviews the foundations for

methodologies used and classifies the forest insect pests studied, the regions in which

research has been conducted, the designated land-use areas, the stakeholders, the values,

the measurement methods used, and the measures of value indicators. Information on each

research project is described with relevant information condensed in tabular form.

Retrieval Terms: forest insects, nonmarket valuation, economic methods, forest health.

The Authors

Randall S. Rosenberger and Eric L. Smith are, respectively, environmental economist,

Management Assistance Corporation of America, on contract with the USDA Forest

Service; and quantitative methods program leader, Forest Health Protection, Forest Health

Technology Enterprise Team, USDA Forest Service, 3825 East Mulberry Street, Fort

Collins, CO 80524.

Publisher:

Albany, California

Mailing address:

PO Box 245, Berkeley CA

94701-0245

510 559-6300

http://www.psw.fs.fed.us

May 1997

Pacific Southwest Research Station

Forest Service

US Department of Agriculture
USDA Forest Service Gen. Tech. Rep. PSW-GTR-164-www. 1997.

In Brief...

Rosenberger, Randall S.; Smith, Eric L. 1997. Nonmarket economic impacts of

forest insect pests: a literature review. Gen. Tech. Rep. PSW-GTR-164. Albany,

CA: Pacific Southwest Research Station, Forest Service, U.S. Department of

Agriculture; 38 p.

Retrieval Terms: forest insects, nonmarket valuation, economic methods, forest health

Natural and human-caused disturbances affect the quality of forests by altering

their ability to provide benefits to people. The direction and magnitude of these

disturbances on forest quality, and their resulting implications for the level and

flow of benefits from forests to people can be discovered in numerous ways. The

magnitude and direction of disturbances on forest benefits can be depicted by

economic methods. The measurement of values of nonmarket goods and services

supplied by a healthy forest, such as recreation and esthetics, and their inclusion

in total economic value, is relatively more difficult than market goods and

services. However, there do exist several methods used by economists in the

measurement of nonmarket benefits. Economic analysis, such as benefit-cost

analysis, must include nonmarket values if it is to be a relevant and complete

component in the decision making process. Exclusion of these substantial values

from economic analysis can lead to misinformed and inefficient management

and policy decisions. This report is a secondary analysis of past nonmarket

economic research efforts to estimate the impacts of forest insect pests on

nonmarket benefits derived from forest quality. This report also acts as a

compilation and review of these studies.

This review covers forest insects from mountain pine beetles in the western

United States to gypsy moths in the northeastern United States. Although there

are many disturbance agents, this report is concerned only with studies on forest

pests (no studies on the nonmarket economic impacts of diseases were found;

thus by default only insects are included). Stakeholders, land-use designations,

values measured, economic nonmarket methods used, and value estimates are

identified for each study. These results are presented in summary tables

throughout the report, with individual study summaries being presented in

several summary tables included as an appendix.

A total of 15 studies were found that estimated the nonmarket economic

impacts of forest insects. Nonmarket forest values that were estimated include

recreation, esthetics, property, and total values, either in terms of willingness to

pay, consumer surplus, or recreation days. Nonmarket economic methods used

include cost estimation, contingent valuation, travel cost, and hedonic pricing.

Other information identified for each study includes the region, land-use

designation, stakeholders, and impact indicators.

It was found that forest insects can greatly affect the level and flow of

benefits to people from forests, especially in the short-run. However, forest

insects also have a natural role in the development and structure of forests. Not

always is it safe to assume that insect impacts on forest health are negative,

although nearly all aspects of the studies support this assumption. Education of

the public and land managers concerning the ecological importance of forest

insects may be enough to mitigate the perceived damages caused by forest

insects, within “natural” boundaries. Although the results of these studies may

not be transferable to other regions, land managers can greatly benefit from these

results by identifying the relevant issues and obtaining additional information

helpful to making more informed decisions.

iii
USDA Forest Service Gen. Tech. Rep. PSW-GTR-164-www. 1997.

1

Introduction Forests are a source of benefits, providing many products and services, such as

timber, water runoff, livestock forage, habitat for plants and animals, recreation

opportunities, esthetic landscapes, and biodiversity. The capability of a forest to

provide these and many other products and services and the quality of those

products and services depend on its health. A healthy forest is an essential

component of a healthy ecosystem, a natural system that is capable of self-renewal,

resilient in its response to disturbances (such as pest, fire, and other nonhumanand human-caused disturbances), and able to sustain the integrity of the natural

and cultural benefits derived from it. In other words, a healthy forest is a dynamic

bundle of natural processes that are interconnected through space and time.

Many factors affect the health of a forest, such as air quality, fire, forest

management practices and other human activities, wind, drought, disease, and

insects. Managers need to be aware of the potential impacts that these

disturbances may have on the quantity and quality of benefits derived from

forests. Also, since ecosystems and forests are constantly changing, information

on the impacts of these disturbances and their relationship to the health and

sustainability of natural systems is needed (Averill and others 1995).

Tradeoffs made by the forest manager to achieve objectives and goals can be

evaluated or assessed in a number of ways. One method, economic benefit-cost

analysis, evaluates a proposed management plan by comparing the benefits of the

plan with its costs. A good benefit-cost analysis requires that all measurable benefits

and costs be included. However, some benefits are more difficult to calculate than

others. Factors not included in a benefit-cost framework are other social and cultural

concerns (equity and welfare distribution issues, as well as noneconomic benefits

and costs), physical and biological needs (functions and processes), and political

realities (feasibility). Although benefit-cost analysis may be a necessary component

of decision making, it is not sufficient in itself as a basis for decisions.

Price is an indicator of the worth of a good representing its economic marginal

value. Some forest products, such as timber and livestock forage, have adequate

measures of their economic worth (or the monetary value as the excess benefit over

the cost of provision of the good or service) to society—established market goods

with prices. Other forest products, such as some recreation opportunities and

esthetic views, are nonmarket or extramarket goods without prices.

The purpose of this report is to review the literature concerning economic

measurement of the impacts of forest insect pests on those products and services

which do not have market-based prices (i.e., most recreation, esthetics, and

homeowner benefits of property). Although there are many concerns about

using these nonmarket valuation methods, the state of the art is continually

improving. The results reported here should be accepted only tentatively. One

significant problem with the results of the reviewed studies is that many of them

are concerned with the flow of products from a forest, rather than the

sustainability of the process or function of the forest. Because of this focus, most

analyses are static, with the exception of some of the studies that address the

issue of forest regrowth mitigating insect disturbances over time. No studies

concerned with similar impacts due to diseases were found in the review.

Forest insect pests may directly damage forest commodities like timber, or

they may indirectly affect noncommodity benefits such as recreation experiences.

They also can have negative impacts on the flow of benefits from services provided.

As with any damage, there is an associated cost or loss. The amount of this loss

depends on a variety of factors, including the condition, type, and location of the

forest, the magnitude of the outbreak, the kind of insect, the quality and intensity

of the desired experience (esthetic, recreational), and the scope of the affected
2 USDA Forest Service Gen. Tech. Rep. PSW-GTR-164-www. 1997.

stakeholders. Insects attack trees, causing discoloration of foliage, defoliation, or

both, resulting in dead and down trees and visible damage to forests which, in

turn, may reduce the benefits derived from the forest and its products. One

important question facing most forest managers is how much they can afford to

pay for the protection of forest health. The answer to this question depends partly

on the level of physical damages which result from forest insect attacks. Another

part of the answer depends on the economic worth of these damages. One area that

needs to be investigated further is the economic valuation of insect-related damages

to forest products. These valuations can then be used in an economic evaluative

framework that enables forest managers to make more informed decisions.

Another concern that received little attention in the past is the role of forest

insects in the natural processes of a forest. A healthy forest can sustain tree

damages due to insects, and can even benefit from these disturbances, which can

change the composition of the forest to provide more diversity and energy flow

(e.g., increased sunlight penetration may increase understory growth, providing

more forage for animals). The view that forest insects primarily cause negative

impacts is based on a static view of a forest or one which considers timber values

only. When the dynamics of natural processes are considered, forest insects have

an important and natural role in the complexity and overall health of a native

forest. Therefore economic considerations may be better cast as the sustainability

of the flow of benefits from a forest in both products and services provided.

This report summarizes the published economic valuation studies of the

impacts of forest insect pests on nonmarket forest benefits. It identifies the key

elements of each study, provides a narrative of each study, and includes an

appendix of tables that summarize the studies. The scope of what constitutes a

forest in the following studies ranges from large, publicly-owned tracts of

forested land to small, privately owned clumps of trees (residential backyards).

The benefits affected by insects include recreation, esthetic or scenic beauty of

landscapes, and property values. The economic and financial worth reported in

the summaries of the studies are all indexed1

 for inflation to 1995 dollars.

Although this method of adjusting for inflation may not reflect actual relative

changes in value of nonmarket benefits, this is the simplest method available.

Some of the estimations in a particular study are based on the worth of the

property at the time of the study; therefore, it may not be correct to assume that

property values have increased at the same rate as the price index.

Arc elasticities of demand are included in the narratives of the studies either

when they were reported in the publication or where there is enough information

available to calculate them for this report (they have been calculated at the

midpoint of the arc). These average arc elasticities show the responsiveness of

demand if an important variable is changed, other things being equal.

Technically, these elasticities represent the percent change in the demand for

forest conditions divided by the percent change in forest condition. The number

reported as the average arc elasticity is equal to the percent change in demand

due to a 1-percent change in the forest condition variable, such as number of

trees per acre, age of stand, or amount of insect damage. As an example, if the

elasticity reported is 2, this means a 1-percent change in the average size of the

trees on a site results in a 2-percent change in the demand for the site. An

advantage of using elasticities as comparisons is that elasticities may be more

directly transferable between time periods than unit-specific economic measures.

The average arc elasticities are calculated over a 1-percent to 15-percent change

in the forest condition variable from the initial level of forest quality (represented

as the status quo state). This is probably the most relevant range for normal

insect infestations. Impacts substantially greater than 15 percent may drastically

alter the perceived damages to forests, resulting in the deterioration of the

estimated demand function under conditions of catastrophic loss.

1 The index used in the adjustment

process was the Consumer

Price Index for Commodities

less Food (Economic Report of

the President. 1995. Washington, DC: U.S. Government

Printing Office.
USDA Forest Service Gen. Tech. Rep. PSW-GTR-164-www. 1997.

3

Economic Nonmarket Valuation Methods

The adequacy of the methods used to estimate the economic worth of nonmarket

goods has increased dramatically in the past few decades. Two of the more

widely used methods to value nonmarket goods are the travel cost method

(TCM) and the contingent valuation method (CVM). The U.S. Water Resources

Council (1983), a federal interagency committee, produced one of the first reviews

of these methods and established standard procedures for their implementation.

A panel of experts convened by the National Oceanic and Atmospheric

Administration (NOAA) also set guidelines for the use of the contingent

valuation method to assess the economic worth of environmental changes (Arrow

and others 1993). This group conducted a fairly critical review of the method and

recommended approaches in an attempt to standardize its implementation. A

third approach used in the reviewed literature is the hedonic pricing method.

The economic worth of an environmental resource such as forest health can

be defined as the individual’s net willingness to pay for the resource (U.S. Water

Resources Council 1983; Rosenthal and Brown 1985). Willingness to pay is a

monetary measure of the worth of a change in the quantity or quality of a good or

service; it is the maximum amount of money (typically willingness to pay is

expressed in monetary terms, although this is not required) one is willing to pay

for the specific change. If the cost of the good or service is higher than one’s

willingness to pay, then one will not purchase the good or service. Total

willingness to pay is the monetary amount actually paid for a good or service

plus the amount one would be willing to pay for it. Net willingness to pay is the

total willingness to pay less what was actually paid. Marginal willingness to pay

is the amount one would be willing to pay for the last unit purchased. A simple

way to calculate social worth is to aggregate individual values.

Some of the studies presented below estimate the impacts on recreation in

terms of days of recreation. These recreation-day estimates can be easily

transformed into commensurable monetary units if the monetary worth of a

recreation day is known. Almost any cardinal unit can be used to measure the

implicit tradeoffs associated with different levels of forest quality; however, the

money metric (such as U.S. dollars) is widely recognizable and well-known as a

medium of exchange. Typically, the costs associated with a management action

are expressed in terms of dollars. Therefore, the economic valuation of nonmarket

goods is typically expressed in commensurable monetary units. As Rosenthal

and Brown (1985) show, price and willingness to pay on the margin are all

equivalent units of the money metric. They are all indicators of the economic

worth of a good or service. Choice of the indicator to be used relies on the level or

magnitude of the change in quantity and/or quality of the resource under

investigation. For small, incremental changes, demand remains fixed, so that

price is equal to marginal willingness to pay. However, for large changes that

shift demand, net willingness to pay is the relevant measure (fig.1).

The travel cost, hedonic pricing, and contingent valuation methods of

estimating the economic worth of nonmarket goods are derived from the

household production approach to consumer theory. This approach assumes

consumers combine purchased inputs (recreation equipment, gasoline, property)

with publicly supplied inputs (forests, trails, unobstructed views) to produce

experiences that give them the most satisfaction or enjoyment (Bockstael and

McConnell 1981). The household production model allows the estimation of the

derived demand for these experiences either by means of the travel cost method

(Bockstael and McConnell 1981), the hedonic pricing method (Mendelsohn and

Markstrom 1988), or if properly specified, the contingent valuation method

(Loomis 1983).
4 USDA Forest Service Gen. Tech. Rep. PSW-GTR-164-www. 1997.

Travel Cost Methods

The travel cost method is a valuation approach which uses variations in the costs

of travel and other expenditures as implicit prices of destination sites to estimate

the demand for the site. This method is typically used to estimate the onsite

benefits of particular sites. It indirectly estimates the economic worth of a

nonmarket resource by first defining the demand for the resource as a function of

travel costs. Distance is an important factor in defining the demand curve. Travel

costs are, in part, the variable costs of the trip. Therefore, the farther individuals

are from the site, the more they pay in travel costs to the site, and in general, the

fewer trips to the site they take. Different resource conditions (i.e., forest health

levels) will result in shifts in the demand function for the resource. Economic

worth of the resource change is measured as consumer surplus, which is

equivalent to net willingness to pay. Consumer surplus is the amount of benefit

gained from the purchase of a good or service beyond what was actually paid

(entrance fees, travel costs) and is usually measured in monetary units.

Changes in forest health caused by pests are likely to shift the demand for

recreation at the site, thus affecting the overall benefits derived from the experience

(fig. 2). Two basic versions of the travel cost model are the individual and the zonal

P

Price

Demand

Consumer surplus=

Net Willingness to pay

0 Q Quantity

Travel

cost

Demand without impact

Demand with impact

Change in consumer

surplus due to pest impact

0 Number of Trips

Figure 2—Travel cost estimation of

loss due to pest impacts

Figure 1—Equivalence of consumer

surplus and net willingness to pay
USDA Forest Service Gen. Tech. Rep. PSW-GTR-164-www. 1997. 5

method. The individual travel cost method defines the number of visits to a site for

a given time period for an individual. The zonal travel cost method creates a set of

zones from which visitors originate, and then defines the visitation rate from the

different zones (where visitation rate is the number of visits from a zone divided

by the population of that zone). For more detailed discussions concerning the

travel cost method, see Rosenthal and others 1984; Walsh 1986.

Hedonic Pricing Method

The hedonic pricing method is another indirect estimation technique used in the

economic valuation of nonmarket resources. This method estimates economic

worth as a hedonic price, or the worth of an attribute as it is associated with the

overall market price of a multi-attribute good such as a house or parcel of land. It

is based on the variation in selling prices in an actual market and assumes that

these variations are correlated with the presence of differing levels of specific

attributes. For example, the price of a house may be based on the number of

rooms, location, nearness to open space or public facilities, proximity of forests,

and the like.

Hedonic pricing assumes that consumers choose market goods based on

certain identifiable characteristics or attributes. It views any good as a bundle of

attributes, each attribute contributing to the overall market worth of the good.

Hedonic pricing statistically determines the marginal contribution of an attribute

to the overall benefit of owning a good having the attribute by means of a twostage process. Usually it relies on a sufficient number of sales transactions in

order to allocate worth to specific attributes. For instance, assume there are two

residences identical in all attributes except one: forest quality. If the residence

with a preferred forest characteristic costs $X more than the other residence, then

the forest attribute can be allocated a worth of $X. This is the implicit price paid

for the attribute in the first stage of the analysis. In the second stage, the implicit

price, along with other relevant information (such as the quality of the

surrounding forest and socioeconomic variables) is used to estimate the demand

for the attribute. Economic worth of the attribute is calculated as the area under

the demand curve and above the implicit price line. The impact of pest-caused

changes in forest health would be the reduced benefit derived from owning a

good with forest health-dependent attributes. For more detailed discussions

concerning the hedonic pricing method, see Freeman 1979; Brookshire and others

1982; Mendelsohn and Markstrom 1988.

Contingent Valuation Method

The contingent valuation method is a direct estimation method based on intended

or stated behavior. This method asks individuals for their values (usually in

monetary units) for defined changes in the quantity or quality of a good or

service. Contingent valuation directly estimates economic worth as willingness

to pay or compensation due2 by surveying or interviewing individuals.

Contingent valuation constructs a hypothetical market in which the quantity

and/or quality of a nonmarket resource is varied or changed, for example, forest

conditions. Thus, the individual bids for the resource in a hypothetical market

contingent on the changes in the resource. The contingent valuation method

assumes the individual can rationally express the economic worth of a nonmarket

resource in this manner and that the individual’s expressions are accurately

elicited by the hypothetical situation.

Some concerns about the empirical application of this method have been

raised, and procedural methods have been published to make its application

more consistent (U.S. Water Resources Council 1983; Arrow and others 1993).

Some of the concerns raised include many potential sources of bias in the results,

2 Compensation due is also known

as willingness to accept. Willig

(1976) argues that, barring any

wealth or income effects,

willingness to pay and willingness

to accept are equal. However,

numerous empirical studies do

not support this hypothesis for

nonmarket goods exhibiting

public goods characteristics. A

brief review of the empirical

disparity between willingness to

pay and compensation-due

measurements can be found in

Gregory and Bishop (1988) and

Fisher and others (1988).
6 USDA Forest Service Gen. Tech. Rep. PSW-GTR-164-www. 1997.

such as interest, interviewer, and strategic biases. Another concern is the proper

amount of information to be included in the survey and the best way to convey

this information. The choice of the proper payment vehicle (taxes, donations, and

the like) has also led to numerous arguments. Yet another concern is what the

proper elicitation method should be. Some of the elicitation methods used include

payment card, open-ended, dichotomous or discrete choice, and iterative bidding

methods.3 Many concerns about these issues can be overcome with proper survey

design. For more detailed discussions concerning the contingent valuation

method, see Mitchell and Carson 1989; and Walsh 1986.

Key Elements Identified in Economic

Valuation Studies

Some of the key elements identified in the reviewed studies are important in the

transfer or application of the information and content of the different analyses.

Some of the concerns in transferring models and results of studies include the

site-specific nature of the data (e.g., region, forest type, kind of insect, magnitude

of damages or infestation, visibility, and stakeholder groups represented), the

valuation methodology used, choice of indicator variables, and the values at

stake. Identification of these different elements in the studies is the first step in

discovering the applicability of the study to current decisions. The studies

reviewed are listed in table 1. The codes shown in the first column of table 1 will

be used in tables 2-8 to identify the relevant studies.

Identification of Forest Insect Pests Studied

Table 2 identifies the different insects studied. Of course, many other insects that

have not been studied in this way affect forest health. Moreover, insects are just

one of many forest or ecosystem health disturbance agents with important

management implications. Other disturbance agents include both natural ones

(fire, wind, drought, and disease), and human-caused ones (silvicultural

practices, pollution, and other human activities). The impacts of insects on forest

health interact with other disturbances, creating problems for forest health

management. The dynamics of ecosystems make management difficult because

the susceptibility and magnitude of insect impacts are difficult to predict and

control. Also, these disturbances can have positive effects on overall ecosystem

(including forest) health and sustainability (Averill and others 1995).

Identification of Regions Studied

The regions studied are listed in table 3. Although the mountainous West has

been the focus of the most studies, these primarily arose out of a USDA Forest

Service project series, published in the early 1980’s, that assessed the impacts of

mountain pine beetle and western spruce budworm damage in the Colorado

Front Range (Walsh and Olienyk 1981; Walsh and others 1981a and 1981b). Four

studies measure the impacts of the gypsy moth in the Northeast. The other

studies focus on the Douglas-fir tussock moth in the Southwest, the mountain

pine beetle in the Northwest, the southern pine beetle in the South, and the

balsam woolly adelgid in the Southeast.

Identification of Land-Use Areas Studied

The overall magnitude of the damages incurred as the result of insects can vary

according to the different land-use designations. The three land-use designations

in table 4 include urban, urban/wildland interface, and wildland.

3 The payment card method of

maximum willingness to pay

elicitation is where the re–

spondent is presented with

information concerning ex–

penditures on other goods and

taxes, and then is asked to select

his/her maximum willingness

to pay from a list of dollar

amounts presented. The modified

payment card is a version of the

payment card method in which

no information concerning

expenditures and taxes is

presented. Open-ended is where

the respondent is asked to write

down the maximum amount he/

she is willing to pay. The

dichotomous choice, or discrete

choice, is where the respondent

is presented with a dollar

amount and needs to reply only

“yes” or “no” to the designated

amount. This approach is also

known as close-ended and takeit-or-leave-it method of value

elicitation. Iterative bidding is

an extension of the dichotomous

choice approach in which the

interviewer continues to present

the respondent with increments

or decrements in dollar amount,

depending on initial response,

until the maximum amount he/

she would be willing to pay is

elicited.
USDA Forest Service Gen. Tech. Rep. PSW-GTR-164-www. 1997. 7

Table 1—Economic studies of forest insect pests

Code Author(s) Year Title

1 Payne and others 1973 Economic analysis of the gypsy moth problem in

the Northeast: II. Applied to residential property

2 Wickman and Renton 1975 Evaluating damage caused to a campground by

Douglas-fir tussock moth

3 Michalson 1975 Economic impact of mountain pine beetle on

outdoor recreation

4 Moeller and others 1977 Economic analysis of the gypsy moth problem in

the Northeast: III. Impacts on homeowners and

managers of recreation areas

5 Leuschner and Young 1978 Estimating the southern pine beetle’s impact on

reservoir campsites

6 Walsh and Olienyk 1981 Recreation demand effects of mountain pine beetle

damage to the quality of forest recreation

resources in the Colorado Front Range

7 Walsh and others 1981a Value of trees on residential property with

mountain pine beetle and spruce budworm in the

Colorado Front Range

8 Walsh and others 1981b Appraised market value of trees on residential

property with mountain pine beetle and spruce

budworm damage in the Colorado Front Range

9 Loomis and Walsh 1988 Net economic benefits of recreation as a function

of tree stand density

10 Walsh and others 1989b Recreational demand for trees in National Forests

11 Walsh and others 1990 Estimating the public benefits of protecting forest

quality

12 Jakus and Smith 1991 Measuring use and nonuse values for landscape

amenities: a contingent behavior analysis for

gypsy moth control

13 Haefele and others 1992 Estimating the total value of forest quality in highelevation spruce-fir forests

14 Miller and Lindsay 1993 Willingness to pay for a state gypsy moth control

program in New Hampshire: a contingent

valuation case study

15 Holmes and Kramer 1996 Contingent valuation of ecosystem health

Table 2—Forest insect pests studied

Insect pest Study code1

Gypsy moth (Lymantria dispar) 1, 4, 12, 14

Douglas-fir tussock moth (Orgyia pseudotsugata) 2

Mountain pine beetle (Dendroctonus ponderosae) 3, 6, 7, 8, 9, 10, 11

Southern pine beetle (Dendroctonus frontalis) 5

Spruce budworm (Choristoneura occidentalis) 7, 8, 11

Balsam woolly adelgid (Adelges piceae) 13, 15

1

See table 1 for description of study codes.
8 USDA Forest Service Gen. Tech. Rep. PSW-GTR-164-www. 1997.

Table 8—Forest insect impact indicator variables

used in economic studies

Impact indicator Study code1

Number of trees 1, 2, 6, 7, 8, 9, 10, 11

Other 5, 6, 7, 8

Presence of insect 4

Tree size 6, 7, 8, 9

Visible damage 2, 3, 4, 6, 7, 12, 13, 14, 15

1

See table 1 for description of study codes.

Table 3—Regions of the United States

where economic studies of forest insect

pests were conducted

Region Study code1

Mountainous west 6, 7, 8, 9, 10, 11

Northeast 1, 4, 12, 14

Northwest 3

South 5

Southeast 13, 15

Southwest 2

1

See table 1 for description of study codes.

Table 4—Forest insect pest studies by designated

land-use areas

Land-use area Study code1

Urban 1, 4, 12

Wildland 2, 3, 5, 6, 9, 10, 11, 13, 15

Wildland/urban 7, 8, 14

1

See table 1 for description of study codes.

Table 5—Stakeholders identified in forest insect

pest studies

Stakeholder Study code1

General public 13, 14, 15

Homeowners 1, 4, 7, 12

Land managers 4

Real estate appraisers 8

Recreationists 2, 3, 5, 6, 9, 10, 11, 13, 15

1

See table 1 for description of study codes.

Table 6—Values identified and measured in economic

studies of forest insect pests

Value Study code1

Esthetics 2, 12

Passive-use 11, 13, 15

Property 1, 7, 8

Recreation 2, 3, 4, 5, 6, 9, 10, 11, 13, 15

Total value 11, 13, 14, 15

1See table 1 for description of study codes.

Table 7—Nonmarket valuation methods used in economic studies of forest insect pests

Nonmarket valuation method Study code1

Contingent 6, 7, 8, 9, 10, 11, 12, 13, 14, 15

Hedonic property 1

Other 2, 4

Travel cost 3, 5, 6, 10

1

See table 1 for description of study codes.
USDA Forest Service Gen. Tech. Rep. PSW-GTR-164-www. 1997. 9

The magnitude of damage caused by insects is expected to be greater in the

urban and urban/wildland interface areas. Property value is little affected by

distant damage, where damages are less visible. However, in urban and urban/

wildland interface areas, property values can be quite sensitive to insect damage

in the near view. Although insect damages are typically short-term (the forest

will recuperate through regrowth), the decrease in recreation, esthetic, and

property values as a result of these damages is real and substantial. Some of the

studies are concerned with the value added by trees to recreation activities,

property values, and esthetic viewsheds. Others are primarily concerned with

wildland areas, where forests dominate the landscape and the supply of

recreation and forest commodities is most affected.

Identification of Stakeholders

Equally important in the management of forests is the identification of the

relevant stakeholders involved. Stakeholders are those affected directly and/or

indirectly by the changes in the quality of a forest which result from an insect

infestation. Properly identifying the stakeholders is a necessary beginning in any

management plan. Table 5 shows the stakeholders identified in the studies.

Implicit in this list are forest managers, planners, and decision makers.

The stakeholders identified in any specific study are not assumed to be an

exhaustive list, but just one element in the overall collection of insect damage

information. For instance, the studies by Walsh and Olienyk (1981) and Walsh

and others (1981a and 1981b) each identify different stakeholders: recreationists,

real estate appraisers, and property owners.

Identification of Values Estimated

Many values are at stake in insect infestations. Table 6 lists the economic values of

a forest identified in the studies.

The value of recreation use is the most often identified. Others include

property, esthetics, passive use values (including option, existence, and bequest

values for forest health), and total value (which is the sum of use and passive-use

values). With increased development of wildland fringe areas, creating more

urban/wildland zones, protection of property and esthetic values will likely

increase in management importance. The economic estimates included in the

studies are primarily short-term responses to a static comparison of forest

conditions. Therefore, these estimates do not necessarily include the social, cultural,

and ecological importance of forest functioning, such as maintaining biodiversity,

sustaining natural processes, and providing historic cultural identity.

Identification of the Nonmarket Valuation Methods Used

in Each Study

As table 7 shows, the contingent valuation method is the most often used method

of benefit estimation in these studies. It is the most viable method of measuring

total economic worth (Randall and Stoll 1983) and can measure recreation,

property, and esthetic benefits, making it broader in its applicability. The travel

cost method is used in the four studies that measured recreation use benefits, and

the hedonic pricing method is used in one study that measured property value.

Other methods used include replacement and expenditure cost estimations.
10 USDA Forest Service Gen. Tech. Rep. PSW-GTR-164-www. 1997.

Identification of Forest Insect Impact Indicators Used

Insects can affect a forest in many ways, including the amount of dead and down

trees, density of the forest, and amount of visible tree damage. Table 8 lists the

different indicators used in each study.

The number of trees and amount of visible damage are the most often used

indicators of insect damages. When insects attack trees, they damage and

sometimes kill them, resulting in fewer trees per acre and, in the short term,

increased evidence of damage. The specific indicators used and impacts

estimated by each study are summarized in the appendix tables. However, these

indicators are static, measuring forest conditions only at a point in time. Both the

visual and biological impacts of insects consist of a series of forest changes which

are not well identified in many studies.

General Relationships Between Indicator Variables and

Values Identified in the Studies

Table 9 lists some of the relationships discovered in the different investigations,

along with two examples of the estimates derived from the studies.

Table 9 shows that forest density (the number of trees per acre) is positively

related to property, recreation, and esthetic benefits. This is a generalization;

some of the studies showed a decrease in benefits when forest density increased

beyond some quantity of trees (Walsh and Olienyk 1981; Walsh and others 1981a

and 1981b). The presence of a few large trees [>24 in. diameter at breast height

(dbh)], together with the presence of a greater variety of tree species, is positively

correlated with benefit levels. The presence of visible damage, dead and dying

trees, and smaller average tree size has a negative impact.

Table 9—Indicator variable and value sources relationship, with two examples of value estimates from

a forest insect pest infestation

Value source

Indicator variable Property Recreation Esthetic

Decrease in no. of trees/acre Decreases Decreases1 Decreases

Increase in visible damage Decreases Decreases Decreases

Increase in dead and dying trees Decreases Decreases Decreases

Decrease in average tree size Decreases Decreases Decreases

Presence of large trees >24 in. dbh. Increases Increases Increases

Increase in tree species mixture Increases Increases Increases

Examples of economic estimates2, 3

Visible damage $2,700 to $7,000 per acre decrease in urban/wildland private property

value with a 15-pct increase in visible damage to surrounding forest

$19 to $70 annual household willingness to pay for reducing visible

damage in corridors (roads, trails) to statewide programs

$254 to $670 annual household willingness to pay for reducing damage in

urban areas

Number of trees/acre $201 to $984 per acre reduction in urban to urban/wildland private

property value due to a 15-pct decrease in no. of trees/acre

$97 to $321 reduction in annual recreation benefit per visitor with a 15-pct

decrease in no. of trees/acre

1

Depends on recreation activity. Most recreation activities were found to be positively related to

number of trees per acre (within bounds), but off-road-vehicle use was found to be negatively related to

the indicator variable. 2

Economic estimates are in 1995 dollars.

3

Insect, region, forest type, and stakeholder differences across the studies are ignored in the examples.
USDA Forest Service Gen. Tech. Rep. PSW-GTR-164-www. 1997. 11

 Table 9 also reports ranges of estimates for changes in two of the indicator

variables across the relevant studies. The examples tentatively lead to the

conclusion that property values are much more sensitive to insect damages than

are esthetics and recreation. Therefore, as more sites are developed near the

wildland fringe, it can be expected that damages will continue to grow and

management of these areas will become more difficult. A disturbance that had

little impact or need for management involvement may change completely with

the increase in urban development of wildland fringes because of the increased

demand for stable esthetic views.

Summary of Nonmarket Economic

Valuation Studies

1. Payne and others, 1973. Residential property in the

Northeast and the Gypsy Moth (appendix table 1)

Payne and others (1973) estimate the gypsy moth’s impact on residential property

value in the northeastern United States. Gypsy moths are most destructive in

residential areas where the worth of trees for conversion to wood products is

greatly exceeded by the amenity benefits produced by the trees. Federal, state,

and local agencies need estimates for the impacts of gypsy moths on the

residential property in order to improve decisions on controlling gypsy moths.

The authors present a method for estimating the losses in residential property

values due to gypsy moths.

This study uses the hedonic pricing method to determine the contributed

worth of trees to residential property where the trees are not normally separable

from the land parcel itself. The amenity benefits of trees for property owners

include shade, microclimatic effects, and esthetics, and are reflected in the market

price of the property. A gypsy moth attack, through repeated defoliation, can kill

the tree and completely eliminate the production of its amenity benefits until a

different tree has matured to the point of total replacement for the lost tree. The

authors test the Amherst model by applying it in a similar environment:

Stroudsburg, Pennsylvania. The data include the fair market value of the parcel,

the size of the parcel, the number of trees [≥6 inches diameter at breast height

(dbh)], and an estimate of the level of tree mortality associated with a given level

of insect infestation.

In the pre-attack scenario (with a gypsy moth control program of 100 percent

effectiveness), it is estimated that the contributed worth of trees to residential

property is $7,767/acre with 29 trees/acre; or about $270/tree. Incremental pertree benefits represent diminishing returns per tree. Beyond this level of 29

trees/acre, each incremental tree adds less to the property value (up to the

observed maximum of 50 trees per acre in the sample). The average arc elasticity

of demand for trees on residential property is 0.24, meaning that a 0.24-percent

reduction in the contributed worth of trees to residential property results from a

1-percent decrease in the number of trees ≥6 inches dbh.

In the post-attack period (without a gypsy moth control program), the loss in

property value is equal to the predicted number of trees killed times the estimated

per-tree worth, according to this study’s estimates. The net worth of the change in

property value after attack by gypsy moths is the difference between the pre-attack

and post-attack estimates. Therefore, a gypsy moth attack with a 15-percent

mortality rate (29 trees per acre to 24.65 trees per acre) results in a loss of

approximately $1,175/acre. The estimated worth is only for the benefits accruing

to the onsite property owners. Benefits not measured are the offsite values
12 USDA Forest Service Gen. Tech. Rep. PSW-GTR-164-www. 1997.

accruing to the general population (neighbors, passers-by). Impacts not accounted

for include non-mortality effects like discoloration and defoliation of trees, and the

unpleasant effects of the presence of moths (caterpillars, feces, cocoons, allergic

reactions to moths). Other losses associated with pest infestations include the

removal and replacement costs of dead trees, and the costs of control. The model

used is applicable only to areas similar to the two study areas.

2. Wickman and Renton, 1975. Esthetics at the Stowe

Reservoir Campground in California and the Douglas-fir

Tussock Moth (appendix table 2)

Wickman and Renton (1975) estimate the total loss of recreation benefits of camping

at a Forest Service campground at Stowe Reservoir in the Warner Mountains,

Modoc National Forest, California, caused by the Douglas-fir tussock moth

infestation. The moth can cause heavy defoliation of white fir, resulting in tree

mortality and top-kill. This damage can have a significant impact on the recreation

benefits at specific sites by reducing the amount of shade, esthetic quality, and

privacy screening. The authors estimate the insect damages by adding the actual

costs of clean-up to a calculated unit worth of trees as esthetic value.

The esthetic worth component of trees in the campground is equivalent to

the total replacement costs of the campground. With 46 trees on each of eight

camp units, the esthetic value of the campground based on estimated replacement

costs is $20,610 (about $2,576 per camp unit or $56 per tree). The actual costs of

clean-up (felling, removal, and topping of affected trees) is estimated to be $324

for the campground with 25 trees killed due to insect infestation. The total loss in

campground worth if 25 trees are killed is estimated to be about $1,725 (total

esthetic damage plus clean-up costs), or about $216 per camp unit.

The method employed in this study may be sufficient to estimate nonmarket

benefits if the economic evaluation is concerned with cost-minimization or costsavings approaches on the public good supply side. However, on the demand

side, the manager may be more interested in the benefits generated by the

resource (in this study, the camp unit with pre-infestation characteristics). The

actual and replacement cost valuation approach may not adequately estimate

nonmarket benefits (Loomis 1993). Total replacement costs of a camp unit may

not be a good proxy for the total worth of the unit if it does not account for

potentially high benefits generated by the unit (esthetic value). The replacement

costs also may not be feasible for a 60- to 70-year-old stand of white fir. If

anything, the loss of nonmarket benefits will continue to accrue until replacement

trees grow to sufficient size, mitigating the damage caused by the insects.

3. Michalson, 1975. Recreationists in the Targhee National

Forest and the Mountain Pine Beetle (appendix table 3)

Michalson (1975) estimates the impact of the mountain pine beetle on the benefits

of recreation in the Targhee National Forest in eastern Idaho. Mountain pine

beetle infestation in the predominantly lodgepole pine forested area affects

recreation by killing trees, thus reducing esthetics in the short run. This study

estimates the impact on recreation of the increased presence of dead trees caused

by a mountain pine beetle infestation. The purpose of this study is to estimate

recreation losses, allowing the decision maker to determine the amount of

investment needed, if a control program is to be implemented.

The author estimates the losses to recreation in the study area by means of the

travel cost method, using expenditure and visitor-day loss calculations. He

calculates the impact of the beetles by estimating the consumer surplus and

expenditure per visitor day, and the number of visitor days for campgrounds with

>30-percent infestation and for campgrounds with <30-percent infestation. The
USDA Forest Service Gen. Tech. Rep. PSW-GTR-164-www. 1997. 13

study’s hypothesis is that the difference between these estimates equals the amount

of recreation loss, or economic impact, associated with the mountain pine beetle

damage. Although, as discussed earlier, expenditure is not a good measure of

economic loss, it is a helpful measure if a cost-minimization approach is chosen.

Michalson (1975) estimates that a scenario without mountain pine beetle

infestation generated $30.49 in average consumer surplus per visitor day, per

person; with each visitor spending on average $5.28 per visitor day and staying

approximately 3.3 visitor days per person per visit. The estimate for a scenario

with mountain pine beetle infestation is $26.40 in average consumer surplus per

visitor day, per person, with each visitor spending on average $4.85 per visitor

day and staying approximately 2.1 visitor days per visit. The difference between

the estimates for the scenario without infestation and those for the scenario with

infestation is the economic impact of a mountain pine beetle infestation. These

impact estimates, on average, are a loss of $4.09 in consumer surplus per visitor

day per person, a reduction in the amount spent per visitor day per person of

$0.43, and a reduction in length of stay per visit of 1.2 visitor days per person.

Based on an estimated 124,783 visitor days per year (in the early 1970’s), there is

an estimated loss of $510,362 in consumer surplus per year in the Targhee

National Forest, and a loss in local expenditures of $53,657 per year with the level

of damage at the time of the study.

4. Moeller and others, 1977. Homeowners and Recreation

Area Managers in the Northeast and the Gypsy Moth

(appendix table 4)

Moeller and others (1977) estimate the gypsy moth’s impact on homeowners and

managers of recreation areas as control costs, financial losses, and lost

recreational use. The authors identify five ownership classes: (1) homeowners

using public control methods, (2) homeowners using commercial control

methods, (3) commercial campgrounds, (4) quasi-public recreation areas, and (5)

public recreation areas. Federal, state, and local agencies need estimates of the

gypsy moth’s impact on the economic and ownership objectives of the different

ownership classes. Decision makers can use the information in the design,

implementation, and coordination of gypsy moth control programs.

Gypsy moth infestations can affect specific objectives of the owner/manager

of a property. The authors interviewed 540 homeowners and 170 managers of

recreation areas in Pennsylvania and New York in 1973. The authors identify

four objectives for each ownership category that can be affected by gypsy moths.

Homeowner objectives, excluding the need for a place of residence, include (1)

the enjoyment of natural beauty, (2) backyard recreation, (3) property value, and

(4) the maximization of recreation use. The study identifies the following

management objectives for managers of recreation areas: (1) the maximization of

recreation revenue, (2) the maximization of property value, (3) the maximization

of the enjoyment of natural beauty, and (4) the maximization of recreation use.

The authors identify four possible effects gypsy moth infestations can have on

the ownership objectives: (1) nuisance (presence of insects, feces, and egg masses),

(2) defoliation of trees and shrubs (reducing the shade and esthetic quality of the

property), (3) mortality (the killing of trees by the moths), and (4) other (allergic

reactions to the moths and the like).

Calculations of important indices provide a measure of the relative importance

of the impact of moths on a specific ownership objective. The study found that the

nuisance effect affected the enjoyment of natural beauty and backyard recreation

the most for homeowners, regardless of whether public or commercial control

methods were employed. The nuisance effect of a gypsy moth infestation also

affects the enjoyment of natural beauty in recreation areas the most, in the opinion
14 USDA Forest Service Gen. Tech. Rep. PSW-GTR-164-www. 1997.

of managers of commercial campgrounds and managers of quasi-public recreation

areas (such as land owned and operated by the Boy Scouts organization). Managers

of public recreation areas believed that the maximization of recreation revenue

and enjoyment of natural beauty are affected most by the nuisance effect associated

with a gypsy moth infestation. The only other effect that shows significant impacts

on specific management objectives is defoliation.

The authors also report financial information on the control costs of a gypsy

moth infestation, as well as financial losses and economic information on

recreation losses for the different ownership classes attributable to the infestation.

Control costs represent an economic measure of the importance owners place on

goods and services and include what the owners actually spend on gypsy moth

control programs, including the cost of equipment, materials, services, and the

owners’ own labor input. This study assigns labor a worth of $2 (in 1977 dollars)

per hour in moth control. Homeowners who participate in a public control

program spend on average $102 per year, whereas those who participate in

commercial control methods spend on average $240 per year. Managers of

recreation areas spend $441 on average for commercial campgrounds and $722

per year for quasi-public recreation areas in control costs. No data were collected

for managers of public recreation areas for either control costs or financial losses.

Financial losses are another measure of the impacts of gypsy moths on

property through the capital cost reduction in property value and the increase in

maintenance costs and revenue losses. Homeowners who participate in public

control programs report $125 in financial losses per year on average, whereas

those who participate in commercial control programs report losses of $479 per

year on average. Managers of recreation areas report financial losses of $249 per

year for the average commercial campground operation, and $996 per year for

the average quasi-public recreation area.

Effects of gypsy moth infestations can alter the recreation benefits derived

from private and public property. The economic effects of a moth infestation on

recreation are not included in the above estimates. Recreation use losses in the

different ownership classes are estimated as the number of person-days of

recreation use lost per year. Homeowners with public controls report a loss of 108

person-days in recreation use per year on average, whereas homeowners with

commercial controls report an average recreation use loss of 133 person-days per

year. Managers of recreation areas report larger impacts on recreation use than

homeowners. Managers of commercial campgrounds report an average of 161 lost

person-days of recreation use per year. Managers of quasi-public campgrounds

report an average recreation use loss of 240 person-days per year. Managers of

public recreation areas report an average loss of 36,660 person-days per year.

This study ranks the relative effects of a gypsy moth infestation on the

different ownership/management objectives. It estimates financial as well as

economic measures of gypsy moth impacts. It measures the economic losses of

recreation use of property in person-days which can be converted to a

commensurable dollar metric if the dollar worth of a person-day in recreation

use is known. This is the first study to address the direct impacts of the presence

of gypsy moths through the nuisance effect. Most studies estimate the secondary

effects of a pest infestation, such as tree mortality, defoliation, and discoloration

which result in reduced recreation quality, esthetic or scenic quality, property

value, and other amenity benefits produced by trees or forests, ignoring the

direct effects the presence of insects may have on benefits.
USDA Forest Service Gen. Tech. Rep. PSW-GTR-164-www. 1997. 15

5. Leuschner and Young, 1978. Recreation at East Texas

Reservoir Campsites and the Southern Pine Beetle

(appendix table 5)

Leuschner and Young (1978) estimate the southern pine beetle’s impact on

recreation use of reservoir campsites in east Texas, where beetles kill patches of

trees near the reservoirs. This affects many different forest products, including

the recreation benefits of the surrounding campgrounds. To deal with these

effects, forest managers need to be able to quantitatively evaluate pest control

programs. One method of quantitative analysis is through the use of benefit-cost

analysis. In order to use benefit cost analysis, all relevant values must be

measured and included. Recreation benefit is negatively affected because the

beetle-killed trees reduce the shade available and the number of living trees in

campsites. Normally, two reactions will be forthcoming following a beetleinfestation: (1) the recreationists will continue to use the site but at a reduced

enjoyment level, or (2) the recreationists will substitute unattacked sites for their

recreation outings. The authors report that they do not attempt to estimate the

first reaction because they lack a state-of-the-art means for estimating this form

of a recreation impact.

The authors estimate the demand functions for two types of campgrounds

on the basis of secondary data collected by the managing agencies. The two

managing agencies are the USDA Forest Service (FS) and the U.S. Army Corps of

Engineers (COE). Seven FS and 12 COE campgrounds are included in the study.

The impact indicator variable is the percentage of pine crown cover, estimated

from aerial photos taken in 1969 (black and white photos) and in 1970 (color

photos). Secondary data on recreation use collected by the managing agencies on

site are used to estimate the recreation demand for campgrounds (based, in part,

on the percentage of pine crown cover) through the use of the zonal travel cost

method. The unaffected recreation benefit is estimated as the area under the

derived demand curve. By changing the percentage of pine crown cover in the

derived demand functions for recreation at different campgrounds to simulate

beetle infestations, the authors were able to predict the impact of a beetle

infestation on the recreation benefit at the site. They estimate total recreation

benefit for the campgrounds included in the study as $12,350,800 to $19,889,600,

depending on assumptions about the worth of travel time to the recreation site.

The smaller amount is when travel time costs are not included, and the larger

amount is when a positive travel time cost is allocated on the basis of a

methodology current at the time of the study (Cesario 1976).

The recreation damages incurred from a beetle infestation are calculated for

each of the campgrounds in the study. Aggregate impacts cannot be calculated

because (1) unattacked campgrounds are substituted, by campers, in place of

infested campgrounds, (2) some of the sites are not included in the simulated

pest infestation, (3) the probability is low that all sites would be affected

identically, and (4) there is no estimate for the decreased recreation benefit for

those who continue to use the affected site. However, a rough aggregate estimate

can be calculated assuming all sites are equally affected and no substitution

occurs. Recreation benefit at FS campgrounds, with a 10-percent reduction in

pine crown cover, are negatively impacted by $1.12 per visit. With a 30-percent

reduction in pine crown cover, recreation benefits decrease by $3.37 per visit.

This results in an estimated recreation loss at FS campgrounds of approximately

$287,400 with a 10-percent reduction in pine crown cover and $862,300 with a 30-

percent reduction. Recreation benefit at COE campgrounds with a 10-percent

reduction in pine crown cover is negatively affected by $0.82 per visit. With a 30-

percent reduction the decrease in benefit is $2.44 per visit. This results in an

estimated loss at COE campgrounds of approximately $1,045,000 with a 10-
16 USDA Forest Service Gen. Tech. Rep. PSW-GTR-164-www. 1997.

percent reduction in pine crown cover and $3,113,000 for a 30-percent reduction.

A total loss of $1,332,400 in recreation benefit at east Texas reservoirs is estimated

with a 10-percent reduction in pine crown cover. Estimated total loss with a 30-

percent reduction is $3,975,300.

The authors also investigate the effect of substitution on the recreation loss of

a simulated pest infestation at two campgrounds. Site-specific damage estimates

are reduced by 85 to 90 percent when unattacked sites are substituted for the

attacked site. However, the larger the affected area, the smaller this reduction is,

because few or no unaffected substitute sites are available. The damages incurred

from a beetle infestation are short-term, but multi-period. These damages may

eventually be mitigated through the natural regeneration of forest quality

through regrowth, but during the replacement and regrowth periods, some

positive level of recreation losses are realized.

6. Walsh and Olienyk, 1981. Recreation in the Colorado

Front Range and the Mountain Pine Beetle (appendix table 6)

Walsh and Olienyk (1981) estimate the impacts of the mountain pine beetle on

recreation demand in the Front Range of the Colorado Rocky Mountains.

Recreation activities include developed camping, semi-developed camping,

backpacking, hiking, fishing, picnicking, and using off-road vehicles (ORVs).

Mountain pine beetles attack and kill ponderosa pines, resulting in the short-run

discoloration of needles and dead and down trees that detract from the perceived

quality of the forests. The long-run effect of a beetle infestation is a reduction in

the density of the forest. Both the very short-run and the short-run effects on

forest quality affect the demand for recreation use of these forests. The results of

the study contributed to the assessment of a USDA Forest Service forest insect

and disease management program including the assessment of forest insect

control programs, and of citizen participation in management decisions and

cost-sharing programs.

A stratified random sample of 435 recreation users was interviewed onsite at

six different forest recreation sites in 1980. Using contingent valuation (with an

iterative bidding technique) and individual travel cost methods, the authors

estimate the worth of these beetle impacts on recreation demand as willingness

to pay (in dollars) and willingness to participate (in user days). The beetlecontingent changes in forest quality (depicted through the use of color photos)

investigated by the authors include the following indicators: (1) the number of

trees 6 inches in dbh or more on the site, on adjacent land affecting the near view,

and on distant land affecting the far view, (2) the size of trees, (3) the presence of

visible beetle damage, (4) the presence of dead and down trees, (5) the

distribution of trees over the area (the presence of treeless patches caused by a

beetle infestation), and (6) the presence of large specimen trees.

The authors estimate the average arc elasticities for aggregate recreation

demand (excluding ORV use) in a 1- to 15-percent decrease from the predicted

level of the indicator variable with a mean number of 178 trees per acre. The

elasticities show that a 1-percent decrease in the number of live trees per acre

onsite results in a 0.28-percent decrease in recreation demand. A 1-percent

decrease in the number of live trees on adjacent property affecting the near view

results in a 0.25-percent decrease in the demand for recreation onsite. A 1-

percent decrease in the number of live trees on distant land affecting the far view

results in a 0.16-percent decrease in the demand for recreation onsite. Recreation

demand decreases by 0.32 percent with a 1-percent decrease in the average size

of the trees surviving a beetle infestation (calculated in the 3-inch to 12-inch dbh

range). Recreation demand decreases by 2.30 percent with either a 1-percent

increase in visible damage such as needle discoloration or a 1-percent increase in
USDA Forest Service Gen. Tech. Rep. PSW-GTR-164-www. 1997. 17

the presence of dead and down trees with slash on the ground. A 1-percent

increase in treeless areas caused by a beetle infestation results in a 0.24-percent

decrease in the demand for recreation onsite. Recreation demand decreases by

2.20 percent with a 1-percent decrease in the presence of large specimen trees

bigger than 24 inches dbh (this is approximately two specimen trees) at the

recreation site. Evidently, recreation demand is more sensitive to visible damage

and the presence of large trees than it is to the other factors.

Walsh and Olienyk (1981) estimate the loss in user days of recreation use for

the Colorado Rocky Mountains Front Range as the result of a 15-percent effect on

the following forest attributes by a beetle infestation. Aggregate recreation

demand (excluding ORV use) decreases by 370,000 user days per year with a 15-

percent reduction in the number of trees onsite; by 330,000 user days per year

with a 15-percent reduction in the number of trees on adjacent land; and by

207,000 user days per year with a 15-percent reduction in the number of trees on

distant land. A 15-percent reduction in the average size of the trees on the

recreation site reduces demand by 422,000 user days per year. Either a 15-percent

increase in the percentage of visible beetle damage or a 15-percent increase in the

amount of dead and down trees decreases recreation demand by 3,045,000 user

days per year. If 15 percent of the recreation site is a contiguous treeless area as

the result of beetle infestations, recreation demand for the site decreases by

317,000 user days per year. A 1-percent decrease in the number of large specimen

trees on the recreation site decreases recreation demand by 192,700 user days per

year. The authors also report the impacts of a beetle infestation on the demand

for the individual recreation activities.

The authors also estimate the impact on consumer surplus per user day with

a 15-percent reduction in the number of live trees 6 inches in dbh or more, per

acre, by means of the contingent valuation method. They estimate a range of

$1.50 to $1.70 per user day in lost consumer surplus, depending upon the initial

number of trees per acre. The $1.50 is calculated for 178 trees per acre, and the

$1.70 is calculated for 270 trees per acre. Using the travel cost method of recreation

demand analysis, the authors also estimate the effect of a 15-percent decrease in

the number of trees per acre on the number of trips to a recreation site in the

Colorado Front Range per person per year, and on the consumer surplus per

person per trip. The study found that a 15-percent decrease in the number of

trees per acre results in 0.16 fewer trips per person per year and in a reduction in

consumer surplus of $11.60 per person per year, or an average reduction of $1.75

in consumer surplus per person per trip.

To account for the natural recovery of a forest from an insect infestation,

Walsh and Olienyk (1981) developed a regrowth model which adjusts the losses

over time to reflect the natural regenerative abilities of the forest. The losses

estimated are per year and will continue to be realized for Colorado Front Range

forests until replacement trees are of sufficient size and quality so that the

original losses are completely offset. Benefits not included in the present study

are the benefits of forest quality to the general public who may be willing to pay

for the preservation of forest quality, for the option of future use of the forest, for

the knowledge that forest quality exists and is protected, and for the satisfaction

from the bequesting of forests and forest quality to future generations. Other

sources of value held by the general public include psychological and ecological

values. The psychological and ecological benefits associated with forest health

may be large enough to exceed the economic estimates listed in this study.
18 USDA Forest Service Gen. Tech. Rep. PSW-GTR-164-www. 1997.

7. Walsh and others, 1981a. Residential Property Owners in

the Colorado Front Range and the Mountain Pine Beetle

and Western Spruce Budworm (appendix table 7)

Walsh and others (1981a) estimate the impacts of the mountain pine beetle and

the western spruce budworm on the contributed worth of trees to residential

property in the Front Range of the Colorado Rocky Mountains. Trees provide

shade, esthetic quality, wildlife habitat, privacy, and other amenity benefits to

the owners of property. Mountain pine beetles attack and either kill or cause

visible damage to ponderosa pine trees. Western spruce budworms attack

Douglas-fir trees, causing extensive visible damage, but rarely kill the trees.

Insect infestations that kill or cause visible damage to trees near residential

mountain properties have an effect on the satisfaction derived from owning and

living on mountain property, which is reflected in the property value. The study

was conducted to develop and apply a procedure for measuring the effect of

mountain pine beetle and western spruce budworm infestations on the worth of

trees to owners of residential property in the Front Range of the Colorado Rocky

Mountains. The results of the study contributed to the assessment of a USDA

Forest Service forest insect and disease management program including the

assessment of forest insect control programs, and of citizen participation in

management decisions and cost-sharing programs.

A representative sample of 64 mountain homeowners was interviewed at

five different study sites along the Front Range of the Colorado Rocky Mountains

in 1980. Using the contingent valuation method (with an iterative bidding

technique), Walsh and others (1981a) estimated the insect impacts on the

contributed worth of trees to mountain residential property as the owners’

willingness to pay for different levels of forest quality. The contingent changes in

forest quality caused by insect infestations investigated by the authors and

depicted in color photos include (1) the number of trees 6 inches in dbh or more

on the residential property and on adjacent property in the near view, (2) the size

of the trees on the property, (3) an expert expectation of a severe insect infestation,

(4) the presence of visible tree damage, (5) the distribution of ponderosa pine and

Douglas-fir on the property, (6) the distribution of trees over the property (the

presence of treeless patches caused by an insect infestation), and (7) the presence

of large specimen trees. The study divides mountain properties into improved

lots (lots where a mountain home has been constructed) and unimproved lots

(plotted lots where a subdivision has been filed but where no mountain homes

have been constructed).

The authors estimate the average arc elasticities for the contributed worth of

trees to mountain properties in a 1- to 15-percent range decrease from the

predicted optimal level of the indicator variable with a mean number of 212 trees

per acre. The elasticities show that a 1-percent decrease in the number of trees 6

inches in dbh or more on the property results in a 0.34-percent decrease in the

contributed worth of the trees to improved lots and a 0.28-percent decrease for

unimproved lots. A 1-percent decrease in the number of trees on property

adjacent to improved lots affecting the near view decreases the worth of the

improved lots by 0.20 percent. The worth of improved and unimproved lots

decreases by 0.35 percent and 0.33 percent, respectively, with a 1-percent decrease

in the average size of the trees surviving a beetle infestation on the lot (calculated

in the 3-inch to 12-inch dbh range). The worth of improved lots decreases by 0.76

percent and the worth of unimproved lots decreases by 0.61 percent with a 1-

percent increase in an expert expectation of insect damage to trees on the lot. A

1-percent increase in visible damage caused by an insect infestation results in a

2.27-percent decrease in improved lot worth and a 1.80-percent decrease for

unimproved lots. A 1-percent increase in treeless areas caused by insects results
USDA Forest Service Gen. Tech. Rep. PSW-GTR-164-www. 1997. 19

in a 0.29-percent decrease in improved lot worth and a 0.40-percent decrease in

unimproved lot worth. The worth of improved lots and unimproved lots increase

by 0.02 percent and 0.04 percent, respectively, with a 1-percent change in the

distribution of tree species from ponderosa pine to Douglas-fir. A 1-percent

decrease in the presence of large specimen trees bigger than 24 inches dbh

(approximately two trees per acre) decreases improved lot worth by 3.64 percent

and unimproved lot worth by 2.61 percent. Property value is evidently more

sensitive to visible damage and the presence of large trees.

Walsh and others (1981a) estimated the dollar equivalents in reduced mountain

property value due to a 15-percent change in the forest quality indicator variables

(calculated with an average of 212 trees per acre and mountain lots averaging 1

acre per lot). A 15-percent reduction in the number of trees on the lot decreases

improved lot worth by $984 and unimproved lot worth by $578. Improved lot

worth decreases by an additional $602 if the number of trees on adjacent property

affecting the near view decreases by 15 percent. A 15-percent reduction in the

average tree size results in a $1,228 reduction in the worth of improved lots and a

$783 reduction in that of unimproved lots. With an increase of 15 percent in

expected damage due to an insect infestation, based on expert opinion, improved

lot worth decreases by $2,351 and unimproved lot worth decreases by $1,364. A

$7,034 reduction in the worth of improved lots and a $4,045 reduction in that of

unimproved lots results from a 15-percent increase in visible insect-caused damage

to trees. With 15 percent of the lot treeless because of an insect infestation, the

worth of improved lots and unimproved lots decrease by $907 and $896,

respectively. A 15-percent change in the distribution of tree species from ponderosa

pine to Douglas-fir results in an increase in the worth of improved lots by $61 and

that of unimproved lots by $84. The increasing percentage of Douglas-fir on the

property leads to increased property value probably because Douglas-fir is scarce

in the elevation range in which the study was conducted. A 1-percent decrease in

the number of large specimen trees per lot decreases the worth of improved lots by

$918 and that of unimproved lots by $449.

To account for the natural recovery of a forest from an insect infestation,

Walsh and others (1981a) developed a regrowth model. The regrowth model

adjusts the losses over time as a result of the natural regeneration abilities of the

affected forest. The losses estimated are per year and continue to be realized for

Colorado Front Range forests until replacement trees are of sufficient size and

quality so that the original losses are completely offset. Benefits not included in

this study are the benefits of forest quality to the general public who may be

willing to pay for the preservation of forest quality, and for option, existence,

and bequest values. Other sources of value held by the general public include the

psychological and ecological values. The psychological and ecological benefits

associated with forest health may be large enough to exceed the economic

estimates listed in this study.

8. Walsh and others, 1981b. Appraised Market Value of

Trees on Residential Mountain Properties in the Colorado

Front Range and the Mountain Pine Beetle and Western

Spruce Budworm (appendix table 8)

Walsh and others (1981b) estimate the impact of the mountain pine beetle and

western spruce budworm on the market value of improved and unimproved

mountain properties in the Front Range of the Colorado Rocky Mountains. Trees

provide shade, esthetic quality, wildlife habitat, privacy, and other amenity

benefits to the owners of property. Mountain pine beetles attack and either kill or

cause visible damage to ponderosa pine trees. Western spruce budworms attack
20 USDA Forest Service Gen. Tech. Rep. PSW-GTR-164-www. 1997.

Douglas-fir trees, causing extensive visible damage, but rarely kill the trees.

Insect infestations that kill or cause visible damage to trees near residential

mountain properties have an impact on the satisfaction derived from owning

and living on mountain property, which is reflected in the property value. Real

estate appraisers allocate worth to all marketable attributes of a property in

appraising the property’s market value for potential or current owners. This

study was conducted to develop and apply a procedure for measuring the effect

of mountain pine beetle and western spruce budworm infestations on the

contributed worth of trees to residential property in the Front Range of the

Colorado Rocky Mountains. The results of the study contributed to the

assessment of a USDA Forest Service forest insect and disease management

program including the assessment of forest insect control programs, and of

citizen participation in management decisions and cost-sharing programs.

A representative sample of 21 real estate appraisers of Front Range mountain

property were interviewed in 1980. Using the contingent valuation method (with

the iterative bidding technique), Walsh and others (1981b) estimate insect impacts

on the contributed worth of trees to mountain residential property through the

professional opinions of mountain property real estate appraisers for changes in

different forest quality indicator variables. The contingent changes in forest

quality caused by insect infestations investigated by the authors and depicted in

color photos include (1) the number of trees 6 inches in dbh or more on the

residential property and on adjacent property in the near view, (2) the size of the

trees on the property, (3) an expert expectation of a severe insect infestation, (4)

the presence of visible tree damage on the property, on adjacent property

affecting the near view, and on distant property affecting the far view, (5) the

distribution of ponderosa pine and Douglas-fir on the property, (6) the

distribution of trees over the property (the presence of treeless patches caused by

an insect infestation), and (7) the presence of large specimen trees. The study

divides mountain properties into improved lots (lots where a mountain home

has been constructed) and unimproved lots (plotted lots where a subdivision has

been filed but where no mountain homes have been constructed).

The authors estimate the average arc elasticities for the contributed worth of

trees to mountain properties in a 1- to 15-percent decrease from the optimal level

of the indicator variable with a mean number of 106 trees per acre. The elasticities

show that a 1-percent decrease in the number of trees 6 inches in dbh or more on

the property results in a 0.14-percent decrease in the appraised contributed

worth of the trees to improved lots and a 0.15-percent decrease in that of

unimproved lots. A 1-percent decrease in the number of trees on property

adjacent to improved lots affecting the near view decreases the worth of these

lots by an additional 0.12 percent. The worth of improved and unimproved lots

decreases by 0.53 percent and 0.54 percent, respectively, with a 1-percent decrease

in the average size of the trees on the lots (calculated in the 3-inch to 12-inch dbh

range). The worth of improved lots decreases by 0.94 percent and that of

unimproved lots decreases by 0.92 percent with a 1-percent increase in the expert

expectation of insect damage to trees on the lot. A 1-percent increase in visible

damage caused by an insect infestation results in a 2.48-percent decrease in the

worth of improved lots and a 2.06-percent decrease in that of unimproved lots.

Improved property decreases in worth by 1.07 percent and unimproved property

decreases by 1.85 percent with a 1-percent increase in the visible damage caused

by insects on adjacent property affecting the near view from the residential

property. A 1-percent increase in visible damage affecting the far view decreases

in worth by 0.16 percent for improved property and by 0.64 percent for

unimproved property. A 1-percent increase in treeless areas caused by insects

results in a 0.29-percent decrease in the worth of improved and unimproved lots.

The worth of improved and unimproved lots increases by 0.05 percent and 0.06
USDA Forest Service Gen. Tech. Rep. PSW-GTR-164-www. 1997. 21

percent, respectively, with a 1-percent change in the distribution of tree species

from ponderosa pine to Douglas-fir. A 1-percent decrease in the presence of large

specimen trees bigger than 24 inches dbh (approximately two trees per acre)

decreases the worth of improved lots by 1.94 percent and that of unimproved lots

by 2.70 percent. Appraiser estimation of property value is most sensitive to

visible damage and the presence of large trees.

Walsh and others (1981b) estimate the dollar equivalents in reduced mountain

property value due to a 15-percent change in the forest quality indicator variables

(calculated with an average of 106 trees per acre and mountain lots averaging 1

acre per lot). A 15-percent reduction in the number of trees on the lot decreases the

worth of improved lots by $209 and that of unimproved lots by $201. The worth of

improved lots decreases by an additional $241 if the number of trees on adjacent

property affecting the near view decreases by 15 percent. A 15-percent reduction in

the average tree size results in an $1,155 reduction in the worth of improved lots

and a $1,014 reduction in that of unimproved lots. With an increase of 15 percent in

the expectation of damage due to an insect infestation based on expert opinion, the

worth of improved lots decreases by $1,810 and that of unimproved lots decreases

by $1,492. A $3,902 reduction in the worth of improved lots and a $2,715 reduction

in that of unimproved lots results from a 15-percent increase in visible damage to

trees. The worth of improved lots decreases by an additional $1,688 for visible

damage affecting the near view and by $259 because of visible damage affecting

the far view with a 15-percent increase in visible damage on surrounding property.

The worth of unimproved lots decreases by an additional $2,445 for visible damage

affecting the near view and by $848 because of visible damage affecting the far

view with a 15-percent increase in visible damage on surrounding property. With

15 percent of the lot treeless due to an insect infestation, improved lot and

unimproved lot worth decreases by $493 and $476, respectively. A 15-percent

change in the distribution of tree species from ponderosa pine to Douglas-fir

results in an increase in the worth of improved and unimproved lots by $102. The

increasing percentage of Douglas-fir on the property leads to increased property

value probably because Douglas-fir is scarce in the elevation range in which the

study was conducted. A 1-percent decrease in the number of large specimen trees

per lot decreases the worth of improved lots by $251 and unimproved lots by $294.

To account for the natural recovery of a forest from an insect infestation, the

authors developed a regrowth model. The regrowth model adjusts the losses

over time as a result of the natural regeneration abilities of the affected forest.

The losses estimated are per year and continue to be realized for Colorado Front

Range forests until replacement trees are of sufficient size and quality that the

original losses are completely offset. Benefits not included in this study are the

benefits of forest quality to the general public who may be willing to pay for the

preservation of forest quality, and for option, existence, and bequest values.

Other values potentially held by the general public include those derived from

psychological and ecological values. The psychological and ecological benefits

associated with forest health may be large enough to exceed the economic

estimates listed.

The two samples used by Walsh and others (1981a and 1981b) (residential

property owners and real estate appraisers, respectively) can be compared

directly. Residential property owners reported the contributed worth of forest

quality to their perceived property value. Real estate appraisers gave their

professional opinions concerning what they believed trees contribute to the

worth of residential mountain property. The average arc elasticities reported

show that real estate appraisers preferred the number of trees per acre less than

property owners did. Owners of property with large specimen trees appreciate

them more highly than real estate appraisers do, supporting the belief that

specific trees may carry larger psychological benefits for the owner of the
22 USDA Forest Service Gen. Tech. Rep. PSW-GTR-164-www. 1997.

property. Real estate appraisers place greater emphasis on insect impacts to

unimproved property than do property owners. This may be because

unimproved property relies more heavily on the contribution of natural assets to

its overall market value than does improved property. Improved property

includes structures such as homes that comprise a large portion of its overall

market value. Also, owners of improved property probably spend more of their

time on their property than do owners of unimproved property.

9. Loomis and Walsh, 1988. Recreation and Tree Stand

Characteristics in the Colorado Front Range

(appendix table 9)

Loomis and Walsh (1988) estimate the net economic benefits of recreation in the

Colorado Rocky Mountains Front Range as a function of tree stand density and

tree size. This study is included because the data set used for analysis is the

Walsh and Olienyk (1981) data set. Effects of tree stand density and tree size on

recreation are the result of perceived impacts from mountain pine beetles.

Information on the effects of tree stand density and tree size on recreation use

and benefit is important to the management of forests for stocking rates and tree

growth. Different tree densities and average tree size in a forest stand can give

rise to different recreation activities. This study investigates the recreation use

and benefits of six recreation activities: camping, picnicking, backpacking, hiking,

fishing, and use of off-road vehicles (ORVs). The results of the study can be used

to derive the management implications of intensive forest management (e.g.,

planting affected areas instead of relying solely on natural regeneration,

silvicultural practices like thinning).

A stratified random sample of 435 recreation users of six forest recreation

sites composed of mixed-age ponderosa pine in the Front Range of Colorado was

interviewed onsite in summer 1980. The contingent valuation method was used

to estimate the recreationist’s maximum net willingness to pay for different

quantities of trees per acre and for changes in average tree size per acre, the

changes being presented to the respondents through the use of color photos. The

implied factor that caused the changes in tree stand density and average tree size

is the mountain pine beetle. Therefore, the survey shows that changes in net

willingness to pay are contingent on changes in tree stand density and average

tree size, in this case being the result of insect infestations.

All of the recreation activities considered in the survey were found to be

positively related to tree stand density and tree size except for the use of ORVs,

which is negatively related to these factors. This means that 5 out of 6 of the

activities have increased benefits with increased tree stand density and average

tree size. The estimated annual recreation benefits as maximum willingness to

pay per visitor, estimated at an average of 200 trees per acre, are $145 for

camping, $169 for picnicking, $161 for backpacking, $302 for hiking, $321 for

fishing, and $97 for the use of ORVs. The annual recreation benefits per visitor as

a function of tree size are estimated to be $28 when the average tree size per

stand is 2.5 inches dbh, and $210 with an average tree size per stand of 10.5

inches dbh. Other estimates reported include recreation benefits per visitor day

of $5 when average tree size is 4 inches dbh, and of $13 when average tree size is

13 inches dbh.
USDA Forest Service Gen. Tech. Rep. PSW-GTR-164-www. 1997. 23

10. Walsh and others, 1989b. Recreation and the Demand

for Trees in National Forests in the Colorado Front Range

and the Mountain Pine Beetle (appendix table 10)

Walsh and others (1989b) estimate and compare the average benefits per

recreation trip in the Colorado Front Range as a function of the number of trees

per acre 6 inches in dbh or more. This study is based on the original Walsh and

Olienyk (1981) data set. The main purpose of this paper is to compare the

benefits measured by means of the contingent valuation method as dollars

willingness to pay for forest quality (the number of trees 6 inches in dbh or more)

and benefits estimated by means of the travel cost method as consumer surplus.

The study is included in this report because it includes three estimates of average

benefits per recreation trip that are not considered in the Walsh and Olienyk

(1981) study.

Recreation demand functions are derived using contingent valuation and

travel cost methods. One measure of the average benefit per recreation trip is

estimated by means of the contingent valuation method, and two measures are

estimated by means of the travel cost method using two different econometric

regression procedures (ordinary least squares and two-stage least squares). The

results of the study support the hypothesis that the contingent valuation and

travel cost methods produce comparable estimates. The estimates reported can

be included in an economic assessment of a forest management alternative that

incorporates market and nonmarket recreation use benefits.

A stratified random sample of 435 recreation users of six forest recreation

sites composed of mixed-age ponderosa pine in the Front Range of Colorado was

interviewed onsite in summer 1980. The contingent valuation method is used to

derive the recreationist’s demand for trees as an essential part of the recreation

experience. A subsample of 220 recreationists (excluding off-road vehicle users

and nonresidents) was selected for participation in the travel cost method of

demand analysis. The travel cost method indirectly derives the recreation

demand for trees. Both demand functions are derived on the basis of the changes

in the number of trees per acre as represented in color photos. After the recreation

demand functions are derived, total benefits can be calculated as willingness to

pay for the contingent valuation method and as consumer surplus for the travel

cost method.

Walsh and others (1989b) estimate the net average recreation benefits per

user day from the contingent valuation method as $24. This and the following

estimates are based on approximately 178 trees per acre and 2.7 days per trip.

From the travel cost method of demand analysis, net average recreation benefits

per user day, using the ordinary least squares regression technique, are estimated

as $26. From the travel cost method, using the two-stage least squares regression

technique, net average recreation benefits per user day are estimated as $20.

Statistical tests show that the estimates based on all three methods are not

statistically different.

11. Walsh and others, 1990. Total Economic Nonmarket

Worth of Forest Quality in Colorado National Forests and

the Mountain Pine Beetle and Western Spruce Budworm

(appendix table 11)

Walsh and others (1990) estimate the total economic nonmarket worth or public

benefits of protecting forest quality in National Forests in Colorado. Total

economic nonmarket worth accrues from recreation use, option, existence, and

bequest values (Randall and Stoll 1983). Recreation use value is the benefit
24 USDA Forest Service Gen. Tech. Rep. PSW-GTR-164-www. 1997.

derived from the recreation experience and is restricted to onsite direct use of the

resource. Option, existence, and bequest values are nonuse or passive-use

benefits and can be derived either onsite or offsite. Option value is the satisfaction

of knowing that a resource is protected for its potential use in the future.

Existence value is the satisfaction of knowing that a resource is protected for its

own sake. Bequest value is the satisfaction of knowing that a resource is protected

for the potential use of others, including family and future generations.

Measuring passive-use value of protecting forest quality is important because an

economic assessment of a management alternative that includes only direct-use

benefits would understate the true worth of the forest, possibly resulting in a

socially inefficient outcome. The general population, including users and

nonusers of forest resources, are affected by changes in forest quality and may be

willing to pay to protect forest health. Therefore, in deciding between

management alternatives, the total economic nonmarket worth of forest resources

must be incorporated in the decision process.

A random sample of 198 households in the Fort Collins and surrounding

rural areas was interviewed in 1983. The sample was found to be socially and

demographically representative of Colorado residents. The study uses the

contingent valuation method (with an iterative bidding technique) to estimate

the maximum net total benefits and recreation use benefits of protecting forest

quality. The indicator variable for forest quality used is tree density measured as

the number of trees 6 inches in dbh or more as depicted in color photos. The

households surveyed state their maximum net willingness to pay for different

forest stand densities as the result of mountain pine beetle and western spruce

budworm infestations.

Walsh and others (1990) find that total average annual willingness to pay per

Colorado household for the protection of forest quality is $52 (estimated with an

average tree stand density of 150 trees per acre). Recreation-use benefit is 27.4

percent of total benefits, or $14 per household per year. Nonuse or passive-use

benefit (option, existence, and bequest) make up 72.6 percent of the total, or $38

per household per year. Option and existence benefit is $11 per household per

year each, and bequest benefit is $16 per household per year. The results show

that nonuse or passive-use benefits are more than three and a half times greater

than recreation-use benefits. Therefore, assessments of management alternatives

that rely on direct onsite use value alone greatly understate the total benefits of a

resource quality protection program and may result in inefficient resource

allocations. These results are consistent with those collected by Brown (1993)

who showed that existence and bequest value estimates derived through the

contingent valuation method can be two to 10 times larger than direct onsite

recreation-use value.

12. Jakus and Smith, 1991. Private and Public Landscape

Amenities in the Pennsylvania/Maryland Area and the

Gypsy Moth (appendix table 12)

Jakus and Smith (1991) collected data on households’ willingness to pay for

esthetic benefits that accrue solely to their own household versus benefits that

accrue to the neighborhood in general from different gypsy moth control programs

in the southcentral Pennsylvania/northcentral Maryland area. One program

sprayed the residential (privately owned) areas only, while the public program

sprayed both residential and common areas in the neighborhood. The author’s

study used the data collected to compare use and nonuse benefits associated with

protection of landscape amenities. The hypothesis of the research is whether

contingent behavior questions can be used for measuring use and nonuse values

derived from an environmental resource (such as landscape esthetics) that provides
USDA Forest Service Gen. Tech. Rep. PSW-GTR-164-www. 1997. 25

both private and public benefits. The contingent valuation method, with

dichotomous choice elicitation, was used in a telephone-mail (informative

brochure)-telephone survey of a 10-county area; 436 surveys were completed.

Respondents were asked to bid their maximum willingness to pay for each of

two public gypsy moth control programs. The programs bid on include (1)

spraying of a bacterial insecticide on residential properties only, and (2) spraying

of a bacterial insecticide on residential and surrounding public areas (local parks

and greenways). From the data, two linear and two nonlinear models are

estimated, both with and without sample selection correction. A sample selection

adjustment is introduced to account for nonparticipants in the second telephone

interview stage. The estimated average household willingness to pay per year

for the uncorrected linear model with a 25-percent reduction in defoliation

ranges from $348 to $352 for the private program, and from $395 to $474 for the

public program. The uncorrected nonlinear model for a 25-percent reduction in

defoliation estimates average annual household willingness to pay as ranging

from $464 to $534 for the private program, and $608 to $670 for the public

program. When sample selection is corrected for, the linear specification for the

private program results in an average annual household willingness to pay of

$254 to $271, and for the public program of $314 to $344. The corrected nonlinear

model estimates the average annual household willingness to pay as $376 to $420

for the private program, and $511 to $527 for the public program.

The authors conclude that individuals distinguish between private and

public services provided by a gypsy moth control program through protecting

landscape amenities. The results show an increase of 12 to 36 percent in average

annual household willingness to pay for a public-scope program over a privatescope program with the uncorrected models, and an increase of 16 to 36 percent

for the sample selection corrected models. Therefore, individuals derive both use

and nonuse benefits from environmental resources that exhibit private and

public goods characteristics. This can be an important motivation for the private

support of public programs.

13. Haefele and others, 1992. Total Economic Nonmarket

Worth of Forest Quality in the Southern Appalachian

Mountains and the Balsam Woolly Adelgid

(appendix table 13)

Haefele and others (1992) estimate the total economic nonmarket worth of

protecting forest quality in the Southern Appalachian Mountains in North

Carolina, Tennessee, and Virginia. The study decomposes total economic

nonmarket worth into use and nonuse or passive-use value components. Nonuse

value is further decomposed into bequest and existence values. Over the past

few decades, two major impacts have affected the sustainability of the spruce-fir

ecosystem in the Appalachians. The first is the decline in the number of Fraser fir

trees in the area. The balsam woolly adelgid attacks the Fraser fir, resulting in

high tree mortality rates. The other impact is the result of atmospheric deposition,

such as acid rain, which is reducing the red spruce population and its regrowth

potential. The results show that the general public is willing to pay for forest

quality protection in the eastern United States, that individuals value forests for

more than their own personal direct use, and that nonuse or passive-use value is

greater than recreation-use value in the total economic nonmarket worth of

protecting forest quality.

A random sample of 1,200 households was surveyed through the mail within

a 500-mile radius of Asheville, North Carolina, in 1991. The contingent valuation

method was used to estimate the maximum net benefits as willingness to pay for
26 USDA Forest Service Gen. Tech. Rep. PSW-GTR-164-www. 1997.

forest quality protection in the Southern Appalachian Mountains. The elicitation

methods employed in the study are modified payment card and discrete choice,

allowing for a comparison of the two methods for consistency of benefit

estimates. The households were also asked to partition total willingness to pay

into its component values: use, existence, and bequest values. The indicator

variable is visual quality as depicted in color photos with changes in visual

quality as the result of insect infestation or atmospheric deposition. The

households surveyed state their maximum willingness to pay contingent on

changes in forest quality for two areas: along roads and trails, comprising

approximately one third of the total forest area, and for the whole forest area.

The pretest and focus group results for this study are presented by Holmes

and others (1990). Haefele and others (1992) find that total average annual

willingness to pay per household for forest quality along roads and trails ranges

from $19 for the modified payment card version to $63 for the discrete choice

version. The estimated total average annual willingness to pay per household for

the whole forest ranges from $22 for the modified payment card version to $107

for the discrete choice version. The disparity between the two method estimates

may be due to anchoring in the modified payment card approach, in which

respondents are conditioned by the bid levels, providing them with valuation

clues. Discrete choice may also exhibit anchoring along with upward rounding

and the desire to provide “correct” answers by the respondents, thus inflating

willingness to pay bids. Walsh and others (1989a) show that discrete choice

models typically return larger willingness to pay estimates than modified

payment card and open-ended question formats.

The allocation of total economic nonmarket worth to its components is very

similar for the two elicitation methods. Total benefits estimated by means of the

modified payment card method ($22) are allocated as 8 percent for use, 59 percent

for existence, and 30 percent for bequest value.4

 This results in the average annual

willingness to pay, for the use of a spruce-fir forest at a given quality level, of $2;

the existence benefit of the forest being $13; and the bequest benefit of the forest

being $7. These benefits, based on the modified payment card method, are very

similar to those estimated in the pretest (Holmes and others 1990). The allocation

of total economic nonmarket worth via the discrete choice method ($107) is 13

percent for use, 56 percent for existence, and 31 percent for bequest value. This

results in average annual willingness to pay, for the use of a spruce-fir forest at a

given quality level, of $14—existence benefits being $60 and bequest benefit being

$33. The results show that when nonuse or passive use values are included in the

benefit estimate of forest quality protection, the total benefits are 7 to 12 times

greater than recreation use value alone. These results support the evidence in

Walsh and others (1990) and Brown (1993). The efficient allocation of forest

resources depends on the estimation of total economic worth.

14. Miller and Lindsay, 1993. Support for a Gypsy

Moth Control Program in New Hampshire

(appendix table 14)

Miller and Lindsay (1993) estimate the public support for a gypsy moth control

program in New Hampshire through residents’ willingness to pay for the

program. In 1981, the gypsy moth population peaked, causing severe defoliation

of 195,000 acres out of 2,000,000 infested acres in New Hampshire forests. At the

time of the study, New Hampshire did not have a state gypsy moth program,

leaving towns, cities, landowners, and homeowners to bear the costs of

controlling gypsy moths. The costs include control methods, clean-up, and tree

loss. Other costs include the psychological and social costs such as esthetic

4 The percentages reported by

the authors add up to 97 percent.

It is not known why this is less

than 100 percent.
USDA Forest Service Gen. Tech. Rep. PSW-GTR-164-www. 1997. 27

degradation, recreation loss, and nuisance factors. Other impacts include wildlife

habitat changes in tree browse and protective foliage.

This study uses the contingent valuation method, with dichotomous choice

elicitation of willingness to pay. Miller and Lindsay surveyed 669 households

from three towns: Bow, Conway, and Exeter. Bow represents the towns that

experienced severe defoliation and had implemented a municipality-wide moth

control program. Conway represents areas that experienced moderate to severe

defoliation but did not adopt any central control program. Exeter represents

towns that experienced no appreciable gypsy moth-caused damage. The results

show that Bow residents’ mean and median annual willingness to pay per

household is $84 and $62, respectively. Conway residents’ mean and median

annual willingness to pay per household is $55 and $31, respectively. And Exeter

residents’ mean and median annual willingness to pay per household is $56 and

$27, respectively. Aggregating the annual willingness to pay of the three towns

results in mean and median annual willingness to pay per household of $70 and

$43, respectively. On a per-acre basis, the aggregate mean and median annual

willingness to pay per household is $16 and $10, respectively. This results in

aggregate public support for a statewide gypsy moth control program of $13

million to $28 million mean annual willingness to pay, and $8 million to $17

million median annual willingness to pay. These results show strong support for

a gypsy moth control program in New Hampshire.

15. Holmes and Kramer, 1996. Total Economic Nonmarket

and Existence Worth of Forest Quality in the Southern

Appalachian Mountains and the Balsam Woolly Adelgid

(appendix table 15)

Holmes and Kramer (1996) estimate the total economic nonmarket and existence

worth of protecting forest quality in the Southern Appalachian Mountains in

North Carolina, Tennessee, and Virginia. Total nonmarket economic worth is

defined as the summation of use and existence values, where use value is the

utility (or satisfaction) derived from active use of the resource and existence value

is the utility derived from the resource for all other reasons other than active use.

The researchers investigate the economic measures of forest health protection for

the boreal montane forest ecosystem, 75 percent of which is contained in the Great

Smoky Mountains National Park. Over the past few decades, mortality of the

spruce and fir trees in this ecosystem has increased dramatically. This is generally

attributable to the balsam woolly adelgid and air pollution.

The households sampled are within a 500-mile radius of Asheville, North

Carolina, and were surveyed through a mail-out, mail-back questionnaire. This

study elicited willingness to pay for the protection of the remaining healthy

spruce-fir forests through the use of the contingent valuation method with a

dichotomous choice elicitation procedure. Of the 210 surveys returned with

usable dichotomous choice responses, 175 were for users of the ecosystem who

stated total economic nonmarket worth, and 35 were for nonusers of the

ecosystem who stated existence worth only. This allows for testing whether the

existence component can be distinguished from total economic value. The

indicator of forest health was visual quality as depicted in color photos with

changes in quality resulting from insect infestation or atmospheric deposition.

This and other data collected were used in a test on the convergent validity of

two contingent valuation elicitation methods: dichotomous choice and modified

payment card (Holmes and Kramer 1995).

Holmes and Kramer (1996) estimate the median annual willingness to pay as

$36.22 for users (representing total economic nonmarket worth) and as $10.81 for

nonusers (representing the existence component). They found the two estimates
28 USDA Forest Service Gen. Tech. Rep. PSW-GTR-164-www. 1997.

to be statistically different. The study draws three conclusions. First, the

responses are consistent with the compositional approach to total economic

worth, i.e., a component is less than the whole. Second, existence worth is a

distinct and substantial component of total economic worth of forest health

(existence comprised approximately 30 percent of the total). And third, the

existence component is distinct from the use component, based on economic

characteristics of direct-use and passive-use values.

Summary

This review of the literature supports the conclusion that forest insect pests affect

forest quality, causing significant impacts on the nonmarket goods and amenity

benefits provided by a healthy forest. The affected values identified include

property values for residential and commercial uses; recreation and esthetic

values; and nonuse values such as existence, bequest, and option. Other damages

caused by insects are increased costs of mitigation and financial losses.

The insects identified include the mountain and southern pine beetle, western

spruce budworm, balsam woolly adelgid, gypsy moth, and Douglas-fir tussock

moth. These pests have caused significant damage to the potential of areas

spanning the United States from the East Coast to the West Coast to generate

nonmarket benefits. Areas specifically studied in the past include the northeast,

northwest, mountainous west, and the south. The studies identify different

stakeholders, including individuals, communities, and the general public.

Property and homeowners are significantly affected by insect infestations, as are

users (recreationists) and nonusers. Land managers, both public and private, are

affected by insect damages, especially in areas where there are large numbers of

users and passers-by, such as campgrounds, urban parks, and scenic greenways.

Decision makers are interested stakeholders in determining the relevant extent

of insect damage mitigation to undertake. Land-use zones include urban, urban/

wildland, and wildland areas.

The techniques employed in the economic estimation of these nonmarket

damages (benefits) of pest infestations (control programs) are the contingent

valuation, travel cost, and hedonic pricing methods. Also employed are direct

cost estimations through the estimation of replacement costs and financial losses.

The relevant metrics used in these measurements include dollars (either market

prices, expenditures, willingness to pay, or consumer surplus) and recreation

days. The estimated models for the relevant studies identify several indicators of

pest impacts. These include number of trees per acre, percentage of visible

damage (e.g., dead and down trees, defoliation rates, and discoloration of

foliage), physical presence of insects, size of trees, and percentage of tree species

composition. All indicators were found to be positively related to the benefits

generated, with the exception of tree species composition, which may be either

positively or negatively related. In other words, the negative impacts of pest

infestations on the level of the indicator variables predominantly result in a

decrease in benefit derived from the resource (or conversely, result in an increase

in the level of damages).

With the preponderance of evidence suggesting that insects do cause significant

economic damage to environmental resources beyond market commodities in the

short term, site-specific information is beneficial to the management decision process.

The transferability of the economic measures and models developed is not addressed

here. Some of the research results can provide thumbnail sketches of the possible

benefits from a control program or policy; however, these are only tentatively

acceptable. Further research in the area of the economic impacts of insects and other

disturbance agents on the productive capability and sustainability of different
USDA Forest Service Gen. Tech. Rep. PSW-GTR-164-www. 1997. 29

environmental resources or areas will aid in resolving the more borderline decision

scenarios. Parallel arguments can be made for other factors which affect

environmental quality, such as fire and pollution.

An issue requiring further inquiry is the role static measures of economic

damages have in a larger, dynamic ecosystem management context. Static

economic analysis does not estimate the economic worth of natural processes or

ecosystem functions that define healthy forests and ecosystems. However, when

management objectives converge (ecological, economic, and social), static

measures may themselves be indicators of the human component of forest health

management.

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USDA Forest Service Gen. Tech. Rep. PSW-GTR-164-www. 1997. 31

Appendix:

Summary Tables of Nonmarket Economic

Studies of Forest Insect Pest Damages

Appendix Table 1—Payne and others, 1973. Economic analysis of the gypsy moth problem in the

Northeast: II. Applied to residential property

Category Description

Region, forest type Pennsylvania/Maryland, mixed hardwood on residential

properties

Stakeholder Homeowners

Insect Gypsy moth (Lymantria dispar)

Indicator variable effect Decrease in no. of trees ≥6 in. dbh

Value type Contributed residential property value of trees

Valuation method, estimate type Hedonic pricing, hedonic price/acre or per tree

Estimated value $1,175/acre or $270/tree loss with 15-pct decrease in no. of trees

Appendix Table 2—Wickman and Renton, 1975. Evaluating damage caused to a campground by

Douglas-fir tussock moth

Category Description

Region, forest type Stowe Reservoir campground in California, white fir

Stakeholder Recreationists

Insect Douglas-fir tussock moth (Orgyia pseudotsugata)

Indicator variable effect Decrease in no. of trees in campground

Value type Recreation, esthetic

Valuation method, estimate type Replacement and clean-up costs allocation, cost/tree

Estimated value $56 esthetic value/tree, $13 clean-up cost/dead tree, with 25

trees killed total damage to campground is $1,725

Appendix Table 3—Michalson, 1975. Economic impact of mountain pine beetle on outdoor recreation

Category Description

Region, forest type Island Park area in Targhee National Forest (Idaho), lodgepole

pine

Stakeholder Recreationists

Insect Mountain pine beetle (Dendroctonus ponderosae)

Indicator variable effect Increase in no. of visible dead trees

Value type Recreation

Valuation method, estimate type Travel cost, consumer surplus/person-expenditure/personvisitor days/person

Estimated value $4.09 consumer surplus, $0.43 expenditure, and 1.2 days with a

>30-pct infestation
32 USDA Forest Service Gen. Tech. Rep. PSW-GTR-164-www. 1997.

Appendix Table 4—Moeller and others, 1977. Economic analysis of the gypsy moth problem in the

Northeast: III. Impacts on homeowners and managers of recreation areas

Category Description

Region, forest type New York/Pennsylvania, northeastern deciduous

Stakeholder (a)1 homeowners

(b)1 managers of recreation areas

Insect Gypsy moth (Lymantria dispar)

Indicator variable effect Presence of moth, defoliation, tree mortality

Value type (i)2 control cost

(ii)2 financial loss

(iii)2 recreation loss

Valuation method, estimate type (i, ii, iii) sample average, (a-i, ii) annual public and commercial

control costs and financial loss/household, (b-i, ii) annual

control costs or financial loss for commercial and quasi-public

campgrounds, (a-iii) annual person-days per household, (b-iii)

annual person-days per campground

Estimated value (a-i) $102 for public control, $240 for commercial control cost;

(a-ii) $125 with public control, $479 for commercial control

financial loss;

(a-iii) 108 person-days with public control, 133 person-days with

commercial control recreation loss;

(b-i) $441 for commercial campgrounds, $722 for quasi-public

campgrounds control costs;

(b-ii) $249 for commercial campgrounds, $996 for quasi-public

campgrounds in financial loss;

(b-iii) 161 person-days for commercial, 240 person-days for

quasi-public, 36,660 person-days for public campgrounds per

unit in recreation loss

1

(a) and (b) refer to corresponding stakeholder.

2

(i), (ii), and (iii) refers to corresponding value type.

Appendix Table 5—Leuschner and Young, 1978. Estimating the southern pine beetle’s impact on

reservoir campsites

Category Description

Region, forest type East Texas Forest Service and Corps of Engineers campgrounds,

mixed pine and hardwood

Stakeholder Recreationists

Insect Southern pine beetle (Dendroctonus frontalis)

Indicator variable effect Decrease in percent pine crown cover

Value type Contributed recreation value of pine crown cover

Valuation method, estimate type Travel cost, consumer surplus/person/visit

Estimated value $3.37 for Forest Service campgrounds, $2.44 for Corps of

Engineers campgrounds per person with a 30-pct reduction in

pine crown cover
USDA Forest Service Gen. Tech. Rep. PSW-GTR-164-www. 1997. 33

Appendix Table 6—Walsh and Olienyk, 1981. Recreation demand effects of mountain pine beetle

damage to the quality of forest recreation resources in the Colorado Front Range

Category Description

Region, forest type Colorado Front Range, 6,000-8,000 ft elevation in Rocky

Mountains, mixed-age ponderosa pine

Stakeholder Recreationists

Insect Mountain pine beetle (Dendroctonus ponderosae)

Indicator variable effect (a)1 decrease in no. of trees ≥6 in. dbh/acre

(b)1 decrease in average tree size

(c)1 increase in pct visible tree damage

(d)1 increase in pct dead and down trees on ground with slash

(e)1 increase in pct pest-caused treeless areas in acres

(f)1 decrease in no. of large tree ≥24 in. dbh

Value type Contributed recreation value of indicator variable

Valuation method, estimate type (i)2 contingent valuation, annual willingness to participate in

user-days

(ii)2 contingent valuation, consumer surplus/user-day

(iii)2 travel cost, no. of trips/person

(iv)2 travel cost, annual consumer surplus/person and per trip

Estimated value (i) 370,000 user-days loss with 15-pct decrease in (a) on-site,

330,000 user-days loss with 15-pct decrease in (a) in nearview, 207,000 user-days loss with 15-pct decrease in (a) in farview, 422,000 user-days loss with 15-pct decrease in (b),

3,045,000 user-days loss with 15-pct increase in (c) or (d),

317,000 user-days loss with 15-pct increase in (e), 192,700

user-days loss with 15-pct decrease in (f);

(ii) $1.50/user-day loss at 178 trees/acre, or $1.70/user-day loss

at 270 trees/acre with 15-pct decrease in (a);

(iii) 0.16 fewer trips per person with 15-pct decrease in (a);

(iv) $11.60/person, or $1.75/person/trip with 15-pct decrease in (a)

1

(a), (b), (c), (d), (e), and (f) correspond to indicator variable effect.

2

(i), (ii), (iii), and (iv) correspond to valuation method and estimate type.
34 USDA Forest Service Gen. Tech. Rep. PSW-GTR-164-www. 1997.

Appendix Table 7—Walsh and others, 1981a. Value of trees to residential property owners with

mountain pine beetle and spruce budworm damage in the Colorado Front Range

Category Description

Region, forest type Colorado Front Range, 6,000-8,000 ft elevation in Rocky

Mountains, mixed-age ponderosa pine

Stakeholder Homeowners, property owners

Insect Mountain pine beetle (Dendroctonus ponderosae), western spruce

budworm (Choristoneura occidentalis)

Indicator variable effect (a)1 decrease in no. of trees ≥6 in. dbh/acre

(b)1 decrease in average tree size

(c)1 expectation of 50-pct tree loss

(d)1 increase in pct visible tree damage

(e)1 increase in pct dead and down trees on ground with slash

(f)1 increase in pct pest-caused treeless areas in acres

(g)1 decrease in no. of large tree ≥24 in. dbh

Value type Contributed property value of indicator variable

Valuation method, estimate type Contingent valuation, annual willingness to pay

Estimated value $984/acre impr. lots, $578/acre unimpr.2 lots loss with 15-pct

decrease in (a) on-site;

$602/acre impr. lots loss with 15-pct decrease in (a) on adjacent

lots in near view;

$1,228/acre impr. lots, $783/acre unimpr. lots loss with 15-pct

decrease in (b);

$2,351/acre impr. lots, $1,364/acre unimpr. lots loss with (c);

$7,034/acre impr. lots, $4,045/acre unimpr. lots loss with 15-pct

increase in (d);

$907/acre impr. lots, $896/acre unimpr. lots loss with 15-pct

increase in (e);

$61/acre impr. lots, $84/acre unimpr. lots gain with 15-pct

increase in (f);

$918/acre impr. lots, $449/acre unimpr. lots loss with 15-pct

decrease in (g)

1

(a), (b), (c), (d), (e), (f), and (g) correspond to indicator variable effect.

2

Improved lots (lots with buildings, primarily residences) is abbreviated “impr.,” while unimproved

lots (lots with no buildings) is abbreviated “unimpr.”
USDA Forest Service Gen. Tech. Rep. PSW-GTR-164-www. 1997. 35

Appendix Table 8—Walsh and others, 1981b. Appraised market value of trees on residential property

with mountain pine beetle and spruce budworm damage in the Colorado Front Range

Category Description

Region, forest type Colorado Front Range, 6,000-8,000 ft elevation in Rocky

Mountains, mixed-age ponderosa pine

Stakeholder Real estate appraisers, homeowners, property owners

Insect Mountain pine beetle (Dendroctonus ponderosae), western spruce

budworm (Choristoneura occidentalis)

Indicator variable effect (a)1 decrease in no. of trees ≥6 in. dbh/acre

(b)1 decrease in average tree size

(c)1 expectation of 50-pct tree loss

(d)1 increase in pct visible tree damage

(e)1 increase in pct dead and down trees on ground with slash

(f)1 increase in pct pest-caused treeless areas in acres

(g) decrease in no. of large tree ≥24 in. dbh

Value type Contributed property value of indicator variable

Valuation method, estimate type Contingent valuation, appraised market value

Estimated value $209/acre impr. lots, $201/acre unimpr.2 lots loss with 15-pct

decrease in (a) on-site;

$241/acre impr. lots loss with 15-pct decrease in (a) on adjacent

lots in near view;

$1,155/acre impr. lots, $1,014/acre unimpr. lots loss with 15-pct

decrease in (b);

$1,810/acre impr. lots, $1,492/acre unimpr. lots loss with (c);

$3,902/acre impr. lots, $2,715/acre unimpr. lots loss with 15-pct

increase in (d) on-site;

$1,688/acre impr. lots, $2,445/acre unimpr. lots loss with 15-pct

increase in (d) on adjacent lots in near-view;

$259/acre impr. lots, $848/acre unimpr. lots loss with 15-pct

increase in (d) in far-view;

$493/acre impr. lots, $476/acre unimpr. lots loss with 15-pct

increase in (e);

$102/acre impr. lots, $102/acre unimpr. lots gain with 15-pct

increase in (f);

$251/acre impr. lots, $294/acre unimpr. lots loss with 15-pct

decrease in (g)

1

(a), (b), (c), (d), (e), (f), and (g) correspond to indicator variable effect.

2

Improved lots (lots with buildings, primarily residences) is abbreviated “impr.,” while unimproved

lots (lots with no buildings) is abbreviated “unimpr.”
36 USDA Forest Service Gen. Tech. Rep. PSW-GTR-164-www. 1997.

Appendix Table 9—Loomis and Walsh, 1988. Recreation and tree stand characteristics in the Colorado

Front Range

Category Description

Region, forest type Colorado Front Range, 6,000-8,000 ft elevation in Rocky

Mountains, mixed-age ponderosa pine

Stakeholder Recreationists

Insect Mountain pine beetle (Dendroctonus ponderosae), western spruce

budworm (Choristoneura occidentalis)

Indicator variable effect (a)1 decrease in no. of trees ≥6 in. dbh

(b)1 decrease in average tree size

Value type Contributed recreation value of indicator variable

Valuation method, estimate type Contingent valuation, annual willingness to pay

Estimated value (a) $145 benefit/visitor for camping with 200 trees/acre; $169

benefit/visitor for picnicking with 200 trees/acre; $161

benefit/visitor for backpacking with 200 trees/acre; $302

benefit/visitor for hiking with 200 trees/acre; $321 benefit/

visitor for fishing with 200 trees/acre; $97 benefit/visitor for

off-roading with 200 trees/acre;

(b) $210 annual benefit/visitor with avg. tree size at 10.5 in. dbh,

$28 annual benefit/visitor with avg. tree size at 2.5 in. dbh; $13

annual benefit/visitor/day with avg. tree size at 13 in. dbh; $5

annual benefit/visitor/day with avg. tree size at 4 in. dbh

1

(a) and (b) correspond to indicator variable.

Appendix Table 10—Walsh and others, 1989b. Net economic benefits of recreation as a function of tree

stand density

Category Description

Region, forest type Colorado Front Range, 6,000-8,000 ft elevation in Rocky

Mountains, mixed-age ponderosa pine

Stakeholder Recreationists

Insect Mountain pine beetle (Dendroctonus ponderosae)

Indicator variable effect Decrease in no. of trees ≥6 in. dbh/acre

Value type Contributed recreation value of indicator variable

Valuation method, estimate type (i)1 contingent valuation, annual willingness to pay/person/day

(ii)1 travel cost, annual consumer surplus/person/day

Estimated value (i) $24 net average benefit with 178 trees/acre and 2.7 days/trip;

(ii) $20 to $26 net average benefit with 178 trees/acre and 2.7

days/trip

1

(i) and (ii) correspond to valuation method and estimate type.
USDA Forest Service Gen. Tech. Rep. PSW-GTR-164-www. 1997. 37

Appendix Table 11—Walsh and others, 1990. Estimating the public benefits of protecting forest quality

Category Description

Region, forest type Colorado National Forests, mixed tree stands

Stakeholder Recreationists

Insect Mountain pine beetle (Dendroctonus ponderosae), western spruce

budworm (Choristoneura occidentalis)

Indicator variable effect Decrease in no. of trees ≥6 in. dbh/acre

Value type Recreation, bequest, existence, option

Valuation method, estimate type Contingent valuation, annual willingness to pay/household

Estimated value $52 average annual total value for 150 trees/acre where $14 is

for recreation-use, $16 is for bequest, $11 is for existence, and

$11 is for option

Appendix Table 12—Jakus and Smith, 1991. Measuring use and nonuse values for landscape amenities:

a contingent behavior analysis of gypsy moth control

Category Description

Region, forest type Southcentral Pennsylvania and northcentral Maryland, urban

residential, parks, and greenways

Stakeholder Homeowners

Insect Gypsy moth (Lymantria dispar)

Indicator variable effect Decrease in esthetic quality (pct defoliation)

Value type Esthetics

Valuation method, estimate type Contingent valuation, annual willingness to pay/household

Estimated value $254 to $534 for a private control program, $314 to $670 for a

public control program

Appendix Table 13—Haefele and others, 1992. Estimating the total value of forest quality in highelevation spruce-fir forests

Category Description

Region, forest type 4,400 to 6,684 ft elevation in Appalachian Mountains of North

Carolina, Tennessee, and Virginia, spruce-fir forests

Stakeholder Recreationists, general public

Insect Balsam woolly adelgid (Adelges piceae)

Indicator variable effect Increase in perceived visible damage (dead and dying trees)

Value type Recreation, bequest, existence, and option

Valuation method, estimate type Contingent valuation, annual willingness to pay/household

Estimated value $19 to $63 for forests near roads and trails, $22 to $107 for total

forest
38 USDA Forest Service Gen. Tech. Rep. PSW-GTR-164-www. 1997.

Appendix Table 14—Miller and Lindsay, 1993. Willingness to pay for a state gypsy moth control

program in New Hampshire: a contingent valuation case study

Category Description

Region, forest type New Hampshire, northeastern deciduous forest

Stakeholder New Hampshire residents

Insect Gypsy moth (Lymantria dispar)

Indicator variable effect Increase in perceived visible damage

Value type Total value

Valuation method, estimate type Contingent valuation, annual willingness to pay/household

Estimated value $70 average annual, $43 median, or mean $16/acre, median $10/

acre

Appendix Table 15—Holmes and Kramer, 1996. Contingent valuation of ecosystem health

Category Description

Region, forest type 4,400 to 6,684 ft elevation in Appalachian Mountains of North

Carolina, Tennessee, and Virginia, spruce-fir forests

Stakeholder Recreationists, general public

Insect Balsam woolly adelgid (Adelges piceae)

Indicator variable effect Increase in perceived visible damage (dead and dying trees)

Value type Existence and total

Valuation method, estimate type Contingent valuation, annual willingness to pay/household

Estimated value $11 median existence value, $36 median total value