Economic Impacts of Critical Habitat Designation for Oregon Chub

(oregonichthys crameri)

Chris CusackJudith Dempsey

Biao HuangTaeyoung Kim

Caiwen Wu

June 4th, 2009

AREC 551

Objective

• This project will investigate the potential economic impacts of designating critical habitat for the Oregon Chub on the commercial, agricultural, industrial, and recreational sectors, over and above those impacts already made by its classification as an endangered species.

Overview

• Oregon Chub – description and background• Endangered Species Designation vs. Critical Habitat Designation• Economic Analysis• Conclusion

Introduction

• The Oregon Chub is a small, minnow-like fish which favors backwaters with little or no current, silty and organic substrate, and ample vegetation for hiding.

Historic habitat

• The Oregon Chub is endemic to the Willamette valley of Western Oregon.

• They were formerly distributed throughout the Willamette River Valley in a dynamic network of off-channel habitats.

Changes in Habitat Conditions

• Alterations in natural flow conditions:– Dams (for flood control and hydropower generation)– Fill and removal activities

• Decline in Water Quality– Siltation from logging– Pesticide runoff

• Introduction of non-indigenous species

Invasive Species

• Consume resources essential to existence of Oregon Chub

• Directly prey on Oregon Chub

• Difficult to monitor or remedy

Historic Distribution of Oregon Chub in the Willamette River Basin

Source: Markle 1991/Oregon Chub Recovery Plan

Source: Oregon Chub Recovery Plan

1998 Distribution of Oregon Chub in the Willamette River Basin

Oregon chub potentially occurs in these Oregon counties:Benton, Lane, Linn, Marion, and Polk county.

(Map may reflect historical as well as recent sightings) Source: http://www.fws.gov/oregonfwo/Species/Data/OregonChub/

Endangered Species Act (ESA)

• Purpose: – protect and recover imperiled species and the ecosystems

upon which they depend.• Endangered species: – any species which is in danger of extinction throughout all

or a significant portion of its range.• Threatened species: – any species which is likely to become an endangered

species within the foreseeable future throughout all or a significant portion of its range.

(http://www.fws.gov/endangered/pdfs/esaall.pdf)

Criteria Used to Evaluate the Listing of A Species

1) Damage to, or destruction of, a species’ habitat;2) Overutilization of the species for commercial,

recreational, scientific, or educational purposes;3) Disease or predation;4) Inadequacy of existing protection; and 5) Other natural or manmade factors that affect

the continued existence of the species.

Critical Habitat• Critical Habitat can include areas occupied by the species,

or those that are outside the geographical area occupied by the species at the time it is listed, but determined to be essential for the conservation of the species.

• Critical habitat may be established for species now listed as threatened or endangered and for which no critical habitat has previously been established .

• Critical habitat generally does not include the entire geographical area which can be occupied by the threatened or endangered species.

ESA and the Oregon Chub

• The Oregon chub was listed as endangered in 1993.

• A recovery plan was published in 1998. • A 5-year review was published in 2008.• Currently, there is a proposal to designate Critical

Habitat for this species. • On May 15th , 2009, the Oregon Chub was down

listed from “endangered” to “threatened”.

Consultation Costs

• Every analysis or project includes consultation costs.

• Consultation costs are a significant portion of overall costs (total percent will vary).

• Assumption: all calculations include consultation costs.

Impacted Activities

• Dams and Reservoir operations:– Hydropower– Recreation

• Logging• Agriculture• Property development – commercial/ residential/ industrial

• In-stream activities – dredging

Dams and Reservoirs

• Economic Impacts– Hydropower– Recreation

• Calculations– Opportunity costs of power generation– Opportunity costs of recreation

Hydropower Dams in Willamette Basin

Dams

# of Power

Generators

GeneratedPower

Total Storag

e

Proj. Cost

Unit Mwatt hrs. Acre-feet

Million

$

Big Cliff 1 46,352 N.A 62.7

Detroit 2 393,539 455,100 62.7

Hills creek 2 164,791 355,500 46

Foster 2 104,956 60,700 82.3

GreenPeter 2 235,961 28,100 82.3

LookoutPoint 3 297,325 455,800 88.2

Dexter 1 87,797 N.A 88.2

Cougar 2 172,171 219,000 54.2

Opportunity Cost of Reduction of Hydropower Generation

• Suppose hydropower generation is the function of water storage volume:

• Then it will be reduced by: , where α is % reduction.

• The total loss in hydropower generation per year will be:

–p: electricity price ($/mwh);–r : discount rate.

( ),l l lg g V l

( ) ((1 ) )l l l lHG g V g V

1

( ) [ ( ) ((1 ) )]L

H l l l ll

C A p g V g V

Recreational Reservoirs in Willamette Basin

# of Recreation

AreasAvg. yearly visits Total Storage Proj.

Cost

Fern Ridge 5 768,000 116,800 6

Cottage Grove 5 417,000 32,900 3.3

Detroit 7 735,000 455,100 62.7

Dorena 5 343,000 77,600 14

Dexter 2 321,000 N.A 88.2

Blue river 3 66,000 89,500 32

Cougar 6 64,000 219,000 54.2

Fall Creek 5 269,000 125,000 22

Hills Creek 5 109,000 355,500 46

Foster 6 590,000 60,700 82.3

Green Peter 3 230,000 28,100 82.3

Lookout Point 6 97,000 455,800 88.2

Opportunity Cost of Recreation• User expenditures (UE) for reservoir i:

– : No. of people visiting– : Average annual household visitation frequency – : Individual daily user expenditure for reservoir i.

• Linear regression model:

– : frequency of visitation;– : water level in mean feet;– : change in visitation for each one-foot change in .

i i i iUE MS V E

iMS

iV

iE

FV a bWL

FV

WL

b WL

Opportunity Cost of Recreation (Cont.)

• Total user expenditure per year due to a

decrease in reservoir water level of Willamette

river basin:

where (b/V) is a percentage reduction in visitation.

13

1

( )R ii i

bC A UE

V

Logging

• Oregon Chub thrive in small tributaries.• Activities such as logging lead to siltation,

filling in these habitats.• Under Critical Habitat, logging practices must

be altered:– reduction in total area;– more stringent controls leading to reduced yield.

Opportunity Cost of Logging• Logging profit function:

– qi : total timber harvest per acre;– P : timber price;– hc : harvest cost; – Ai : area;

– RCi : replanting cost.

• If logging is required to be reduced by a (0<a<1) , then the

associated profit loss for unit i would be:

• Total profit loss per year is:

( )i i i ip hc q A RC i

( )i i ia p hc q A i

1

( ) ( )I

L i ii

C A a p hc q A

Opportunity Costs of Agriculture

• Production reduction by changing farming practice.

• Runoff control cost from:– applying alternative materials;– changing irrigation method;– leaving alternate uncultivated; – Conservation tillage.

• So, the total profit loss per year is from:– production reduction;– additional runoff control cost.

( )AC A

Other Costs

• Property Development:– Future development may be reduced;– Existing structures not impacted;– Federal Permits/Safe Harbor Agreements.

• In-stream activities:– Must maintain habitat;– Impacts uncertain;– Changes from the natural state may make the

habitat more sensitive to invasive species.

Aggregate Costs

• The expected present value of aggregate costs of the Oregon chub critical habitat designation for the future 20 years:

– : consultation for activity i, – : the i th activity.

201

0

Pr( ) ( ) Pr( ) Pr( ) ( )

(1 )

N

i i i i ii

tt

C C C C A C A

r

iC

iA

Oregon Chub vs. Salmon

• Salmon is a high-profile case:– Listed earlier than chub;– More recreation and economic activities

associated with salmon.• Difficult to split costs.• Due to existing protection, many impacts of

Critical Habitat designation for the Oregon Chub will come from land use in isolated, specific areas.

Benefits

• Benefits are difficult to determine:– Contingent valuation;– Impacts on other species;– Other environmental benefits.

• Assumption: – While the costs of Critical Habitat Designation are

potentially high, the expected benefits outweigh the costs.

Conclusion

• Costs have the potential to be high.• Costs spread through many sectors of economy.• Local impacts relatively high.• Additional overall impact may not be significant

due to existing protections afforded to Salmon.

Willamette River – Past and Present

Source: Sedell and Froggatt 1984/Oregon Chub Recovery Plan.