Sustainingthe Flows of Naturaland Economic
Resources fromWatershedLands
Peter F. Ffolliott, School of RenewableNaturalResources,University of Arizona, TucsonAZ 85721;
and
Daniel G Neary, Rocky MountainResearchStation,USDA Forest Service, FlagstaffAZ 86001
Abstract
Watershedsare the source of naturaland economic resourcesthat are often subjecttojoint productionprocesses,
which is when the productionor use of a resource is closely linked to the production or use of other resources.
Consequently,tradeoffsamong crucialresourcesare often necessary.The optimalamountof goods and services from
the sharedresources shouldbe the flow of resourcesthatmaximizethe presentvalue of the net benefits to society. The
best way to achieve the maximumnet benefit is throughintegratedwatershedresourceplanning.It is also necessarythat
naturaland economic resourcesbe environmentallysustainable,while they satisfy society's increasing demand for
products and services. This paper focuses on how watershed managementcan address the increasing demand for
high-qualitywater, while sustainingnaturaland economic resourceflows.
Introduction
Watershedsare the source of many naturaland
economic resources that benefit society. The
resources are often subject to joint production
processes, which is when the productionor use of a
resourceis closely linkedto the productionoruse of
otherresources(Gregersenet al. 1987; Brookset al.
1992, 1997). Due to joint production processes,
tradeoffs among crucial resources are often necessary. The optimal amountof goods and services
from the shared resources should be the flow of
resourcesthatmaximizethe presentvalue of the net
benefits to society. In this paper,we will show that
the most effective way to achieve the maximumnet
benefit is through integrated watershed resource
planning.
Natural Resources
A variety of naturalresourcesthat sustaineconomic developmentandbenefitpeople arefoundon
watershedlands (Gregersenet al. 1987, Brooks et
al. 1997, Eckman et al. 2000). Most of Arizona's
clean water comes from upland watersheds and
flows to downstreamplaces-of-use, where it is used
for irrigationandhumanconsumption.Hydropower
generation in the Phoenix area is another waterbased activity that benefits society.
Many of Arizona'swatershedsarethe sourceof
timber that is processed into a variety of wood
productsfor sale or local use. Watershedmanagers,
foresters, and other land managers have long
debated the relationship of timber harvesting to
streamflowregimes. Agriculturalcrop production
and livestock grazing are also watershedactivities
that are economically important. Consumptive
(huntingandfishing) andnonconsumptive(viewing
and photography) wildlife values are found on
watersheds,which also contain opportunitiesfor a
varietyof otheroutdoorrecreationactivities.Locally importantnaturalresources,such as pinyon nuts,
mushrooms,andmedicinalsandbotanicals,arecollected on watershedlands.
EconomicResources
While describing shared naturalresources on
watershedsin physical terms is useful, economists
provideanotherperspectiveof watershedresources.
Consideringthe economicvalueof naturalresources
is fundamentalto developing managerialstrategies
to sustainnaturalresource flows. Use values, both
marketandnonmarket,andnonusevalues areterms
used by economists to describethe value of natural
resourceson watershed lands. The values must be
quantifiedto assess the benefits and costs of watershedmanagementto sustainnaturalresourceflows.
The direct consumptionor use of a resource,
ratherthanpassively contemplatingor enjoying it,
is a use value. Examplesof use values includethose
for water,timber,and othernaturalresourcesavailable on a watershed.Marketvalue is the value of a
resource once it is traded in the marketplace.The
seller'sproductioncosts and a consumer'swillingness to pay establishthe price of a good or service.
Hydropower,timber,and some formsof recreation,
such as paying a fee to use a camp site, are market
commodities.The resourcesareproducedand consumedby users who pay a pricethatshouldapproximate their values. Nonmarket values are also
obtainedfrom the direct consumptionor use of a
resource;however, no paymentis made to the pro-
Ffoluott, P. F., and D. G. Neary. 2003. Sustaining the Flows of Natural and Economic Resources from
Watershed Lands. Journal of the Arizona-Nevada Academy of Sc/ea/ce 35(1)76-80. ©2003 Peter F. Ffolliott and
Daniel G. Neary.
Sustaining the Flows of Natural and Economic Resources +Ffolloittand
ducer for the resource. Lack of payment does not
mean that the resource has no value, only that a
marketplacetransactiondoes not reflect its value.
Although flood control is valuable, a cash market
forthe good does not exist. Althoughwildlife observation,clear-flowing water,and scenic vistas do not
have a tangiblemarketvalue, they remaineconomically valuable to society. The goods and services
from nonmarketvalues arepublic goods; if a producerprovidesthem, the good or service is integral
and accessible to all.
Nonuse values are the other category of economic values. Resourceswhose values are derived
from the possibility of their futureuse are nonuse
values. Nonuse values includethe following.
• Optionvalues reflect the willingness to pay to
preserve the choice to use an amenity in the
future.
• Existence values reflect the willingness to pay
to know that a resourcewill continueto exist,
even if the person never uses it.
• Bequestvalues reflectthe willingness to pay to
maintaina resource for use by future generations.
• Stewardshipvalues reflect the willingness to
pay to maintaina healthy environmentfor use
by all living organisms.
An arrayof economic resources must be consideredwhen managingthe sustainabilityof watershedresourceflows. Manyplanners,managers,and
decisionmakersrecognizethe relevanceof nonmarket andnonusevalues to naturalresourcedecisions.
Methods for inputtingthe economic value of nonmarket and nonuse resources have been recently
developedto facilitatethe decisionmakingprocess.
SustainingResourceFlows
In the past,a watershedwas managedto sustain
the flow of resources through equal, periodic
resourceflows year afteryear, decade after decade
(Gregersen et al. 1987, Brooks et al. 1997, de
Steiguer2000). Currently,managingfor even, natural resource flows from a watershed has been
replacedwithmanaginga watershedto achieve economic resource flows. The economic goal of this
multiple-useproblemis to selectwatershedmanagementactionsthatwill maximizethe presentvalue of
the net social benefits from the combined flow of
water,timber,andothernaturalresourcevalues over
time. Maximizing the economic benefits of the
resources on a watershed has been legislatively
mandated.The Forest and RangelandsRenewable
Resources PlanningAct of 1974 and the National
ForestManagementAct requiresthatwatershedsare
managedto maximize the net benefits using multiple-use, ecosystem-based, and sustained-yield
Neary
77
managementprescriptions.Watershedmanagement
practicesthatreachthis goal are complex, detailed,
and holistic in their implementationand, therefore,
requirelarge amountsof data and analyses. Fortunately, emerging tools and technologies are available to planners,managers,and decisionmakersto
help achieve the goal (Guertinet al. 2000).
Integratedplanningefforts structuredarounda
watershed approach to land stewardship sustain
economically efficient resource flows from watershed lands.Variousanalyticaltechniques,methods,
andprocedureshelp to realize the planningefforts.
Watershedmanagersaredevelopingcomprehensive
plans using integrated planning tools. Recently,
watershedmanagerssuccessfullyimplementedpractices, projects,andprogramsthatmeetthis objective
and that sustainnaturalresourceflows fromwatershed lands.
Respondingto
IncreasingWaterDemands
Planners,managers,and decisionmakersknow
thatit is criticalto practicenaturalresourceconservation and sustainability and economic resource
flow sustainability, while meeting the increasing
demandfor land,water,and othernaturalresources.
Much of the literatureavailable on this important
subjectbroadlyaddressesintegratedwatershedmanagement practices, projects, and programsand the
multipleoutputsobtainedfromthese efforts(Brooks
et al. 1997, Gregersen et al. 2000, Ffolliott et al.
2002b). This paper focuses on watershedmanagementas it relatesto the increasingdemandfor highquality water, which is a continuingissue in Arizona and other regions that experience persistent
water shortfalls. This perspective is based on the
following.
• Wateris a key watershedmanagementissue in
the twenty-first century.
• Wateris the only resourcethat unifies the various elements of integratedwatershedmanagement.
• Water is the best example of why planners,
managers,anddecisionmakersmustaddressthe
demandfor and supply of naturalresources.
Although the increasing cost of water will
reduceits use, the supply of high-qualitywaterwill
continueto decline. Many relatedissues have been
discussedelsewhere (Brookset al. 1997;Ffolliottet
al. 2000, 2002a; Gregersenat el. 2000). However,
some commonalities suggest water and watershed
managementareas that must be addressedto meet
the increasingdemandfor high-qualitywater.They
include:
78
•
Sustainingthe Flows of Natural andEconomicResources + Ffolloittand Neary
Watershedmanagementresearchershave successfully developed the technical ability to
securethe highest quantityand qualityof available water. Continuing technical research on
water resources, while focusing on obtaining
the necessary management and institutional
supportto effectively use currenttechnologies
is necessary.
• People effectively reducetheir consumptionof
water, and increase their investments in the
infrastructuresneeded to sustain high-quality
watersupplies,duringandafterfloods, drought,
and other crises. However, the emphasis on
crisis managementshould be replaced with a
focus on developinglong-termmitigationstrategies to avoid unsustainable use, thereby,
makingfuturedisastersless likely.
• Decentralization of environmental responsibilities andan increasein participatorymanagement of watersheds and water resources is
occurring.Manylocally led watershedmanagement initiatives exist in Arizona (Endebrock
2000), andthis formof naturalresourceparticipatorymanagementis growing worldwide.
• Globalization of environmental issues and
responses is receiving increasing attention.
Internationaltrade of commodities produced
from naturalresources and global agreement
and programs about the environment and
naturalresourceshave increasedsignificantly.
Society mustdevelop effective combinationsof
institutionalarrangementsin responseto increasing
water and other natural resource scarcity. These
responses should:
• Use the accumulatedtechnicalknowledgeabout
how to manage water and other natural
resources;
• Employ local watershed resource users who
understandof the issues and options associated
with a watershedmanagementapproachto land
stewardship;and
• Help resolve conflicts that occur due to the
actions of users at different locations on a
watershedor within the large river basin.
Participantsat the InternationalConferenceon
Waterandthe Environmentheld in Dublin, Ireland,
on January 26 through 31, 1992, developed the
Dublin Conferenceand the ConferenceReport to
help guide the development of effective internationalwaterpolicies (The WorldBank 1993, World
Meteorological Organization 1999). The basic
underlyingprinciplesof the reportare that water:
• Is a finite andvulnerableresourcethatis essential to sustaining life, economic development,
and environmentalintegrity;
•
Developmentandmanagementshouldbe based
on a participatoryapproachthatinvolves users,
planners,and policymakersat all levels; and
• Has an economic value and, therefore, should
be managedto achieve an economic goal.
To encourage effective international water
policies, the participantsof the Dublin Conference
adopted several policy objectives. Those that
concernArizona include:
• Protectingagainst droughts, floods, and other
naturaldisastersby increasingthe investmentin
datacollections to betterpredictdisasterrecurrence intervalsand, in doing so, upgradedisaster preparedness;
• Providing for sustainableurban development,
which unaffordable water can threaten, by
developing futurereliable water supplies;
• Contributingto ruralwatersuppliesby applying
water-saving technologies and management
methods that introduceinstitutions and incentives for the ruralcommunitiesto adopt effective water-conservationapproaches;
• Protectingaquaticecosystems from water-flow
disruptionandpollutiondischargesthatrequire
expensive treatment,destroyaquaticbiota, and
limit water-basedrecreationalopportunities;
• Enhanceeffective watermanagementby accurately measuringwater-cycle components and
other environmentalcharacteristicsthat affect
the delivery of high-qualitywater; and
• Resolve water-useconflicts by reconciling the
interests of all stakeholders,monitoringwater
quantityand quality, developing action plans,
exchanging pertinentinformation,and enforcing agreements.
The Dublin Conferenceand ConferenceReport
was the impetusfor formationof a Global Partnership on Water,which formalizedthe recommendations of the United Nations Conference on the
Environment and Development, held in Rio de
Janeiro,Brazil, in June 1992. Participantsgathered
to consider effective water policies (Brooks et al.
1994, 1997; Easteret al. 1995; Quinn et al. 1995)
and the sustainable development of natural
resources(Gregersenet al. 2000). The main objectives of this partnership,which arerelevantto Arizona, were to:
• Supportintegratedwaterresourcemanagement
programsthroughexisting and future government and othercollaborativeefforts;
• Encouragegovernments,landowners,andother
stakeholdersto adopt consistent and mutually
complementarypolicies and programs;
• Build mechanisms to share information and
experiences;
78
•
Sustainingthe Flows of Natural andEconomicResources + Ffolloittand Neary
Watershedmanagementresearchershave successfully developed the technical ability to
securethe highest quantityand qualityof available water. Continuing technical research on
water resources, while focusing on obtaining
the necessary management and institutional
supportto effectively use currenttechnologies
is necessary.
• People effectively reducetheir consumptionof
water, and increase their investments in the
infrastructuresneeded to sustain high-quality
watersupplies,duringandafterfloods, drought,
and other crises. However, the emphasis on
crisis managementshould be replaced with a
focus on developinglong-termmitigationstrategies to avoid unsustainable use, thereby,
makingfuturedisastersless likely.
• Decentralization of environmental responsibilities andan increasein participatorymanagement of watersheds and water resources is
occurring.Manylocally led watershedmanagement initiatives exist in Arizona (Endebrock
2000), andthis formof naturalresourceparticipatorymanagementis growing worldwide.
• Globalization of environmental issues and
responses is receiving increasing attention.
Internationaltrade of commodities produced
from naturalresources and global agreement
and programs about the environment and
naturalresourceshave increasedsignificantly.
Society mustdevelop effective combinationsof
institutionalarrangementsin responseto increasing
water and other natural resource scarcity. These
responses should:
• Use the accumulatedtechnicalknowledgeabout
how to manage water and other natural
resources;
• Employ local watershed resource users who
understandof the issues and options associated
with a watershedmanagementapproachto land
stewardship;and
• Help resolve conflicts that occur due to the
actions of users at different locations on a
watershedor within the large river basin.
Participantsat the InternationalConferenceon
Waterandthe Environmentheld in Dublin, Ireland,
on January 26 through 31, 1992, developed the
Dublin Conferenceand the ConferenceReport to
help guide the development of effective internationalwaterpolicies (The WorldBank 1993, World
Meteorological Organization 1999). The basic
underlyingprinciplesof the reportare that water:
• Is a finite andvulnerableresourcethatis essential to sustaining life, economic development,
and environmentalintegrity;
•
Developmentandmanagementshouldbe based
on a participatoryapproachthatinvolves users,
planners,and policymakersat all levels; and
• Has an economic value and, therefore, should
be managedto achieve an economic goal.
To encourage effective international water
policies, the participantsof the Dublin Conference
adopted several policy objectives. Those that
concernArizona include:
• Protectingagainst droughts, floods, and other
naturaldisastersby increasingthe investmentin
datacollections to betterpredictdisasterrecurrence intervalsand, in doing so, upgradedisaster preparedness;
• Providing for sustainableurban development,
which unaffordable water can threaten, by
developing futurereliable water supplies;
• Contributingto ruralwatersuppliesby applying
water-saving technologies and management
methods that introduceinstitutions and incentives for the ruralcommunitiesto adopt effective water-conservationapproaches;
• Protectingaquaticecosystems from water-flow
disruptionandpollutiondischargesthatrequire
expensive treatment,destroyaquaticbiota, and
limit water-basedrecreationalopportunities;
• Enhanceeffective watermanagementby accurately measuringwater-cycle components and
other environmentalcharacteristicsthat affect
the delivery of high-qualitywater; and
• Resolve water-useconflicts by reconciling the
interests of all stakeholders,monitoringwater
quantityand quality, developing action plans,
exchanging pertinentinformation,and enforcing agreements.
The Dublin Conferenceand ConferenceReport
was the impetusfor formationof a Global Partnership on Water,which formalizedthe recommendations of the United Nations Conference on the
Environment and Development, held in Rio de
Janeiro,Brazil, in June 1992. Participantsgathered
to consider effective water policies (Brooks et al.
1994, 1997; Easteret al. 1995; Quinn et al. 1995)
and the sustainable development of natural
resources(Gregersenet al. 2000). The main objectives of this partnership,which arerelevantto Arizona, were to:
• Supportintegratedwaterresourcemanagement
programsthroughexisting and future government and othercollaborativeefforts;
• Encouragegovernments,landowners,andother
stakeholdersto adopt consistent and mutually
complementarypolicies and programs;
• Build mechanisms to share information and
experiences;