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Public Values for Riparian Ecosystems: Experimental Results
in the West and Implications for the Grand Canyon 1
Philip A. Meyer
2
Abstract.--Economic, psychological and legal arguments
for use of compensatory procedures in valuing riparian
resource protection and restoration activities are presented.
Values from studies of riparian habitat in California and
Washington are reported, and implications for economic
evaluation of restorative alternatives affecting Grand
Canyon considered.
ALTERNATIVE PROCEDURES FOR
VALUATION OF PUBLIC RIPARIAN RESOURCES
By public resources, I mean those resources
that are publically owned or held, and have not
been divided up in private markets. Economists
evaluating public riparian habitat have two basic
procedural choices. If riparian habitat is to be
enhanced beyond normal levels, assessment of respondent's willingness to pay for the improvement
is required. Direct survey assessment of willingness to pay, and indirect approaches such as travel
cost and hedonic travel cost address the "willingness to pay for enhancement" issue. Procedures
are summarized in Dwyer, Kelly and Bowes (1977).
If riparian habitat is threatened, or is to be
restored to more normal conditions after sustaining
prior damage, economists must assess the level of
appropriate compensation required to leave respondents as well off as if they had not been damaged.
Compensating valuation has proceeded via direct
survey of respondents to this date. Prior compensatory studies are summarized by Meyer (1984).
The distinction between paying ~nd compensating
approaches is based on the economic principal that
in any transfer of resources between user groups,
gainers should gain enough to compensate losers,
whether compensation is paid or not, if the resource
shift is to be beneficial for society (Kaldor,
1939; Hicks, 1939). It has more recently been
affirmed by a variety of applied contemporary
economists (Meyer, 1982; Desvouges, Smith and
McGivney, 1983; Huppert, 1983; Knetsch, 1983;
Biosystems Analysis, Inc., 1984; Rueth and
Niklitschek, 1984).
lpaper presented at North America Conference
on Riparian Ecosystems and their Management,
University of Arizona, Tucson, April 17, 1985.
2Philip A. Meyer is President, Meyer Resources,
Inc., Davis, CA.
417
In the past, some economists (Willig 1976)
argued that while a theoretical distinction between
paying and compensating approaches to valuing public
goods was clear, as a practical matter, answers via
either method came out about the same, and the two
approaches could be usually used interchangeably.
In the nine years since Willig's article, empirical
analysis has made it clear that compensatory values
associated with public resource damage or restoration
of previous damage are significantly higher than
those developed via "paying" approaches (Meyer,
1975; Crutchfield and Schelle, 1978; Meyer, 1979;
Bishop and Heberlein, 1979; Rowe d'Arge and
Brookshire, 1980; Adams, Currie, Hebert and Shikiar,
1980; Schulze, d'Arge and Brookshire, 1981; Meyer
Resources, Inc., 1982; Knetsch, 1983). Psychological
expertise has confirmed that such differences are to
be expected from alternative framing of public resource valuing procedures (Kahneman and Tversky,
1982). The magnitude of empirical differences is
illustrated in a selection of results from comparative work (table 1).
LEGAL AND INSTITUTIONAL CONSIDERATIONS
ASSOCIATED WITH EVALUATION OF RIPARIAN HABITAT
Recent legal developments have lent urgency to
the need for proper compensatory evaluation of
riparian habitat protection and restoration measures,
and have raised a seemingly new issue-associated
responsibility of institutions and their experts.
State fish and game agencies, using their respective authorizing legislation, have sought compensation for fish and wildlife damages in a number
of cases (Halter and Thomas, 1982). In the recent
Mono Lake case (National Audubon Society v. Superior
Court, 1983), the concept of common proprietorship
may have been further expanded, with concern for
public trust apparently coequal with that for private proprietorship. Rueth and Niklitschek (1984)
are explicit with respect to the linkages between
emerging legal pronouncement and required evaluation
Table !.--Comparative Responses to Paying and Compensating
Approaches for Valuation of Public Resources.
Public Resource
Ratio of
Compensating to
Paying Values
Author
1.
All saltwater fishing within
a day's round trip.
Meyer (1975)
19:1
2.
Favorite fishing site in a
region.
Sinclair (1976)
20:1
3.
Elk hunting in Wyoming
Brookshire and Randall (1978)
7:1
4.
One acre of Riparian habitat
along the Sacramento River.
Meyer Resources, Inc. (1982)
5:1
5.
Wetland hunting in an area.
Hammack and Brown (1974)
4:1
6.
Statewide goose hunting for
one year.
Bishop and Heberlein (1979)
2:1 to 5:1
7.
Washington ocean fishing.
Crutchfield and Schelle (1978)
4:1
8.
Fishing in a park.
Ehy (1975)
9.
One day of recreation along
the Sacramento River.
Meyer Resources, Inc. (1982)
4:1 to 5:1
10.
Local postal service.
Banford (1977)
4:1
11.
Fishing pier.
Banford (1977)
3:1
procedure for public resources -- and in the context of other recent legal initiative.
3.5:1
no distinction needs to be made between
enhancement and mitigation projects.
The term enhancement is meaningless,
and all projects can properly be regarded
as mitigating past losses, until preMcNary Dam run levels have been restored.
(p. 93).
The purpose of this paper is to
examine the different evaluation procedures which might be used for projects
intended to mitigate past fishery losses,
rather than to enhance production on the
Columbi~ system.
The need for this work
stems from passage of the Pacific Northwest Electric Power Conservation Act of
1980, which directed the Northwest Power
Planning Council to "promptly develop and
adopt pursuant to this subsection a program to protect, mitigate, and enhance
fish and wildlife •.• on the Columbia River
and its tributaries" (Section 4Hla).
Subsequently, the Northwest Power Planning
Council has established the 1953, preMcNary Dam run level as the reference
point for mitigation and enhancemen.t projects which are mandated by the Act ••••
Such legal perspective and related economic assesments would seem to compel proper compensatory
evaluation of restorative alternatives affecting
riparian habitat. To proceed otherwise may render
agencies and experts vulnerable not only to criticism on the basis of economic theory, but to legal
challenge and possible liability (Honour Brown v.
U.S • A. , 19 84) •
EMPIRICAL EVIDENCE CONCERNING
COMPENSATORY VALUES FOR RIPARIAN HABITAT
This section reports on two studies providing
initial data on the value of riparian habitat. The
first study, conducted for the California Resources
Agency, surveyed residents of Sacramento and Colusa,
California to develop "fair compensatory values" for
riparian habitat along the Sacramento River (Meyer
Resources, Inc. 1982). The second study, conducted
with Biosystems Analysis, Inc. for the Bonneville
Power Administration developed ecologically based
economic values for old growth Douglas fir forest
in Western Washington state (Biosystems Analysis,
Inc.; 1983). These data are preliminary, andrevised estimates based upon further th~oretical
In general, economic evaluation
procedures change as the institutional
environment changes. The viewpoint of
this paper is that passage of the Act
and establishment of pre-McNary run size
as goals for fishery runs has given the
potential beneficiaries of increases in
runs a right to fish production up to
the levels established by the Council.
Until such levels have been attained,
whether by on-site or off-site projects,
418
modification recently completed by the author are
expected to render them somewhat conservative.
They are based on direct evaluation of habitat as
it supports a variety of nature-based activities
and interests. Details for each analysis can be
obtained from the indicated source documents.
Annual value per acre, and total present value per
acre are displayed in table 2.
THE RELEVANCE OF REQUIRED ECONOMIC VALUING
PROCEDURES FOR RIPARIAN RESOURCES
IN THE G~D CANYON
In conclusion, it seems appropriate at this
Arizona conference, to reflect on the implications
developed here for economic value work associated
with riparian habitat in Grand Canyon National Park.
Such comments appear timely. In 1963, completion
of a hydro-electric peaking facility at Glen Canyon
resulted in flows sometimes going from 3,000 to
25,000 cfs. in a 24 hour period. This has degraded
recreation use conditions both on the Colorado River
and along its banks, with attendant impact, one
would suspect, on riparian communities. In response
to these concerns, the U.S .• Bureau of Reclamation,
in association with the National Park Service advertised in 1984 to conduct a Grand Canyon Recreation Study (USBR, 1984). One of the purposes of
this study was to estimate the economic value of
public activities based upon the riverine and
riparian features of the Canyon, presumably for
use in evaluating alternative flow regimes to
restore ecological and recreational viability along
the river. Instructions identified that only a
"willingness to pay" approach to evaluation could
be used, however, thus preempting the greater part
of any economic value that might be developed.
Originating authors may have believed that they
were proceeding with whatever technology was available. It is clear from the information provided
here, however, and from empirical results concerning
the economic value of riparian and related resources
developed elsewhere, that willingness to pay evaluation of restorative improvements in Grand Canyon
National Park are not consistent with economic
theory and may also not be consistent with legal
obligation. More importantly, they are likely to
develop values that significantly underestimate the
public's interest in restoration of riparian capabilities in the Grand Canyon, relative to alternative more appropriate valuing procedures that are
available. Thus, while applauding the initiative
of agencies who are moving forward to address the
issue of restoring riparian habitat and other riverbased opportunity in the Grand Canyon, I call upon
them to review their program, and make such midcourse corrections as may be necessary to expand
its scope to include a full and comprehensive
evaluation of the restorative opportunities at hand.
Table 2.--Per Acre Preliminary Value Estimates for
Riparian Habitat.
Total Present
Annual
Valuel
Value
-----$ per Acre-------A. Sacramento River
Riparian Habitat
1. Thirty-foot leave
strip along the
river bank.
1,663
52,549
2. Full riparian
between s:et back
levies.
3,625
114,546
B. Old Growth Douglas. Fir
Forest in Western Was.hington
3. Based on estimate of 1,362
330,0QQ acres of old
growth still remaining in Western
Washington.
43,0.38
4. Based on a hypothetical reduction in
remaining total
acreage to 230,00.0
acres.
2,229
22,553
5. Based on a hypothe- 10,680
tical reduction in
remaining total
acreage to 64,000
acres.
337,476
lTotal present value is calculated at 3 per
cent rate of discount. Some agencies confuse
interest rates with discount rates, and use a
higher discount rate. We concur with the increasing use of 3 percent by federal and state
agencies in the energy field, and use it here.
A theoretical discussion of discounting issues is
found in Lind et. al. (1982).
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Adams, R.C., J.W. Currie, J.A. Hebert and R. Shikiar.
1980. The visual aesthetic impact of alternative closed cycle cooling systems. BatellePacific Northwest Laboratory.
The economic value of riparian habitat will
vary with habitat type and quality, with the total
amount of riparian habitat generally available and
with other local circumstance. These values do
possess a relative degree of comparability, however, and will serve as initial estimates until
further work can be completed.
Banford, Nancy. 1977. Willingness to pay and
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postal service. Unpublished paper, Simon
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419
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