The primary economic difficulty that watershed restoration faces is that there are relatively few markets for its products. In economic-speak, this is a market failure in the provision of watershed restoration. Because of this market failure, collective action, often in the form of government intervention, usually occurs in order to pay for restoration activities. Many government programs, and society at large, typically require the benefits of an activity to outweigh its costs. Thus it is important to quantify the economic benefits arising from watershed restoration. Measured by damage caused, willingness to pay, political referenda, averted expenditures, travel costs incurred, and changes in housing values, researchers consistently conclude that watershed restoration has significant economic benefits. Watershed restoration projects have other economic impacts as well, directly and indirectly employing many people, and potentially contributing to the long-term viability and growth of communities. However, restoration advocates face hurdles in justifying restoration on economic grounds due to the vague nature of nonmarket valuation, long timescales required for achieving a positive return on investment in certain restoration projects, and unknown incremental benefits of watershed restoration in increasing the natural amenity qualities of communities.

The United States is currently one of the many countries across the globe which continues to work towards implementing mechanisms focused on mitigating anthropogenic carbon emissions. In the U.S., markets and the market-like instruments which are employed within them, known most commonly as carbon offsets and renewable energy certificates (RECs), are the tools which encourage the development of renewable energy and reduce carbon emissions. These market-based incentives have the potential to significantly endorse or impede hydropower, dependent upon the potential interaction of science and politics.

The implications of the voluntary and compliance markets on alternative and renewable energy affect both the future development of power plants, as well as the management of existing facilities. Case studies demonstrating the financial impacts of these markets on hydropower projects are presented, which highlight the regulatory requirements in place for hydropower and other renewable power plants. The paper concludes with a discussion of what the future may hold for the environmental commodities markets and the role of the hydropower industry within them.

We conduct a benefit-cost analysis of a relicensing agreement for two hydroelectric dams in Michigan. The agreement changed daily conditions from peaking to run-of-river flows. We consider three categories of costs and benefits: producer costs of adapting electricity production to the new time profile of hydroelectric output; benefits of reductions in air pollution and greenhouse gas emissions; and benefits of improved recreational fishing. The best estimates suggest that the aggregate benefits are more than twice as large as the producer costs. The conceptual and empirical methods provide a template for investigating the effects of an environmental constraint on hydroelectric dams.

Formulation of recovery plans for endangered salmon populations in the Columbia River Basin of North America is a complex, controversial resource-management issue. This report presents an integrated assessment model to analyze the biological-economic tradeoffs in recovery of Snake River spring/summer-run chinook salmon (Oncorhynchus tshawytscha).

The authors find that the removal of an estuarine predator, the Caspian tern (Sterna caspia), and elimination of adult salmon harvest are recovery measures that markedly increase long-term population-growth rates regardless of transport effectiveness. Dam breaching significantly increases growth rates under the best available estimate of transport effectiveness. The authors also conclude that recovery strategies in the cost-effective set depend on assumptions about transport effectiveness. Tern removal and harvest elimination are generally cost effective. At the best estimate of transport effectiveness, strategies that discontinue smolt transportation or breach dams are prevalent in the cost-effective set. In contrast, strategies that maximize transportation are prevalent in the cost-effective set if transport effectiveness is relatively high.

This paper links biology and economics through an integrated model thus providing a valuable tool for science-based policy and management.

The paper can be downloaded from Michael R. Moore's website at http://sitemaker.umich.edu/micmoore/working_papers

This US Fish and Wildlife Service filed a report with FERC on the economic value of refuge based recreation across the nation, on Dec 6, 2007. The main objective of the study was to estimate the national impact of refuges on their regional and local economies. This report studied 80 sample refuges (of a total of 548) and presented findings on:

1. Visitor Recreation-Related Expenditures

2. Economic Effects Associated With Refuge Visitation, and

3. Summary of Economic Effects of Refuge Visitation.

Summary findings:

1. In 2006, 34.8 million people visited wildlife refuges resulting in $1.7 billion in sales and $185 million in tax revenues.

2. Activities related to refuge visitation resulted in employment for 27,000 people

It concludes that recreational visits to national refuges generate substantial economic activity.

The report is available here.