Changes in forest overstory lead to changes in runoff. This report estimates what such changes in runoff are worth to society using two sources of information: economicvaluation studies and, most importantly, water market transactions. Evidence from over2,000 transactions that occurred in the western U.S. over the past 14 years (1990 through 003) was examined to learn who is selling to whom and for what purpose, how muchwater is involved, and how much it is selling for. Roughly half of the transactions were sales of water rights; the rest were water leases. The transactions show that the price ofwater is highly variable both within and between western states, reflecting the localized nature of the factors that affect water prices. Ideally, if water market prices or valuationstudies are to be used to help determine the marginal value of water from specific areas, such as national forests, information from local markets or local studies should be used.Lacking site-specific value information, only rough estimates are possible.
Thomas C. BrownRocky Mountain Research StationU.S. Forest ServiceFort Collins, Colorado
The economic value of water that flows over a scenic waterfall was measured using the contingent valuation method. Allowing both the value per day and trips to vary with flow resulted in values per cubic feet per second (cfs) of flow ranging from $1000 for the first 100 cfs to $300 for additional flow at 550cfs. Accounting for the value of foregone hydropower, the economically optimum flow just considering aesthetics of the falls was about 235-240 cfs during the main recreation season. Monthly analysis during the recreation season suggested that optimum flows varied from 165-175 cfs during the early and later recreation season to 500-600 cfs during the four prime recreation months. These flows were three to ten times greater than current minimum flows. Recommendations are made that the Federal Energy Regulatory Commission should use non-market valuation techniques such as contingent valuation surveys to ensure that environmental values are given equal consideration with power values in dam licensing and relicensing decisions.
The two methods [FERC] now uses to evaluate the economic value of power from hydro projects have evolved through the years and generally conform to techniques set forth in the Principles and Standards, which the Water resources Council published as final rules in September 1980. Both methods attempt to quantify how an electric power system's future costs would differ with and without a proposed or existing hydro project. The two methods: 1. Simulated market price (often called marginal price, avoided cost, or incremental cost in the electric utility industry) 2. Cost of the most likely thermal alternative
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