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.
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 green house gas emissions; and benefits of improved recreational fishing. The best estimates suggest that the aggretate benefits are more than twice as large as the producer costs. The conceptual and empreical methods provide a template for investigating the effects of an environmental constraint on hydroelectric dams.
Nonusers, or individuals who never visit or otherwise use a natural resource, may nevertheless be affected by changes in its status or quality. Monetary expression of their preferences for these resources is know as nonuse or passive-use economic value. Empirical estimates indicate that nonuse value may be substantial for some resources. Inclusion of nonuse value in economic efficiency analyses may alter the outcome of these analyses in some cases. So far, applications have remained largely in the research realm. However, changes in the legal and institutional framework and recent policy pronouncements make it probable that nonuse value will play an important role in natural resource decision making in the future. We briefly discuss the concept of nonuse economic value and its relevance in water resource decision making. The current institutional framework and the applicability and integration of nonuse value within the National Environmental Policy Act (NEPA) process are explored. Details of an ongoing application for the Glen Canyon Environmental Studies Program are described.
This paper addresses five issues encountered when estimating secondary benefits in regional project analysis; (a) the correction for opportunity cost of factors used, (b) the treatment of mobile factors, (c) the effect of economies of size, (d) the role of forward linkages, and (e) the role of spatial structure of economic regions. The first four are reasons that only a small part, if any, of regional impacts can be treated as regional net benefits. The fifth is a reason that, when secondary benefits or damages do exist, their correct estimation can depend on the spatial structure of the affected areas.