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Economists Work on Analysis Tools for Subbasin Plans by Mike O'Bryant Columbia Basin Bulletin - October 11, 2002

Local planning committees should identify the economic consequences of their subbasin plans to pave the way for better local participation, according to a panel of eight economists.

However, with little funding provided to subbasin planners, the economic work may get short shrift in the planning process.

The Independent Economic Advisory Board to the Northwest Power Planning Council is drawing up the blueprint for how a subbasin plan could incorporate economic impacts. That work could also be the basis for choosing among alternative habitat conservation measures, and deciding the costs of mitigation and cost-sharing in the implementation stage, if the information is gathered early.

The Council's schedule calls for completion of the 62 subbasin plans over the next three years. Work plans describing how the subbasin plans will be developed have been approved for only two subbasins so far, the Flathead and Kootenai. And those work plans have little to say about how a fully-implemented plan would impact the local economy, said Roger Mann of the IEAB. He said such a study could be a way for the local subbasin planning committee to identify the costs and benefits of a plan and eventually deal with those who have standing in the process, such as landowners, or it could identify parties willing to cost share in the plan's implementation.

According to a "Recommendation and Guidance for Economic Analysis in Subbasin Planning," the first draft written by Mann, consideration of economic impacts could serve two purposes: It would help the Council when comparing basin by basin measures that could be implemented. Cost-effectiveness of fish and wildlife strategies and programs "should be addressed when alternative means of achieving the same biological objective are being considered," the draft document says.

Secondly, economics "should be addressed because cooperation with local interests is often needed to develop, fund and implement a subbasin plan. Cooperation may require that local costs be mitigated or compensated. Positive impacts might compensate for some costs, or they might provide a basis for cooperation and cost-sharing," the document says.

At its Aug. 12 meeting, Lynn Palensky, the Council's subbasin planning coordinator, suggested the IEAB put together a template that would help subbasin planners know what socio-economic information to collect when developing a plan. At the same time, however, she said there would be no additional money to conduct such an analysis, but the document could be part of the planning guidance materials. Mann presented the draft template at the IEAB meeting Oct. 3 in Portland.

Each subbasin planning group is allocated about $115,000 to complete a plan, so there is little money to complete a full cost-effective analysis of conservation measures, according to Dan Huppert, IEAB member from the University of Washington. For that reason, the IEAB agreed the guide should describe just the minimal level of information that would be needed to make economic decisions.

As Mann said, there are two separate economic issues each subbasin planning group should consider. The first is that the Northwest Conservation and Power Act requires cost-effective spending of the Council's fish and wildlife funds. The second is that a subbasin planning group may need to identify both the adverse and positive economic benefits of a plan in order to get final local agreement before it sends the plan to the Council for approval.

"I have this fear at these meetings (subbasin planning meetings) that there will be cowboys on one side and fish guys on the other and if we put our model out there they'll spend all their time arguing about the model," said Ken Casavant. He suggested simply getting the planning committees to provide general statements about economic impacts, rather than a full-blown analysis. "The debate of all the costs and benefits may still help move the plan forward," he said.

"All we really want is a description of the industries affected," said Hans Radke. If apple production goes down, he offered as an example, there will always be an income impact. But a measure may also increase fishing days, he offered as a positive impact.

However, some wondered if that would be enough. "But if there is only a general description, how do you (meaning the Council) decide what to pay for among all the projects," Paul Sorensen asked.

In the draft, Mann suggested each subbasin planning group estimate and show the economic costs and benefits both to local groups and to regional groups. For example, an improvement that has a cost locally could have a benefit further downstream when more fish begin to return for harvest.

However, the IEAB agreed that would be more information than any subbasin planning group would likely be able to provide. The IEAB is completing the guidance document this month and will present it to both Palensky and the Council.

The IEAB is a panel of economists created in 1997 by the Council to assess the cost-effectiveness of fish and wildlife recovery measures funded by the Bonneville Power Administration. IEAB members include Hans Radke, a natural resource economist and also co-chair of the Pacific Fisheries Management Council; Joel Hamilton, professor of agricultural economics at University of Idaho; Daniel Huppert, associate professor at the Institute for Marine Studies at the University of Washington; Jack Richards, a resource economist retired from the National Marine Fisheries Service; Lon Peters of Portland, president of Northwest Economic Research; Ken Casavant, professor of agricultural economics at Washington State University; Roger Mann, specializing in water supply economics, and Paul Sorenson, founder and principal of Belyea, Sorenson, Trottier and Associates, an economics consulting firm in Bothell.

Related Sites:
NWPPC: www.nwcouncil.org/