I. Introduction

Little research effort has been expended to date to understand and quantify social, economic and cultural values linked to fisheries in the Klamath basin. Typically, fisheries and other agencies have spent several million dollars annually on biophysical projects, while slapping in whatever socio-economic data was handy at the back end of analysis. This mode of analysis has largely left articulation of socio-economic values to the "public" and to particular interest groups. Such articulation has been sincere and often compelling. It has been neither rigorous nor scientific, however, and has failed to resolve the difficult user issues that exist between fisheries, or between fishery and non-fishery interests. A brief synopsis of required initial remedial work is appended.

Compounding the difficulty of lack of socio-economic data is the fact that, at present, no quantitative restoration targets for the Klamath have been enunciated beyond a generalized intention to "double stocks." Without such quantified targets, socio-economic analysis of a traditional "impact" variety has little in the way of anticipated real effects to relate to.

Notwithstanding these deficiencies, it is possible to provide some socio-economic guidance of use to Klamath restoration planners. Meyer Resources, Inc. (1989) developed estimates of economic benefit from fisherier restoration that can provide some policy level reference for the Klamath.

That work, commissioned by the California Salmon and Steelhead Advisory Committee, stops short of comprehensiveness in several important areas; most notably, failure to estimate benefits for Indian peoples, for commercial fishing communities, or for concerns over the existence of Klamath fishery resources. Futher, the data there assembled was based on sometimes differing methodologies, and consequently cannot be used to allocate fisheries between user groups. Finally, Meyer Resources, Inc. (1989) developed joint values for the Klamath/Trinity system, and Trinity values needed to be backed out for our present anlysis.

Viewing the above qualifications, and data at hand, it is still possible to develope an array of some, but not all, of the benefits that would accrue from differential levels of restorative success in the basin, and to identify associated levels of feasible investment. This will provide planners with an envelope of potential financial feasibility values by which initial investment decisions and subsequent monitoring of program results can be bounded.

II. Assumptions Important to the Analysis

1. Klamath/Trinity Value Apportionment

The relative apportionment of fishery production between Klamath and Trinity sub-basin varies by year, by species, and according to the ratio of artificially spawned to naturally spawned stocks.

For this analysis, we took the two-basin production totals for chinook, coho and steelhead contained in Meyer Resources, Inc.(1988), and reduced them by 45 percent, the ratio of Trinity production to total Klamath/Trinity production indicated for fall chinook in Table 4-1 from CH2M Hill (1985). This procedure is arbitrary, and will obviously need to be adjusted as firm planning target numbers for Klamath basin fishery restoration come on line. The procedure is sufficient, however, to begin to consider economic feasibility in the face of the difficulties cited earlier.

2. Selection of Restorative Increments for Planning

Our feasibility envelope approach also requires specification of potential levels of restorative success in Klamath fisheries. For this analysis, levels of +25%, +50%, +75%, and +100% were selected. Combining Steps (1) and (2) provides the Klamath system fishery baseline and potential increments specified in Table 1.

This analysis considers market economic values for

commercial fisheries and for businesses servicing sport

fisheries. It also incorporates non-market values for sport

fishermen. As noted, it is limited to fisheries on three species; chinook, coho, and steelhead, and does not include Indian or commercial fishing/community values. Unit values are as stated in Meyer Resources, Inc. (1988).

4. Comparing Present and Future Values

Discounting refers to the procedure by which economists balance the relative importance placed on fishery benefits in the near term versus those occurring in the more distant future. A positive discount rate values the present more highly than the future. A negative discount rate values the future more highly than the present. A zero discount rate values the present and the future equally. Lind. et. al. (1982) have identified that discount rates should not be confused with interest rates, which indicate the required rate of return on investment. Lind recommends a discount rate of 3 percent for projects in the public policy sphere, with sensitivity at 2 percent and at 4.6 percent. The California Energy Commission (Wilson, 1981), also recommends a central discount rate of 3 percent, with sensitivity over a range of 1 percent to 4 percent.

Bonneville Power Administration's environmental planning office utilizes a discount rate of 3 percent, with sensitivity analysis of 1 percent and 10 percent. Finally, the Salmon and Steelhead Advisory Committee to the California Legislature recommends discounting of fishery restoration projects a 1% and 0%, with sensitivity analysis at -1% and 3%. In this analysis, we will discount potential future fishery benefits from restoration of Klamath fish stocks at 0%, 1%, 2%, 3%, and 4.6%.

III. Analytical Results

Feasibility results utilizing previously discussed data sources and assumptions are provided in Tables 2 through 4. Table 2 estimates the present value of benefit from Klamath fishery restoration, in market exonomic, and then in market plus non-market, economic terms, for each identified success rate/discount rate combination. Table 3 identifies the maximum level of annual investment that each success/discount rate benefit estimate would justify, assuming investment in fishery restoration takes place on a straight line basis from 1991 to 2006 (a 16 year period). Table 4 reduces that feasible maximum investment estimate to yield an 8.75 percent return on capital, a return utilized by some government agencies (and sometimes confused with a discount rate).
 
 
 

25% 50% 75% 100%

Market+ Market Market+ Market Market+ Market Market+

Discount Value Non-Mkt Value Non-Mkt Value Non-Mkt Value Non-Mkt

Rate Value Value Value Value

---millions of dollars in present value terms---

0 63 218 126 435 189 653 252 871

1 42 146 85 294 127 440 170 587

2 30 103 60 207 89 309 119 412

3 22 75 44 151 62 222 87 301

4.6 14 49 28 97 42 146 56 194
 
 

25% 50% 75% 100%

Market Market+ Market Market+ Market Market+ Market Market+

Discount Value Non-Mkt Value Non-Mkt Value Non-Mkt Value Non-Mkt

Rate Value Value Value Value

---millions of dollars in present value terms---

0 4.0 13.7 7.9 27.3 11.8 40.8 15.7 54.4

1 2.9 8.0 5.7 19.9 8.6 29.8 11.5 39.8

2 2.2 7.6 4.4 15.2 6.5 22.7 8.7 30.3

3 1.8 6.0 3.5 12.0 5.2 18.0 6.9 23.9

4.6 1.3 4.4 2.5 8.7 3.8 13.1 5.1 17.5

Klamath Fishery Restoration

25% 50% 75% 100%

Market Market+ Market Market+ Market Market+ Market Market+

Discount Value Non-Mkt Value Non-Mkt Value Non-Mkt Value Non-Mkt

Rate Value Value Value Value

---millions of dollars in present value terms---

0 3.7 12.6 7.3 25.1 10.9 37.6 14.4 50.0

1 2.7 9.2 5.2 18.3 7.9 27.4 10.6 36.6

2 2.0 7.0 4.0 13.9 6.0 20.9 8.0 27.9

3 1.7 5.6 3.2 11.0 4.8 16.6 6.3 15.7

4.6 1.2 4.0 2.3 8.0 3.5 12.1 4.7 11.5

IV. Conclusion

As noted, the comprehensiveness of the socio-economic data set available to the Klamath fisheries is significantly limited. Further, benefit estimates associated with fisheries restoration can be affected by assumptions employed. Even under a "most adverse" scenario, however, where only market benefits are considered, where only a 25 percent improvement in stock levels over the restoration program is assumed, and where the upper range discount rate of 4.6 percent is employed, an annual investment in excess of $1 million seems justified. More substantial success levels would justify higher maximum investment rates.

These estimates will, of course, need to be adjusted as real data concerning restoration rates becomes available to the Task Force -- for as the program progresses, it will be necessary to base evaluation of economic feasibility less on assumption and more on observation of actual fishery returns due to restorative efforts. Such adjustments will alter the calculations presented here, but are unlikely to extend beyond the bounds of the feasibility envelope identified in this analysis.

V. References

Bonneville Power Administration, 1986. Calculation of Environmental and Benefits Associated with Hydropower Development in the Pacific Northwest. Portland, DE-AC79- 83BP11546.

CH2M Hill, 1985. Klamath River Basin Fisheries Resource Plan. A Report to the U.S. Department of Interior, Redding, CA.

Lind, Robert C., Kenneth J. Arrow, Gordon R. Corey, Partha Dasgupta, Amartya K. Sen, Thomas Stauffer, Joseph E. Stiglitz, J.A. Stockfish, and Robert Wilson, 1982. Discounting for Time and Risk in Energy Policy. Resources for the Future, Washington, D.C.

Meyer Resources, Inc. 1988. Benefits from Present and Future

Salmon and Steelhead Production in California. A Report to the California Advisory Committee on Salmon and Steelhead. Davis, CA.

Wilson, J. 1981. 1981/82 Non-residential Building Standards Development Project: Economic Assumptions for Building Standards Cost Effectiveness. California Energy Commission, Sacramento, CA.