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7 Recreation and Nonuse Values THE ROLE OF ECONOMIC VALUES IN GOES AND THE EIS Much of the research under the Glen Canyon Environmental Studies (GOES) was physical and biological. Economic research also became an integral component of the research program. Economic research had three foci. First, economic tools were used to quantify, in monetary terms, the effects of dam operations on the quality of river recreation. Second, econ- omic tools were used in analyzing the effects of dam operations on values held by those who do not directly use resources affected by dam operations (i.e., nonuse values). Third, economic analysis was used in quantifying the linkage between operating criteria and value of the electricity generated atthe dam. It is important to keep in mind that the economic studies focus on valuing the effects of alternative dam operations, not on the river as a whole. This chapter acldresses the use of economic methods to document changes in the value of recreational opportunities associated with changes in dam op- erations. It also explains the concept of nonuse values, their relevance to dam operations, and the results of nonuse value studies. Chapter 9 sum- marizes and evaluates GCES work on the economics of power generation at Glen Canyon Dam. Use and Nonuse Values Defined Recreation and power values are use values because they stem from the direct use of river resources to produce electrical and recreational benefits. 118
Recreation and Nonuse Values 119 Policymakers, economists, and the public question whether the economic values of environmental resources should be limited to use values (HBRS, 1991, Harpman et al., 1995~. For example, those who have not visited the Grancl Canyon may place an economic value on the preservation of its resources for future generations or their own option to use the canyon in the future. Such values are often called nonuse values. They are motivated by value attached to the continued existence or preservation of a resource or the resource's for future generations (Chapter 3~. Nonuse values are not held only by "nonusers." Visitors to the river corridor below the clam may hold nonuse value in addition to use value. Environmental economists have developed a theory of total value, which consists of use and nonuse values (HBRS, 1991, Harpman et al., 1995~. Questions about the effects of dam operations on the total value of the resources downstream from Glen Canyon Dam are appropriate because federal law requires, as part of the environmental impact statement (EIS) process, consideration of the economic implications of alternatives. The economic theory and empirical measurement techniques relevant to nonuse values in resource valuation studies have evolved rapidly during the past decade (HBRS, 1991, Harpman et al, 1995~. As a result, nonuse values have been included in a variety of policy analyses for which changes in the quality or availability of natural resources are an issue. Perhaps the most important example is the rules for assessing damages to natural resources from spills of oil and toxins under the Comprehensive Environmental Response, Compensation, and Liability Act and the Clean Water Act (U.S. Department of the Interior, 1991~. A U.S. Court of Appeals decision in 1989 strengthened the role of nonuse values in such cases, and nonuse values were important in arriving at a negotiated settlement on liability for the Ewon Valdez oil spill. More recently, the National Oceanic and Atmospheric Administration convened a blue-ribbon panel that evaluated the validity of methods for measuring nonuse values and developed guidelines for mea- suring nonuse values in natural resource damage assessment (NOM, 1993~. In addition, several federal agencies are writing administrative rules for the measurement and application of nonuse values to public policy processes. Measurement of Nonuse Values While the validity of nonuse values is well established in theory, such values cannot influence policy decisions unless they can be measured
120 River Resource Management in the Grand Canyon accurately. Measurement of nonuse val ues relies on the contingent valuation method (CVM), which quantifies willingness to pay. There has been sub- stantial debate among economists and other social scientists over the quantification of willingness to pay. Although contingent valuation continues to be controversial, there is a growing body of evidence that supports its practical usefulness (Harpman et al., 1995~. Contingent valuation is routinely applied with confidence to estimates of use values, and earlywork on nonuse values is encouraging. Whether nonuse values can be measured with sufficient accuracy to meet high scientific standards is a question still widely discussed among policy analysts and economists. There is, however, a theoretical economic frame- work sufficient to form a foundation for their use in the GCES. The literature on CVM indicates that accuracy is sufficient to make quantification of nonuse value useful in understanding the balance of values at stake in managing Glen Canyon Dam. This is particularly true given all that can be learned in the nonuse valuation process regarding public views of the resource issues being addressed under GCES. To neglect total values in favor of more narrowly defined use values would be to leave a major gap in the economic studies under GCES and in the Glen Canyon Dam EIS. This would be unjustifiable given that nonuse values can be estimated. OVERVIEW OF RECREATIONAL USES Recreation is an important use of the Colorado River below Glen Canyon Dam. Each year over 20,000 anglers, 33,000 day-trip rafters, and 15,000 to 20,000 white-water boaters use this section of the river. The GCES examined recreational use patterns and values in considerable detail and focused on those types of recreation most likely to be affected by changes in the dam's operations. The 15-mile segment of the Colorado River immediately below Glen Canyon Dam is located in the Glen Canyon National Recreation Area. It is used by a variety of recreationists, including fishermen, boaters, day rafters, campers, bird watchers, and hikers. Below the Glen Canyon reach the Colorado River flows through Marble and Grand canyons for 277 miles, including over 160 recognized rapids. Some of the world's most challenging and exciting white waters occur here. Below the Grand Canyon, Hoover Dam holds back the Colorado River to form Lake Mead, which is one of the largest reservoirs in the western United States. The dam's operation affects the
Recreation and Nonuse Values 121 experience of recreationists using the Colorado River in Glen Canyon and the Grand Canyon. In 1987 a study of river-based recreation between Lakes Powell and Mead was completed by Bishop et al. The goals of the study were to document the quantity and pattern of river-based recreational use, to identify factors having a significant effect on the net economic value of recreational use, and to estimate the net economic value of river-based recreation. The authors identified four major categories of river-based recreational use: (1) day (scenic) rafting in Glen Canyon, (2) angling in Glen Canyon, (3) commercial white-water boating in Grand Canyon, and (4) private white-water boating in -Grand Canyon. Bishop et al.'s early survey work (Bishop et al., 1987) involving anglers and boaters determined that the value of angling and white-water boating is affected by river stage and daily fluctuations but that day rafters are not particularly sensitive to these aspects of dam operations. Consequently, the economic effects of operational alternatives on day rafters are negligible; Fishing in Glen Canyon The Glen Canyon trout fishery is a by-product of Glen Canyon Dam. Discharge from the dam is colder, carries less silt, and is more stable on an annual basis than prior to construction of the dam. This altered environment supports a good trout fishery. The Arizona Department of Game and Fish (ADGF) stocks up to 100,000 rainbow trout in some years; in more recent years, brook trout and cutthroat trout also have been stocked. Surveys of Arizona anglers conducted by ADGF indicate that trout are the most desired sport fish in the state, but preferences among trout species and between native and stocked trout have not been well documented, as pointed out in 1987 by the NRC committee (NRC, 1987~. The introduced trout have created an important fisherythat is considered to be of high quality. Glen Canyon is one of only two blue-ribbon stream fisheries in Arizona. Each year more than 19,000 anglers fish for rainbow trout in the 1 5-mile reach below the dam. Bishop et al.'s (1987) study also revealed that the attributes most strongly affecting the Glen Canyon fishing experience are the site and number of fish the respondent expected to catch. Fishing success is believed to be related to flow in two ways. Rising water may improve fishing as fish begin to feed on invertebrates that are dislodged in this way. In addition, flows of 10,000
122 River Resource Management in the Grand Canyon cubic feet per second (cfs) and less provide gravel and rock bars for fishing and some room for bank fishing between the water's edge and shore vegetation. Low flows limit boaters ability to get upstream. Fishing in Grand Canyon Fishing in Grand Canyon is likely an activity incidental to white-water boating or backpacking, except in some side canyons around Marble Canyon. The National Park Service (NPS) controls access to these wild trout fisheries by issuing back-country and river permits. Commercial river com- panies are not allowed to offer trips that are primarily for fishing in Grand Canyon, even though fishing is allowed as an incidental activity on river trips. Day Rafting In 1991 more than 33,000 visitors took half-day tours of the Glen Canyon reach. Bishop et al. (1987) found that the only flow-sensitive attribute of a Glen Canyon clay-raft trip may be from where the trip originates. At low-to- moderate flow levels (generally less than 29,500 cts), the 20-person tours depart from a dock near Glen Canyon Dam and float or motor downstream to Lee's Ferry. When releases are above 29,500 cfs and outlet works are in use, departure from the base of the dam is unsafe due to the volume and turbulence of the water. In these cases, rafts normally depart from Lee's Ferry carrying fewer people (10) and motor part way upstream before floating back downstream. White-Water Boating White-water boating in Grand Canyon is a major industry; 21 companies have permits to conduct commercial raft trips in the park. Also, the Hualapai Tribe conducts river trips from Diamond Creek to Lake Mead. Each year 15,000 to 20,000 commercial and private boaters annually run the river. The number of user-days is restricted to 1 15,500 for commercial trips and 54,450 for private parties. White-water boating use is limited to 166 visitors per day during the primary season (May 1 through September 30~. These limitations were designed to maintain boating safety, reduce crowding on the river, and
Recreation ant! Nonuse Values 123 minimize damage to riparian resources. The regulations preclude any increases in use of the river for white-water boating. Motorize trips are allowed to launch from mid-December through mid-September. Oar-powered craft can be used throughout the year. The size of private groups averages less than the limit of 16, while commercial group size usually is 36 people. The lower gorge, which begins at Diamond Creek, is used by the Hualapai Tribe concession as well as by other commercial and private rafters. Most commercial and private raft trips take place between May and October. Bishop et al. (1987) asked white-water boaters to identify the attributes that contribute most to an excellent Grand Canyon white-water trip. Of the attributes listed by at least 1 5 percent of all respondents, four are potentially affected by dam operations: time for layovers and stops at specific sites, rapids, wilderness experience, and not feeling crowded. Rivertrips make planned stops at attractions located along the tributaries and side canyons and also include scheduled short or extended day hikes. These stops are important attributes of white-water trips. During low flows, both commercial and private trip passengers may miss one or more sites because of the additional time needed on the river to maintain a trip schedule. Rapids are also important attributes of white-water boating trips (Bishop et al., 1987~. Rapids are flow related because a number of small-to-medium rapids become less exciting to run at high flows, while larger rapids generally become more exciting to run at high flow. Also, guides and trip leaders are more likely to have passengers walk around major rapids at the highest flows (above 35,000 cfs). At low flows (5,000 cfs or less), it often becomes ne- cessary to either walk passengers around some rapids or to wait for higher water. One of the attributes of an excellent river trip most often identified by river runners is a wilderness experience. Enjoying a wilderness experience is more important to private rafters and oar trip passengers and less important to commercial and motor passengers. Most river runners are aware of wide daily fluctuations, and most feel that the fluctuations make the setting for the trip seem less natural (Bishop et al., 1987~. White-water boaters may feel most crowded at high flows because the number and size of beaches for camping are significantly reduced. In addition, during daily fluctuations in flows, boaters may congregate above rapids as they wait for the water level to rise. Flows affect the usable area of a camping beach. The rise and fall of water levels that result from fluctuating discharges (Chapter 4) inundate portions of beaches, strand boats, and influence the character of the setting. Daily fluctuations influence campsite
124 River Resource Management in the Grand Canyon selection in that many river runners will not choose a campsite that does not offer protection against changes in water level (Bishop et al., 1987~. An average of 35 percent of potential campsite area is inundated when releases increase from 5,000 to 25,000 cfs. Bishop et al. (1987) asked white-water boaters and commercial white- water guides to provide reports on the quality of their Grand Canyon white- water trips. Both the guides and the passengers reported the highest quality for trips during periods of constant flows in the range of 25,000 to 30,000 cfs. For a variety of reasons, however, it is impractical to release 30,000 cfs over long periods of time to increase the quality of white-water trips (Chapter 4~. River levels affect accident rates; flood flows and low flows are believed to be the most hazardous. Fluctuating flows are not considered a significant factor in river safety. At low flows, major rapids become difficult to navigate. Kearsleyand Warren (1992) analyzed mooring conditions forwhite-water boaters at 129 campsites. Mooring conditions were influenced by large fluctuating flows at all sites. This study indicated that better mooring quality exists under constant flows than under fluctuating flows. Recreation at Lakes Powell and Mead Lake Powell is the second-largest reservoir in the western United States. Glen Canyon Dam and its power plant were designed to operate between the water levels of 3,490 and 3,700 feet above sea level. In this range the lake has a water surface area of 52,000 to 163,000 acres and a shoreline that is 990 to 1,960 miles long. Lake Powell provides several major categories of re- creation: lakeshore and back-country camping, campground use, fishing, boating, beach use, and picnicking. Fluctuations in water level are un- avoidable for Lake Powell (Chapter 4~. The highest water levels generally occur between April and June and the lowest levels between February and March. Lake Powell has five marinas, and some expansions and additions are being planned. Normal lake fluctuations influence recreational boating because changing water levels affect access to the water via developed facilities. A change in reservoir levels requires adjustments in facilities, including marinas, docks, buoys and buoy lines, breakwater barriers, channel markers, and ramps. Boaters use the stretch of Luke Mead where the Colorado River enters the lake for scenic boating, fishing, water skiing, and other recreational pursuits.
Recreation and Nonuse Values 125 Navigability in this interface between Lake Mead and the river may be affected by dam operations. Recreation and Native American Tribes A substant al portion of the Hualapai Tribe's gross revenue is clerived from river-based recreational activities. The largest of these activities iswhite-water boating. The Hualapai Tribe owns and operates Hualapai River Runners, a commercial white-water boating company. Hualapai River Runners is one of four enterprises operated by the Hualapai Tribe and was the major source of tribal income in the 1980s. In addition to offering white-water boating trips, Hualapai River Runners provides shuttle services, tows across Lake Mead, and access for river takeouts at Diamond Creek. In 1987 it earned 49 percent of the Hualapai Tribe's gross income. The tribe has diversified its business interests and now depends less on river-based recreational activities than it did in the past. Nevertheless, the tribe earned about 33 percent of its total 1991 income from such activities. The net economic value of commercial white-water trips that launch at Diamond Creek by arrangement with the Hualapai Tribe was estimated by data from Bishop et al. (1987) on commercial white-water boating in the Grand Canyon. No separate economic value study was conducted for commercial trips launched by the Hualapai Tribe at Diamond Creek. The Navajo Reservation borders portions of Glen Canyon National Recreation Area and Grand Canyon National Park. There has been little development of business enterprises in this region because of a federal statutory freeze that has precluded construction or development on this portion of the reservation, pending resolution of a territorial dispute. The development ban was l fled recently, and river-based enterprises may develop in the near future. At the present time, however, no river-based enterprises owned or operated by the Navajo Nation have been documented. Although several other tribes have land bordering Grand Canyon National Park or have current and historical ties to the Grand Canyon, no river-based enterprises owned or operated by these tribes have been documented. ECONOMIC EFFECTS OF DAM OPERATION ON RECREATION The effects on recreational activities of various operational schemes for
126 River Resource Management in the Grand Canyon the Glen Canyon Dam are summarized in the operations EIS (BOR, 1994~. The EIS gives numerical values where possible; otherwise, it gives qualitative assessments. Assessments are based on rankings of alternative operational scenarios in a study of visitor preferences by Bishop et al. (1987~. Each alternative was ranked as more or less favorable for recreation overall and for each of several indicator activities. Indicator activities in the EIS include fishing, day rafting, white-water boating, and lake facilities and activities. Effects of habitat maintenance flows (Chapter 5) are discussed in the EIS under the three alternatives that include such flows. Background on Economic Methods Used Two economic measures-the net economic value of recreation and the regional economic impact of recreation-were used in GOES to estimate the national and regional economic effects of proposed alternatives for dam operations. Table 7.1 summarizes the net economic value of various recreational activities under different types of water release years. The net economic value of an activity is its net addition to the nation's output of goods and services, measured in clollars. The net economic value is a measure of the value of an activity above the actual costs of participating in the activity. Bishop et al. (1987) used the contingent valuation technique to analyze the economic effects of dam operations on recreation. They presented recreationists with descriptions of recreational opportunities at several dif- ferent flow levels and asked them to state their willingness to pay for these recreational opportunities at different flow levels. Bishop et al. found that the value of angling and white-water boating was related to flow and that there were significant differences between the effects of flow on commercial and private white-water boaters. Statistical models for angling and commercial and private white-water boating were developed by Bishop et al. (1987) and HERS (1993~. These statistical models describe the relationships among the economic benefits of each recreational activity, the average flow during the month, and the occurrence of fluctuations exceeding 10,000 cfs during the month. For each type of activity, the model calculates net economic benefits per trip and then aggregates benefits over the actual distribution of trips recorded in 1991. The statistical models predict the same economic benefits for several of the alternatives in the EIS because some alternatives have the same average
Recreation and Alonuse Values 127 TABLE 7.1 Net Economic Value of Recreation (annual benefits in 1991 nominal $ millions) Commercial White- Private Commercial Water Boating White Type of Release White- Below Diamond Water {year) Anglers Water Boating Creek Boating Total Low (1989) 1.3 5.4 0.104 1.1 7.904 Moderate (1987) 1.2 6.4 0.122 1.2 8.922 High (1984) 1.1 12.4 0.230 2.0 15.730 SOURCE: BOR (1995). monthly flows and the same degree of fluctuations over 10,000 cfs. For example, both the Interim Low Fluctuating Flow and Existing Monthly Volume Steady Flow Alternatives have the same average monthly flows. There would be nofluctuations underthe Existing MonthlyVolume Steady Flow Alternative and no fluctuations over 10,000 cfs under the Interim Low Fluctuating Flow Alternative. Consequently, the statistical models do not distinguish between these two alternatives. Likewise, the No Action, Maximum Power Plant Ca- pacity, and High Fluctuating Flow Alternatives all allow daily fluctuations exceeding 10,000 cfs and have identical average releases. Much of the white-water boating use occurs during the summer months. Most of the angling use occurs during the spring and fall. These patterns of use have important effects on the generation of net economic benefits. To the extent that net economic benefits are directly determined by flow, chan- ges in flow during periods of high recreational use produce larger changes in net economic value than similar changes in flow occurring at other times of the year. Regional economic impact is a measure of the importance to the local economy of the expenditures. Since expenditures made by recreationists reflect the costs of participation, they are not considered benefits from the national point of view end are not included in the calculation of net economic value. River-based recreationists, such as anglers and white-water boaters, spend large sums of money in the Grand Canyon region. Such expenditures provide some measure of the local impacts of recreational users. Direct expenditures alone, however, do not fully measure the effects of spending by visitors to the region. Local businesses and residents spend part of the
128 River Resource Management in the Grand Canyon money they receive from anglers and white-water boaters to purchase goods and services from other individuals and local businesses. These individuals and businesses, in turn, spend a portion of their revenue in the region, and so on. Because a portion of each dollar spent by nonresident recreationists is respent over and over in the region, the effect of each dollar of direct expenditure by visitors is greater than $1. A multiplier relates the amount of nonresidential expenditure to the total amount of local economic activity produced by the visitor's spending. Multipliers allow the effect of nonresident expenditures to be more fully assessed. The U.S. Forest Service's Impact Analysis for Planning model (Taylor et al., 1992), a sophisticated framework for assessing regional effects of expenditures, was used to estimate multi- pliers for this analysis. Estimates of average expenditures by anglers and white-water boaters were obtained by Bishop et al. (1987~. Commercial white-water boaters generate most of the economic activity in the region. In total, river-based recreational users generated some $23 million in local economic activity in 1991. Because the number of white-water boating trips is not expected to change and the number of angling trips taken is held constant for this an- alysis, there is no change in regional economic activity for any of the altern- atives listed in the EIS. Economic Effects of Dam Operations on Anglers The quality of a fishing trip for most anglers in the Glen Canyon reach is highest during moderate steady discharges because such discharges appear to improve several attributes of fishing trips. Presently, there are no con- straints on the number of anglers permitted to fish in Glen Canyon. The number of fishing trips to the area in any given year varies with general economic conditions, fishing regulations, and the quality of the fishery. Anglers using the Glen Canyon trout fishery place a high value on large fish. Under the EIS fluctuating flow alternatives, including no action, trout were assumed to be less likely to reproduce and survive until they reach trophy size. Underthe Moderate, Modifiecl Low, and Interim Low Fluctuating Flow Alternatives, the potential for catching large fish was assumed to increase, and therefore fishing trip quality also would have the potential to increase. The underlying validity of this assumption is questionable (Chapter 6), but the economic analysis does show the sensitivity of the value of the fishing to fish population size and age structure.
Recreation and Nonuse Values 129 Rapid changes of stage put wading anglers in Glen Canyon at risk of inur~ation. This risk would be reduced under the alternatives with ramp rate restrictions and would be eliminated in the steady flow alternatives. Downstream in the Grand Canyon, angler safety is not believed to be significantly affected by dam operations, primarily because most fishing activities take place from boats or from shore. Studies in other basins have documented a relationship between angling quality and the number of trips taken. In these studies, angling quality has been related to the species, number, and size of fish caught as well as by the presence of native fish in the catch. Some ways of operating Glen Canyon Dam may change these factors for anglers who fish below the dam. A change in the quality of the fishery might result in the total amount of fishing that takes place. Biological models that could predict angling quality are unavailable, however, and economic models that could predict the amount of fishing based on the quality of the fishing have not been developed. As a result, it is not possible to predict changes in the economic value of angling as a function of dam operations. Economic Effects of Dam Operations on Day Rafting Boaters in the Glen Canyon reach, most of whom are anglers, have d fficulty navigating around sand bars when discharge is 3,000 cfs or less. Most boaters are unable to move up or downstream, and some of those attempting to do so hit rocks and sustain boat and motor damage. Minimum flows of 5,000 cfs eliminate navigation and safety considerations for most day rafters and other boaters. Steady flows make sand bars passable to all boaters. All EIS alternatives were treated as having similar influences on day rafting. Also, habitat maintenance flows (occasional high flows) are unlikely to have any effect on the quality of day rafting below Glen Canyon Dam. Because the alternatives do not differ significantly for day rafters, the economic effects of changing operations are estimated as zero. Economic Effects of Dam Operations on White-Water Boating White-water boaters prefer moderate fluctuations and steady flows because of their influence on itinerary, character of rapids, wilderness values,
130 River Resource Management in the Grand Canyon and boat management at camp. White-water boaters were asked to rank several operational scenarios in the study by Bishop et al. (1987~. Of the EIS alternatives, the steady flow would be most preferred by this group. Fluc- tuating flow alternatives with daily range and ramp restrictions and 5,000-cfs minimum flows are more acceptable than those without such restrictions. Wilderness values are influenced by daily fluctuating flows. When the river undergoes wide daily fluctuations, most river runners are aware of these fluctuations and think they make the setting seem less natural (Bishop et al., 1987~. Fewer river runners would be aware of more moderate daily fluc- tuations. An index of white-water accident risk (Brown and Hahn, 1987) was used to compare the safety of alternatives. At low flows, accident potential is greatest for commercial motor and small oar-powered craft. Risk is reduced most by steady flow; restricted fluctuating flow reduces risk half as much as steady flow. The accessibility of the river to the handicapped was raised as an issue for the EIS and is a concern for NPS, which issues permits preferentially for trips with handicapped individuals. Effects on accessibility follow the same pattern as general accident risk. The number, size, and character of camping beaches in the Grand Canyon have a direct effect on the total recreational capacity of the river corridor and the experience for white-water recreationists. Under the fluc- tuating flow alternatives, the distribution of sites within power plant capacity would be 0.7 sites per mile in narrow reaches and 1.1 sites per mile in wide reaches. Steady flow alternatives would support 0.9 sites per mile in narrow reaches and 1.1 in wide reaches. The size of a particular camping beach is highly variable in relation to flow. In most years the area suitable for camping would average 7,720 ~2 or less under the fluctuating flows and up to 9,200 ft2 under steady flows. Fluctuating flows influence mooring and cause boat management problems and stranding. Under the fluctuating flow alternatives, mooring would be fair to good at 64 percent of camping beaches; under steady flow, 92 percent would be fair to good. Economic Impacts of Dam Operations on Native American Tribes A number of commercial and private white-water boating trips launch from Diamond Creek on the Hualapai Reservation. White-water boating use
Recreation and Nonuse Values 131 below Diamond Creek, as measured by the number of trips taken, is expected to increase over time until use reaches capacity limits. The nature and timing of this increase cannot be reliably predicted. Changes in the number of trips are expected to be unrelated to clam operations. SUMMARY OF EFFECTS OF DAM OPERATIONS ON RECREATION The majority of recreational benefits are derivecl from commercial whRe- water rafting, which in general is positively related to average daily flows and negatively related to fluctuations. Alternatives that increase average summer flows or eliminate daily fluctuations in excess of 10,000 cts tend to increase recreational benefits. The estimates of net economic benefit are based on the statistical relationship between flow and recreation holding all other factors constant at the time of the study. Therefore, these benefit estimates do not accountforanylong-term changes in the recreational environment/hat might affect value. Table 7.2 shows expected changes in the equivalent annual value of recreation under different alternatives, as estimated in the EIS (BOR, 1 995~. STUDIES OF NONUSE VALUE The final EIS (March 1995) includes a brief but useful discussion of the conceptual basis for nonuse values, their potential magnitude, the reasons why people hold nonuse values, the resources to which nonuse values may apply, and methods used by GOES to assess nonuse values. Preliminary studies indicated that quantification of nonuse values associated with Glen Canyon Dam operations is feasible. Participants were able to distinguish effects on the river corridor from effects on the Grand Canyon in general and indicated that they, as nonusers, would be affected by changes in dam operations. A full-scale nonuse value study was completed in mid-spring 1995. Findings from the survey of 2,550 households in the Colorado River Storage Project power marketing area and 3,450 households in the United States as a whole have been made available as a GOES report (Welsh et al., 1995~. The results, summarized below, show that substantial nonuse values are at stake with regard to managing dam operations. The nonuse value work examined public values associated with only three main alternatives for operating the Glen Canyon Dam, even though the EIS
132 River Resource Management in the Grand Canyon TABLE 7.2 Change in Equivalent Annual Value of Recreation for the 50 year Planning Period, as estimated by BOR for the operations ElSa Changes in Equivalent Annual Value Compared to No Action (1991 ~ millions) White Water Boating Commercial Below White-Water Private White- Diamond Alternative Anglers Boating Water Boating CreekTotal No Action 0.0 0.0 0.0 0.00.0 Maximum power plant capacity 0.0 0.0 0.0 0.00.0 High fluctuating flow 0.0 0.0 0.0 0.00.0 Moderate fluctuating flow 0.40 0.10 ~.10 0.00.40 Modified low fluctuating flow 0.90 2.60 0.20 0.043.74 Interim low fluctuating flow 1.00 2.70 0.20 0.043.94 Existing monthly volume steady flow 1.00 2.70 0.20 0.043.94 Seasonally adjusted steady flow 0.80 3.60 0.30 0.064.76 Year-round steady flow 1.00 1.70 0.20 0.032.93 ·The net economic benefits in each year were inflated by the projected gross national product price deflatorforthatyear (Power Resources Committee, 1993) and were discounted using the federal discount rate of 8.5 percent). The equivalent annual value was then calculated using the same rate. SOURCE: BOR (1995~.
Recreation and Nonuse Values 133
134 River Resource Management in the Grand Canyon TABLE 7.3 Annual Values Associated with Alternative Dam Operations ($ millions) Nonuse Values Marketing Power Recreation National Area Moderate fluctuating flow 36.7 to 54.0 +0.4 +2,286.4 +62.2 Low fluctuating flow 15.1 to 44.2 +3.7 +3,375.2 +60.5 Seasonally adjusted -88.3 to -123.5 +4.8 +3,442.2 +81.4 steady flow SOURCE: Adapted from Tables 7-1, 7-2, and 7-3 in Welsh et al., 1995; and as corrected in Table 7-1 in Welsh, 1995. marketing area. The national nonuse values, however, are about 30 times larger than the foregone power revenues for seasonally adjusted steady flows. SUMMARY Studies of recreation economics were designed and conducted using state-of-the-art economic methodologies that are appropriate for the task of measuring the economic impacts of EIS alternatives on recreationists. The CVM was applied in a manner that maximizes the reliability of the recreational value results. Surveys were extensively tested prior to being administered, sample sizes were adequate, and statistical results were robust and consistent with economic theory (Chestnut et al., 1991~. It is important to keep in mind several issues when interpreting the economic analysis of recreation. The analyses focused on the relationship between recreational benefits and the immediate effect of river flows on the quality of recreational experiences. For both the white-water rafters and anglers, other long-term factors are related to the various alternatives and to the quality of the recreational experience. For anglers the implications of alternatives are very uncertain over the long term. Factors such as the availability of camping beaches play a role in the quality, and thus the net benefits, of rafting trips. The economic analyses, however, focused on benefits associated with trips in which the number and
Recreation and Nonuse Values 135 sizes of beaches were fixed, and so the recreational benefits underestimate the long-term benefits associated with alternatives that would maintain larger numbers or sizes of beaches (Chapter 5~. The GCES nonuse value studies are one of the-most comprehensive efforts to date to measure nonuse values and apply the results to policy decisions. The studies were subject to extensive scrutiny by the interests (agencies, advocacy groups) participating in GCES and also to intensive review by a panel of professional economists with no stake in the outcome of the studies. While the CVM was applied in a manner consistent with current professional practice for measuring nonuse values, there is no objective standard of benefits against which the CVM results can be compared. If there were, the CVM exercise would not have been necessary. While not com- pleted in time to be reported in the final EIS, the nonuse value results are an important contribution of GCES and deserve full attention as decisions are made regarding dam operations. REFERENCES Bishop, R. C., et al. 1987. Glen Canyon Dam Releases and Downstream Recreation. GCES Technical Report, Bureau of Reclamation, Salt Lake City. Brown, C.A. and M.G. Hahn. 1987. Effect of flows in the Colorado River on reported and observed boating accidents in Grand Canyon, Glen Canyon Environmental Studies Technical Report. Bureau of Reclamation, Salt Lake C ty, Utah. Bureau of Reclamation. 1994. Operation of Glen Canyon Dam. Draft Environmentallmpact Statement, U.S.Departmentofthelnterior,Wash- ington, D.C. Bureau of Reclamation. 1995. Operation of Glen Canyon Dam. Final Environmental ImpactStatement, March, U.S. Departmentofthe Interior, Washington, D.C. Chestnut, L., R. Raucher, and R. Rowe. 1991. A Review of the Economic Studies Conducted in Phase I of the Glen Canyon Environmental Studies. Prepared for the Glen Canyon Environmental Studies by RCG/Hagler, Bailly, Inc. Harpman, D.A., M.P. Welsh, and R.C. Bishop. Nonuse Economic Value: Emerging Policy Analysis Tool." Rivers 4 No. 4 (March 1995~:280-291.
136 River Resource Management in the Grand Canyon HBRS, Inc. 1991. Assessing the Potential for a Total Valuation Study of Colorado River Resources. Final Report, prepared for the Glen Canyon Environmental Studies by HBRS, Inc., Madison, Wisc. HBRS, Inc. 1993. Analysis of the Impact of GCDEIS Alternatives on Rec- reational Benefits Downstream from Glen Canyon Draft Report. Prepared for the Glen Canyon Environmental Studies by HBRS, Inc., Madison, wise. Kearsley, L.H., and K. Warren. 1992. (1993 in EISJ River Campsites in Grand Canyon National Park: Inventories and Effects of Discharge on Campsite Size and Availability. Final report. Grand Canyon National Park Division of Resource Management, National Park Service. National Oceanic and Atmospheric Administration (NOM). 1993. Report of NOM Panel on Contingent Valuation. U.S. Department of Commerce, Washington D.C. National Research Council. 1987. River and Dam Management: A Review of the Bureau of Reclamation's Glen Canyon Environmental Studies. Washington, D.C.: National Academy Press. Power Resource Committee. 1993. Power Systems Impacts of Potential Changes in Glen Canyon Power Plant Operations. Glen Canyon Environmental Studies Technical Report, Stone and Webster Man- agement Consultants, Inc., Englewood, CO. Taylor, C., S. Winter, G. Alward, and E. Siverts. 1992. Micro IMPlAN User's Guide. U.S. Department of Agriculture, Forest Service, Land Man- agement Planning Systems Group, Fort Collins, Colorado. U.S. Department of the Interior. 1991. Notice of proposed rulemaking: Natural resource damage assessment. Federal Register 56~82J : 19752- 1 9773. Welsh, M. 1995. Memorandum on corrections to the GCES Non-use Values Study Draft Final Report, July 28. Prepared by Hagler Bailly Consulting, Madison, Wisc. Welsh, M.P., R.C. Bishop, M.L. Phillips, R.M. Baumgartner. 1995. GCES Nonuse Value Study. Draft final report, prepared by RCG/Hagler Bailly, Inc., Madison, Wisc. July 12.
