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Economic Value ofForest Ecosystem Services:A Review

THEWILDERNESS

SOCIETY

By Douglas J. Krieger, Ph.D.

THE ECONOMIC VALUE OFFOREST ECOSYSTEM SERVICES:

A REVIEW

By Douglas J. Krieger, Ph.D.

an analysis prepared for The Wilderness Society

Page i

Economic Value of Forest Ecosystem Services: A Review

CONTENTS

Acknowledgments...............................................................................................................................ii

Executive Summary ...........................................................................................................................iii

Chapter 1. Ecosystem Services: Values and Valuation................................................................1Economic Value of Environmental Goods and Services...................................................1Measurement of Economic Values.........................................................................................2

Valuation approaches and value measures.....................................................................4

Chapter 2. The Value of Forest Ecosystem Goods and Services.............................................7Watershed Services....................................................................................................................7

Water quantity....................................................................................................................9Water quality....................................................................................................................10

Soil Stabilization and Erosion Control..............................................................................12Air Quality................................................................................................................................12Climate Regulation and Carbon Sequestration................................................................13Biological Diversity.................................................................................................................14Recreation and Tourism.........................................................................................................15

General recreation............................................................................................................15Hunting and fishing........................................................................................................17

Non-timber Commercial Forest Products.........................................................................20Cultural Values.........................................................................................................................21

Aesthetic and passive use values of forests and wilderness....................................21Endangered species habitat............................................................................................23Cultural heritage values...................................................................................................23

References..........................................................................................................................................26TWS Offices....................................................................................................................................31

FiguresFigure 1. Ecosystem service values of U.S. forests ............................................................ivFigure 2. Consumer surplus for a change in an ecosystem good or service .................3

TablesTable 1. Range of estimated forest ecosystem service values by region.........................vTable 2. Estimate of forest ecosystem values......................................................................8Table 3. Water quantity service values of forests..............................................................11Table 4. Summary of water quality values of forests......................................................13Table 5. Summary of carbon sequestration values of forests .......................................15Table 6. Recreation and tourism values of forests....................................................19-20Table 7. Summary of cultural values of forests.........................................................24-25

Page ii ACKNOWLEDGMENTS


Cindy De Grood, Research Analyst in The Wilderness Society’s Ecology and EconomicsResearch Department (EERD), conducted preliminary research for this report. EERDResource Economist Carolyn Alkire reviewed the report and made helpful suggestionswith assistance from colleagues Spencer Phillips and Pete Morton.

Research for this report was supported by a grant from the Alex C. Walker Educationaland Charitable Foundation.

March 2001The Wilderness Society1615 M Street, NWWashington, D.C. 20036Phone: 202-833-2300Fax: 202-429-3945

Cover Photo by Charlie Or r, “Big Trees, California”

Editor: Deanne KloepferDesigner: Mitchelle Stephenson

Page iiiEXECUTIVE SUMMARY


The importance of natural forestecosystems to human well-being cannotbe overstated. Forests provide raw materi-als for food, fuel and shelter. In forests,ecosystem components such as micro-organisms, soils and vegetative cover inter-act to purify air and water, regulate theclimate and recycle nutrients and wastes.Without these and many other ecosystemgoods and services, life as we know itwould not be possible.

When we make decisions to alter natur-al forest ecosystems, we often give littlethought to the consequences that changemay have on forest ecosystem services orto the ultimate cost of losing those ser-vices. This oversight stems from ourincomplete knowledge about how changesin ecosystems affect the level of servicesthat the systems provide and our inade-quate understanding of the roles playedby seemingly trivial ecosystem compo-nents.

Perhaps the most significant factor isthat few ecosystem services have clearlyestablished monetary values. And this canhave a strong impact, considering thatmany decisions about resource use aremade by comparing benefits and costs.The decision to log a forest tract, forexample, should be based on a compari-son of the expected monetary value ofthe timber and the costs associated withthe ecosystem goods and services foregoneas a result of logging. Any ecosystemgoods and services that do not have mon-etary values are generally not accountedfor in the decision calculus. Neither is thefact that the benefits of many resourceuse decisions are usually enjoyed by small,fairly cohesive groups of people or thecurrent generation, while the costs offoregone ecosystem goods and services areborne by larger, more dispersed groups orfuture generations.

Resource economists have long recog-nized the market distortions caused byunpriced goods. They have developedtechniques to estimate monetary values,and ecological economists have appliedthose methods to estimate values forecosystem services. This paper reviewsestimates of the economic value of forestecosystem goods and services in theUnited States. Globally, Costanza et al.(1997b) estimated the total value of for-est ecosystem goods and services at $4.7trillion annually and the total annual valueof all temperate/boreal forests at $894billion. There are about 520 million acresof temperate/boreal forest in the UnitedStates (Pimentel et al. 1997), with animplied annual value for services of about$63.6 billion, using Costanza’s estimates(Figure 1). Climate regulation, wastetreatment and food production accountfor approximately 75 percent of this total.

Forest ecosystem values estimated instudies reviewed for this paper aregrouped into eight categories: watershedservices (water quantity and quality), soilstabilization and erosion control, air qual-ity, climate regulation and carbon seques-tration, biodiversity, recreation andtourism, non-timber products and culturalvalues. Table 1 reports ranges of the esti-mated values within each category for theentire United States and by region. Thesevalues are not necessarily comparableacross regions because they often corre-spond to different aspects of a forestecosystem service, were arrived at usingdifferent methods and are expressed indifferent units. While the estimates donot provide meaningful comparisons ofvalue across regions, they neverthelessindicate the magnitude of values byregion.

The remainder of this summary brieflyreviews sources of value and value esti-mates for each ecosystem service category.Chapter 1 discusses the economic conceptof value and introduces techniques usedto estimate monetary values for ecosystemgoods and services. Chapter 2 reviews theliterature relevant to estimating monetaryvalues for forest ecosystem services.

Watershed ServicesFo rested watersheds capture and store

wa t e r, thus contributing to the quantityo f water ava i l a ble and the seasonal fl owo f wa t e r. Fo rests also help purify wa t e rby stabilizing soils and filtering contam-inants. The quantity and quality ofwater f l owing from fo rested wa t e r s h e d sa re important to agr i c u l t u re, the ge n e r a-tion of e l e c t r i c i t y, municipal water sup-plies, re c reation and habitat for fish andother wildlife species. Estimates of wa t e rquantity values focus primarily ons t re a m fl ow and range from $0.26 pera c re - foot for electricity generation to asm u ch as $50 per acre - foot for irr i ga t i o nand municipal use. Most values fo rre c reational use are $10 per acre - foot or

less (Sedell et al. 2000). In ge n e r a l ,re c reational values are pro b a bly higher inarid regions such as the Southwest andin regions that experience substantialseasonal variation in stre a m fl ow. Studiesin Colorado and Alabama found sub-stantial existence values for stre a m fl ow.On ave r a ge, Colorado households we rewilling to pay $95 and Alabama house-holds $57 a year to pre s e rve naturals t re a m fl ow in rivers (Brown 1992).

Water quality is part i c u l a rly impor t a n tfor municipal uses. The U. S.E nv i ronmental Protection Age n cy esti-mates that as many as 3,400 public wa t e rsystems serving 60 million people obtaintheir water from watersheds that containnational fo rests. The value of the wa t e rp u r i fication services of fo rested wa t e r-sheds is re flected in the costs that somecommunities incur to protect their wa t e r-sheds. New York City spent $1.4 billionto protect the quality of water from the8 0 , 0 0 0 - a c re fo rested watershed thats e rves much of the city. To protect theirwatersheds, Po rtland, Oregon spends$920,000 and Po rtland, Maine$729,000 per ye a r.

Page iv EXECUTIVE SUMMARY


Figure 1. Ecosystem Service Values of U.S. Forests

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

20.0

Climateregulation

Wastetreatment

Foodproduction

Recreation Rawmaterials

Soilformation

Biologicalcontrol

Cultural

Forest Ecosystem ServicesForest ecosystem services

Figure 1. Ecosystem service values of U.S. forests

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Table 1. Range of Estimated Forest Ecosystem Service Values by RegionEcosystem Service Region

Entire Rocky Southeast Pacific Northeast SouthwestUnited States Mountains Northwest

Watershed services

Quantity $0.26 to $4.07 to $57/$50.86/ $940/ household/acre-foot acre-foot year

Quality $64.16/ $920,000 to $729,000 tohouse-hold/ $3.2 million/ $35 million/year year year

Soil stabilization $1.94/ton $5.5 million/ $90,000year

Air quality $4.16/tree(urban)

Climate regulation $1 to $6 billion/ $20.75/treeand carbon year (cost to coolsequestration buildings)

Biological $4 to $54 diversity billion

Recreation

Economic $1.3 to $110 $736 million $6 billion (all) $1 billion impact billion (wilderness) to $407 million (fishing)

(national forests) (hunting)

Wilderness $600 million/ $14/ $12/ $29 million/recreation year visitor day visitor day year

Hunting and $2.07 to $12.3 $237 to $637 $13 to $25/fishing million million deer

Non-timber $300 million/ $910,000/products year year

Cultural values

Aesthetic and $280 million/ $14 to $92/ $12 to $99/ $48 to $144/ $4.5 to $167 passive use year household/year household/year household/year million

Endangered species $2 to $3.7 $15 to $95/ $40/house-billion/year household/year hold/year

Cultural heritage $4.5 million

Soil Stabilization and Erosion ControlFo rest vegetation helps stabilize soils

and reduce erosion and sedimentation.Estimated values associated with soil sta-bilization primarily re flect the costsassociated with sedimentation. Va l u e sr a n ge from $1.94 per ton in Te n n e s s e eto $5.5 million annually in Orego n’sWillamette Va l l e y. In Tucson, Arizona, ah a l f million mesquite trees are ex p e c t e dto reduce ru n o ff that would otherwisere q u i re construction of detention pondscosting $90,000.

Air QualityTrees trap airborne particulate matter

and thus improve air quality and humanhealth. This paper discusses only onestudy of the value of air quality servicesfrom trees. That study concluded that the500,000 mesquite trees whichTucson,Arizona intends to plant will, once theyreach maturity, remove 6,500 tons of par-ticulate matter annually.Tucson spends$1.5 million on an alternative dust con-trol program. Therefore, the air qualityvalue of each tree equals $4.16.

Climate Regulation and Carbon Sequestration

Trees help regulate climate by trappingmoisture and cooling the earth’s surface.Costanza et al. (1997b) imply that U.S.forests yield $18.5 billion per year in cli-mate regulation benefits. Studies in urbansettings conclude that 100,000 properlyplanted, mature trees in U.S. cities maysave as much as $2 billion in heating andcooling costs. Trees also capture atmos-pheric carbon dioxide, thereby reducingglobal warming.The U.S. Forest Serviceestimates that such carbon sequestrationservices yield benefits of $65 per ton,which totals to $3.4 billion annually forall U.S. forests.

Biological DiversityBiological diversity is important for

many reasons, including its role as a store-house of genetic material that can be usedto selectively breed plants and animals, itscontribution to natural pest and diseasecontrol and its ability to provide valuablepharmaceutical products.

Few studies have addressed the value ofbiological diversity in forest ecosystems,but it is estimated that the cost to U.S.agriculture of using chemical pesticides toreplace the natural pest control servicesfrom all natural ecosystems would beabout $54 billion annually.The U.S.Forest Service estimates that it would costmore than $7 per acre to replace the pestcontrol services of birds in forests withchemical pesticides. In addition, the polli-nation services of natural ecosystems pro-vide U.S. agriculture benefits of $4 billionto $7 billion annually.

Recreation and TourismScenic beauty and recreational amenities

associated with forests make them popularrecreation destinations. The U.S. ForestService estimated that recreational activi-ties on national forests alone contribute$110 billion annually to this nation’sGross Domestic Product. Regionally, theeconomic impact of forest-based recreation depends to some extent on theproximity of population centers as well ason the unique characteristics of a region’sforest resources. Estimates of the econom-ic impact of forest-influenced recreationvary from $736 million annually inMontana to $6 billion annually in theSouthern Appalachians region.

Wild, unroaded lands offer a uniqueform of outdoor recreation, and manystudies have estimated the value of wilder-ness-related recreation. Based on an aver-age value of $41.87 per visitor day, theeconomic value of recreation on the 42

Page vi EXECUTIVE SUMMARY


Page viiEXECUTIVE SUMMARY


million acres of roadless areas in U.S.national forests is $600 million annually.Among residents of the Northeast, usevalues for eastern wilderness total $29million annually.Visitors to wildernessareas in Colorado are willing to pay $14and in Utah $12 per visit for wildernessrecreation.

Forest ecosystems are also importantdestinations for hunters and anglers. In1996, hunters spent 19.4 million dayshunting on national forests, and morethan 18 million people fished in nationalforests. The economic impact of theseactivities is substantial — between $1.3and $2.1 billion for hunting and $1.4 and$2.9 billion for fishing nationwide. In theSouthern Appalachians region, huntinggenerated impacts of $594 million andfishing $407 million in 1996. Hunters onfederal lands in the Columbia River Basinspend as much as $150 million annually.In the Pacific Northwest, commercial andrecreational fishing generate more than $1billion in income annually. In Montana,anglers were willing to pay $2.07 millionto protect high-quality recreational fishingin just one roadless study area.

Non-Timber Commercial Forest Products

Fo rests produce many commerc i a l lyva l u a ble products other than timber,i n cluding mushrooms, floral gre e n s ,medicinal plants and edible plant andw i l d l i fe species. The total market va l u eo f these non-timber products harve s t e din the Pa c i fic Nor t h west amounted toabout $300 million in 1992. In NewYork, a single community ge n e r a t e d$910,000 in sales of non-timber fo re s tp roducts. Non-timber fo rest pro d u c t sa re also important sources of s u b s i s t e n c efoods in some regions. In southeasternAlaska, the ave r a ge household consumes

an ave r a ge of 889 pounds of e d i bl ere s o u rces annually. This includes 295pounds of salmon with a market value of$590 and 118 pounds of venison with am a r ket value of $472.

Cultural ValuesCultural values associated with forests

include what economists call passive usevalues for forest goods and services(including endangered species habitat),the aesthetic value of forest scenery andvalues associated with a region’s culturalheritage. The scenic characteristics offorests attract tourists to forested regions,and the resulting economic impact can besubstantial. Visitors to the scenic BlueRidge Parkway in North Carolina andVirginia, for example, contribute $1.3 bil-lion to local economies. Visitors to theSouthern Appalachians region reported awillingness to pay $18 to $99 per house-hold per year to maintain the scenic quali-ty of the region’s forests. Forest ecosys-tems also provide habitat for some endan-gered species. Values attached to PacificNorthwest old-growth forests for north-ern spotted owl habitat range from $35to $95 per household per year.

Many people attach value to knowingthat forests exist now and into the future.Estimates of such existence value for old-growth forests west of the CascadeMountains extend from $48 to $144 perU.S. household per year. Residents ofWisconsin revealed a willingness to pay$7 million to protect wilderness areas inUtah that they are unlikely to visit. Astudy in Vermont found passive use valuesassociated with protecting eastern wilder-ness of more than $167 annually (aggre-gated) for all residents in the Northeast.In the Rocky Mountain region, passiveuse values for wilderness protection rangefrom $14 to $92 per household per year.

ECOSYSTEM SERVICES: VALUES

AND VALUATION

Goods provided by natural ecosystemsare the basic building blocks of humanwelfare. Natural ecosystems provide muchof the food we eat, the water we drink,the clothes we wear, material for shelter,fuel to keep us warm and inspiration andexperiences that enrich our lives. The abil-ity of ecosystems to provide these goodsdepends on the less obvious ecosystemservices or processes through which thegoods are created and maintained. Thequantity and quality of water available forhuman use — an ecosystem good —depends on the water purification servicesof an ecosystem. The process by whichecosystems provide clean water dependson complex interactions between vegeta-tive cover, soils, wetlands, microorganismsand other ecosystem components (Dailyet al. 1997). When the components thatcontribute to water purification are dam-aged or altered, water quality and humanwelfare may suffer.

Some goods and services from naturalecosystems cannot be produced simultane-ously at a single location. Cutting downtrees for wood products may reduce, atleast for a time, the level of carbonsequestration or erosion control servicesof natural forests. Clearing land for foodproduction may eliminate wildlife habitatfor some species and reduce genetic diver-sity. Such conversion of natural ecosys-tems causes the most concern when ittakes place on a large scale or when italters a rare ecosystem that provides glob-ally or regionally valuable goods or ser-vices such as habitat for an endangeredspecies.

A necessary part of providing forhuman existence involves making tradeoffsamong different ecosystem goods and ser-vices. Decisions to use one ecosystem

good at the expense of other goods andservices are often based on a comparisonof the associated benefits and costs. Manyof the benefits associated with ecosystemgoods are measured as profit or income.The costs, on the other hand, ofteninclude reductions in the levels of otherecosystem goods and services that have noeasily determined market value. The valueof these non-market ecosystem services israrely accounted for in tradeoffs amongecosystem goods and services. In addition,the benefits from use of some ecosystemgoods and services often accrue to rela-tively small, concentrated groups in thehere and now, while the costs in relationto lost goods and services are often borneby a larger, more dispersed population andfuture generations.

Resource economists have developed avariety of techniques to estimate the mon-etary value of non-market environmentalgoods such as hunting, fishing, outdoorrecreation and water quality, and ecologi-cal economists have applied these methodsto estimate the economic value of variousecosystem services (Costanza et al.1997b). This chapter introduces the eco-nomic concept of value and brieflyreviews several methods to estimate eco-nomic values for ecosystem goods and ser-vices. The objective is to provide back-ground needed to interpret the estimatesof forest ecosystem values summarized inChapter 2.

Economic Value of EnvironmentalGoods and Services

In economics, a good or service is valu-able if it increases human well-being.Thisimplies that goods and services have novalue in their own right. Rather, theirvalue is defined only in the context ofhuman welfare. The economic concept ofvalue does not imply, however, that anecosystem’s ability to add to monetary

Page 1CHAPTER ONE


wealth is the only determinant of howecosystem goods and services should beused. Many people gain pleasure fromnon-consumptive use of ecosystem goodsand services — hiking, birdwatching andadditional kinds of outdoor recreation.Other people value ecosystem goods andservices even though they have not andmay never intend to experience thosegoods and services directly. Such non-monetary sources of value are part of theeconomic value of ecosystem goods andservices.

Economists classify the values associat-ed with ecosystem goods and serv i c e sinto two broad categories — use andp a s s ive use, the latter also known as non-use values (Freeman 1979). Use va l u e sa re derived from the direct use of e nv i-ronmental goods and services, incl u d i n gl o gg i n g, commercial and re c re a t i o n a lfi s h i n g, outdoor re c reation, subsistencehunting and gathering and the enjoy m e n to f e nv i ronmental amenities such as ascenic view. Another source of use va l u e sis the indirect provision of goods ands e rvices through processes such as awa t e r s h e d ’s ability to maintain wa t e rq u a l i t y, a we t l a n d ’s ability to prov i d ehabitat for migr a t o ry birds or a fo re s t ’sability to store carbon and thus helpc o n t rol global temperature s .

Passive use values are unrelated to thephysical impacts of an ecosystem good orservice on individual well-being.There isample evidence that people value manyenvironmental goods and services eventhough they never intend to use them orexperience them (Randall 1991). Peoplemay value a natural ecosystem simplybecause it makes them happy to know thatthe ecosystem exists. They may valueendangered species because of a beliefthat species have a right to exist regardlessof their use by humans. These passive usevalues are called existence values. Bequest

values are also passive use values. They areassociated with a desire to protect ecosys-tem goods and services for the use orenjoyment of future generations. Optionvalues, a third kind of passive use values,are associated with maintaining the optionof use by either the current or future gen-erations. An example is the value of pro-tecting rainforest biodiversity to preservethe option of extracting genetic materialfor future agricultural or pharmaceuticalproducts.

While the concept of economic value isnot necessarily based on money, econo-mists often estimate monetary values forecosystem goods and services. Some peo-ple argue that this should not be donebecause ecosystems and species have aninherent right to exist independent oftheir use by humans (Goulder andKennedy 1997). A counter argument isthat failure to place monetary values onenvironmental goods and services will ulti-mately lead to their exploitation and loss(Costanza et al. 1997a). As an example,one consequence of refusing to determinethe monetary value of recreation, wildlifehabitat, scenery and other forest ecosys-tem services may well be an emphasis onlogging — which generates monetaryvalue — to the detriment of the unpricedgoods and services.

Measurement of Economic ValuesThe economic measure of the value of

ecosystem goods and services is consumersurplus. This is the difference between themaximum amount an individual would bewilling to pay for a good and service andthe amount that person actually pays. Theconcept is based on the fact that somepeople are willing to pay more for a goodor service than others. Therefore, when allconsumers are charged the same price,some people pay less than what they arewilling to pay. Since these people pay less

Page 2 CHAPTER ONE


for the good than the maximum they arewilling to pay, they enjoy an increase inwell-being relative to not purchasing thegood. Consumer surplus for society as awhole is the sum of consumer surplus forall individuals.

Figure 2 illustrates the concept of con-sumer surplus for a typical ecosystemgood or service. The demand curve, D,defines the quantity of the good or servicethat individuals in the aggregate demandat each price. With high prices, few indi-viduals are willing to purchase the goodand the quantity demanded is low. Asprices fall, more individuals judge thegood to be worth the price and purchaseit, thus increasing the quantitydemanded.1

While a demand relationship exists forany good or service, estimating thedemand for many ecosystem goods andservices may be challenging, in partbecause many ecosystem goods and ser -vices are public goods available to every-

one in fixed quantity regardless of price.The scenic beauty of forests, for example,is available to everyone with no priceattached. It is impossible or prohibitivelyexpensive to exclude people from the ben-efits of such goods and services if theydon’t pay.Thus, markets do not exist, andecosystem goods and services are oftenunpriced. A demand curve representschanges in the quantity demanded as pricechanges. Since neither price nor changes inquantity are easily observable for manyecosystem goods and services, demand isdifficult to determine.

Assume that the demand relationship fo ra specific ecosystem good and service canbe defined. The supply curve, S0, in Figure2 rep resents the quantity of the good ors e rvice ava i l a ble under specific conditions.The height of the demand curve at anyquantity rep resents society’s maximumwillingness to pay for a marginal incre a s ein quantity. The consumer surplus associ-ated with the marginal ch a n ge in quantityis the diffe rence between the height of t h edemand curve and the price, wh i ch in thiscase is zero. The consumer surplus associ-ated with quantity q0, there fo re, is the sumo f consumer surplus for each marg i n a lch a n ge in quantity from zero to q0. This isthe area under the demand curve between aquantity of z e ro and q0.

Suppose that an activity increases thequantity of the good or service availableto everyone — a stream restoration pro-ject, say, increases the quantity of ecosys-tem services associated with a naturalstream. The line S1 represents this newquantity.The consumer surplus associatedwith the stream restoration project is thedifference between consumer surplus priorto the restoration and consumer surplusafter the restoration. The shaded area ofFigure 2 represents this value.

For a complete discussion of consumersurplus and valuation of ecosystem ser-

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Figure 2. Consumers surplus for a change in an

ecosystem good or service

Quantity

1 In the context of ecosystem goods andservices, the horizontal axis can representeither quantity or environmental quality.

S0 S1

0 q0 q1

D

vices, see resource economics texts such asRandall (1987) or Freeman (1993).

Valuation Approaches and Value Measures.

Economists have developed several spe-cialized techniques to address the diffi-culties inherent in estimating demand —and thus consumer surplus measures —for unpriced or non-market goods ands e rvices. The remainder of this sectionreviews the most common techniques top rovide an understanding of h ow theresulting value measures relate to the eco-nomic concept of value depicted inF i g u re 2.

Travel cost method. One commonlyused method to estimate the value ofnon-market goods relies on travel expendi-tures incurred to visit a site (Freeman1979). This approach is applied to recre-ational and other site-specific activities orresources that necessitate travel costs toexperience the goods or services associatedwith the site. Consider, for example, thechallenge of estimating the value of awilderness area. Wilderness is a non-mar-ket good - visitors rarely pay to use it. Butthey do incur travel costs to visit a wilder-ness area. The travel cost approach queriesvisitors to a site to determine the relation-ship between visitation rates and distancetraveled. The observed variation in visita-tion rates (quantity of visitors) and travelcost (a proxy for price) describes demandfor the site. The demand function permitsconsumer surplus estimates of the eco-nomic value of the site.

Hedonic approach. The hedonicapproach applies to situations where theprice of a market good reflects access toan ecosystem good or service (Freeman1979). In the case of estimating the valueof air quality, we know that levels of airquality may vary across an urban area. Ifhomebuyers are aware of this variation

and care about air quality, then housingprices should reflect dif ferences in airquality.The hedonic approach would col-lect information on home sales (prices)and the environmental amenities availableat locations where homes were sold. Itwould employ statistical techniques toseparate the influence of air quality fromother factors that affect housing pricesand then estimate the portion of the saleprices of the homes that is attributable toair quality. This observed willingness topay for air quality, as an addition to theprice of a home, is used to calculate ademand function for air quality and thusthe consumer surplus associated with dif-ferent levels of air quality.

Contingent valuation. The travel costand hedonic methods use observations ofactual behavior — traveling or purchasinga home — to estimate demand and con-sumer surplus. Both techniques rely on theability to link market behavior to a non-market ecosystem good or service. This isnot possible for passive use values. Analternative valuation method, called con-tingent valuation, was developed to esti-mate passive use values.

Instead of re lying on observed behav-i o r, the contingent valuation method askspeople what they would be willing to payfor an ecosystem good or serv i c e( M i t chell and Carson 1989). Th ea p p ro a ch uses a questionnaire or inter-view to present respondents with a mar-ke t - l i ke situation wh e re they can ex p ress am o n e t a ry value for a care f u l ly describedn o n - m a r ket good or service. For ex a m p l e ,the re fe rendum fo rmat asks wh e t h e rrespondents would vote for or against are fe rendum that would raise taxes a speci-fied amount to provide a non-marke tp u blic good. Responses across a rep re s e n-t a t ive sample of people provide the info r-mation necessary to estimate demand andeconomic va l u e .

Page 4 CHAPTER ONE


The travel cost, hedonic and contingentvaluation methods are the only valuationapproaches that estimate demand relation-ships and, thus, consumer surplus fornon-market goods. There are a number ofother approaches, described below, thatestimate proxies for consumer surplus andother measures of economic impact.

Defensive (averting) expenditures. O n es u ch method relies on the existence oft e chnological substitutes for some ecosys-tem services. A water treatment plant is asubstitute for the water purification ser-vices of a fo rested watershed. Such defe n-s ive (or ave rting) ex p e n d i t u res to preve n tor counteract the loss of an ecosystems e rvice with a substitute provide one mea-s u re of the value of the service (Fre e m a n1993).

Note that defe n s ive ex p e n d i t u res are avalid measure of value only if the ex p e n s eis actually incurred (Heal 2000). NewYork City spent $1.4 billion to pro t e c tits watershed and the water purifi c a t i o ns e rvices that the watershed provides. Indoing so, the city avoided spending am u ch greater amount on a water tre a t-ment plant. In this case, the cost toreplace the water purification services ofthe fo rest with a water treatment plant isnot a measure of value because the citychose the less ex p e n s ive altern a t ive ofp rotecting the watershed. Instead, thecost the city incurred to protect thewatershed and ave rt a reduction in wa t e rquality is the correct measure of va l u e .The measure does not correspond to con-sumer surplus because it measures actualex p e n d i t u res rather than maximum will-ingness to pay.

Defensive or averting expenditures rep-resent the lower end of the scale regardingthe value of ecosystem services. First, theyrely on actual expenditures for the least-cost alternative rather than maximum will-ingness to pay. If it were not possible to

protect the watershed that supplies NewYork City, residents would likely be will-ing to pay the much greater cost for awater treatment plant to ensure the qualityof their water. Even if the city hadincurred the cost of a water treatmentplant, the expenditure would still be lessthan the proper consumer surplus measureof value because it is based on actualexpenditures rather than maximum will-ingness to pay.

Second, technological alternatives arerarely perfect substitutes for ecosystemservices. A water treatment plant providesclean water for municipal use but not forrecreational activities, fish habitat or otheruses that stem from a healthy forestecosystem.

Benefits transfer. Under certain condi-tions, value estimates for ecosystem goodsand services in one location or setting canbe used to estimate value in another loca-tion or setting.This approach is calledbenefits transfer.The validity of the bene-fits transfer approach depends on thequality of the original estimation and onhow closely the valued good and valuationsetting match the new setting (Boyle andBergstrom 1992, Brookshire and Neil1992). Benefits transfer is a widely usedapproach because it is relatively easy andinexpensive to apply.

Commercial value. The methods abovec over situations wh e re market prices fo recosystem goods and services are notava i l a ble. In some cases, market prices doexist. Coastal wetlands provide import a n thabitat for many commercial fish speciesthat have we l l - d e fined market values. Inthis case, the commercial value of t h ewetlands for fish production is the pre-sent value (based on market prices) of t h ef u t u re fish that will result from pro t e c-tion of the wetland. The measure is onlyp a rtial because it incorporates only thevalue of the wetland for the pro d u c t i o n

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o f c o m m e rcial species, while ignoringother va l u e s .

Gross expenditures. Another commonmethod estimates the gross expendituresincurred to enjoy a good or service. Thisapproach is often used in relation to recre-ational activities such as the total expendi-tures on travel, equipment and suppliesfor a fishing trip to measure the value offishing. Gross expenditure is an indicationof the importance of an activity, but itdoes not measure economic value asdefined by consumer surplus. The grossexpenditure measure allocates expenses toan activity that are not specific to theactivity. Also, it does not estimate demandcurves and maximum willingness to pay(Sorg and Loomis 1984).

Economic impact. Many studies esti-mate the total economic impact of anactivity on a regional economy. As anexample, a wilderness area may attract vis-

itors to the region in which the wildernessis located. Those visitors will have a directimpact on the local economy throughtheir spending on food, gas, lodging andsupplies. Measures of these direct impactsinclude income, profits, employment andtax revenue. Local businesses directlyimpacted by tourist activity will indirectlyaffect businesses that supply them goodsand services — for example, the firm thatsupplies food products or kitchen appli-ances to a restaurant. And increased localincome generated from the direct andindirect impacts of tourism will generateinduced impacts such as increased spend-ing by workers and the additional incomeand jobs supported by that spending.While measures of economic impact pro-vide an indication of the impact of anactivity on a local economy, they do notmeasure economic value as defined byconsumer surplus.

Page 6 CHAPTER ONE


THE VALUE OF FOREST

ECOSYSTEM GOODS

AND SERVICES

A recent study of the attitudes offorestry professionals, environmentalistsand the general public suggests that eachof these groups attach greater significanceto the life support processes and moralvalues of national forests now than theydid a decade ago (Xu et al. 1997).Similarly, in a study conducted bySchaberg et al. (1999), residents of NorthCarolina ranked five non-market goodsand services — clean water, contributionsto global oxygen, endangered species habi-tat, stable forest cycles and climate stabili-ty — as the most important benefits thatforests provide.

While people appear to value the non-m a r ket services associated with fo re s tecosystems, quantifying the value ofthese goods and services in monetaryt e rms is difficult. Costanza et al.(1997b) identified 17 specific goods ands e rvices provided by ecosystems: gas reg-ulation, climate regulation, disturbanceregulation, water regulation, water supply,e rosion control and sediment re t e n t i o n ,soil fo rmation, nutrient cycl i n g, wa s t et reatment, pollination, biological contro l ,refugia, food production, raw materials,genetic re s o u rces, re c reation and culturals e rvices.

The authors employed various methodsto estimate the economic market and non-market values of these goods and servicesin 16 different ecosystems, including trop-ical and temperate/boreal forests. Whileforest ecosystems probably contribute insome way to the production of all 17goods and services, Costanza et al. wereable to estimate economic values for only14 and temperate/boreal forest values for8. Table 2 summarizes the study findingsrelevant to forest ecosystems. The final

column of the table was calculated byapplying the estimates from the study —reported on a per-hectare basis — to theapproximately 520 million acres oftemperate/boreal forests in the UnitedStates.2 Values are reported in U.S.dollars per acre.

The Costanza study provides a revealingbut rough estimate of the magnitude ofecosystem service values on a global scale,and the reported values can serve as abasis for estimates relevant to specificregions or ecosystems. This chapterreviews existing estimates of economicvalues associated with forest ecosystems inthe United States. Forest ecosystem ser-vices are organized into eight categories,rather than Costanza’s 17, to reflect thefindings of specific studies reviewed forthis paper.Those categories are watershedservices (water quantity and quality), soilstabilization and runoff control, air quali-ty, climate regulation and carbon seques-tration, biological diversity, recreation andtourism, non-timber products and culturalvalues.

Watershed ServicesForest ecosystems are key determinants

of the quantity and quality of water avail-able for human use. Inadequate waterquantity and quality affect agriculturalproduction, quality of life and humanhealth in many regions of the world. Asthe human population increases and theavailability of high-quality water declines,the watershed services of forests will likelybecome increasingly important.

Forests influence water quantity —both total quantity and seasonal variationin flows — through a number of interre-lated processes. The so-called “albedo”effect refers to the process by which forestvegetation increases evaporation of water

Page 7CHAPTER TWO


2 Pimentel et al. 1997

from the earth’s surface to cause increasedcloud formation and rainfall (Myers1997). Through the albedo ef fect, large-scale clearing of forests can alter rainfallpatterns over entire regions by decreasingthe amount of rain. Forest ecosystemsalso act as a sponge, soaking up and stor-ing water when it is abundant and releas -ing it during dry periods. This processserves to even out annual water flows fromforested watersheds and reduce the

impacts of downstream flood/droughtcycles (Myers 1996).

In the United States, forest ecosystemsplay a key role in providing water. Sedellet al. (2000) estimated that as much astwo-thirds of the runoff in this countryoutside Alaska comes from forests, and 14percent of that amount from nationalforests. Forests east of the Mississippiproduce more water per acre than forestsin the West and account for about 60 per-

Page 8 CHAPTER TWO


Table 2. Estimates of forest ecosystem values

Ecosystem good Market nature Global values by forest type Value of allor service of servicea ($/acre)b U.S. forestsc

All Tropical Temperate/(billion $)

forests Boreal

Climate regulation NM 57.1 90.2 35.6 18.5

Disturbance regulation NM 0.8 2.0 n.a. n.a.

Water regulation NM 0.8 2.4 0.0 0.0

Water supply M,NM 1.2 3.2 n.a. n.a.

Erosion control and sediment retention NM 38.8 99.1 0.0 0.0

Soil formation NM 4.0 4.0 4.0 2.1

Nutrient cycling NM 146.1 373.1 n.a. n.a.

Waste treatment NM 35.2 35.2 35.2 18.3

Biological control NM 0.8 n.a. 1.6 0.8

Food production M 17.4 12.9 20.2 10.5

Raw materials M 55.8 127.5 10.1 5.3

Genetic resources M,NM 6.5 16.6 n.a. n.a.

Recreation M,NM 26.7 45.3 14.6 7.6

Cultural NM 0.8 0.8 0.8 0.4

Total 392.1 812.2 122.2 63.6

Note: n.a. = not available.a “NM” denotes a good or service that is primarily non-market in nature. “M”

denotes a primarily market good or service. “M,NM” denotes a good or service thathas significant market and non-market characteristics.

b Calculated from the $/hectare estimates of Costanza et al. (1997b) based on a con-version factor of 2.471 acres/hectare. All values are in U.S. 1994 dollars.

c Estimates for the United States were based on a total area of 520 million acres oftemperate/boreal forest

cent of the total runoff from all forestsnationwide. In the West, national forestsare relatively more important than non-federal forests as sources of water. InCalifornia, 45 percent of runoff is fromnational forests, and national forests in thePacific Northwest (the Columbia RiverBasin and the coastal rivers of Oregonand Washington) account for 38 percentof the total runoff in the region.

Forests also contribute to water qualityby reducing soil erosion and filtering pol-lutants from water.The vegetative cover offorests shelters soil from the force of rainwhile roots help hold soil in place andreduce soil erosion (Myers 1996). Theinteraction of vegetation and soils also fil-ters other contaminants from water. Cleanwater from forest ecosystems is particular-ly important to the many municipalitiesthat obtain their water from forestedwatersheds. The Environmental ProtectionAgency estimated that 3,400 public watersystems serving about 60 million peopleobtained their water from watersheds con-taining national forests in 1999 (Sedell etal. 2000). National forest watersheds areparticularly important sources of munici-pal water in Oregon and Washington.

Water Quantity. The quantity of waterfrom forest ecosystems contributes tomany valuable activities and services. TheU.S. Forest Service estimates that nationalforest watersheds produce 530.4 millionacre-feet of water annually with an averageconsumptive use value of $50.86 per acre-foot. If all water produced from nationalforests alone were valued at its averagevalue for consumptive use, it would have atotal value of $27 billion annually(Dunkiel and Sugarman 1998).

Of course, not all water flowing fromnational forests is consumed. Sedell et al.(2000) estimated consumptive use ofwater flowing from national forests atalmost 34 million acre-feet per year. At a

marginal value of about $40 per acre-foot, the study estimated a conservativeconsumptive use value of water fromnational forests of about $1.4 billionannually. A recent study of economic ben-efits from all forests in the Sierra Nevadaregion of California concluded that theproductive value of water from the forestswas $1.32 billion annually (Stewart1996). Most of the value was attributableto agricultural use.

In addition to its value in consumptiveuse, water quantity enhances many recre-ational activities. The quantity of wateravailable in a stream (the streamflow) canaffect fish populations and fishing activityas well as recreational boating and rafting.Brown (1992) reviewed studies thataddressed the value of streamflow andconcluded that increased streamflow haspositive value up to some maximum abovewhich additional flow is detrimental tothe recreational experience. The studiesused contingent valuation and travel costmethods to estimate the marginal value ofan additional acre-foot of water used toaugment low seasonal flows in streams ina number of regions.

Estimated values ranged from $1 to$45 per acre-foot. In general, smallerrivers and more heavily used rivers gener-ated the largest values. In most regions ofthe country, anglers placed a marginalvalue of less than $10 on an additionalacre-foot of water. In the Southwest, how-ever, values were considerably more. Astudy in Colorado (reviewed inMoskowitz and Talberth 1998) reportedstreamflow value estimates of $810 to$940 per acre-foot in the UpperGunnison River Basin.

Sedell et al. (2000) reviewed valuesassociated with water flowing fromnational forests and found that the average(across reviewed estimates) value of waterin streams was about $40 per acre-foot

Page 9CHAPTER TWO


for offstream uses (irrigation, industrialand municipal use). Estimates of the mar-ginal value of streamflow for generatingelectricity ranged from $0.26 to $17.00per acre-foot, with most values below$2.00, and most estimates of the marginalvalue of streamflow for recreation werebelow $10.00 per acre-foot.

Th e re are also passive use values associ-ated with stre a m fl ow. Some people va l u ethe know l e d ge that the habitats, speciesand conditions supported by naturals t re a m fl ows are pre s e rved even thoughthey may never dire c t ly experience them.S everal contingent valuation studies esti-mated total values (use plus passive use)for diffe rent aspects of s t re a m fl ow. Twostudies estimated willingness to pay of$95 and $57 per household per year top re s e rve natural stre a m fl ow in 11 rivers inColorado and 15 in Alabama, re s p e c t ive ly( B rown 1992). Another study, cited inB rown (1992), estimated that householdswe re willing to pay $115 per year toi m p rove lake levels in Mono Lake ,C a l i fo rnia to reduce salinity, improve birds u rv ival and diversity and improve visibili-t y. These studies consistently found thatmost (69 perent to 80 percent) of t h etotal value was associated with bequestand existence values rather than use va l-u e s .

A contingent valuation study inMontana estimated the average total valueof increasing summer streamflow in fiverivers to maintain trout populations, birds,wildlife and plants at $4.07 to $35.94 perhousehold per year, with an average of$15 per household per year (Duffield1992). The higher values corresponded toa greater scope of the proposed stream-flow program (five rivers versus one river),respondents who lived closer to theriver(s) in question and respondents whoactively used the rivers. Duffield (1992)also reviewed four other contingent valua-

tion studies of the total value of stream-flow in Montana. Estimated values againfell within the range of $4.07 to $35.94per household per year.

Table 3 summarizes values associatedwith water quantity.

Water Quality. Many municipalitiesdepend on forested watersheds as a sourceof clean water.When these ecosystems aredisturbed, water quality often suf fers. Thecost of constructing and operating watertreatment plants to purify polluted wateris one common measure of the value ofthe water purification function of forestedwatersheds. The city of New York obtainsdrinking water for about eight millionpeople from the 80,000-acre Catskillwatershed. In the late 1990s, the NewYork State and federal governments com-mitted $1.4 billion to protect the qualityof the water in the watershed (Reid 1999,Moskowitz and Talberth 1998) and thusavoided a cost of $4 billion to $6 billionto construct a filtration plant and $300million a year to operate the plant. NewJersey chose to spend $55 million to pro-tect the Sterling Forest watershed ratherthan incur an estimated $160 million infiltration costs (Lerner and Poole 1999).Portland, Oregon spends $920,000 annu-ally to protect its Bull Run watershed,thereby avoiding the $200 million expenseof constructing a filtration plant.Portland, Maine spends $729,000 annual-ly on watershed protection, preventing anexpenditure of $25 million for a water fil-tration facility and $750,000 in annualoperating costs (Reid 1999). In each ofthese cases, the money actually spent —rather than the expenditure avoided — isthe more appropriate measure of the valueof water purification services.

Intact forests in watersheds prevent ero-sion that can reduce water quality. Salem,Oregon’s watershed, for example, lies with-in the Willamette National Forest. In the

Page 10 CHAPTER TWO


Page 11CHAPTER TWO


Table 3. Water Quantity Service Values of ForestsStudy Geographic scope of values Basis for valuation Value estimates

Entire United States

Dunkiel and Sugarman All national forests Consumptive use value of $50.86/acre-foot(1998) all water flowing from forests $27 billion/year

Sedell et al. (2000) All national forests Consumptive use value of $40/acre-footwater actually consumed $1.4 billion/year

Offstream and onstream value $3.7 billion/yearof all water

Average marginal offstream $40/acre-footvalue of water

Marginal value for hydroelectric use $0.26 to $17.00/acre-foot

Marginal value of streamflow < $10/acre-footfor recreation

Brown (1992) All national forests Recreational value of streamflow $1 to $45/acre-foot

Value of streamflow to anglers < $10/acre-foot

Total value of maintaining $15 to $115/streamflow or lake levels household/year

California region

Stewart (1996) Sierra Nevada region Productive use value of water $1.32 billion/yearflowing from forests

Rocky Mountain region

Moskowitz and Talberth Colorado Value of streamflow $810 to $940/(1998) acre-foot

Duffield (1992) Montana Total value of maintaining $6.38 to $35.94/streamflow (contingent valuation) household/year

Brown (1992) Colorado Willingness to pay to preser ve $95/natural streamflow in 11 rivers household/year

Duffield (1992) Montana Willingness to pay to $4.07 to $35.94/augment streamflow household/year

Southeast region

Brown (1992) Alabama Willingness to pay to preser ve $57/household/yearnatural streamflow in 15 rivers

winter of 1996, severe storms causedmudslides in the heavily logged watershed,and the city was forced to spend$700,000 on a temporary pre-treatmentfacility, $200,000 to treat turbid waterand $1.2 million on a permanent pre-treatment system. Additional relatedexpenses included a $100 million watertreatment plant and $3.2 million in annu-al operating costs (Moskowitz andTalberth 1998). Mitsubishi Corporation,located in Salem, also spent $2 million ona private well to provide clean water whenthe city’s water system was shut down.

Water quality af fects recreational andpassive use values associated with water. Acontingent valuation study in Montanaestimated the value of protecting waterquality in Flathead Lake and the FlatheadRiver (Sutherland and Walsh 1985). Onaverage, households allocated $7.37 perhousehold per year to recreational use val-ues associated with maintaining waterquality. Passive use values totaled $56.96per household per year - $10.71 foroption value, $19.88 in existence valueand $26.37 in bequest value. The totalvalue of maintaining water quality was$64.16 per household per year.

Table 4 summarizes estimates of thevalue of the water quality services offorests.

Soil Stabilization and Erosion ControlFo rest vegetation helps stabilize soils

and prevent erosion. The costs associatedwith erosion include reduced soil pro d u c-t iv i t y, damaged roads and stru c t u res, fi l l e dd i t ches and re s e rvoirs, reduced water quali-ty and harm to fish populations.M o s kowitz and Ta l b e rth (1998) rev i e we dstudies of the costs associated with log-g i n g, including costs attribu t a ble to log-ging-induced erosion on national fo rests ins everal regions. Several studies rev i e wed bythe authors addressed the costs associated

with sedimentation such as in the LittleTennessee River Basin wh e re sedimentationcosts residents an ave r a ge of $1.94 perton. In the Willamette Valley of O rego n ,with its large expanses of national fo re s tland, sedimentation imposes costs ofabout $5.5 million per ye a r. Sedimentationin Po rtland, Orego n’s Bull Run re s e rvo i rreduced capacity from 10 billion ga l l o n sto 5.5 billion gallons between 1964 and1972. The sedimentation corresponded tosubstantial logging activity in the wa t e r-shed that supplies the re s e rvo i r.

E rosion also damages roads and harm sfish populations. The U. S. Fo rest Ser v i c espent about $125 million repairing land-slide damaged roads on national fo re s t sin Washington and Orego n3 and morethan $4 million over a fo u r- year periodto repair logging roads damaged by ero-sion on the Siuslaw National Fo rest inO regon alone. Erosion and sedimenta-tion associated with logging on theS i u s l aw also caused an estimated $1.7million in damages to re c reational fi s h i n gover a 30-year period (Moskowitz andTa l b e rth 1998).

Forests also help control storm waterrunoff. In Tucson, Arizona, one maturemesquite tree is expected to reduce stor mwater runoff by nine cubic feet. Based onthe cost of constructing detention pondsto control runoff, the value of a tree forrunoff control is $0.18 annually(McPherson 1992, Dwyer et al. 1992).Tucson plans to plant 500,000 mesquitetrees in the city.The total estimated valueof these trees for runoff control is$90,000 per year.

Air QualityTrees can trap airborne particulate mat-

ter and ozone that can be harmful tohumans and thus contribute to improved

Page 12 CHAPTER TWO


3 No time period was given for thisestimate.

air quality and human health. Air purifica-tion functions of forests are particularlyimportant in urban environments. Oncethe 500,000 mesquite trees that Tucson,Arizona plans to plant reach maturity,they should reduce airborne particulatematter by an estimated 6,500 tons annual-ly (Dwyer et al. 1992, McPherson 1992).Tucson’s current street paving program,which was designed to reduce dust, costsan average of $0.12 per pound of dustcontrolled every year. Using that amountas the defensive expenditure required to

replace the dust control service of treesimplies that the trees have a dust controlvalue of $1.5 million per year, or, adjust-ing for mortality, $4.16 per tree.

Climate Regulation and Carbon Sequestration

Forests help regulate local climatethrough their ability to contribute to andregulate rainfall and temperature. Loomisand Richardson (2000) estimated that theclimate regulation benefits associated withthe 42 million acres of roadless areas on

Page 13CHAPTER TWO


Table 4. Summary of Water Quality Values of ForestsStudy Geographic scope Basis for valuation Value estimatesa

of values

Northeast region

Reid (1999) New York City Defensive expenditures to protect $1.4 billionMoskowitz and Talberth water purification services of(1998) forested watershed

Lerner and Poole (1999) New Jersey Defensive expenditures to protect $55 millionwater purification services offorested watershed

Reid (1999) Portland, Maine Defensive expenditures to protect $729,000/yearwater purification services offorested watershed

Pacific Northwest region

Reid (1999) Portland, Oregon Defensive expenditures to protect $920,000/year water purification services offorested watershed

Moskowitz and Talberth Salem, Oregon Defensive expenditures to purify water(1998) affected by erosion in damaged watershed

City of Salem $2.2 million plus $3.2 million annual operating costs

Mitsubishi Corporation $2 million


Sutherland and Walsh (1985) Montana Recreational and passive use of $64.16/household/yearwater quality (contingent valuation) (total): $7.37 (use), $10.71

(option), $19.88 (existence),$26.37 (existence)

a The magnitude of values depends to a great extent on the number of people who obtain water from the watershed.

national forests are $490 million annually.Those estimates were based on the per-acre benefits reported by Costanza et al.(1997b). Forests also contribute to cool-ing. In an urban setting, properly locatedtrees can reduce cooling costs and energyuse as demonstrated in Madison,Wisconsin, where air conditioning andheating costs for a typical home increasedfrom $671 per year with an energy effi-cient tree planting design to $700 with notrees and $769 for an inef ficient plantingdesign. Nationally, computer simulationsestimate that 100 million mature trees inU.S. cities could reduce annual energycosts by $2 billion dollars (Dwyer et al.1992). The 500,000 mesquite treesplanned for Tucson, Arizona should savean estimated $20.75 per tree in coolingcosts for buildings every year (McPherson1992).

On a global level, fo rest vege t a t i o nabsorbs atmospheric carbon dioxide andt h e reby reduces the potential for gl o b a lwa rm i n g. Tropical fo rests — because theycontain so much vegetation — are part i c u-l a rly va l u a ble for carbon sequestration. Th et e m p e r a t e / b o real fo rests of the UnitedStates also provide carbon sequestrationb e n e fits, wh i ch the U. S. Fo rest Service esti-mated at $65 per ton of c a r b o ns e q u e s t e red, or $3.4 billion eve ry year fro mthis country ’s national fo rests (Dunkiel andS u ga rman 1998). Loomis and Rich a rd s o n(2000), also using the $65 per ton va l u e ,estimated carbon sequestration benefits ofabout $1 billion eve ry year associated withjust the 42 million acres of roadless are a son the national fo rests. The present va l u eo f these benefits — assuming a four per-cent discount rate — is $26.7 billiona n n u a l ly. Pimentel et al. (1997) estimatedthe value of carbon sequestration serv i c e sby using estimates of the coastal fl o o dd a m a ges that would be avoided if i n c re a s e sin sea levels caused by global wa rming we re

p revented. Based on this appro a ch, the car-bon sequestration value of the ro u g h ly 520million acres of fo rest in the United Statesis $6 billion per ye a r.

To put these values in perspective ,Costanza et al. (1997b) estimated thecarbon sequestration benefits of a l lfo rests wo rl dwide at $684 billion annu-a l ly. By fo rest type, benefits from tro p i c a lfo rests we re $424 billion and benefi t sf rom temperate/boreal fo rests we re $260billion. In another summary of e c o s y s-tem values, Myers (1996) rep o rted thecarbon sequestration value of the rain-fo rests in the Brazilian Amazon at $46billion and the replacement cost of t h ecarbon storage capacity of all tro p i c a lfo rests at $3.7 trillion.

Table 5 summarizes estimates of thecarbon sequestration value of forests.

Biological DiversityProtecting biological diversity ensures a

wealth of potentially valuable geneticmaterial such as that used in selectivebreeding to improve yields of commercialcrops and livestock (Pimentel et al. 1997).Genetic diversity also contributes to devel-opment of pharmaceuticals that improvethe quality and length of human life andto biotechnology that improves cropyields and reduces the use of chemicalpesticides. Natural ecosystems also pro-vide habitat for numerous species thatnaturally control potential agriculturalpests (Daily et al. 1997). Moskowitz andTalberth (1998) report that the cost toU.S. agriculture of replacing natural pestcontrol services with chemical pesticideswould be about $54 billion annually.Natural ecosystems also provide pollina-tion services on which a large portion ofcommercial agriculture depends (Nabhamand Buchmann 1997). Natural pollinationservices may be worth as much as $4 to$7 billion annually to U.S. agriculture

Page 14 CHAPTER TWO


(Moskowitz and Talberth 1998). Some portion of these benefits can be

attributed to forest ecosystems, althoughfew estimates specific to forest biologicaldiversity values exist. In one case in CostaRica, a banana plantation pays an adjacentforested conservation area $1 per hectare($0.40 per acre) every year to provide nat-ural pest control services (Reid 1999). Inthe United States, birds control manyinsects that damage forests, and the U.S.Forest Service estimated that the use ofpesticides or genetic engineering toaccomplish the level of pest control pro-vided by birds would cost at least $7.34per acre (Moskowitz and Talberth 1998).Because the cost has not actually beenincurred, however, this estimate representsonly the cost of replacing the natural pestcontrol services of birds and not the valueof pest control services.

Balick and Mendelsohn (1992), in astudy conducted in Belize, estimated thatthe market value of medicinal plants froma tropical forest ranged from $350 peracre in a 30-year-old forest to $1,624 peracre in a 50-year-old forest. When laborcosts were considered, net revenues peracre were $228 and $1,236, respectively.

The present value of a sustainable harvestof medicinal plants was $294 per acrewith a 30-year rotation and $1,346 peracre with a 50-year rotation.

Recreation and TourismForests hold a wide range of recreation-

al opportunities. They are crucial habitatfor game animals and fish sought byhunters and anglers, and they also serve asthe source of rivers and streams used forrecreational purposes. Forests are thebackdrop for non-consumptive recreation-al activities such as hiking, birdwatching,wildlife viewing and other such pursuits.In addition, wilderness areas — many ofwhich are forested — attract substantialrecreational activity. A large number ofstudies address the economic value ofoutdoor recreational activities, incorporat-ing common valuation perspectives such asestimating the value of an activity day fordifferent activities, the value of access torecreational opportunities and the regionaleconomic impact of recreational activities.

General Recreation. Moskowitz andTalberth (1998) cite a number of mea-sures of the economic importance offorests for recreation. The U.S. Forest

Page 15CHAPTER TWO


Table 5. Summary of Carbon Sequestration Values of Forests

Study Geographic scope of values Basis for valuation Value estimates

Dunkiel and Sugarman (1998) U.S. national forests Benefits transfer $65/ton$3.4 billion annually

Loomis and Richardson (2000) 42 million acres of roadless Benefits transfer $65/tonarea on U.S. national forests $1 billion annually and

$26.7 billion present value

Pimentel et al. (1997) Entire United States Coastal flooding $6 billion/yeardamages avoided

Myers (1996) Brazilian Amazonia Defensive expenditure $46 billiona

Costanza et al. (1997b) All forests Unknown $684 billionAll tropical forests $424 billionAll temperate/boreal forests $260 billion

a The study does not indicate whether the reported values are in annual or present value terms.

Service, for example, estimated that theeconomic value of recreation in all nation-al forests was $6.8 billion in 1993 andprojected a value of $12.7 billion for theyear 2045. In 1996, national forest-basedrecreation supported 139,000 full-timejobs. Regionally, recreational activitiesfocused largely on forest ecosystemsaccounted for 2770 jobs in southeastAlaska, $379 million in annual value inSouthern Appalachian national forests anda value of $1 billion in five nationalforests in the southern Rocky Mountains.The Forest Service further estimated thatby the year 2000, recreation on nationalforests would contribute $110 billion tothe nation’s Gross Domestic Product,compared to a $3.5 billion contributionfrom logging on national forests (Dunkieland Sugarman 1998).

National forests contain much of theremaining undeveloped forestland in thiscountry — lands that contribute valuablerecreational experiences. The 42 millionacres of roadless areas on the nationalforests attract an estimated 14.6 millionrecreation days annually. Based on an aver-age value of $41.87 per visitor day,4 theeconomic value of recreation on theseroadless areas is $600 million annually(Loomis and Richardson 2000). Spendingby recreational visitors to forested areashas a substantial impact on localeconomies in some regions. Consideringtotal economic impacts (direct, indirectand induced), recreation in roadless areasgenerates an estimated $576 million inincome, $916 in value added and 23,700jobs annually to local economies (Loomisand Richardson 2000).

Yuan and Christensen (1992) foundthat as many as 60 percent of out-of-state

visitors to Montana in 1990 were attract-ed by the abundance of undevelopedforestlands and the recreational activiti-esthose lands offer.Visitors that wereinfluenced by wildlands were defined asthose who engaged in fishing, hunting ,camping or viewing scenery or wildlife.On average, this subset of all visitorsdescribed in the study spent $546 pergroup in Montana during their trips -substantially more than visitors not influ-enced by wildlands. ThroughoutMontana, wildland-related recreation gen-erated more than $736 million in directspending and supported almost 12,000jobs. By activity, fishing generated thegreatest direct expenditure ($450 million),supporting more than 3,900 jobs directlyand 3,200 through indirect impacts.Nature study generated $97 million indirect spending and supported 6,000 jobs,while backpacking generated $19 millionin wages and salaries and supported 1,200jobs (Power 1992).

Recreational tourism in the SouthernAppalachians region (portions ofAlabama, Georgia, North Carolina, SouthCarolina, Tennessee and Virginia) gener-ates nearly $6 billion per year in total eco-nomic impacts (Barnhill 1999). Nationalforests were the setting for much of thisactivity. Forest ecosystems in the regioncontribute to clear water in the scenicrivers that attract substantial whitewaterrafting activity. In 1996, rafting on theOcoee River generated more than $3 mil-lion in commercial and private user feesand contributed more than $300,000 intax revenues to Polk County,Tennessee.Rafting on the Nantahala River generatedlocal economic impacts of more than $14million in 1993. And the impacts ofrecreational spending ripple outward fromlocalities. For five regional rivers, includ-ing the Nantahala, every job in raftingcreated between 1.67 and 1.90 jobs else-

Page 16 CHAPTER TWO


4 Estimated from 20 existing travel costand contingent valuation studies of thevalue of a roadless area recreation day.

where in the Southern Appalachian states’economies. For every $1,000 spent onrafting, $2,000 to $2,400 were added tototal income levels within the states(Barnhill 1999).

While the economic impact of forest-based recreation is an indicator of theimportance of forest ecosystems to localeconomies, it is not a measure of thevalue of the ecosystem. Several studieshave estimated consumer surplus measuresof the economic value of forest ecosys-tems, primarily for wilderness lands. Acontingent valuation study in Vermont, forexample, asked respondents how muchthey would pay to protect both the LyeBrook Wilderness Area in the GreenMountain National Forest in Vermontand all designated wilderness areas (landsthat Congress has included in theNational Wilderness Preservation System)east of the Mississippi River (Gilbert etal. 1992). Respondents reported willing-ness to pay of $9.04 (median) per house-hold per year to protect the Lye Brookarea and $10.42 per household per year topreserve all eastern wilderness areas. Forboth scenarios, respondents who had visit-ed an eastern wilderness area were willingto pay more than those who had not -$9.71 versus $8.64 to protect Lye Brookand $14.28 versus $6.40 to protect alleastern wilderness. Respondents in all cat-egories attributed about 85 percent oftheir total valuation of wilderness to pas-sive use value and the remaining 15 per-cent to passive use value. Summed over allhouseholds in the study area (a zone fromwithin 26 miles to 75 miles of the LyeBrook area), annual passive use valuestotaled $5.7 million, while use valuestotaled $1.1 million.

Walsh et al. (1984) used contingentvaluation to estimate use and passive usevalues associated with protecting wilder -ness in Colorado. Based on a $14-per-visi-

tor day use value of wilderness, the studyconcluded that the 1.2 million acres ofdesignated wilderness that existed in 1980had a use value of $13.2 million and thatincreasing the total amount of designatedwilderness to 2.6 million acres wouldincrease the use value to $21 million. Usevalues for protecting 5.0 million and 10.0million acres of wilderness in theColorado were $33.1 million and $58.2million, respectively.When use values toresidents of other states were factored in,the marginal value of increasing wilder-ness in the state to 2.6 million acres was$78 per acre, or $125 million.

In another contingent valuation study,cited byWalsh and Loomis (1989), visi-tors to the Ramseys Draft Wilderness inVirginia reported a use value of about$12 per day.

Many people also gain value from view-ing wildlife species that depend on forest-ed habitats. By one estimate, the value ofwildlife viewing alone on national forestswas between $118 and $514 million in1990 (Moskowitz and Talberth 1998).Clayton and Mendelsohn (1993) estimat-ed use values associated with the opportu-nity to view grizzly bears on the McNeilRiver in Alaska, employing the contingentvaluation method to estimate a willingnessto pay that ranged from $227 to $277per person for a four-day visit.

Hunting and Fishing. Forest ecosystemssupport crucial habitat for many gameanimals and fish species. Forests are thus akey factor in generating the substantialeconomic benefits associated with huntingand fishing activity. In 1996, huntersspent 19.4 million days hunting onnational forests and generating a total eco-nomic value between $1.3 and $2.1 bil-lion (1990 dollars; Moskowitz andTalberth 1998). The U.S. Fish andWildlife Service estimated that hunters inthe Southern Appalachians region spent

Page 17CHAPTER TWO


about $1.3 billion on equipment and tripexpenses in 1988. Barnhill (1999) esti-mated the total economic impact of hunt-ing activities and wildlife viewing in theSouthern Appalachians region at $594million and $407 million, respectively, in1996. In the Columbia River Basin,hunters on federal lands, including nation-al forests, spend as much as $150 millionannually to pursue their sport.

While estimates of economic impactsp rovide evidence of the regional impor-tance of s p e c i fic activities on fo rests, theyl a ck the links between land use, wildlifepopulations and value that would be mostuseful to fo rest management decisions.Two studies rev i e wed here estimate unitvalues for animals sought by hunters, andone links those values to fo rest manage-ment decisions. The first study (Live n go o d1983) used the hedonic travel costa p p ro a ch to estimate the value that leasehunters in Texas placed on taking a deer.On ave r a ge, those hunters we re willing top ay about $25 to be assured of taking onedeer and about $13 for an additional deer.

The second study (Loomis 1992)e m p l oyed a habitat model to link the pre s-ence and number of fo rest roads to re d u c e delk populations. It then applied the modelto estimate the expected decline in thep robability of taking a six-point or large rbull elk that would be associated with log-ging in an undeveloped fo rest, applying themodel to the 145,000-acre Hya l i t e -Po rcupine Buffalo Horn Wi l d e rness StudyA rea in the Gallatin National Fo rest inMontana. On ave r a ge, hunters we re willingto pay $108 per trip for the ex p e c t e di n c reased potential of taking a six-point orbetter elk associated with wilderness. To t a lestimated benefits to elk hunters from pro-tecting the area as wilderness we re morethan $12.3 million (1978 dollars).

More than 18 million people fished innational forests in 1996. The economic

value of this activity was between $1.4and $2.9 billion (Moskowitz and Talberth1998). Regionally, the national forests ofthe Southern Appalachians region con-tribute to excellent cold-water fish habitat,and the consumer surplus associated withfishing in those forests was estimated tobe between $237 and $637 million in1997 (Moskowitz and Talberth 1998).Another study of the SouthernAppalachians region found that fishingopportunities in the region generated 3.3million fishing days with related retailsales totaling $173 million in 1996(Barnhill 1999). The total economicimpact of recreational fishing in the six-state region was estimated at $407 mil-lion. Moskowitz and Talberth (1998)report that in Washington and Oregonwhere national forests contribute to thehabitat of valuable salmonid species, com-mercial and recreational fishing generatemore than $1 billion in income and sup-port 60,000 jobs every year.

U n d eveloped fo restland contributes tothe quality of s t reams for trout species thata re part i c u l a rly sensitive to ch a n ges in wa t e rquality and temperature. Loomis (1992)estimated expected trout populations andc a t ch rates for two scenarios — wildern e s sdesignation and opening the area to log-ging — for the 145,000-acre Hya l i t e -Po rcupine Buffalo Horn Wi l d e rness StudyA rea in the Gallatin National Fo rest inMontana. The study used the travel costa p p ro a ch to estimate the economic value ofch a n ges in trout fishing conditions associat-ed with development. Wi l d e rness pro t e c-tion generated re c reational fishing benefi t swith a present value of $2.07 million(1978 dollars), for a total present value inadded fishing benefits of $2.1 million ove ra 40-year planning period.

Table 6 summarizes estimates of recre-ational values associated with forestecosystems.

Page 18 CHAPTER TWO


Page 19CHAPTER TWO


Table 6. Recreation and Tourism Values of Forests



Moskowitz and Talberth All national forests Economic impact of $6.8 billion in 1993 and(1998) national forest recreation 139,000 jobs in 1996.

Dunkiel and Sugarman All national forests Contribution of national forest $110 billion annually(1998) recreation to Gross Domestic

Product

Moskowitz and Talberth All national forests Total economic value $1.3 to $2.1billion(1998) of fishing in 1996

Moskowitz and Talberth All national forests Total economic value associated $1.4 to $2.9 billion(1998) with fishing (method unknown)

Loomis and Richardson 42 million acres of roadless Aggregate user day values $600 million annually(2000) areas on national forests for roadless area recreation

Economic impact of $1.49 billion and 23,700 jobs.roadless area recreation


Loomis Montana wilderness Elk hunting value of wilderness $108/trip (1992) study areaa protection (contingent valuation) $12.3 million total

Loomis Montana wilderness Present value of recreational $2.07 million in 1978 dollars(1992) study areaa fishing benefits associated with

protecting wilderness (travel cost)

Walsh and Loomis Colorado Use value of wilderness $14/visitor day(1989) protection (benefits transfer)

Yuan and Christensen Montana Economic impact of Total of $736 million in direct(1992); Power (1992) wildlands influenced recreation spending and 12,000 jobs.

Southeast region

Walsh and Loomis Virginia Use value of wilderness protection $12/visitor day(1989) (contingent valuation)

Moskowitz and Talberth Southern Appalachian regionb Expenditures on hunting $1.3 billion in 1988(1998) equipment and trip expenses

Moskowitz and Talberth Southern Appalachian regionb Consumers surplus of $237 to $637 (1998) recreational fishing million in 1997

Barnhill (1999) National forests of the Economic impact of $407 millionSouthern Appalachian regionb recreational fishing

Barnhill (1999) National forests of the Total economic impact of $594 million and $407 Southern Appalachian regionb hunting and wildlife viewing million, respectively, in 1996

Barnhill (1999) National forests of the Economic impact of recreation $6 billion annuallySouthern Appalachian regionb on the national forests

Page 20 CHAPTER TWO


Table 6. Recreation and Tourism Values of Forests continued


Northeast region

Gilbert et al. (1992) Lye Brook Wilderness, Vermont Use value of wilderness $29 million total use preservation (contingent valuation) value of eastern wilderness

All eastern wilderness Lye Brook area Median willingness to pay of $9.04/household/year

All eastern wilderness Median willingness to payof $10.42/household/year

Pacific Northwest region

Moskowitz and Talberth Federal lands in the Columbia Total expenditures for hunting $150 million(1998) River Basin

Moskowitz and Talberth Pacific Northwest Economic impact of commercial $1 billion and (1998) national forests and recreational fishing 60,000 jobs annually

Southwest region

Livengood (1983) Texas Value of taking a deer in $25 for one deer,hunting (hedonic travel cost) $13 for second deer

aThe Hyalite-Porcupine Buffalo HornWilderness Study Area in the Gallatin National Forest.

bThe Southern Appalachian region consists of Alabama, Georgia, North Carolina, South Carolina, Tennessee and Virginia.

Non-Timber Commercial Forest Products

Fo rests produce many commerc i a l ly va l u-a ble products besides timber. These incl u d em u s h rooms, floral greens, medicinal ande d i ble plants and wildlife re s o u rc e s .O rego n’s Willamette National Fo rest pro-duced $72 million in sales of the orn a m e n-tal greens salal, huck l eb e rry, swo rd fe rn andb e a rgrass in 1991. More than 1.3 millionpounds of s even medicinal plants we re har-vested from Missouri’s national fo rests in1993. Floral greens and holiday and eve r-green boughs from national fo rests inO regon and Washington generated sales of$128 million in 1989 and employe d10,000 people. The entire non-timber fo r-est products industry associated withnational fo rests in Oregon and Wa s h i n g t o nc o n t r i buted about $300 million to theregional economy in 1992, with $41 mil-

lion attribu t a ble to mushroom harve s t s( M o s kowitz and Ta l b e rth 1998).

Fo rest ecosystems are critical componentsin maintaining viable habitat for salmonidspecies. In some regions, these fish have sub-stantial commercial and re c reational va l u eand generate large local economic impacts.In southeastern Alaska in 1987, commerc i a lh a rvest of five salmon species totaled morethan 14 million fish with a market value ofm o re than $71.8 million. The commerc i a lfishing industry in the region dire c t lye m p l oyed 1,496 people in fishing in 1984and, between 1981 and 1984, an ave r a ge of1,000 people annually in seafood pro c e s s i n g(Glass and Muth 1992). As noted in thep revious section, commercial and re c re a t i o n-al fishing combined in the Pa c i fic Nort h we s tgenerate more than $1 billion in income ands u p p o rt 60,000 jobs annually (Moskow i t zand Ta l b e rth 1998).

Fo rest products are also important fo rsubsistence living in many regions. In south-e a s t e rn Alaska, residents took 174,456salmon in 1987 for subsistence purp o s e s ,wh i ch was an ave r a ge of 143 pounds perhousehold (Glass and Muth 1992). Muthand Glass (1989) found that households inthat region consumed an ave r a ge of 8 8 9pounds of e d i ble fo rest products annually,i n cluding 295 pounds of salmon and 118pounds of venison. Based on market pricesfor commerc i a l ly ava i l a ble meat and adjust-ed for protein content, the economic va l u eo f the salmon and venison to a householdwe re $590 and $472, re s p e c t ive ly.

In Crown Point, New York, the ave r a gehousehold generated about $1,500 in gro s svalue (based on market prices) from fo re s tp roducts eve ry ye a r, while the total value ofp roducts collected by the entire communitywas $910,780 (Muth and Glass 1989).

Cultural ValuesThe cultural values associated with for-

est ecosystems include their aesthetic valueand the value people attach to knowledgethat forests exist. They also include thevalues people attach to forests as habitatfor endangered species that they may ormay not ever see in the wild.

Aesthetic and Passive Use Values ofForests and Wilderness. Barnhill (1999)attributed a portion of the economicimpact of tourism along the Blue RidgeParkway to the scenic beauty of the adja-cent forests. The study found that visitorsspend $1.3 billion in North Carolina andVirginia counties contiguous to theParkway, that these expenditures generate$98 million in tax revenues annually, andthat visitor spending directly supportsmore than 26,500 jobs.

Holmes et al. (1997) used the hedonict r avel cost appro a ch to rank the impor-tance of scenic characteristics of w i l d e r-ness fo rests in the Southern Ap p a l a ch i a n

Highlands. The study concluded that larget rees we re an important scenic ch a r a c t e r i s-tic of fo rest landscapes. Two additionalstudies estimated willingness to pay for thedensity of l a rge trees in fo rests and wilder-ness areas and associated tree density withfo rest quality. Walsh et al. (1990) in ac o n t i n gent valuation study in Coloradoa s ked respondents how much they wo u l dbe willing to pay for a fo rest quality-pro-tection pro gram that would maintain standdensities at 125 to 175 trees per acre re l a-t ive to zero to 50 trees per acre withoutthe pro gram. The ave r a ge response wa s$47 per household per ye a r. Statewide,this implies a present value of a fo re s tquality pro gram of $675.9 million, or$50 per acre. Re c reation value accountedfor $13 of the total value while option,existence and bequest values accounted fo r$10, $10 and $14, re s p e c t ive ly.

In the other study, Haefele et al. (1992)used a contingent valuation survey ofhouseholds within 500 miles of A s h ev i l l e ,N o rth Carolina, to estimate use and non-use values for protecting fo rests in theAp p a l a chian Mountains from further mor-t a l i t y. Respondents we re willing to payb e t ween $18 and $59 per year to pro t e c tthe remaining undamaged fo rests alongtrails and ro a dways. They we re willing top ay between $20 and $99 to protect allremaining high-quality fo rests. Existencevalues accounted for more than half o f t h etotal value of fo rest protection. Bequestvalues accounted for almost 30 perc e n t ,and use values accounted for about eightp e rcent to 12 percent (Aldy et al. 1999).

Champ et al. (1977) designed a contin-gent valuation survey of Wisconsin re s i-dents elicit passive use values and fo u n dthat respondents we re willing to makeactual cash donations to support a pro-gram to re m ove roads from the Nort hRim of the Grand Canyon and conve rt thea rea to wilderness. Aggregated to the

Page 21CHAPTER TWO


e n t i re population of Wisconsin, passiveuse values for the created wildern e s stotaled $7 million. Gilbert et al. (1992)also employed a contingent valuation studyto ask how much respondents would payto protect both the Lye Brook Wi l d e rn e s sin Ve rmont and all eastern wilderness. Th es t u dy estimated passive use values associat-ed with protecting eastern wilderness atm o re than $167 million annually aggrega t-ed over all households in the Nort h e a s t .

Four studies of passive use values forwilderness provide additional insight intothis issue. Walsh et al. (1984) undertooka contingent valuation survey of Coloradoresidents and estimated passive use(option, existence and bequest) valuesassociated with increasing the number ofacres of wilderness in Colorado. On aver-age, households attached a passive usevalue of $14 (1980 dollars) to the state’s1.2 million acres of designated wilderness,essentially equal to use values. Passive usevalues associated with protecting an addi-tional 1.4 million acres, for a total of 2.6million acres, were $19 per household peryear. Passive use values for protecting 5.0million and 10.0 million acres were $25and $32 per household per year, respec-tively. Respondents also indicated theywould be willing to pay $21 per year toprotect 125 million acres of additionalwilderness in other states.

A second contingent valuation study,cited byWalsh and Loomis (1989),applied the design of the Colorado studyto Utah residents. Total values (use andpassive use) associated with wildernessprotection in Utah were $53 per year toprotect 2.7 million acres of wilderness,$64 for 5.4 million acres, $75 for 8.1million acres and $92 for 16.2 millionacres. The study did not distinguishbetween use and passive use values.

The third contingent valuation study,cited byWalsh and Loomis (1989), elicit-

ed passive use values for the WashakieWilderness Area (adjacent to YellowstoneNational Park) from respondents inWyoming.Wilderness users reported pas-sive use values of $46 per household peryear, while respondents in five cities atvarying distance from the area reportedpassive use values of $9.70 (urban) and$8.40 (rural). The fourth study, also citedbyWalsh and Loomis (1989), was a con-tingent valuation survey of visitors to theRamseys Draft Wilderness Area inVirginia. That study reported a consumersurplus of $12 per day for use values andabout as much for passive use values.

Loomis and Walsh (1992) in their con-tingent valuation study of willingness topay for wilderness preservation inColorado estimated current values andprojected those values 30 years into thefuture based on changes in the demo-graphic makeup of the population. Perhousehold willingness to pay for protect-ing 5.0 million acres of wilderness rosefrom $25.30 in 1980 to $30.76 in 2010(1980 dollars). When projected popula-tion increases were factored in, totalpreservation value rose from $28 to $49million over the same time period.

Loomis and Richardson (2000) in theirstudy of the economic benefits of road-less areas on national forest land used abenefits transfer approach to estimate pas-sive use values associated with roadlessareas. Based on contingent valuation esti-mates from previous research, the studyapplied passive use values of $6.72 and$4.16 per acre to western and easternroadless areas, respectively.The study esti-mated passive use values of $274 millionper year for roadless areas in the West and$6.24 million annually for roadless areasin the East. The total passive use valueassociated with protecting the 42 millionacres of roadless area on the nationalforests was $280 million.

Page 22 CHAPTER TWO


Endangered Species Habitat. One ratio-nale for passive use values is that peoplea t t a ch a value to knowing that fo rests ex i s tand provide habitat for wildlife species.Estimates of existence value for old-grow t hfo rests west of the Cascade Mountains rangef rom $48 to $144 per U. S. household peryear (Moskowitz and Ta l b e rth 1998).

Loomis and Ekstrand (1997) used con-t i n gent valuation to estimate the value offo rest ecosystems as habitat for the thre a t-ened Mexican spotted owl, wh i ch lives pri-m a r i ly in the Four Corners region ofArizona, Colorado, New Mexico and Utah.The ave r a ge respondent was willing to pay$40.49 annually to protect 4.6 milliona c res of o l d - growth fo rest habitat necessaryfor this species. The present existence va l u eassociated with protecting the ow l ’s habitatwas between $2.0 billion and $3.7 billion.

At least three contingent valuation stud-ies have estimated the economic value ofp rotecting old-growth fo rest ecosystems ashabitat for the nort h e rn spotted owl. Onec o n cluded that the ave r a ge Wa s h i n g t o nState household was willing to pay $34.84per year to protect spotted owl habitat( Rubin et al. 1991). The analysis ex t r a p o-lated the estimates to Oregon, Califo rn i aand the entire United States based on theassumption that willingness to pay decl i n e sby 10 percent for each 1000 miles of d i s-tance from the site. Corresponding willing-ness to pay estimates we re $36.91 perhousehold per year in Oregon, $20.88 perhousehold per year in Califo rnia and$15.21 per household per year in the re s to f the country. The study estimated thetotal value of p rotecting spotted owl habi-tat at almost $1.5 billion per ye a r.

A second study estimated ave r a ge willing-ness to pay for a pro gram to increase pro-tection from fi re for three million acres ofo l d - growth fo rest set aside as habitat for then o rt h e rn spotted owl in Oregon (Loomis etal. 1994). The ave r a ge household in the

sample was willing to pay just over $90 peryear for the pro gram. In the third study,H a gen et al. (1992) estimated that the ave r-a ge Oregon household was willing to pay$95 annually to protect old-growth fo re s thabitat for the ow l .

Howard (1997) estimated the opportu-nity cost associated with protecting old-growth forests as endangered species habi-tat for the northern spotted owl, pileatedwoodpecker and marbled murrelet inWashington State’s Olympic NationalForest. The study estimated the timberrevenue that would be lost by shiftingmanagement priorities from logging toprotection of old-growth stands. Thestudy concluded that the dif ference in pre-sent value of timber was $17,411 per acre(calculated over a 200-year stand rotationand expressed in 1994 dollars) before log-ging costs were considered. This figurerepresents the present value of timber rev-enue that would be foregone to managethe forest primarily for old-growth habitatrather than for timber production.

Cultural Heritage Values. Fo rests can alsoc o n t r i bute to quality of l i fe through their ro l eas part of an are a ’s cultural heritage. A re c e n tdecision involving the conversion of fo re s t-land in Weston, Massachusetts illustrates thei m p o rtance of cultural heritage as a source ofvalue (Fausold 1999). To expand Boston’swater supply infrastru c t u re, the Massach u s e t t sWater Re s o u rces Authority wanted to pur-chase a 36-acre parcel of fo rested conserva-tion land, wh i ch had been owned by the tow no f Weston since 1974. While the fair marke tvalue of the parcel was $236,000, the wa t e rauthority eve n t u a l ly had to pay the town $4.5million to purchase a similar parcel. The mag-nitude of the diffe rence between fair marke tvalue and the final settlement re flects, in part ,the value attached to the cultural signifi c a n c eo f a particular site.

Table 7 summarizes existing estimatesof cultural values associated with forests.

Page 23CHAPTER TWO


Page 24 CHAPTER TWO


Table 7. Summary of Cultural Values of Forests



Loomis and Richardson National forest roadless areas Passive use values of roadless $280 million annually(2000) areas (contingent valuation) (nationwide)

Southeast region

Barnhill (1999) Blue Ridge Parkway, Economic impact of $1.3 billion in tourism expen-North Carolina and Virginia forest scenery ditures, $98 million in annual

tax revenues, 26,500 jobs.

Haefele et al. (1992) North Carolina Use and passive use values of $18 to $99/ household/yearAldy et al. (1999) healthy forest (contingent valuation) total value (use and passive use)

(contingent valuation)

Walsh and Loomis Virginia Use and passive use values for $12/day use value, $12/day(1989) wilderness (contingent valuation) passive use value


Walsh et al. (1990) Colorado Use and passive use values $47/household/year:of healthy forest $13 (recreation), $10(contingent valuation) (op-tion), $10 (existence),

$14 (bequest)

Walsh and Loomis Colorado Use and passive use value of $14 to $32/household/year(1989) wilderness — 1.4 to 10 million

acres (contingent valuation)

Walsh and Loomis Utah Use and passive use value of $53 to $92/household/year(1989) wilderness — 2.7 to 16.2 million

acres (contingent valuation)

Walsh and Loomis Colorado Use and passive use value $25.30/household/year (1989) of wilderness (contingent valuation) to protect 5 million acres;

total preservation value of$28 million.

Walsh and Loomis Wyoming Passive use values for wilderness $8.40 to $46/household/year(1989) - 5 million acres

(contingent valuation)

Pacific Northwest region and California region

Moskowitz and Talberth Western states Existence value for old-growth $48 to $144/household/year(1998) forest (contingent valuation)

Rubin et al. (1991) Oregon, Washington, Value of habitat for endangered Total value of $1.5 billion/California and United States species protection year: $34.84/household/year

(contingent valuation) (Washington), $36.91 (Oregon), $20.88 (California), $15.21 (United States)

Loomis et al. (1994) Oregon Value of protecting old-growth $90/household/yearforest habitat for northern spotted owl (contingent valuation)

Page 25CHAPTER TWO


Table 7. Summary of Cultural Values of Forests continued


Hagen et al. (1992) Oregon Value of protecting old-growth $95/household/yearforest habitat for northern spotted owl (contingent valuation)

Howard (1997) Washington Opportunity cost of endangered $17,411/acrespecies protection (contingent valuation)

Northeast Region

Gilbert et al. (1992) Vermont and eastern states Passive use value of eastern $5.7 and $167 million for wilderness (contingent valuation) Vermont residents and all

residents of the east, respectively

Fausold (1999) Massachusetts Replacement cost of public $4.5 million for 36 acresforest area

Upper Midwest region

Champ et al. (1977) Wisconsin Total passive use value of $7 million wilderness (contingent valuation) (residents of Wisconsin)

Southwest region

Loomis and Ekstrand Arizona, Colorado, Value of protecting old-growth $40.49/household/year(1997) New Mexico, Utah forest habitat for Mexican

Spotted Owl (contingent valuation)

Moskowitz and Talberth Southwest Existence value of threatened $2.0 and $3.7 billion (1998) species (contingent valuation) (nationwide)

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National

The Wilderness Society1615 M Street, NWWashington, D.C. 20036Tel: 202-833-2300webpage: www.wilderness.org

Northeast

The Wilderness Society45 Bromfield St., Suite 1101Boston, MA 02108Tel: 617-350-8866; [email protected]

Southeast

The Wilderness Society1447 Peachtree St., NE, Suite 812Atlanta, GA 30309-3029Tel: 404-872-9453; [email protected]

Northern Rockies

The Wilderness Society105 W. Main St, Suite EBozeman, MT 59715-4689Tel: 406-586-1600; [email protected]

The Wilderness Society710 N. 6th St., Suite 102Boise, ID 83702Tel: 208-343-8153; [email protected]

Four Corners

The Wilderness Society7475 Dakin St., Suite 410Denver, CO 80221Tel: 303-650-5818; [email protected]

California/Nevada

The Wilderness SocietyPresidio Building 1016P.O. Box 29241San Francisco, CA 94129-0241Tel: 415-561-6641; [email protected]

Pacific Northwest

The Wilderness Society1424 Fourth Ave., Suite 816Seattle, WA 98101-2217Tel: 206-624-6430; [email protected]

Alaska

The Wilderness Society430 West 7th Ave., Suite 210Anchorage, AK 99501-3550Tel: 907-272-9453; [email protected]

The Wilderness Support Center835 E. 2nd Avenue, Suite 440Durango, CO 81301Tel: 970-247-8788; [email protected]

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