Forest Investment Account (FIA) - Forest Science Program
FIA Project Y081250

    Valuing low-elevation old growth forests of the southwestern British Columbia mainland: an application of the contingent choice and production function techniques
 
Project lead: Haider, Wolfgang (Simon Fraser University)
Author: Haider, Wolfgang
Subject: Forest Investment Account (FIA), British Columbia
Series: Forest Investment Account (FIA) - Forest Science Program
Description:
Conservation of old growth forests has been a contentious issue in B.C. in recent decades but surprisingly little effort has been devoted to economic analysis of this issue. Even more pronounced is the absence of valuation studies concerned with non-market values of coastal old growth forests. For example, the most recent study of recreation values on public forest lands in B.C. dates from 1991, and it is still frequently cited (Ministry of Forests, 1991). The study by Van Kooten and Bulte (1999) is a rare attempt to subject conservation of B.C. old growth forest to a benefit-cost analysis. Yet they were forced to use data from U.S. studies on non-market values associated with old growth since little was available for B.C. A similar analyses by Stone and Reid (1997), devoted primarily to preservation of spotted owl, made no estimates of non-market values associated with spotted owl or old growth at all. The issue of spotted owl preservation raises an important point with regard to old growth valuation. Spotted owls are an attribute of the coastal old growth forest, whose habitat more-or-less coincides with the remaining areas of old growth within their geographic and ecological range. As a result, attempts to value spotted owl are misdirected since they ignore the many joint benefits associated with preserving spotted owl habitat, such as conservation of over twenty other endangered species (Yezerinac and Moola, 2006). In other words, the benefits of spotted owl conservation must be seen as nested within the larger context of old growth conservation.
Many valuation techniques have difficulty in dealing with such complex valuation problems. As Stone and Reid point out with respect to the use of the contingent valuation method (CVM) (a survey-based expressed preference valuation approach), "there is a wider range of values associated with protecting spotted owls and other endangered species than is estimated by CVM studies" (1997, p80) Important management questions arise as to what action should be undertaken to protect the few existing spotted owl pairs, as well as the other endangered species of the old growth forest. Further, to what extent should the essential habitat structures of the coastal rain forest be maintained to permit reintroduction of endangered species where they are no longer present?
Old growth rain forest features is valued for reasons other than species preservation too. From a valuation perspective, the situation is clearly dynamic. How important is the presence or absence of endangered species (e.g. spotted owls) to individuals’ willingness to pay (WTP) for old growth preservation? How does this WTP change as the chance of reintroduction varies? The valuation of non-market values for old growth forest must recognize these complex dynamics. This research question can be pursued in part through the investigation of the opportunity cost associated with protecting old growth forest and its species or habitat, as is currently being done and will be expanded in a separate study by Knowler and Lertzman. The other crucial information which is so far not known about old growth and its key attributes (e.g. spotted owls, other non-use values) in BC is the existence value related to preserving biodiversity. Ideally, both sets of information would be required in the societal debate about spotted owls, since ultimately society faces a trade-off between more timber harvesting and preservation of biodiversity. Existence value summarizes a large suite of non-use values and have public good qualities. Whether these values should be considered in decision processes remains a political question. Its measurement requires the application of economic techniques such as contingent valuation or contingent choice.
The FSB Sustainability program clearly calls for the valuation of non-timber economic values (Theme / Topic 3.3), and if such a study is designed properly, it would also contribute to Topic 3.4. We propose to use the contingent choice method, because it permits the measurement of additional effects on the valuation of the environmental good / service under question. We will be able to measure the willingness to pay for preserving old growth forest as a function of other attributes such as the presence of endangered species (e.g. spotted owls) in different numbers, and other use and non-use values; in turn, any of the other values may be valued. A contingent choice survey consists of several choice sets, made up of pairs of policy, management, or outcome scenarios, and respondents are asked to choose the one they would more likely support. Each profile is composed of several attributes. It is also possible to include use values (e.g. recreation) into the study, which will permit a strict separation of non-use values from use-values. Valuation is achieved through the inclusion of a payment vehicle as one attribute in the choice sets. For the survey, a random sample of the population of the Lower Mainland of BC will be drawn, and surveyed via the web. The study site will be the Fraser Timber Supply Area (TSA), which is contained within the Chilliwack Forest District. Data from the survey will be used to generate valuation estimates that link monetary measures to forest attributes. This information will be combined with the opportunity costs of lost old growth timber harvests in the Fraser TSA resulting from preservation, and other data on benefits and costs associated with preservation, gathered in the earlier study by Knowler and Lertzman. Thus, in the proposed FIA-FSP study we will develop the necessary valuation model and then combine this with estimates of foregone timber benefits within a cost-benefit framework. Several scenarios for preservation will be considered, each varying in terms of the area and extent of old growth forest retained. A major challenge will be to determine the anticipated levels of biodiversity retained in association with various levels of forest preservation. Previous studies, expert consultations, species-area modeling and other approaches will be used to calibrate the cost-benefit model in this regard. Once completed, the analysis will produce net present value estimates for the various scenarios of forest preservation, reflecting the economic net benefits to society of preservation. The project would be a two year project and cost a total of $92,880. The first year will be concerned with undertaking the contingent choice exercise to value coastal old growth forest. In the second year, we will combine this valuation information with information about the opportunity costs of preserving old growth forest in the cost-benefit framework. As noted above, preliminary estimates of these opportunity costs are being prepared at present in a study by Knowler and Lertzman. There will be a need to develop these further before the full cost-benefit analysis can be carried out.
Related projects:  FSP_Y092250
Contact: Haider, Wolfgang, (778) 782-3066, whaider@sfu.ca

    Deliverables:

Executive Summary (20Kb)

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Updated August 16, 2010 

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