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Economists Work on Fish Passage Cost Effectiveness Report by Mike O'Bryant Columbia Basin Bulletin - December 12, 2003

Economists are working on a report that describes the cost-effectiveness of some juvenile passage measures, particularly measures that could eliminate or cut spill, and how cost-effective analyses could be useful for making decisions about fish and wildlife actions in the Columbia River Basin.

The Independent Economic Advisory Board, which advises the Northwest Power and Conservation Council on economic issues, is preparing the "Juvenile Passage Cost Effectiveness Analysis for the Columbia River Basin." It plans to deliver the report to the Council or the Council's Fish Committee at the Council's meeting at Skamania Lodge in southern Washington, Jan. 20-22, 2004.

Compared to the cost of spill at Ice Harbor Dam on the lower Snake River, the IEAB's analysis at this point has found that extended length screens at Lower Granite and Little Goose dams, as well as a corner collector at Bonneville Dam "are highly cost-effective."

The economists have also calculated that adding removable spillway weirs at Lower Monumental and Ice Harbor dams would be cost-effective. In other words, the IEAB says, "increased power revenues from reduced bypass spill should be more than enough to finance the costs of the weirs themselves." However, their preliminary calculations also show that an RSW at Little Goose Dam is not cost-effective.

"These results, though preliminary, suggest that reducing spill to fund passage improvements in some situations could increase survival while increasing net revenues to the hydropower system, thus reducing costs to power consumers," the draft report says.

Some gains in power revenue as a result of reducing spill could be used for other fish passage improvements. The report says that a cost effective analysis and the "ability to borrow against future power revenues might speed the implementation of cost effective passage measures, and ultimately, the recovery of listed species."

The report goes on to say that a cost effective analysis could "also help identify passage improvements that may be bad investments," such as the RSW at Little Goose Dam, "which should then be avoided or put on hold."

The U.S. Army Corps of Engineers installed an RSW at Lower Granite Dam in early 2002 to improve fish passage and survival at the dam. Preliminary results of an evaluation of that RSW show that survival probability rises from 93.1 percent with spill to 98 percent with the RSW and that survival is more consistent over the entire spill season with the RSW.

Due to the results, the Bonneville Power Administration in October 2002 proposed to the System Configuration Team to accelerate the installation of RSWs at Ice Harbor and Lower Monumental dams. NOAA Fisheries will recommend to the Federal Executives at their Dec. 17 meeting that installation of an RSW at Ice Harbor Dam should occur in 2005, followed by installation of RSWs at Lower Monumental Dam in 2006 and at Little Goose in 2007.

Terry Morlan, Council staff, cautioned that a cost effective analysis is simply a tool for making decisions. "It's not the whole caboodle. We need to make it clear that this is just one input for Council decision-making," he said.

"Still, if there are two ways to achieve a biological goal and one is $9 million cheaper, isn't that better?" asked IEAB chair Ken Casavant, professor of agricultural economics at Washington State University.

The task for evaluating the cost effectiveness of juvenile passage measures by the IEAB was triggered by the Council's Mainstem Amendment that called for equal or greater level of survival while reducing the amount of water spilled, particularly during the summer. "That's an important issue now and the Council called for the cost effective analysis of spill and other measures," Morlan said.

Such analyses could have implications on where to transfer dollars away from spill to other measures or it could help set priorities and drive budgets for future biological research, the economists said.

It is important, said Daniel Huppert, IEAB member and faculty at the University of Washington. "We're spending hundreds of millions of dollars on fish passage," he said. "That's enough to build another university."

"Or enough to fund our existing ones," Casavant added. He said that the cost of implementing all the NOAA Fisheries' 2000 biological opinion measures coupled with the foregone opportunity cost of spill is what the region spends on fish and wildlife programs now. "We are looking at changes to that," Cassavant said of the analysis.

"The BiOp has survival standards that must be achieved," said Roger Mann, IEAB member from Sacramento, Calif. "Biologists would say that they aren't very concerned about cost-effectiveness until the standards are achieved. However, while there you should consider measures that cost less and get the same biological benefit."

"There is a budget constraint even while meeting the BiOp," said IEAB member Lon Peters, an economics consultant.

"As a matter of broad social and economic policy," the report says, "available fish and wildlife dollars should be spent in a way that maximizes the beneficial impacts to fish and wildlife."

According to the draft report, a cost effective analysis could help power and fisheries managers choose among alternative passage measures that exceed a fixed budget amount; or it could help managers achieve an objective at least cost; or it could simply be used to compare among alternatives.

But, the economists also say that cost effective analyses also have limitations. One is that such an analysis "does not consider whether the given objective has a value greater than its cost," while a benefit-cost analysis could provide that information because such an analysis compares all costs and benefits in terms of dollars.

The IEAB is a panel of economists created in 1997 by the Council to assess the cost-effectiveness of fish and wildlife recovery measures funded by the Bonneville Power Administration. The eight members are:

• Ken Casavant, chair, professor of agricultural economics, Washington State University and noted expert in the economics of the transportation sector.
• Joel Hamilton, professor emeritus of agricultural economics, University of Idaho and expert in the field of agricultural economics, irrigation, water use, navigation, local area impacts and non-market valuation of natural resources.
• Susan Hanna is also a member of the ISRP and ISAB and expert in fishery economics and management policy. She joined the IEAB in December 2002.
• Daniel Huppert is an expert in fishery economics, management and policy, and principal author, "Economics of Snake River Salmon Recovery."
• Roger Mann has broad experience in economic evaluation of natural resource projects.
• Noelwah R. Netusil, associate professor of economics, Reed College, and expert in non-market evaluation and environmental economics. She joined the IEAB in December 2002.
• Lon Peters, Economic consultant, past senior economist for the Public Power Council and expert in Northwest electricity system configuration and economics.
• Hans D. Radke, freelance economist, adjunct professor at Oregon State University, chair of the Pacific Fisheries Management Council and noted expert in economic effects of fisheries.

Related Sites:
Independent Economic Advisory Board: www.nwcouncil.org