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Economists Consider Hatchery Supplementation Valuation by Mike O'Bryant Columbia Basin Bulletin - May 17, 2002

As they put the final touches on their hatchery economics report, the Northwest Power Planning Council's Independent Economic Advisory Board considered how to value hatcheries used specifically to supplement or augment wild salmon and steelhead runs.

Looking at the cost of hatcheries, the IEAB has found that the cost to produce smolts at eight Northwest hatcheries stays relatively steady over the years, but the cost of returning adults is inconsistent and can be expensive. An economic analysis of hatcheries whose purpose is to produce adult fish is relatively straightforward because adults can be counted. They are either harvested or return to the hatchery.

The problem arises in the IEAB report when analyzing the Nez Perce hatchery in Idaho and the Yakama Nation hatchery in Washington. Both are conservation hatcheries and use new techniques to supplement naturally spawning populations. The hatcheries cost more to build and operate, so the cost to produce smolts rises. Further compounding the difficulty of completing an economic analysis of these hatcheries is the lack of information about returning adults. The Columbia River Inter-Tribal Fish Commission's Doug Dompier said supplementation hatcheries differ from production hatcheries and should not be compared. "They have totally different missions," he said "It would be an apples to oranges comparison."

Tom Karier, Council member from Washington said there is a need for an economic study of hatcheries. He said hatcheries have been producing fish for years and their operations are begging for analysis so that the region can compare which are more and which are less efficient. However, he said, the value to the region of conservation hatcheries will more than likely be determined by policy makers, not by economics.

"Most of the supplementation debate is in genetics and biology," Karier told the IEAB this week. "That will go on for many years and it will not be decided by economics."

He said that supplementing natural spawning fish has other benefits. If the debate determines the policy is genetically sound and that it helps recover endangered populations of fish, "then no one will care how much it costs," Karier said.

Much of the problem with evaluating conservation hatcheries today is a lack of information. No one knows for sure how many of the fish return to spawn naturally in streams. Rather than wait five or six years for the data, one way to deal with the issue is to predict future returns, according to IEAB member Hans Radke. That would reduce the enormous costs now in the report.

Another idea floated by IEAB member Ken Casavant at April's IEAB meeting is to simply evaluate the cost per smolt, not the cost per adult because the number of adults returning may have very little to do with the effectiveness of the hatchery and much more to do with a hatchery's location on the river or with ocean conditions.

"Hatchery managers should not be blamed for unit costs (adult returns)," suggested Roger Mann, IEAB member. "Adult survival is important, but it is not in the manager's control" once the smolt leaves the hatchery.

Dompier said that a monetary value cannot always be placed on hatcheries and that for some it may be better instead to evaluate how well the hatchery helps restore fish runs. An example is the Umatilla River where a tribal supplementation program has restored four runs of salmon and steelhead. "There is now a value to people in the area to have those fish in the basin," he said.

However, the conservation hatchery debate is decided, the IEAB believes that the analysis would benefit from better biological information. "Deeper biological understanding of survival factors should be combined with the economic assessment in order to anticipate the effects of various hatchery design and location choices on fish survival and cost-effectiveness," the draft report said.

The IEAB's review looks at costs per fish, but doesn't compare costs and benefits. While that has never been done for hatcheries, it could be done in a future economic analysis, said IEAB chair Daniel Huppert. "Hatcheries have never been screened for cost benefit," he said. They were built "to help compensate for the loss of salmon. That was the package deal and they didn't need to show that each component passes a cost-benefit test."

Dompier said the tribes worked hard when helping to formulate the Northwest Power Act in 1980 to make sure that accounting of hatcheries would not include cost-benefit analyses.

"If you do something above a dam, then there will be more mortalities and each fish will cost more," Dompier said. "We're worried that could be an argument against upriver tribal hatcheries." All are above numerous dams, whereas the U.S. Fish and Wildlife Service hatchery at Spring Creek is only above one dam -- Bonneville.

However, Huppert said one reason a cost-benefit analysis might be needed in the future is the federal re-authorization of hatcheries in which they may have to justify their existence.

The Council spent $312 million in its Columbia Basin Fish and Wildlife Program artificial production efforts between 1977 and 1999. The IEAB economic analysis is not the same as a hatchery by hatchery analysis (120 to 140 hatcheries) being conducted by the Artificial Production Advisory Committee.

The Council asked the IEAB in June 2001 to embark on a two-part cost-effectiveness analysis of hatcheries in its Fish and Wildlife program. The first part is the current study that looks at the costs of the eight hatcheries. The IEAB is considering what to do in the second phase of its study. Under consideration is a cost-benefit analysis of the hatcheries.

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. IEAB members include Hans Radke, a natural resource economist and also co-chair of the Pacific Fisheries Management Council; Joel Hamilton, professor of agricultural economics at University of Idaho; Daniel Huppert, associate professor at the Institute for Marine Studies at the University of Washington; Jack Richards, a resource economist retired from the National Marine Fisheries Service; Lon Peters of Portland, president of Northwest Economic Research; Ken Casavant, professor of agricultural economics at Washington State University; Roger Mann, specializing in water supply economics, and Paul Sorenson, founder and principal of Belyea, Sorenson, Trottier and Associates, an economics consulting firm in Bothell.

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