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IEAB Completes Economic Guidance for Subbasin Plans by Mike O'Bryant Columbia Basin Bulletin - January 10, 2003

Subbasin planners may need to consider economic issues and cost-effectiveness when completing 64 subbasin plans over the next several years, according to the Independent Economic Advisory Board to the Northwest Power Planning Council.

The IEAB completed Jan. 3, 2003, its blueprint for how a subbasin plan could incorporate local and regional economic impacts at the same time planners consider the biological impacts of local strategies and projects.

In its report -- "Recommendations and Guidance for Economic Analysis in Subbasin Planning" -- the IEAB said that determining cost-effectiveness of local strategies and projects is required by the Pacific Northwest Electric Power Planning and Conservation Act, although it has been left out of many biological analyses.

"As a practical matter, economic impact analysis may be required to address concerns of stakeholders that will be identified during the public involvement process," the guidance document said. "Subbasin strategies and projects should be designed to minimize adverse impacts."

It goes on to say that when there are adverse impacts, a cost-effective analysis could help to determine how to address those impacts through direct payments to those impacted, while beneficial impacts could provide a basis for cost sharing.

The ability to determine who benefits and who suffers, however, is predicated on the idea that all stakeholders are represented, not just those who show up to meetings -- a definition of stakeholder that will challenge local subbasin planning groups to ensure wide participation of people.

"The process is intended to be 'bottoms-up'," said IEAB member Susan Hanna, a professor of agricultural and resource economics at Oregon State University. "And, that gets into the definition of who is a stakeholder. Is it just the people who show up? But when they assess the impacts, it is not just on those who show up."

The guidance document suggests that economic impacts be scoped early in the subbasin planning process and not be tacked on at the end of a report. Stakeholders, the document said, include all residents of the subbasin and all non-residents who are affected by decisions.

The Council has completed its review of the first completed subbasin plan -- the Clearwater. It has little to say about how a fully-implemented plan would impact the local economy. According to Hanna, who is also a member of the Council's Independent Scientific Review Panel, which reviewed the Clearwater plan, that plan did not include an economic analysis of its recommended strategy. She had said at the IEAB's December meeting that the developers of the Clearwater plan wanted to include a socio-economic analysis, but "they simply didn't know which questions to try to answer."

"I think this (guidance document) will be quite helpful in subbasin planning," she said at the IEAB's January 3, 2003 meeting.

Although an economic analysis could be as simple as pointing out the economic tradeoffs of any plan, according to IEAB member Roger Mann, the economists still worry that the small amount of cash available for each plan -- about $50,000 according to Hanna -- could discourage local planning groups from making an effort to do the economic analysis. Mann co-chairs the IEAB and is founder and principal of Rmecon in California.

Lynn Palensky, the Council's subbasin planning coordinator, suggested in August that the IEAB put together a template that would help subbasin planners know what socio-economic information to collect when developing a plan. However, she offered no additional money to conduct such an analysis. That prompted this month IEAB member Daniel Huppert to dub the requirement to assess economic impacts in subbasin planning an "unfunded mandate." Huppert is an associate professor in the Institute for Marine Studies at the University of Washington,

Still, the IEAB is drawing up a plan to offer a limited amount of time with the economists to advise subbasin planners on the economic aspects of their plans. This could include limited reviews of plans, explaining and expanding on the guidance document and consultations with Council staff, but not to do specific analyses, all at a proposed cost of $15,600, including 160 hours of work and travel expenses.

The guidance document, according to the IEAB, will help planners identify both the adverse and beneficial impacts of their plans and it will provide the basis for determining the cost-effectiveness of projects, ensuring that "ratepayers will obtain the most 'bang for the buck' " in the Council's fish and wildlife programs. Having this information will help planners accommodate the economic concerns that could "derail" the process.

Specifically the document calls for planners to:

• Scope economic impacts early during the public involvement process.
• Describe the relationship between stakeholders and the affected naturally resources, "including the economic dimension of these relationships."
• Describe the adverse and beneficial impacts and to provide a more detailed analysis of specific projects proposed.
• Develop strategies that minimize adverse impacts. Include proposals for compensation and/or cost sharing when appropriate.
• Provide a short cost-effective analysis. Identify alternative projects that could achieve the same result and compare the results.
• Provide information on biological and physical benefits in a way that would allow the Council to prioritize projects.

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: