OWLECON: A Spreadsheet Program for Calculating the Economic Value to State Residents from Protecting Spotted Owl Habitat from Fire

The spreadsheet program, OWLECON, was developed to allow managers to quickly calculate the economic value of reducing fire risk to California and northern spotted owl habitat in California and Oregon. The program draws from surveys performed of California and Oregon residents. The user simply types in the current average annual acres burned and the expected acres that would burn with different fire management projects or scenarios. The program will calculate the economic value to people living around the particular National Forest. The annual value per acre protected in the fire management unit is calculated. This can be inputted into the National Fire Management Analysis System (NFMAS) so that the northern spotted owl can be considered with other multiple use resources in the net value change computation. Federal agencies have began to recognize that in addition to protection of traditional multiple uses, other environmental values need to be incorporated into fire decision-making (González-Cabán 1993, González-Cabán and Chase 1992). These values often reflect public desire to know that rare and distinctive ecosystems exist (e.g., existence value; Krutilla 1967) and will be protected for future generations (bequest value), as well as being available for visits at future times (option value). In addition to recreation, these three values are sometimes referred to as total economic value (Randall and Stoll 1983). Vaux and others (1984) conducted the first study on the influence of fire on the economic value of forest recreation and found that "Willingness-to-pay is an appropriate measure for valuing the effects of fire on forest recreation" (p. 1). This is consistent with Federal benefit-cost directives that require use of willingness-to-pay (WTP) as a measure of benefits (U.S. Water Resources Council 1983). This paper discusses the development of a spreadsheet program, OWLECON, that used data from two contingent valuation studies (CVM) of the willingness-to-pay (WTP) of residents in Oregon and California to protect oldgrowth habitat of the northern spotted owl from catastrophic fire. Non-Market Valuation Methodology The contingent valuation method (CVM) uses a questionnaire or survey to create a hypothetical market or referendum and then allows the respondent to use it to state or reveal his or her WTP for recreation, option, existence, and bequest values (Mitchell and Carson 1989). The first part of a CVM survey presents the current and proposed change in quantity or quality of the resource. Second, the respondent is told how they would pay for the proposed change. Then the provision rule is made clear: if you agree to pay you get the proposed quantity/ quality, if you do not agree to pay you remain at the current quantity/ quality level. The recommended WTP question format asks respondents to state whether they would pay a specific dollar amount that varies from respondent to respondent (Arrow and others 1993). The use of responses from a survey to measure WTP is not without objections, such as the validity of responses. An abbreviated version of this paper was presented at the Symposium on Fire Economics, Policy, and Planning: Bottom Lines, April 5-9, 1999, San Diego, California. Professor, Department of Agri­ cultural and Resource Econom­ ics, Colorado State University, Fort Collins, CO 80523; e-mail: [email protected]. Economist, Pacific Southwest Research Station, USDA Forest Service, 4955 Canyon Crest Drive, Riverside, CA 92507;e­ mail:agc/[email protected] USDA Forest Service Gen. Tech. Rep. PSW-GTR-173. 1999. 209 Session V Program to Calculate Value of Owl Habitat---Loomis, Englin, González, Cabán Specifically, the question arises if the respondents would actually pay the dollar amounts they state or agree to pay in the survey. There have been dozens of studies testing the validity of stated WTP by comparison of values derived from other methods. A summary of these studies by Carson and others (1995) determined that CVM derived estimates of WTP for recreation were somewhat less than actual behavior-based methods for valuing recreation. Although concerns remain about the degree of accuracy of CVM estimates of WTP for existence and bequest values for natural resources that are unfamiliar to the public, the method has been shown in empirical test-retest studies to be reliable at eliciting such values (Loomis 1989, 1990). CVM is a recommended method for use by Federal agencies for performing benefit-cost analysis (U.S. Water Resources Council 1983) and for valuing natural resource damages (U.S. Department of Interior 1994), and it has been upheld by the Federal courts (U.S. District Court of Appeals 1989). A "blue ribbon panel" co-chaired by two Nobel laureate economists concluded that CVM can produce estimates reliable enough to be the starting point for administrative and judicial determinations (Arrow and others 1993). Study Design To statistically estimate willingness to pay as a function of acres of old-growth habitat protected from catastrophic fire, survey data was compiled from two separate CVM studies. The first study was a survey of Oregon households to determine their WTP for a fire prevention and control program to protect northern spotted owl habitat in Oregon. The second study was a survey of California and New England households to determine their WTP to reduce fire intensity and acres burned of spotted owl habitat in old-growth forests in California and Oregon. In both the California and Oregon study a survey booklet was developed to provide the basic information to respondents before eliciting their WTP. In the Oregon resident study, respondents were asked to value a fire prevention and control program for 3 million acres of old-growth forests in Oregon that have been designated as Critical Habitat Units (CHU's) for northern spotted owls. This was emphasized by a half page map of western Oregon showing the CHU's. Below the map, the current number and size of fires in Oregon old-growth forests were described. Then the elements of the Fire Prevention and Control Program that would reduce the acres burned were listed (Loomis and GonzálezCabán 1997). In the Oregon survey the respondents were told: "Adoption of this improved fire prevention and control program would on average reduce the number of acres of Critical Habitat Units that burn by half, a reduction of 3,500 acres a year (from 11 square miles to 5.5 square miles) on publicly owned old-growth forests in Oregon." The narrative of the California Program was similar to this and reduces the acres of high intensity fires and total acres of old-growth forests burned by all intensities of fire by 20 percent or 2,850 acres each year in California. California residents were asked their WTP to reduce the amount of old-growth forests in northern spotted owl CHU's in Oregon that burn each year by 20 percent or 1,400 acres. The third program was a combined California and Oregon Program, reducing acres burned by 4,250 acres. Willingness-to-Pay Questions Households were told that there were insufficient funds to pay for the improved fire prevention and control programs. In the California survey (Loomis and González-Cabán 1996, 1997) respondents were then asked, "Thinking about Program B, which reduces the proportion of high intensity fires and also includes a 20 percent reduction in the acreage of old-growth forest that burns each year, if Program B 210 A Forest Service Gen. Tech. Rep. PSW-GTR-173. 1999. Program to Calculate Value of Owl Habitat---Loomis, Englin, González, Cabán Session V were the only program available and your household was asked to pay $X each year to help pay for Program B, would you pay this amount?"