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Valuing Endangered Species
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Newsletter: | Volume: III # 12 December, 1996 |
Source Reports: | Mark A. White, "Valuing Unique Natural Resources: Endangered Species" The Appraisal Journal July 1996 pages 295 - 303. |
Subject: | 1. Benefits Analysis 1. Benefits Analysis - Valuation 1. Benefits Analysis - Valuation - Stated Preference 1. Benefits Analysis - Valuation - Stated Preference - Non-contingent Valuation |
Environmental Media/Problem: | e. Ecosystems |
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| Mark A. White, the author of "Valuing Unique Natural Resources: Endangered Species" defines the total economic value of an environmental asset as the sum of its use value and non-use values. Use value can be divided into direct use value (game, wilderness areas and water recreation) and indirect use value (watershed protection and climate mitigation). Appraisers can measure use value by using the "income capitalization" and "sales comparison approaches". Economists measure use value through the travel cost and contingent valuation methods. Non use (or passive use) values include option values and existence values. Option value arises from a willingness to pay for access to a particular environment in the future, originating from uncertainty regarding future supplies and preferences. Existence value refers to value unrelated to any actual or potential use. For example, people enjoy viewing birds (passive use) and knowing that birds are an integral part of the ecosystem (existence value). The author argues that neither profession is appropriately valuing environmental goods. He states that only the contingentvalue method can capture non-use values, and it is flawed. He advocates use of the Delphi method which surveys the opinions of a panel of experts; and then applies the method by surveying members of the Virginia Association of Assessing Officers attending a professional seminar on the impact of environmental issues on valuation. As tax assessors, the members were expert in valuation, but not in conservation biology. Participants were asked the monetary value of a single member of 8 different species. Bald eagles were valued the most, with a median value of $500. The mean value was $25,339 and the range was $0 to $1 million. The northern flying squirrel was next at $10 per squirrel with a mean of $383, followed by the Eastern chicken turtle at $5, and the Shenandoah salamander at $3. The Tennessee dace, swamp pink, snuffbox mussel, and smooth coneflower were valued at $1 each. White points out that the highest values are for mammals, and the lowest for amphibians and species with no "personality." His findings are similar to those of Donald Coursey, a professor at the University of Chicago, who fielded a general survey on the importance or unimportance of conservation efforts for 231 endangered or threatened species. The bald eagle was deemed the most important to protect, while the noonday snail was the least important. Results of the study are presented in the table below. VALUATION OF ENDANGERED SPECIES
Demographic characteristics did not significantly affect the 51 responses. There was evidence, however, that people who did not actively engage in outdoor activities had lower values than those who did. In addition, hunters and fishermen valued species lower than other respondents. White compares his estimates with several others. The U.S. Fish and Wildlife Service estimates the value of a bald eagle at $2,500 when sold illegally. Frederic Vester calculated the material value of a songbird at $0.02 based on the phosphorus content of its skeleton and the use of feathers in decorations; added $25 per year for tranquility and relaxation arising from the bird's soothing song; $36 for insect removal; $12 for tree planting; $60 for environmental monitoring (the miner's canary function); $22 for general symbiosis functions; $96 for serving as an example of bionic engineering; and additional miscellaneous services--resulting in a total value of $180.87 per bird, above most estimates presented by White. He also notes that in 1988 there was a trial in Virginia to assess damages for the shooting of red-tailed hawks, a protected species. The value of a hawk was estimated in 3 ways: 1) The replacement cost of a hawk was estimated using the average $3,500 cost incurred by the Peregrine Fund to breed and release a peregrine falcon. 2) A "use" value of $500 for falcon breeders and exhibitors 3) An average rehabilitation cost of $500 incurred by the Wildlife Center of Virginia for a hawk. White also cites seven contingent valuation (CVM) studies estimating existence values of endangered and wildlife species which are shown below: CONTINGENT VALUATION SURVEY ESTIMATES
White claims that the Delphi method will reduce hypothetical bias (resulting from the fact that survey responses may not reflect real world behavior), and strategic bias (meaning that individuals may alter their responses to produce desired results, for example by saying that they would spend a $1 billion on preserving a particular animal). The author notes that his survey can be improved by including conservation and wildlife biologists and appraisers on the expert panel. References for the articles cited here: Thomas H. Stevens, Jaime Echeverria, Ronald J. Glass, Tim Hager and Thomas A. More "Measuring the Existence Value of Wildlife: What Do CVM Estimates Really Show?" Land Economics 1991 pages 390-400 Kevin J. Boyle and Richard C. Bishop "Valuing Wildlife in Benefit-Cost Analysis: A Case Involving Endangered Species" Water Resources Research May 1987 pages 943-950 Thomas H. Stevens, Thomas A. More and Ronald J. Glass "Interpretation and Temporal Stability of CV Bids for Wildlife Existence: A Panel Study" Land Economics August 1994 pages 355-363 David S. Brookshire, Larry Eubanks and Alan Randall "Estimating Option Prices and Existence Values for Wildlife Resources" Land Economics February 1983 pages 1-15 J.M. Bowker and John R. Stroll "Use of Dichotomous Choice Nonmarket Methods to Value the Whooping Crane Resource" American Journal of Agricultural Economics May, 1988 pages 372-381 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
