Thursday, August 6, 2009 - 10:10 AM

OOS 39-7: Economic methods and empirical estimates of use and passive use values of instream flows for recreation and fisheries

John Loomis, Colorado State University

Background/Question/Methods This presentation defines the many economic values of instream flows and explains why optimum instream flows is a more appropriate concept than minimum instream flows. Economic values include recreation use values and passive use/existence values. The economic methods for monetizing recreation use includes the travel cost method and the contingent valuation method. For estimating passive use values the contingent valuation method is relied upon. These non market valuations can be compared to market transactions as a simple cross check.

Applying these methods to river recreation yields annual (e.g., lease price) values of $10 an acre foot for rafting and $20 an acre foot for kayaking in Colorado. In New Mexico the present value (e.g., water right price) was estimated at $900 an acre foot for rafting. Fishing values per acre foot range from $45-$116 an acre foot in California to $43-$86 per acre foot in Colorado.

These estimated values are in the same range as recent annual water lease transactions ranging from $10 an acre foot just for recreation up to $40 an acre foot for fishing and general instream flow.  Water right purchases for recreation average $1,200 an acre foot while for fish it averages about $500 an acre foot, and for general instream flow about $700 an acre foot. These actual water purchases and leases suggest the non market values of water estimated using the travel cost and contingent valuation methods are reasonable.

Passive use values per household to maintain instream flows for rare fish such as the Silvery Minnow in the Rio Grande River is $30 a household while for the Arctic Grayling in Montana it ranges between $3-$23 per household. Passive use values for salmon are much higher at $120 to $240 per household. Passive use values are also quite large for protecting entire critical habitats for T&E fish in the Colorado and Green Rivers, ranging from $132 to $268 per household. Given the ability of economic methods to estimate the many types of economic benefits of instream flow, it is time to move beyond the historic focus on minimum instream flow. Minimum instream flow should be a floor not a ceiling. When the incremental marginal benefits of additional flows exceeds the incremental costs of flows, instream flows should be increased beyond the minimum toward the optimum instream flows in FERC and other instream flow negotiations.