In 2009 the IEAB completed a Phase I report on Integrated Hatchery Operations under Task 139. The report provided a preliminary discussion of the possible effects of HSRG recommendations on the cost of hatcheries in the Pacific Northwest and included the following conclusions:
- The HSRG recommendations generally would not require major changes in planned operations at Fish and Wildlife Project (FWP) hatchery projects, partly because most of the changes were already planned. Therefore, the recommendations should not result in large cost increases above planned costs at these hatchery projects.
- Estimates for additional one-time investment costs at FWP hatchery projects were "as an order of magnitude estimate, about $10 to $20 million." Long term operations costs could increase "as an order of magnitude estimate, $1 million to $2 million annually."
- Incremental costs could be more if major re-engineering of existing hatcheries is required; no such changes have been identified.
- Research, monitoring and evaluation (RM&E) costs are currently almost 40 percent of NWPCC FWP costs depending on the definition used. HSRG recommendations could have important effects on RM&E costs. Given the relatively large role the FWP has assumed in RM&E, the potential for RM&E cost increases should be further investigated.
- The IEAB recommended some cost engineering studies to estimate and compare costs of alternative selective harvest strategies, including weirs, modifications at existing facilities, and live capture gear.
- The report also identified some missing elements needed to identify costs of recommended changes in hatchery operations.
The IEAB concluded that a "Phase II study might provide useful information, but only after additional information has been provided in the form of a harvest BiOp." While NOAA Fisheries (NMFS) has not issued a BiOp on Columbia River hatcheries, their recent "Draft Environmental Impact Statement to Inform Columbia River Basin Hatchery Operations and the Funding of Mitchell Act Hatchery Programs" (MA-DEIS) provides additional information on hatchery costs, and proposes five alternative approaches to addressing the listed species concerns. The alternatives range from "no action" to "implementation of strong performance goals to reduce negative impacts of hatchery programs on natural-origin salmon and steelhead populations" to "no Mitchell Act funding and closure of the hatcheries". This EIS appears to be one of the first significant actions to implement the HSRG recommendations, and has the goal of informing future Mitchell Act funding allocations as well as informing NMFS’ "future review of individual Columbia River hatchery programs under the ESA (at p. 6, ES). The "performance goals" embodied in the alternatives are based in part on HSRG recommendations. The HSRG goals are in part defined by a key measure of the relative gene flow from the natural to the hatchery program and from the hatchery to the natural environment: the Proportionate Natural Influence (PNI).
In Task 171 the IEAB explores the information contained in NMFS’ Draft EIS to determine whether it can be used to expand and enhance the IEAB’s assessment of potential costs of implementing the HSRG recommendations. We reviewed the content and structure of the economic analysis contained in the EIS to determine whether it provides significant and reliable new cost data that could help the IEAB expand its earlier report to refine the estimates of the possible effects of HSRG recommendations on the costs of FWP hatchery projects.
Overview of MA-DEIS Economics
The DEIS contains a significant amount of descriptive socio-economic information distributed over several locations: Chapter 3 Section 3 "Socioeconomics" (pp3-67 to 3-114); Chapter 4 Section 3 "Socioeconomics" (pp 4-107 – to 4-157); Appendix I "Draft Socioeconomics Resource Report Submitted by The Research Group to NMFS 2008"; and Appendix J "Mitchell Act Hatchery EIS Socioeconomics Impact Methods Appendix".
The Chapter 3 Socioeconomics section presents a comprehensive summary of the catch levels associated with Columbia Basin hatcheries over four sub-regions of the Columbia Basin (lower Columbia River, mid-Columbia River, Upper Columbia River, and Lower Snake River). Tribal and non-Tribal catches are summarized for 2002-2006, and the average annual catch and ex-vessel revenues are displayed in Table 3-16. Annual catches and ex-vessel revenues in commercial ocean fisheries during 2002-2006 (for all salmon not just fish originating in the Columbia basin) are summarized for 5 sub-areas (Oregon coast, Washington Coast, Puget Sound/Strait of Juan de Fuca, British Columbia, and Southeast Alaska) in Table 3-17 through 3-19. Recreational fishery catch and expenditures are summarized for the Columbia Basin fisheries in Tables 3-20 and 3-21, and for the five sub-areas of the ocean recreational fishery in Tables 3-22 through 3-23. Next, Table 3-24 displays the Operating Costs of the hatcheries in the Columbia River basin and the "personal income" and "Number of jobs" associated with the Hatchery operations and the fisheries, based upon the analysis presented in Appendix J. The aggregate annual "economic impact" in the basin is claimed to be $46 million in personal income and 1,370 jobs. Finally, the economic impact of the ocean fisheries, which are partly supported by Columbia River hatcheries, is stated as $9.2 million in income and 278 jobs in Washington and $4.5 million in income and 142 jobs in Oregon. The analysis also includes estimates of "net economic values" which equal ex-vessel value minus fishing costs for the commercial fisheries, and "willingness to pay" minus expenditures on fishing for recreational fisheries.
Chapter 4’s Section 4.3 on "Socioeconomics" compares the changes in hatchery program costs, harvest and ex-vessel values, and regional economic impacts associated with DEIS Alternatives 2-5 to the no-action Alternative 1. For each sub-region discussed in Section 3 above, this chapter displays the estimated commercial catch and value of fisheries and recreational expenditures associated with each alternative. This is followed by estimates of the net incomes of tribal and non-tribal fisheries in the Pacific Ocean and Columbia Basin sub-regions. Compared to Alternative 1, the other four alternatives all cause reduced economic impacts in terms of catches, incomes, jobs, and net incomes from commercial and recreational fisheries in each sub-area. Alternative 2 (No Mitchell Act Funding) has the largest negative impacts of the 4 alternatives to No Action. The chapter (p. 4-114) recognizes that the public holds broader non-market values to preserving wild salmon runs (e.g. willingness to pay to preserve a salmon sub-species), but they note that information on this value dimension is insufficient to base an estimate of impacts across alternatives.
The basic socioeconomic information (including hatchery costs) supporting the summary results presented in Chapters 3 (Affected Environment) and 4 (Environmental Consequences) is supported by a more detailed discussion of methods and data sources in Appendix J. There is an additional uncited appendix, Appendix I, which appears to be an earlier draft of the socioeconomics sections that was apparently never peer reviewed or otherwise utilized in the DEIS, but is (for some reason) reported anyway. Surprisingly, Appendix I has its own supporting appendix (denoted as Appendix A).
Prospects for Additional IEAB Analysis of the costs of Hatchery Policy Alternatives Question: Does the draft Mitchell Act EIS (MA-DEIS) have sufficient new data to merit a closer review by the IEAB with the goal of updating the 2009 hatchery analysis? Response: The MA-DEIS does not appear to provide much in the way of "new data" with respect to costs at any given FWP hatchery. However, there appears to be enough of an overlap between the methods and scope of IEAB 2009-2 and the MA-DEIS that it may be useful for the IEAB to provide a review as a "second opinion".
Because the decision was made in the MA-DEIS to include an analysis of non-Mitchell Act hatcheries, findings are generally reported for both the Mitchell Act and "other" hatcheries. FWP hatcheries are part of the latter, but are not reported separately. For example, in the analysis of hatchery cost implications of Alternative 2, which would end funding to MA hatcheries, additional best management practices (BMP) would be implemented for hatchery programs not funded by the Mitchell Act. An estimate of $5.1 million in new costs is associated with implementing BMPs (Table 4-85, text at 4-122).
Question: Aside from the fact that this is for a broader group of hatcheries (all non-Mitchell Act funded, not just FWP), how do estimated costs compare to, for example, the IEAB 2009-2 estimate of new capital costs of $10 to $20 million? Response: Since the latter is an order of magnitude estimate, apparently the two estimates are in the same ballpark. (The MA-DEIS does not appear to provide uncertainty bounds on any of the estimates.) The MA-DEIS appears to provide adequate detail on what is included in its cost estimates and what is not, whether it is capital or operating, assumptions, and data sources in Chapter 4 and Appendix J. It appears it would be feasible to systematically compare the cost analysis relating to FWP hatcheries in IEAB 2009-2 and the MA-DEIS. Clearly the IEAB analysis was limited in scope and heavily qualified as to what was not estimated. Similarly, the MA-DEIS does not provide estimates for every potential capital and operating cost. The primary cost categories reported are changes in smolt production , new weir costs, and best management practices (BMP) costs. (Smolt production costs for the "other" non-Mitchell Act hatcheries, including the FWP hatcheries, are approximated by cost data for the Mitchell Act hatcheries aggregated at the agency/location level in Appendix J.) The MA-DEIS lists specific elements of the BMP costs at p. 8-9 of appendix J. Fifteen specific "implementation measures" were identified across alternatives (at Table 2-6) and include changing production levels, broodstock protocols, water intake screens, by-pass at hatcheries, water quality issues, new temporary weirs, new permanent weirs, etc. Not all of these implementation measures are associated with cost estimates for capital and operations.
The MA-DEIS examines a broad range of policy alternatives, and, relative to the IEAB analysis, has a broader scope of both accounting frameworks and outcomes (e.g. not just including hatchery cost impacts, but also harvest). In IEAB 2009-2, it was assumed (in the absence of policy-making decision documents like the MA-DEIS) that future policy would parallel the HSRG recommendations, and the effects of these recommendations were estimated on costs of individual FWP hatcheries. By contrast the MA-DEIS alternatives are more broad-brush, examining the implications of different policy options that are permutations of new performance standards at two levels (intermediate and strong) for two regions (Willamette/Lower Columbia and "Interior Columbia", for three population types (primary, contributing, stabilizing), and for two funding sources (MA and other). The information on which the economic analysis of the MA-DEIS alternatives is based appears to be fairly comprehensive and accurate regarding the Mitchell Act hatcheries. It demonstrates the economic impacts of the hatchery programs and calculates the net economic values for the commercial and recreational fisheries as accurately as can be expected using existing data. For sport fishing, the MA-DEIS does provide nonmarket value estimates of net economic benefits (values anglers realize over and above their trip costs). And it correctly notes the absence of estimates in the MA-DEIS analysis for publicly-held passive use value (value that does not derive from direct recreational use but rather from knowing that salmon populations are viable and available for use by future generations - what economists frequently call "existence values" and "bequest values" for salmon runs) .
The net economic value results could be useful to the IEAB in evaluating alternative salmon protection and conservation projects in the Columbia Basin. Our cost-effectiveness analyses (CEA) have focused on the allocation of hatchery funds among alternative projects, comparing the outcomes (effectiveness) in terms of fish produced (catch plus hatchery returns) and costs in terms of program expenditures. However, the net economic benefit for a non-selected project alternative represents a more comprehensive measure of the opportunity costs incurred for the selected project. It is the net economic effect of selecting one project over the other. This economic perspective expands beyond the simple cost-effectiveness of project fund allocations, and represents a more comprehensive attempt to measure the economic consequences of planning decisions. It would be a more data-demanding version of CEA.
The IEAB could investigate the pros and cons of using this more comprehensive measure of costs in our analyses of NPCC projects being proposed for the Fish and Wildlife Program.
Recommendation for Further Research
To summarize, the MA-DEIS is an important document with respect to hatchery policy in the Columbia River Basin in the post-HSRG world. The potential policy changes considered in the MA-DEIS will affect the Council’s FWP hatchery program. This EIS does specifically consider the potential impacts of policy on costs at non-Mitchell Act funded programs including the FWP hatcheries. Like the earlier work by IEAB (IEAB 2009-2), the hatchery cost estimates are incomplete and based on a number of important assumptions. However, it does appear that cost estimates specific to the FWP hatcheries as a group could be disaggregated from the "other hatchery" estimates reported and that this could be done across alternatives. A limitation of the IEAB’s earlier work is that it simply assumes the HSRG hatchery level recommendations would be implemented.
The advantages of reviewing the MA-DEIS in greater detail include: 1) an independent "second opinion" on likely cost impacts of the HSRG recommendations; 2) insights on cost parameters not included in the earlier analyses; 3) a perspective on how these costs will vary depending on how the HSRG recommendations are implemented; and 4) a perspective on the broader impacts of the policy, including harvest policy. (The MA-DEIS provides an initial pass at the future analysis of harvest-related impacts, something that was suggested as a second phase for IEAB 2009-2).
The IEAB recommends that, since the MA-DEIS does not include a "preferred alternative", we wait for the final document before considering development of a potential future task. The final EIS would also presumably be improved by comments. Any potential future review task would focus on updating our earlier work on the FWP hatcheries and the implications of the MA-DEIS preferred alternative on costs for these hatcheries.
Hatchery Scientific Review Group. 2009. Columbia River Hatchery Reform Project System-Wide Report.
IEAB. 2009. Integrated hatchery Operations: Fish and Wildlife Program Costs and Other Economic Effects Phase I. Publication IEAB 2009-2. Northwest Power and Conservation Council. Portland, Oregon.
NOAA-NMFS Northwest Regional Office. 2008. Draft Environmental Impact Statement to Inform Columbia River Basin Hatchery Operations and the Funding of Mitchell Act Hatchery Programs.