Costs of Implementation

The Pacific Northwest Can Afford Salmon Restoration

Since time immemorial, the Columbia River’s bountiful salmon sustained the culture and economies of the Indian people. With development of the Columbia River for hydropower, agriculture, and navigation, the economy of the Pacific Northwest has thrived, while the Columbia’s salmon have declined. Annual tribal catches of salmon have dwindled from millions to thousands of fish. In 1995, the tribes will take fewer than 600 spring chinook from the Columbia River needed to support “first salmon” religious ceremonies for thousands of tribal members.

The Pacific Northwest can afford salmon restoration. Salmon are a significant part of the Northwest’s quality of life, and the Northwest’s quality of life and its economy go hand-in-hand. When asked whether maintaining a quality environment to attract people and business or relaxing environmental regulations was more important to economic growth, Oregonians responded overwhelmingly (75% versus 16%) in favor of maintaining a quality environment (OBC 1993).

The costs of Columbia River salmon restoration are significant, but they are also affordable. The Northwest’s economy is robust and the cost of salmon restoration, in the context of the Northwest’s economy, is small. The annual costs of the salmon restoration measures in this plan are estimated to be less than 0.2-0.5% of the region’s annual personal income.

The Northwest’s economy is experiencing relatively strong growth. Annual personal income in the region is approximately $200 billion and is forecast to grow 2.3% per year in real terms (adjusted for inflation) for the period 1993 to 2015 (NPPC 1994). At the same time, the Northwest’s population is growing and is projected to continue growing. In recent years, for instance, approximately 150,000 persons have immigrated to Oregon annually (Niemi and Whitelaw 1995). Idaho’s population growth and its growth in the number of jobs have exceeded the national average since 1988 (Niemi and Whitelaw 1995). Idaho’s economy is projected to continue to outperform the national economy for the foreseeable future (Idaho Division of Financial Management 1995).

Employment in the Northwest, as a whole, is projected to continue to grow faster than the rest of the nation (NPPC 1995). The economic sectors experiencing the greatest employment growth in the Northwest are those associated with services. The retail trade, business, and health service sectors alone accounted for approximately half of the employment growth in Idaho from 1988-1993 (Niemi and Whitelaw 1995). All service sectors now account for 85% of the Northwest’s employment (NPPC 1995).

While the Northwest’s economy as a whole is relatively strong, the salmon fishing industry in the Northwest has suffered significant economic losses. The Northwest’s sportfishing industry has suffered multi-million dollar losses in the last five years (American Sportfishing Association 1994). Nevertheless, salmon-related industries are a significant aspect of the Northwest’s economy. In 1990, salmon fishing maintained over 60,000 jobs (PRC 1992). The net value of the Northwest’s salmon fishing in 1990 was estimated to be $279 million (ASA 1994).

Severe declines have occurred in salmon fisheries. Landings in the Oregon and Washington coastal troll and commercial gillnet fisheries (not including tribal fisheries) have declined dramatically. Since 1988, the combined harvest in these fisheries has plummeted from approximately 18 million pounds landed in 1988 to 2 million pounds landed in 1993 (Huppert and Fluharty 1995). These declines have coincided with decreased salmon abundance.

The tribes’ salmon fisheries have also declined dramatically since 1988. Catches in the tribes’ commercial fisheries have declined from 261,600 in 1988 to 46,600 in 1994. While these fisheries primarily catch fall chinook, they tell only part of the story. The tribes have not held a commercial fishery on summer chinook since 1965. The tribes’ last commercial fishery on spring chinook was in 1977. Since closing these commercial fisheries, the tribes have fished for spring and summer chinook only to meet their ceremonial and subsistence needs. Even these limited tribal fisheries on spring and summer chinook have declined since 1988 from 6800 to 1300 in 1994. In contrast, tribal people of the Columbia Basin annually consumed more than 40 million pounds of salmon prior to the arrival of non-Indians (NPPC 1986).

Who owns the Salmon?

In entering into treaties with the United States, the tribes reserved more than the right to dip their nets into empty waters. The treaties have been interpreted by the federal courts to guarantee the tribes the right to take 50% of the harvestable fish destined to pass their usual and accustomed fishing places. U.S. v. Oregon, 529 F.2d. 570 (9th Cir. 1976); aff’d sub nom. Washington v. Washington State Commercial Passenger Fishing Vessel Ass’n, 443 U.S. 658 (1979) (Passenger Fishing Vessel).

In Passenger Fishing Vessel, the Court painstakingly examined the circumstances surrounding the negotiation of the treaties to understand the parties’ long-term intentions. The Supreme Court emphasized that Governor Stevens invited the tribes to rely on the United States’ good faith efforts to protect their right to a fisheries livelihood. Stevens specifically told the tribes: “This paper [the treaty] secures your fish.” Id. at 667 n.11. During the treaty negotiations, “the Governor’s promises that the treaties would protect that source of food and commerce were crucial in obtaining the Indians’ assent.” Id. at 676 (emphasis added). As the Supreme Court stressed:

It is absolutely clear, as Governor Stevens himself said, that neither he nor the Indians intended that the latter “should be excluded from their ancient fisheries,” … and it is accordingly inconceivable that either party deliberately agreed to authorize future settlers to crowd the Indians out of any meaningful use of their accustomed places to fish.

 Inherent in many economic evaluations is the assumption of the status quo as the baseline for assessing costs of proposed actions. Such analyses assume that the existing distribution of property rights and responsibilities reflects existing legal mandates. Other analyses (e.g., Huppert and Fluharty 1995) recognize problems with this assumption, but nevertheless make this assumption because of the difficulty in establishing adjustments from the status quo.

Overlooking the tribes’ rights to take salmon in an economic analysis would imply that the failure to restore salmon imposes no cost upon society. Yet the cumulative losses of millions of salmon that would have been harvestable by the tribes equates to losses of billions of dollars of commerce to the tribes. To date, most of these costs have been borne by the tribes. Yet, this distribution of costs is not what the tribes bargained for in their treaties. Compensating the billion-dollar losses incurred by the tribes is something that is often overlooked. For instance, the economics report to the NMFS on Snake River salmon recovery (Huppert and Fluharty 1995) does not account for the legal rights of the tribes. Such oversights have been a common problem in salmon mitigation analyses (Lothrop 1986).

Compounding the problems associated with assuming the status quo as a baseline for economic analyses is the role direct subsidies play in shaping the value of goods and services in the market place. Federal water, energy, timber, and grazing policies provide tremendous subsidies to the Northwest. These subsidies distort the real costs of goods and services. For example, the energy-related subsidies of the BPA annually total hundreds of millions of dollars (Table 6.1).

Not included in these subsidies is the revenue BPA forgoes as a result of irrigation withdrawals. Annually, BPA loses $150-300 million in foregone revenues due to water withdrawn for irrigation purposes that does not generate power at federal dams (CNR 1994). In addition to these subsidies and foregone revenues, BPA is paying about $550 million in annual principle and interest payments on a $7.1 billion debt associated with Washington Public Power Supply System (WPPSS) nuclear projects. This debt was incurred on behalf of BPA’s utility and industrial customers.

BPA is now struggling to remain competitive in the deregulated wholesale power market that resulted from the Energy Policy Act of 1992. Changes in federal regulations now allow wholesale power customers greater access to competitively priced power than ever before (FERC 1995). BPA can no longer afford to provide subsidies to its customers (many of whom are its chief competitors) and shoulder the region’s nuclear power debts. The subsidies must be eliminated and BPA’s stranded nuclear debt must be borne equitably by BPA and its customers on whose behalf the debt was incurred, whether or not those customers continue to purchase power from BPA.

The need for stranded debt recovery, brought about by changing energy regulations, is an industry-wide issue affecting utilities across the nation. The FERC recently proposed rules allowing for recovery of stranded debts for public utilities engaged in interstate commerce (FERC 1995). The principles in FERC’s proposal square with BPA’s need to recover the costs of WPPSS.

Benefits of Restoring Salmon

Benefits accrue not only to ocean and in-river fishers (commercial, tribal, and sport), but to a broader spectrum of related economic interests, such as fish processing, fishing gear manufacturing, retail outlets, and hotel/motel industries. Because many of these expenditures are made in coastal communities, fishing-related industries are the second largest source of income and employment in some of Oregon’s coastal communities (Radtke 1993).

Most of the harvesting-related expenditures and much of the value-added processing activities resulting from salmon restoration will take place in Columbia River communities. These activities will benefit Indian people as well as other local residents of the area. For example, each additional spring chinook can generate about $100 of income to the local community (primary processing only).

Using a value-added approach to estimate economic activity associated with rebuilding tribal fisheries on the mainstem Columbia River, the economic benefits to tribal communities is substantial (CRITFC 1992). This value-added approach only considers economic activity directly associated with fishing, processing, and marketing. It is estimated that with healthy salmon runs, tribal marketing and processing of 560,000 salmon caught by Indian fishers could generate $98 million in economic benefits, the equivalent of about 1400 annual jobs in these communities.

These benefits do not include estimated benefits to sport fisheries and non-Indian commercial fisheries, nor do the benefits consider multiplier effects for related industries. Because relatively weak Columbia River stocks are limiting fisheries from Oregon to Alaska, increased abundance of Columbia River salmon stocks could be expected to allow increased landings of other stronger stocks.

Costs of Restoration Measures (Estimated Annual)

The following cost estimates, aggregated into general categories, represent anticipated costs of implementing the tribes’ recommended salmon restoration measures. The funding needs are in addition to ongoing (or currently programmed) expenditures, except where noted. Estimated costs for each of the 15 hypotheses in the Recommendations section (Table 6.2) and for tribal restoration plans in each salmon-producing watershed above Bonneville Dam (Table 6.3) are summarized below.

Artificial Propagation ($10 million)1

Over $20 million is currently expended annually on operating and maintaining federal salmon hatchery programs in the Columbia Basin (LSRMP 1994; R. Z. Smith, Biologist, NMFS Environmental and Technical Services Division, personal comment) Many of the measures in this plan call for redirecting ongoing operation and maintenance expenditures under the Mitchell Act and Lower Snake River Compensation Plan. In addition to redirecting these funds, additional funds needed for the construction, operation, and maintenance of broodstock collection and juvenile salmon acclimation and release facilities are required to implement the propagation measures called for in this plan. These funding needs are estimated to be approximately $10 million per year. These funding requirements also address emergency supplementation and other propagation measures recently adopted by the NPPC.

Habitat Protection and Restoration ($33 million)2

Protection (net savings)3

The federal government regularly invests more in timber and range programs than the receipts these programs generate. The timber programs on 10 out of the 15 national forests with salmon habitat above Bonneville Dam in the Columbia Basin reported a net loss to the federal government (Gorte 1994). The timber sales programs on the Umatilla and Wallowa-Whitman National Forests in fiscal year (FY) 1994 together lost more than $6 million (USFS 1995). These costs do not include recreation and fishing-related losses associated with logging. Others have estimated that eliminating grazing on salmon-bearing federal lands in the Snake River Basin would result in net savings to the federal government when administration costs are compared to grazing receipts (Niemi and Whitelaw 1995). In this light, one must question the costs and the management sense of these land-disturbing activities.

Watershed Restoration ($33 million)4

The success of measures to restore degraded watershed habitat is often dependent on future and on-going land disturbing activities affecting the watershed where restoration activities take place (Beschta et al. 1991). Habitat restoration measures must take into account land management activities.

Implementation of new watershed restoration measures adopted by the NPPC in 1994 is estimated to require an increase in BPA habitat funding of approximately $9 million annually beginning in FY 1996 (BPA 1995). Many habitat restoration measures identified in the subbasin summaries in the tribal salmon restoration plan could be addressed if BPA committed to habitat restoration funding at this level. In addition, the costs of habitat restoration activities to be funded and carried out by federal land managers in each subbasin is likely to range up to $4 million annually depending on the basin (e.g., WWNF et al. 1992). Such activities include road closures and road resurfacing in watersheds where existing road densities are high.

Cost estimates for restoration measures in the 23 subbasins are included at the end of this section. Volume II Subbasin Plans contains more detailed estimates of the costs of watershed restoration activities.

Mainstem Passage ($165-245 million)5

The estimated costs for capital facility construction and operation and maintenance for the mainstem passage measures in the tribal salmon restoration plan are estimated to be from $110 million to $190 million on an annualized basis. The range includes capital costs of $95 million to $167 million per year (from Huppert and Fluharty 1995) for Snake River natural river level drawdown. The high end of the range includes $55 million per year (from NPPC 1994) for John Day spillway crest drawdown. Also included are costs for adult ladder improvements, nitrogen abatement measures (e.g., flip lips at John Day Dam), surface bypass at Bonneville Dam, and relocation of bypass outfalls. Assuming embankment removal at only two Snake River dams (natural river drawdown), the annualized cost for the first six years’ measures is approximately $150 million, based on a 50-year amortization at eight percent interest. The range does not include foregone energy costs6 or the cost of measures at nonfederal hydroelectric projects.

Harvest Management (net benefits)7

The harvest-related measures call for changes in existing harvest management processes for more effective restoration of naturally spawning salmon populations. Although certain measures may result in near-term harvest restrictions (e.g., abundance-based management of Canadian and Alaskan fisheries intercepting Columbia River stocks), such restrictions would be eventually offset by improved salmon survival in other life stages due to other measures in this plan. Harvestable numbers of salmon would increase significantly as a result of implementing these measures. Such increases in the numbers of harvestable salmon would yield significant economic benefits to fisheries and related industries.

Research Coordination (net benefits)

In FY 1996, the BPA plans to allocate over $27 million to salmon research, monitoring, and development activities (BPA 1995). In FY 1996, the US Army Corps of Engineers plans to invest more than $45 million in research and development activities. Most of this funding will go to studies addressing the passage of juvenile salmon through the federal hydroelectric system. Unfortunately, many of the studies being carried out with these funds are proceeding over objections of state and tribal fish managers. Agreement on research priorities and study designs would reduce the amount of funding allocated to research to allow greater emphasis on measures physically improving salmon survival.

Monitoring and Evaluation ($5-$10 million)8

The costs accounted for in this category include those associated with improved stock and habitat monitoring. These measures call for establishing additional monitoring programs for each of the major tributary systems in the basin to monitor adult escapement and resulting smolt production.

Improving Federal Funding Mechanisms

Achieving salmon restoration goals requires significant improvement in ensuring that available funds yield results “on the ground.” Mechanisms for funding projects must be made more efficient to achieve savings in costs and time. For instance, a review of the costs associated with irrigation screening by the Fish Screen Oversight Committee showed that screening projects funded by BPA cost nearly twice as much as screening projects funded by NMFS.

Needed improvements in federal funding mechanisms include: agreement on funding priorities by federal, state, and tribal governments; streamlining contracting procedures; and greater accountability by project implementors. To achieve these improvements, among others, various interests have called for transferring administration of measures funded under the NPPC’s Fish and Wildlife Program from BPA to USFWS (Committee on Natural Resources 1994). Regardless of the specific mechanisms chosen, it is clear that improvements in the effectiveness of federal investments must be achieved.

1 This estimate addresses the costs associated with hypotheses 4. Supplementation, 5. Reintroduction, 15. White Sturgeon.

2 Generally addresses the funding needs for implementing hypotheses 15. White Sturgeon, 4. Supplementation, and 5. Reintroduction.

3 Addresses hypothesis 1. Land Use Practices. The monitoring coasts associated with this hypothesis are described infra.

4 Addresses the funding needs for hypothesis 3. Watershed Restoration.

5 Addresses funds needed to implement the recommended actions in hypotheses 11. Adult Salmon Passage, 14. Lamprey Passage, and 6. Juvenile Salmon Passage.

6 The following statement of Chief Joseph of the Nez Perce Tribe illustrates the chicanery that has befallen the tribes with regard to ownership of natural resources. “If we ever owned the land we own it still, for we never sold it. In the treaty councils the commissioners have claimed that our country had been sold to the Government. Suppose a white man should come to me and say, ‘Joseph, I like your horses, and I want to buy them.’ I say to him, “No, my horses suit me. I will not sell them.’ Then he goes to my neighbor and says to him: ‘Joseph has some good horses. I want to buy them, but he refuses to sell.’ My neighbor answers, ‘Pay me the money, and I will sell you Joseph’s horses.’ The white returns to me, and says, ‘Joseph, I have bought your horses, and you must let me have them.’ If we sold ours to the Government, this the way they were bought” (Howard 1965). Just like the neighbor did not own the horses to sell, neither does BPA own the water of the Columbia River Basin to generate power.

7 The harvest-related measures are found in hypothesis 11. Stock-Specific Harvest Management (and in the institutional recommendation 11. Harvest Management).

8 This category addresses the costs associated with the monitoring activities recommended in the land-use practices, stock specific concerns, and water quantity and quality hypotheses. Addition monitory activities are incorporated in the habitat restoration, supplementation, and reintroduction hypotheses.


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