Measurement of Passive Use Values
Passive Use Values In NOAA Natural Resource Damage Assessments
Passive Use Values for Pacific Northwest Salmon/Steelhead Species
Layton, Brown, and Plummer (LBP)
Passive Use Value and the Multi-Species Framework Alternatives
This technical memorandum summarizes the state of knowledge concerning passive use value and its measurement, and suggests some options for application to the Multi-Species Framework alternatives.
To better understand passive use value, it is helpful to first define direct use value. Direct use value is defined as "the value individuals derive from direct use of a natural resource. Direct uses include both consumptive uses, such as fishing and hunting, in which resources are harvested, and non-consumptive uses, in which the activity does not reduce the stock of resources available for others at another time, such as bird watching or swimming" (National Oceanic and Atmospheric Administration [NOAA], 1994; p. 1073). Passive use values are defined as "the values individuals place on natural resources independent of direct use of a resource by the individual. Passive use values include, but are not limited to: the value of knowing the resource is available for use by family, friends, or the general public; the value derived from protecting the natural resource for its own sake; and the value of knowing that future generations will be able to use the resource" (NOAA, 1994; p. 1073). The terms "existence value," "intrinsic value," and "non-use value" also have been used to refer to the same concept.
Passive use values for Pacific Northwest salmon and steelhead populations may be motivated by the public’s desire to preserve these species and their associated habitats for the enjoyment of future generations and by the belief that anadromous fish have worth that is independent of their own or other persons’ values. These natural resources may be viewed as a significant component of what distinguishes the Pacific Northwest from other parts of the country. . Currently, there is no market mechanism to capture such values and ensure that they are reflected in decisions that affect the viability of salmon and steelhead populations in the Pacific Northwest. The Endangered Species Act (ESA) and the broad public support that salmon and steelhead species enjoy are indications that passive use values for these species are significant.
The concept of passive use value is rarely challenged; however, measurement is difficult, and empirical results can vary among samples. The next sections discuss such methods and the empirical studies that attempt to estimate passive use values for Pacific Northwest salmon and steelhead. In comparing the Multi-Species Framework alternatives, the question of the potential for passive use values associated with effects other than changes in salmon/steelhead populations and related wildlife habitat/ecosystems may arise. Therefore, a more general discussion of the potential for other significant sources of passive use value to play a role in evaluating the Multi-Species Framework alternatives follows the section on passive use values for salmon and steelhead populations in the Pacific Northwest.
Measurement of Passive Use Values
Contingent Valuation Method
Passive use values for non-market goods cannot be measured using market data because such goods are not exchanged in markets. Persons are free to contribute time and money to environmental organizations, and these values might be helpful, but such values are complicated by free-rider and uncertainty problems. People are unwilling to contribute to a public good when there is no assurance that others will, and the benefits of one contribution will be small and uncertain at best. Another potential source of information is referendums for financing of environmental improvements. Such referendums, however, are still rare, and the improvements to be financed may not be similar to those under study.
Therefore, economists have turned to stated preference methods, most notably, contingent valuation methods (CVMs), to measure passive use values. More recent additions to the stated preference methods include conjoint analysis methods and contingent ranking methods. These methods generally use surveys of a representative sample of the relevant population to elicit expressions of a stated preference that can be directly or indirectly used to determine willingness to pay for a good or service. This willingness to pay value is contingent upon the nature of the constructed market described in the survey scenario, hence the name "contingent value."
The valuation scenario requires information about the selection of the hypothetical good and its level of provision that is the object of the study, the method of paying for the good, the timing of the payment(s), a description of who will pay and, finally, any other additional information needed to complete the setting or "market" in which the exchange of dollars for goods is to occur. The question format for eliciting respondents’ self reports of willingness to pay (for example, open-ended, close-ended, iterative bidding, payment cards, etc.), and other aspects of the survey design are chosen to reflect the practitioners best professional judgement on how these decisions will affect the quality of the results as well as the cost of the study. That is, the researcher attempts to present the valuation scenario in a way that will be viewed as credible and plausible to the respondent within an overall survey design that must fit within a certain budget.
The good being valued is generally determined by the policy being evaluated, but it may nonetheless require considerable effort to determine exactly what well-defined goods and services will result from the policy. The description of the transaction must be credible to the respondent who otherwise will construct her/his own interpretation of the good and its provision, which she considers to be more likely. Therefore, it is important that the terms for the transaction in the scenario description be interpreted correctly by the respondent and correspond with how the actual policy may be implemented. Explanations of what may happen if a policy is not implemented also may be appropriate in some cases. To the extent that the policy context differs from the scenario description of the contingent valuation study, the results will be "biased." As with all applied work, in designing contingent valuation studies, the analyst attempts to balance the desired degree of the reliability and validity of the results with the costs of the study.
The reliability and validity of contingent values depends on the extent to which they accurately measure actual values. Empirical research has demonstrated general support for the reliability of contingent values obtained from careful studies (Mitchell and Carson, 1989). For example, regression analyses of willingness to pay show that it generally conforms to theoretical expectations. In addition, tests of contingent values over time indicate that recall of contingent values is good.
Because passive use values are not observable, there are no direct tests of the validity of contingent values. However, tests of the similarity of contingent values and results from using other types of valuation methods for observable goods and services provide evidence in support of validity. Carson et al. (1996) review available comparisons between contingent valuation results and revealed preference results (primarily travel cost and hedonic prices) for valuation of comparable quasi-public goods. Valuation studies for private goods were not included in their review. The goods in the Carson et al. (1996) review include various forms of recreation (mostly outdoor), changes in health risks, and changes in environmental amenities such as air pollution, noise pollution, water pollution, or parks. The review covers 83 studies containing 616 comparisons of CVM and revealed preferences results. The authors conclude that, on average, the CVM results are comparable to, or slightly lower than, the revealed preference results for similar amenities. The finding that contingent values are generally lower than revealed preference values is significant because it suggests that respondents do not tend to overstate their actual values in contingent valuation studies involving direct use goods and services.
Results of tests of the sensitivity of contingent values to changes in the scope of the valued good were mixed. For example, the concern has been raised that respondents will say they would pay something for any "good cause," but that their responses are not keyed to the specific quantity or quality change described in the study scenario (Kahneman and Knetsch, 1992). Some experiments have shown that stated values are largely independent of the scale of the resource, that stated values are strongly related to the format of questioning, or that interpolation to numerous environmental goods implies unlikely or infeasible levels of payment. (See Hausman, 1993, for a critical assessment of contingent valuation.) However, other studies have shown that contingent values are sensitive to the scale of the good. Carson (1997) has reviewed over 30 CVM studies that provide results of split sample scope tests and reports that the vast majority show statistically significant differences in WTP for the different scopes, while there were "only a handful of studies in which the hypothesis [of scope insensitivity] is not clearly rejected."
This apparent ambivalence has prompted the recommendation to incorporate validity tests directly into the design of contingent valuation studies (i.e., tests for internal consistency and sensitivity to scope, evaluations of zero and "high" value responses, regressions to estimate WTP as a function of respondent characteristics, and evaluations of potential non-response bias (Fischhoff and Furby (1988); Fischoff et al., (1993); Mitchell and Carson (1989); and, NOAA, (1993)). Mitchell and Carson (1989) provide comprehensive treatment of potential threats to validity and offer suggestions for avoiding or minimizing bias.
Conjoint Analysis and Contingent Ranking
Contingent valuation survey methods are only one type of stated preference method. Two other types of stated preference methods, conjoint analysis and contingent ranking, are becoming increasingly popular alternatives. Indeed, the Layton, Brown and Plummer study uses a contingent ranking methodology to value changes in fish populations in Washington waters. The same general guidelines for contingent valuation study design apply equally to these two additional methodologies, however, these methods have not been subjected to the same level of scrutiny as has contingent valuation.
Stated preference methods that ask respondents to make choices between two or more alternatives (conjoint analysis) or rank multiple alternatives (contingent ranking) that differ in at least some of their alternatives can be used t to estimate the value of changes in the attributes of the alternatives. Such methods could be used to estimate the value of increases in salmon populations.
For example, contingent ranking analysis methods are used in the Layton, Brown, and Plummer (1999) study discussed below. This study employs surveys to ask respondents to rank several alternatives that differ in their cost as well as their expected impacts on fish populations. The analysis is structured in such a way as to obtain measures of the incremental willingness to pay for increases in fish populations based upon the choices that respondents make. In summary, stated preference methods provide a suite of alternative survey design options. This enables the researcher to tailor the study design to meet the study objectives subject to the budget for the study.
The benefits transfer method is a practical alternative to valuation methods involving the collection of original data about preferences. This valuation method relies on approaches toward "transferring" existing studies, value estimates, and willingness to pay functions, to new policy contexts, sites, and affected populations. The reliability and validity of such transferred values depend upon the quality of the original studies as well as the degree of similarity between the original context in which the values were estimated and the new policy context.
Benefit transfer methods are described by the U.S. Environmental Protection Agency (EPA) in its draft guidelines for conducting regulatory impact analyses (USEPA, 1999). The issues related to the reliability and validity of value estimates obtained from any other valuation method are therefore, present in the case of benefit transfer analysis. This is because benefit transfer methods use the results from those studies and adjust them to apply to a new, but similar context. It is not likely that accuracy of the value estimates will be improved in the new context relative to the original context for which the value estimates were initially derived. Nonetheless, The benefits transfer method is a practical valuation alternative when direct survey data concerning an identified issue are unavailable. As with each of the valuation tools, if the degree of accuracy is not sufficient for supporting a decision, further analysis may be required.
Although benefits transfer methods are less costly and time consuming than the other valuation methods, care must be taken if credible results are to be produced. For example, some minimal data collection effort may be required to establish the effects of the policy and the population likely to experience those effects. The analyst must review the available studies for quality and applicability to the policy case, determine which benefits transfer method is supported by the data and required by the policy situation, and conduct the analysis. The judgments and assumptions as well as their expected impacts on final estimates and expected ranges in uncertainty all require descriptions to interpret the results. Absent any stated preference studies that are designed specifically to evaluate the Multi-Species Framework alternatives, the only option will be to use a benefit transfer approach. The present document should not be construed as a benefit transfer analysis of the Multi-Species Framework alternatives. Such an analysis was beyond the scope.
Passive Use Values In NOAA Natural Resource Damage Assessments
Following the Exxon Valdez oil spill, the controversy about including passive use values as part of a natural resource damage claim under the Oil Pollution Act (OPA) of 1990 caught national attention. A large part of the controversy involved the use of CVMs to assess these values. To address the issue of the reliability and validity of contingent values, NOAA convened a Blue Ribbon Panel including two Nobel laureates in economics as well as several other distinguished scholars. The panel’s discussions culminated in a report published in the Federal Register in which the panel members proposed guidelines for conducting such studies, that if followed, could be used as "the starting point of a judicial process of damage assessment" (NOAA, 1993).
Currently, the Natural Resource Trustees rarely include contingent valuation studies as part of their Natural Resource Damage Assessments (NRDAs). Changes to the OPA (1990) regulations placed much greater emphasis on resource-based compensation in place of monetary compensation. Although stated preference surveys of the public’s preferences are still a component of some natural resource damage assessments, these studies are more likely to elicit trade-offs of alternative restoration/enhancement/acquisition packages than to assess the monetary damages due to an injury. Monetary valuations are used only as a last resort.
Passive Use Values in Cost/Benefit Analyses
Regulatory agencies, particularly the EPA, continue to assess passive use values in conducting costbenefit analyses of their regulations, policies, and programs. Costbenefit analyses are required under Executive Order 12866 for all significant regulations costing the private sector $100 million or more, unless such analyses are prohibited by statute. Unlike the NRDA context, the monetary quantification of the changes in environmental and ecological services is often required to aggregate all of the disparate effects of the alternatives under consideration. Dollars provide a common metric for aggregating effects in costbenefit analyses.
The EPA has not released guidelines specific to the conduct of contingent valuation and other stated preference survey methods, but it does include a discussion of such methods in its Draft Guidelines For Preparing Economic Analyses (USEPA, 1999). In addition, EPA prepared comments in response to the proposed NOAAU.S. Department of the Interior regulations on NRDAs and the NOAA Blue Ribbon Panel report that offer further insight into procedures deemed acceptable by the EPA (USEPA, 1994). As with all benefit assessments, the EPA takes a pragmatic approach toward determining the appropriate methodology for assessing passive use values. This view is consistent with guidance issued by the Office of Management and Budget (OMB) (E.O. 12855, Introduction):
"Analysis of the risks, benefits, and costs associated with regulation inevitably also involves uncertainties and requires informed professional judgments. There should be balance between thoroughness of analysis and practical limits to the agency’s capacity to carry out analysis. The amount of analysis (whether scientific, statistical, or economic) that a particular issue requires depends on the need for expedition, the nature of the statutory language and the extent of statutory discretion, and the sensitivity of net benefits to the choice of regulatory alternatives."
The EPA provides a brief description of stated preference methods, including contingent valuation, conjoint analysis, and conjoint ranking methods in their Draft Guidelines For Preparing Economic Analyses (USEPA, 1999). The premise is that through careful study design, implementation, and analysis of results it is possible to enhance and to assess the reliability and validity of values obtained using stated preference methods.
Other federal agencies, including the U.S. Bureau of Reclamation (USBR) and the U.S. Forest Service (USFS) have a history of applying economic valuation tools to assess the benefits of their policies and programs.
Passive Use Values for Pacific Northwest Salmon/Steelhead Species
Recent studies of passive use values for salmon, steelhead, and other fish populations have included Layton, Brown, and Plummer (1999), and Loomis (1999). Earlier studies by Olsen, Richards, and Scott (1991) and Loomis (1996) also are relevant, but they, along with a third study by Hanemann et al. (1991), are included in the Loomis (1999) report. Therefore, these studies are not discussed separately here.
The objective of this memorandum is to provide guidance with respect to how these studies might be used to place bounds on the estimates for passive use values that could be attributed to the Multi-Species Framework alternatives. It is not possible to estimate the bounds because of the current lack of specificity of the Multi-Species Framework alternatives. However, once certain information gaps are filled, one could proceed with a bounding analysis of passive use values subject to the limitations described below.
Layton, Brown, and Plummer (LBP)
The purpose of the Layton, Brown, and Plummer (LBP) study was to develop a model that would be capable of estimating the value to Washington households of changes in fish populations in Washington waters for the full range in types of fish under a variety of conditions. Therefore, this is the most promising study for application to the Multi-Species Framework alternatives, especially once the study has been subjected to peer review.
LBP conducted a contingent ranking survey of Washington households to provide the data for estimating a willingness to pay function for improving fish populations in Washington waters. The specification of the function supports separately measuring willingness to pay for incremental populations of three generic types of fish in two geographic areas within Washington State. These are:
- Eastern Washington and Columbia River freshwater fish (CF)
- Eastern Washington and Columbia River migratory fish (CM)
- Western Washington and Puget Sound freshwater fish (PF)
- Western Washington and Puget Sound migratory fish (PM)
- Western Washington and Puget Sound saltwater fish (PS)
The willingness to pay function values incremental changes in the various types of fish populations over time relative to baseline conditions. Due to uncertainty about this future baseline condition, the authors used two different baselines, which were presented to a split sample of respondents. The low status quo condition showed populations declining during the next 20 years at the same rate as the previous 20 years. In the high status quo condition, populations stabilized at current levels during the next 20 years.
LBP Model Results
The authors estimated two WTP functions, one corresponding to each of the two baseline conditions. The estimates of willingness to pay for increases in each type of fish population depend on the baseline and the size of the increment. To illustrate their results, the authors computed the welfare estimates that correspond to two scenarios.
The first scenario evaluated a change in the two migratory populations that would return the fish populations to current levels in 20 years rather than continue to decline at historical rates (that is, the low baseline condition). This would require a 300 percent increase in the CM fish population from 0.5 million to 2.0 million (which was beyond the range of their model and had to be extrapolated), and a 100 percent increase in the PM fish population (that is, from 2.5 million to 5 million). The authors estimated that on average, Washington households were willing to pay $27.66 per month for this increase in CM populations and $33.70 per month for the change in PM populations, or a total of $61.36 per month per household, and lower and upper 95 percent confidence bands of $47.18 and $76.38, respectively. For an approximate 2 million Washington households, this comes to $122.7 million a month or $1.5 billion a year over 20 years. The 95 percent confidence bands give a range in aggregate annual willingness to pay of $1.13 billion to $1.83 billion per year. Smaller increments in fish populations result in lower estimates, but even a 10 percent increase in the populations of both migratory species has an estimated worth of $736 million a year to Washington households.
Alternatively, if one believes that in the absence of any new programs, fish populations would stabilize at current levels, changes in fish populations would be measured relative to the high status quo scenario. For a doubling of CM populations from 2.0 million to 4.0 million fish in 20 years, the authors found that Washington households were willing to pay $11.67 per month. For a doubling of PM populations (that is, from 5 million to 10 million) the estimate for average household willingness to pay is $24.52 per month, which gives a combined total of $36.19 and a 95 percent confidence band of $26.07 to $46.61 for both increases. Summing across all 2 million Washington households over the year gives $868.6 million and a range from $625 million to $1.1 billion a year for 20 years.
Note that it would not be appropriate to sum the results across the low status quo and high status quo baselines. These represent two different states of the world (future baselines) and the results are contingent upon the state of the world. Once having determined the appropriate baseline, LBP demonstrate how their model results can be used to estimate the willingness to pay for changes from either of their baseline conditions. In an undated slide presentation, LBP report estimates of willingness to pay for increases in migratory fish populations from 10 percent to 100 percent above their high and low status quo baselines in 20 years. Furthermore, in the event that neither baseline is accurate, the LBP models can be used to make the appropriate adjustment for the new baseline condition, so long as it is within range of either the changes evaluated in either their high status quo or low status quo baselines.
LBP Model and the Multi-Species Framework Alternatives
To apply the LBP results to the context of evaluating the benefits of Multi-Species Framework alternatives, it first would be necessary to establish the appropriate baseline condition and, second, to provide an estimate of the incremental change in fish populations that can be attributed to those alternatives. In addition, to interpret the LBP model results, any assessment of the passive use values that could be attributed to the Multi-Species Framework alternatives should include the LBP model’s estimated confidence bounds. These confidence bounds pertain to their econometric model, only, and do not reflect any of the other sources of uncertainty. In addition, the authors make the standard assumption that, on average, non-respondents have the same willingness to pay as respondents. To provide additional perspective on the range of uncertainty in the empirical estimates, the authors could conduct a sensitivity analysis of the welfare estimates to the choice of functional form and the treatment of non-respondents (for example, assume zero WTP rather than average WTP).
This sensitivity analysis would provide additional information to support a judgment about the reliability and validity of the LBP results for the purpose of evaluating Multi-Species Framework alternatives. In addition to the issue of how to evaluate the econometric model results, are questions related to the survey design itself. Judging solely from the questionnaire, it appears that the survey design conforms with Bishop and McCollum’s (1994) checklist for content validity. However, additional information related to the survey design process and respondent understanding of the task would be needed to ensure that the survey was interpreted according to the researchers’ intentions. For example, did the researchers debrief respondents or conduct any verbal protocols in an attempt to verify respondent understanding? How carefully did the respondents consider the different alternatives before providing their ratings? What kind of thought process did they go through? Did respondents acknowledge that they understood that they would have to pay for any additional programs? The authors indicated that they did explore respondent understanding issues through their use of focus groups (Personal communication: David Layton, August 12, 1999).
In summary, the LBP study provides a strong basis for drawing inferences about the range of values that they consider. The original study conforms well to guidelines for designing a reliable and valid study, and at least some of the study population overlaps with the population affected by the Framework alternatives. However, as discussed further below, it is difficult to directly relate the results of the LBP study with the Framework context. The extent to which the context of the valued commodity in the LBP study is reasonably similar to the policy context of the Framework alternatives.
Limitations
Assuming that the Multi-Species Framework alternatives adequately characterize the baseline condition and expected incremental changes in fish populations, the LBP model results provide the best available basis for placing bounds on the likely magnitude of passive use benefits to Washington households. However, there are some limitations to applying the LBP study results to an assessment of the benefits of the Multi-Species Framework alternatives.
First, LBP’s study is restricted to Washington residents. It is silent on the issue of the potential for positive values that residents of other areas of the Pacific Northwest or elsewhere may hold for increasing fish populations in Washington waters, thus potentially underestimating total regional passive use values. Application of these Washington state values to other areas thus needs to be conditioned on any differences in values among the states revealed by other studies and data. A careful literature review might indicate the required magnitude of such adjustments. Among the issues that such review should consider would be comparative sampling and calculating procedures, the baselines from which various analyses occurred, and the degree to which substitute resources and recreational opportunities were considered.
Second, the LBP model could be interpreted as providing estimates of total value, which includes the use benefits as well as passive use values for members of the public who, for example, use or would use the resource for recreation purposes. Therefore, to avoid double counting, it may not be appropriate to add estimates of recreation benefits to the LBP figures.
Third, the LBP model cannot be used to separately estimate the benefits of improving stocks of one type of migratory species over another. All types of migratory species are given equal weight in their model. Related to this issue is the question of whether respondents believed that all migratory species were in danger of extinction.
Fourth, ancillary ecosystem benefits that may be provided by the activities to increase fish populations were not addressed by LBP. To the extent that some of the Multi-Species Framework alternatives provide such ancillary benefits, they would not be reflected in the LBP estimates unless these ancillary benefits happened to coincide with respondent understanding of the valuation scenarios.
The purpose of the Loomis (1999) study was to develop a model to estimate the WTP for expected changes in salmonid resource conditions resulting from alternative actions developed as part of the U.S. Army Corps of Engineer’s (COE) Lower Snake River Juvenile Salmon Migration Feasibility Report/Environmental Impact Statement. He used a benefit transfer methodology based upon the existing literature values related to Pacific Northwest salmonid species. These passive use estimates were based primarily on three recent studies (Olsen et al., 1991; Loomis, 1996; and Hanemann et al., 1991), which were used to estimate a WTP function that could be applied to a wide range in salmon population changes. This report was prepared before the release of the LBP study, which had the benefit of using original data to estimate the same relationships. It is likely that Loomis will revise his report to reflect the new information from the LBP study (Personal communication: J. Loomis, June 23, 1999).
Nonetheless, the Loomis report and the studies that he relied on raise some issues that could be relevant to the Multi-Species Framework alternatives.
- Baseline conditions differ among referent studies.
- Relationships among the values that the various geographic sub-groups within the Pacific Northwest may place on the health or recovery of fish and wildlife are unclear, and have to be inferred.
- The substitutability of fish populations in different regions (for example, the value residents of Oregon may place on recovery of fish in Oregon versus in Washington) must be clarified.
- The recovery rates for fish populations vary among studies, or are not explicit in all studies.
- As Loomis notes, the public may hold passive use values for free-flowing streams over and above the values that they hold for salmon populations. This may well be the case for the public values associated with the Framework alternatives.
Passive Use Values for Non-Environmental "Commodities"
Theoretically, people can hold passive use values for non-environmental "commodities," including other public goods, such as schools and highways, as well as for saving jobs (on net), a traditional way of life, and items of historical and cultural significance. Whether the passive use values are large relative to total value, including market value, is the issue. If passive use values are small in relation to market value (or taxes and other non-market expenditures, in the case of public goods), it is not likely that their omission from the analysis will affect the relative rankings of the Multi-Species Framework alternatives.
Non-Market Commodities
Currently, the public pays taxes to support services such as public education, highway construction and maintenance, job creation and transition programs, museums, libraries, and preservation of historical monuments, etc. These goods and services provide direct use benefits to at least some members of the public. For example, children who receive public education are direct beneficiaries. In addition, society as a whole derives indirect economic benefits. That is, a better educated population is believed to be a more productive population (that is, more goods and services). Society benefits from the increase in goods and services as well as from the other aspects of society that are influenced by the contributions of an educated population.
Above and beyond these direct and indirect benefits, may be passive use values. In the case of education, some members of the public may derive benefits from the knowledge that all children will receive the opportunity to achieve some minimal level of learning, and that other members of society, besides themselves, will be living in a more enlightened society. To be passive use values, the individual must receive an increase in his or her sense of well-being from the recognition or knowledge that others are better educated, and not solely from how he or she enjoys the direct or indirect fruits of an educated society.
If one has a measure of the total value, or if passive use value is very small in relation to total value, there is no need to be concerned with measuring passive use values for education. This may explain why passive use value is not usually an issue for such public goods. However, for public goods such as populations of threatened and endangered salmonid and steelhead fish populations, the largest component of total value could well be passive use value. Absent a measure of passive use value, decision-makers may wrongly assume that total value is zero or too small to affect the relative ranking of alternatives. Thus, of the failure to consider passive use values could lead to a misallocation of resources that results in a net loss to society.
Market Commodities
People may hold passive use values for market commodities (for example, hydropower, wood products from timber harvest, agricultural products). Separate from the actual goods and services produced, it is conceivable that some people have a positive willingness to pay for harvesting timber if, for example, they otherwise believe that the trees would go to waste (Lockwood et al., 1994). The size of such values in relation to the market prices for these commodities is an empirical question.
People also may hold passive use values (that is, intrinsic values) for a traditional way of life (for example, commercial fishing, barge transportation, the small family farm). These values may not be reflected in market prices for the commodities that are produced in these sectors. In economic jargon, Person A’s traditional way of life, per se, and not the utility that Person A derives from that way of life, is an argument in Person B’s utility function. This intrinsic value likely would not be reflected in the conventional economic impact analysis. Whether this value is large in relation to the direct and indirect effects on the regional economy is an empirical question. Attempts to measure such values would require special care to ensure against double counting. For example, to the extent that members of the public value the income generated by the traditional way of life, rather than the cultural or historical attributes of the traditional way of life, including the public’s willingness to pay would result in double counting.
Loss of Jobs
Some of the Multi-Species Framework alternatives may result in job losses in certain sectors of the economy and regions of the country. The issue of passive use losses associated with the reduction in employment in the affected sectors may arise. In evaluating such claims, one must be careful to avoid double counting. First, the loss of jobs may be temporary, in which case it would not be appropriate to base an analysis on a permanent state of unemployment. Second, the direct and indirect economic effects already are captured in economic impact analysis. The public’s total willingness to pay to avoid the loss of jobs may be due more to the economic consequences (that is, reduction in expenditures and income in the region for a period of time) than they are to intrinsic values they hold for the specific jobs that were lost in exchange for other jobs elsewhere in the economy. The direct and indirect economic effects already are measured, so that including the public’s total willingness to pay to avoid the transfer in jobs from one sector to another would result in double counting.
In summary, passive use values are independent of one’s use of the valued "commodity." Rather, they arise from perceptions of the commodity’s intrinsic value and/or from other people’s (including future generations) use of the commodity. Passive use values can exist for both market and non-market commodities. However, passive use values are likely to be a larger component of total value for relatively unique goods and services that are not exchanged in markets and that have special natural, cultural, or historical significance to society. When passive use values are potentially large enough to affect the relative ranking of alternatives, it can be important to measure them. Otherwise, society runs the risk of choosing a less efficient alternative that wastes society’s resources.
While passive use values are an important element of the evaluation of fish and wildlife recovery alternatives, it is important to use caution in applying existing estimates to the Framework alternatives. No single comprehensive assessment of passive use values that closely corresponds to the Framework alternatives has been conducted, thus estimates used here must be inferred from studies focused on narrower ranges of species and referent groups. It is reasonable to assume that the differences in the scopes and results of the studies that have been conducted also would result in significant variation in estimates when applied to the Framework alternatives. Consequently, we conclude that inferences regarding passive use values may be most useful for comparing or ranking Framework alternatives and for comparing orders of magnitude between alternative human effects, but may be less useful for determining actual numerical measures of impacts.
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