5 alternatives

The discussion below summarizes the effects of the alternatives, first by human effects category, then by human effects indicator. The purpose and meaning of human effects indicators were discussed in detail in Section 4.1.

The mix of strategies in each alternative varies by ecological province. This information was used explicitly for the EDT analysis of chinook salmon populations and costs of habitat measures. For hydrosystem actions, and facility modifications, each alternative includes specific actions and modifications provided by the Hydrosystem Workgroup.

5.1 Social Effects

The Framework alternatives would have a variety of social effects?some related and some unrelated to economics. The five human effects indicators in this category include indicators for health and human well-being, environmental quality, and other factors that affect the quality of life of citizens of the Northwest. Information about these indicators is closely tied to the results of the Ecological Workgroup analysis, which was not available when this Human Effects Analysis was prepared.

Table 5-1 provides a summary of social effects of the alternatives.
 

5.1.1 Poverty

Most impacts on poverty are likely to be related to unemployment, especially in natural resource industries: agriculture, forestry, and fisheries. Tribal poverty related to subsistence opportunities is a concern. Poverty rates may be affected by:

• Increased unemployment in agriculture, flatwater recreation, transportation, and forestry
• Changes in unemployment levels in salmon fisheries
• Increases in employment in river-based recreation
• In the long run, reduced poverty conditions in tribal economies associated with increases in treaty harvest, subsistence catch, and ecosystem health
• Short-term gains from construction and implementation activities
• Reduced economic activity associated with higher energy costs
• Increased employment associated with the attraction created by improved ecosystem health.

5.1.2 Mortality

Mortality rates may be affected by several factors including:

• Availability of more salmon for subsistence harvest may increase nutrition levels and reduce mortality of tribal members
• An increased sense of well-being may reduce suicide and violent crime rates among tribal members
• Employment changes in natural resource industries could affect number of fatalities in these hazardous occupations
• In Alternative 2, changes in reservoir configuration and operations could increase risk to life associated from flooding, especially along the lower Snake river. Additional costs would be required to maintain mortality risk at current levels.

Table 3-4 shows tribal death rates relative to non-tribal members. Mortality rates are notably higher than non-tribal levels. Quantitative measurements of impacts on mortality are not available.

5.1.3 Passive Use

Passive use values are discussed in Section 4.2.2 and in more detail in Appendix E. In summary, passive use values are potentially large economic benefits associated with healthier fish and wildlife populations. Positive passive use values associated with fish and wildlife protection are evidenced by public support for the ESA and the allocations of public funds for the protection and recovery of endangered species.

Passive use values for the Framework alternatives have not been quantified because (1) The available studies do not cover the range of population increases estimated for the Framework alternatives, (2) the available information about salmon does not differentiate hatchery and natural fish, (3) limited information is available about the values of some groups of Pacific Northwest residents, and (4) results of the available contingent valuation studies have not been verified by use of actual willingness-to-pay experiments. Several techniques have been suggested for verifying contingent valuation results, including better use of sampling and bias control techniques. However, as described earlier (Section 4.2.2), passive use values are probably the largest benefit potentially associated with Framework alternatives.

5.1.4 Other Environmental Effects

The only environmental benefits that have been estimated are for salmon populations and, from DREW: salmon and steelhead trout population increases from the breaching of the Lower Snake dams. Other environmental benefits will involve improvements in the status of other species of animals and plants. Many other environmental benefits should be included in the analysis (for example, water quality improvements, biological diversity) but cannot be quantified at this time because strategies have not been specified or impacts of the strategies have not been measured. Environmental benefits that are unrelated to fish and wildlife populations (that is, the multiple benefits of healthy ecosystems) are discussed in Section 4.2.

The alternatives also would have environmental costs. Alternatives that decrease hydroelectric power supply would be likely to cause an increase in thermal generation. This increase would contribute to fossil fuel emissions, including carbon. DREW analysis showed a small effect on fossil fuel emissions for Lower Snake drawdown alone.

5.1.5 Other Quality of Life

Other factors that may affect the quality of life for residents include impacts on local populations, infrastructure, finance and social services, non-economic effects of construction, impacts on community and culture, and wealth effects that may not be picked up by other economic analyses. Alternatives 1, 2, and 3 may impair quality of life for natural resource occupation workers in rural communities, at least in the short run. Alternatives 4, 5, 6, and 7 may impair quality of life for tribal members, fishermen, and river-based recreationists. No quantitative information has been developed.

Community effects stem from disruptions to established local norms of work and behavior. Some habitat strategies might result in disruptions to established resource use patterns and property rights. Some alternatives might reduce these effects by use of more incentives.

5.2 Tribal Effects

Additional tribal effects are human effects indicators of concern to Tribes above and beyond those human effects indicators discussed earlier in this document. Tribal members have unique concerns (identified for the Human Effects Workgroup by participants reflecting tribal perspectives) that transcend their roles in the non-tribal economy. This section covers some of these concerns.

Given the broad cultural and spiritual relationship between Columbia Basin natural resources and tribal peoples, it is likely inappropriate?and also not fully possible?to establish linkages between Framework alternatives and the circumstances of tribal peoples based on some single calculus or measure. Information is adequate, however, to distinguish between Framework alternatives, based on three inter-related bodies of information available to this report:

• First, direct information provided by the tribes themselves, in their own words, and reflecting their own value systems, provides an important basis for identifying which alternative or alternatives will best improve tribal living circumstance, and which will not. Some tribal testimony is incorporated in this report. Other testimony will be provided to the broader Framework process.
• Second, direct monitoring of expected results from implementation of each Framework alternative on key indicator species will provide a good indication of whether tribal circumstances are, in fact, improving. Underlying this key indicator species approach is the concept that while tribal and non-tribal residents may perceive "how to measure the value" of such species differently, they can agree that "they are of value." By focussing on estimated abundance changes for each species, we leave persons from each culture free to value the species in their own words?while being able to distinguish which alternative actions are superior for the species involved.
• Third, the key species selected for such measurement are salmon, bull trout, beaver, and bear. It is also a reasonable presumption that if these species were recovering, it is likely that the ecosystem as a whole also may be recovering.

It is probably not possible to develop shorter-term quantitative relationships between changes in underlying levels of tribal resources and associated well-being. In fact, this may be neither feasible nor necessary ? as most of the core data about poverty, unemployment, and per capita income used in this report are from the U.S. decennial census. Noting this, we employ the following qualitative typology to distinguish among the effects of Framework alternatives on the Tribes:

• "Substantial" effects would be expected to resonate in communities across the tribal landscape almost immediately, bring hope/despair to tribal peoples, and to create substantial changes in tribal poverty, unemployment, and health measures within a 10-year (decennial) period.
• "Significant" effects would provide shorter term impacts (positive or negative) for some tribal communities or groups, and would provide measurable changes to human effects indicators during a decennial period.
• "Moderate" effects would provide benefits or costs which could be significant for some tribal communities or groups, but which might not result in measurable changes to poverty and health indicators during a decennial period.

5.2.1 A Summary of Impacts of Alternative Framework Initiatives on the Tribes

Estimates of changes in numbers of chinook salmon in the Framework alternatives from the EDT analysis are provided in Table 5-2. Estimates for other salmon species are not currently available.
 

The EDT results suggest that all of the alternatives would provide more natural salmon than alternative 4. This finding rests on numerous assumptions about survival of natural and hatchery fish that have not been reviewed or approved outside of the Ecological Workgroup. Therefore, these results are not yet accepted as the basis for analysis of tribal effects. Rather, results from PATH used for the Feasibility Study are considered.

The Feasibility Study provides fairly extensive data about breaching Ice Harbor, Little Goose, Lower Monumental, and Lower Granite dams on the Lower Snake River, but little information is provided about other Framework strategies.

PATH (1998) studies found that breaching Lower Snake and John Day reservoirs would increase fish populations and increase the chances of meeting NMFS jeopardy standards. NMFS (1999) finds that "based on the PATH analyses conducted to date, actions involving drawdown (Feasibility Study alternatives A3 and B1) projected consistently higher relative probabilities of exceeding survival and recovery population thresholds than actions using the current configuration? ." These studies support the biological benefits of breaching strategies independent of their role in the Framework alternatives.

Assessment of tribal impacts from the alternatives posed also depends critically upon whether it is assumed that populations of key fish and wildlife species, and more broadly, Columbia Basin ecological diversities in general, are stable, or whether they are in continued decline (Section 5.5). Historically, it has been demonstrated that tribal life has been devastated by cumulative destruction of the salmon-producing capabilities of the Columbia-Snake system and by declines of many game and plant species upon which they depend. Much of this destruction has been accompanied by mitigative assurances which, with time, turned out to be hollow promises. As a result of this empirical record, the Tribes have learned to be cautious of promised mitigation. That concern carries to the present assessment?where the Tribes see little in Framework Alternatives 4 through 7 to indicate that these long-term cumulative losses to key species will be reversed. Because of these concerns, summary results in this section first will be presented under the tribal assumption that key stocks are still under threat and will continue to decline unless major remedial actions are quickly undertaken. We will then summarize results using a stock stability presumption, for comparison with other like sections of this report.

5.2.2 Salmon

The Tribes used PATH results refereed by independent experts to estimate comparative tribal harvests from breaching the Lower Snake River dams, and compared these to harvests forecast under "status quo" and under an alternative termed "the transportation alternative," which maximized potential retrofitting of fish passage measures at these dams. Probabilities of removal of natural spring/summer chinook from the Endangered Species List after 48 years of recovery are presented in Table 5-3.
 

Considering these data, several conclusions seem evident with respect to impacts on Tribes.

• Retrofitting Lower Snake River dams to provide "improved" fish passage offers little relief to the Tribes and is inferior to "status quo" present day fish passage and flow measures. This option offers only a 37 percent chance of salmon recovery after 48 years. If we assume salmon stocks are still in decline, this action might be accompanied by further extinction of stocks with attendant catastrophic results for affected tribal peoples. As noted, these assessments apply only to dams on the Lower Snake River. However, to the extent that Framework Alternatives 5 through 7 are substantially dependent on the assumption that retrofitted dams can safely pass recovered salmon, these findings would seem to imply that they also will not succeed and that they may result in further salmon extinctions in the future.
• Maintaining status quo fish passage and flow measures on the Lower Snake River was found to be slightly better for salmon than dam retrofitting. However, potentials for delisting of spring/summer chinook within 48 years fall below 50 percent?and if stock declines are continuing, still risks extinctions?with attendant catastrophic damages for affected Tribes. More broadly, this would seem to imply that salmon recovery throughout the full Columbia/Snake system will require some mix of dam breaching, improved fish passage at remaining dams, and attendant habitat recovery for successful salmon renewal. These observations seem particularly to apply to Framework Alternatives 1 and 2.

Finally, these findings suggest that "maintaining status quo" measures for a further study period poses significant extinction risks for affected stocks and for dependent Tribes. This poses a serious consideration for Framework Alternative 4.

• Cited data indicate the breaching of the four Lower Snake River dams is the only alternative considered that offers hope of substantial recovery of Snake River salmon stocks and the prospect of significant reduction in threats of extinction. Breaching the four dams is forecast to produce 2.5 times more salmon than retrofitting or status quo and would reach biological recovery goals within a reasonable period of time. Within 50 years, this action is estimated to add 1.7 million pounds to presently diminished tribal harvests. To paraphrase Chris Walsh (Walsh, 1999), a psycho-social nursing specialist working for the Yakama Indian Nation, if these salmon came back, substantial positive changes would start for tribal peoples. These findings primarily apply to Framework Alternative 3, and the Tribes who depend on Snake River stocks. They also are relevant for Framework Alternatives 1 and 2, because breaching of the four Lower Snake River dams are incorporated in those alternatives.

Further discussion of the effect on salmon-dependent Tribes must necessarily await completion of work by the Framework Ecology Workgroup.

5.2.3 Wildlife Habitat

As with salmon, available information about habitat and dependent fish and wildlife awaits the completion of work by the Framework Ecology Workgroup. That work also may specify impacts on several potential key species of interest to Tribes, notably, bull trout, beaver, and bear, and provide further information about salmon. Preliminary information from the Framework process suggests the ranking of habitat recoveries under framework actions shown in Table 5-4.

Additional information is available for impacts on the Nez Perce, Yakama, and Umatilla Tribes if the reservoirs for the four Lower Snake River dams were drawn down to "natural river" by breaching. This information is summarized in Table 5-5.
 

Table 5-5

Tribal Impacts on Lands Inundated by Four Lower Snake River Reservoirs
 

5.2.4 Water Quality

The tribes place great importance on cool, free-flowing, pollution-free streams and rivers to support humans, fish, and wildlife. Framework Alternatives 1, 2, and 3 breach Lower Snake dams, and presumably would improve water quality as a result. Alternative 5 explicitly targets adequate summer temperatures for fish, and should lead to improved water temperatures in the system. Conversely, alternatives that continue adverse discharges (toxic or non-toxic) into Columbia Basin waters will rank low with respect to water quality. Our analysis awaits further information.

5.2.5 Distribution of Columbia Basin Income and Wealth

Historically, the Tribes of the Columbia Basin have been deprived of the resource wealth required for their survival, even though protection of these tribal resources was promised by representatives of the United States and often were guaranteed in treaties. Non-Indian residents of the Columbia Basin obtained these tribal resources by force, coercion, negotiation, and in later periods, by conversion of rivers to support great amounts of electric energy production, irrigated agriculture, and commercial transportation, but far less fish and wildlife. So as most residents of the region have prospered, the circumstances of tribal peoples have become increasingly desperate. These circumstances and their result for tribal peoples are summarized in Section 3.2.2.

Tribes are consequently critically interested in the issue of fairness?whether alternatives considered by the Framework solidify these prior takings of wealth from the Tribes, and the imbalances of poverty, unemployment, income, and ill health they created between tribal peoples and regional residents in general. Such concerns about distributional fairness also are mandated under the EPA?s Environmental Justice Guidelines.

Based on discussion in this report, it appears that Framework Alternatives 1 through 3 would move the region toward a fairer balance between the wellbeing of tribal and non-tribal citizens. It is not clear that Alternatives 5 through 7 would achieve this objective. Alternative 4, by recommending "status quo and study" would continue present adverse levels of poverty, unemployment, insufficient income, and premature death for tribal peoples of the region.

5.3 Economic Efficiency Effects

Economic efficiency effects are meant to provide some of the information required for NED accounts, which are most commonly encountered in the context of benefit-cost analysis. The accounting stance for NED analysis is usually the entire nation, or all U.S. citizens. Cost measures also could be used in the context of cost-effectiveness analysis.

5.3.1 Fisheries

This human effects indicator includes economic surplus associated with commercial harvest of salmon. Other fish species that may be impacted have little or no commercial importance. Recreational harvest is included in the discussion of the recreation industry (Section 5.3.3) and subsistence harvest is included in tribal effects under the salmon human effects indicator (Section 5.2.2).

Producer surplus in commercial fisheries involves sales, costs, and net returns. Sales are the price of fish times quantity sold. Costs are payments for labor, services, and equipment. Net returns, or sales minus costs, are a measure of economic benefit. Costs must include the opportunity costs of unpaid factors for benefits calculations. The analysis does not include consumer surplus of fish consumers in the United States. Consumers of salmon are not likely to be affected much because in a world market for salmon (much salmon is commercially cultivated), the price of salmon would not be affected much by Columbia River actions.

The specific strategies for chinook salmon included in the preliminary EDT analysis are:

• Alternative 1: Eliminate ocean and lower river harvest; improve harvest on known populations, use traditional methods and sport on mainstem
• Alternative 2: Reduce ocean harvest, provide for a lower river net fishery, status quo mainstem harvest
• Alternative 3: Same as Alternative 2
• Alternative 4: Status Quo
• Alternative 5: Same as Alternative 2
• Alternative 6: Eliminate ocean and lower river harvest; known population C&S, known stock and focus on hatchery fish on mainstem
• Alternative 7: Same as Alternative 6

The Human Effects Analysis takes the perspective that these strategies would be primarily short run and harvest restrictions could be reduced in the long run as stocks recover. This perspective is supported by the EDT analysis (Table 4-2) in that future total harvest potential exceeds preterminal harvest by multiples of 2 to 32. In the long run, the alternatives? effects on salmon fisheries should be largely positive and stem from the beneficial effects of many strategies that would increase numbers of salmon. These population increases will interact with harvest strategies and other background conditions in the commercial fishing industry to determine harvest levels and value. Some economic benefit estimates were developed in Section 4.2.2. These estimates, using total harvest potential, allow that some harvest strategies to reduce harvest could be weakened in the future to allow for more of the total harvest potential to be taken.

Short-run harvest reductions, though not currently specified by any alternatives, may be required. The analysis assumes that harvest reductions are accomplished by positive voluntary incentives so that owners of fishing enterprises are not worse off. By assumption, ratepayers would pay the costs of these voluntary incentives.

Table 5-6 summarizes the available information about impacts of the alternatives on fisheries. Sources of information were discussed in Section 4.5.

Important uncertainties in estimating fisheries impacts involve fish population increases and future fisheries regulations. Critical assumptions involved in estimating fisheries impacts involve U.S. v. Oregon and the Pacific Salmon Treaty. The NMFS currently is considering salmon harvest alternatives in the West Coast Salmon Environmental Impact Statement ranging from status quo to no harvest. A reasonable range of common assumptions might include more restrictive harvest regulations. If more restrictive harvest regulations were adopted as a common assumption, the effect would be to minimize the adverse effects of the Framework harvest strategies.
 

5.3.2 Hydropower

This human effects indicator includes economic measures of hydropower costs and benefits. Hydropower production is affected by several strategy blocks, including dam breaching or construction, dam modifications, and dam operations and flow management. The value of sales also is affected by operations that change the timing of production. In addition, hydropower costs are increased by the share of other costs (mostly habitat, harvest, and hatcheries) assigned to hydropower.

The Human Effects study team has assumed that ratepayers (electricity consumers) pay for the costs of electricity needed to replace lost hydropower, and that ratepayers must pay for harvest reductions, hatcheries, and one third of habitat costs. Demand may be more elastic in the future as market conditions change, and this may reduce the ability to pass on these costs.

Table 5-7 summarizes the available information about impacts of the alternatives on hydropower. The analysis involves electricity producers in two ways?BPA sales are reduced, and other costs are increased. BPA customer costs are increased by the cost of replacement power and the other costs are passed to ratepayers. On the other hand, thermal power producers and construction interests may benefit from the need for new capacity. These benefits are reflected in the regional assessment.
 

5.3.3 Recreation

This human effects indicator includes producer and consumer surplus from all forms of recreation that may be affected by the alternatives. Important categories of recreation include:

• Recreational fishing. Important species that may be affected include salmon, steelhead trout, and a variety of resident fish including trout, sturgeon, and bass.
• Recreational boating. Flatwater, river, and whitewater boating would be affected.
• Hunting, wildlife viewing, and wildlife/natural history education. Land-based recreation could be affected by habitat actions and effects on wildlife. Important habitat actions involve road closures, riparian land management, and management of land acquired and restored for habitat.

The recreational industry includes businesses that sell recreation goods and services, and consumers of those goods and services. The analysis is concerned with consumers as well as producers because both are located in-region, and both would be affected by changes in the mix and quality of recreation services available.

Table 5-8 summarizes the available information about impacts of the alternatives on recreation.
 

5.3.4 Transportation

This human effects indicator includes producer and consumer surplus in the navigation industry, its customers, and rail and trucking industries. Impacts occur only in alternatives with breaching. Transportation is shifted to truck and rail. The economic cost is the difference in resource costs between the two transportation modes. Most of the freight is agricultural products and supplies. Agricultural demand is elastic, so most cost would be paid by agricultural transportation users.

Table 5-9 summarizes the available information about impacts of the alternatives on transportation. Important uncertainties involve the ability of agriculture to absorb the transportation cost increases and the market structures in barging, rail, and trucking that affect the costs of transportation. Improvements in rail and road transportation might be beneficial for regional residents.
 

  5.3.5 Agriculture and Water Users This human effects indicator includes impacts to the agricultural sector and other water users that stem from several types of strategies: 1. Strategies that breach dams or lower reservoirs would reduce water levels or groundwater tables. Structural modifications would be required for diversions or groundwater pumping to continue, or the use of water might cease. These costs probably would be borne by the water users. Annualized costs are estimated to be more than $60 million, $30 million, and about $10 million in Alternatives 1, 2, and 3, respectively.

2. Habitat and hydrology strategies that reduce irrigation withdrawals to leave more water in-stream would require reductions in the amounts of water used for irrigation. Costs would be required for increased irrigation efficiency, or irrigated land use would be changed. Costs could be up to $100 million annually in Alternative 1; near $30 million annually in Alternatives 2, 3, or 5; and minimal in Alternatives 6 and 7. By assumption, these costs would be borne by ratepayers, and taxpayers. By assumption, electricity ratepayers would pay about one-third, taxpayers two-thirds, so he share paid by farmers would be zero or minimal.

3. Some habitat strategies would change farming practices; require on-farm improvements, change farming practices, or increase costs for screens. Costs could be $100 million to $200 million annually in Alternative 1; near $50 million annually in Alternatives 2, 3, or 5; about $30 million in Alternative 6, and minimal in Alternative 7. Most of these costs would be borne by ratepayers and taxpayers. Some costs, such as screening and reduced grazing on public lands, are assumed to be paid by the affected water or land users. In general, increased costs assigned to agriculture could not be passed to consumers because demand is elastic; that is, prices are set by national or international markets.

4. Some habitat strategies would reduce grazing, especially in riparian areas. Private land owners would be compensated. Costs on public lands probably would be borne by livestock owners, and the public landowner would receive less grazing revenue.

5. Some strategies would acquire agricultural land and devote it to conservation uses.

Table 5-10 summarizes the impacts of habitat-related strategies on land use and costs by alternative. Costs are shown by where they first occur, not who pays for them. Impacts to agriculture account for much of the land and economic cost of habitat actions. In Alternative 1, more than 20,000 square miles of cropland and grazing land would be affected. From Table 4-8, about half of agricultural land and a third of grazing land would be affected. In Alternatives 2 and 3, habitat intensities are reduced from 3 to 2. This decreases the amount and cost of habitat strategies markedly.
 

Table 5-11 summarizes the available information about impacts of the alternatives on agriculture and water users.
 

5.3.6 Forestry

This human effects indicator includes the direct costs of implementing major changes to land use on forested lands in the Columbia Basin. Forestry-related strategies would change forestry practices and reduce timber harvest. Table 5-10 shows potential impacts from the preliminary habitat assessment. In Alternative 1, added costs for restoration and management on forestlands could be $70 million to $130 million annually in costs and net revenue losses. Annual costs in Alternatives 2, 3, and 6 are similar at about $20 million to $60 million annually. Alternative 5 forestry costs amount to about $40 million to $70 million annually, Alternative 4 would cost $5 million to $10 million annually, and Alternative 7 would have little effect on forestry.

Most of these costs represent changes to forestry practices on private lands that would be compensated. Costs on federal lands would be minimal because a relatively small amount of federal land is being harvested in the region. One exception is that costs to establish normative fire conditions on federal lands could be large. Restoration and management costs on federal lands are assumed to be paid by federal taxpayers, but increased harvest costs on federal lands probably would be paid by users, not taxpayers.

5.4 Regional Economic Effects

This category of effects considers all of the industry-level effects combined, plus the effect of trade linkages, on important indicators of regional economic activity. These indicators are the value of output, personal income, and employment. These human effects indicators are discussed in Section 3.2.4, as are some issues about the meaning and application of these measures.

The DREW regional analysis suggests that a substantial amount of temporary employment and income would be created by breaching the Lower Snake River dams. Total temporary construction employment would be about 5,500 jobs in power plant construction; and about 15,000 jobs in construction of new transmission lines, rail, highways, facilities, pump stations, and wells. In the long run, and permanently, about 3,000 jobs would be lost due to loss of irrigated agriculture and cessation of dam operations, but 2,300 jobs would be gained from power plant operations and increased recreation use (USACE, 1999h).

The Feasibility Study did not include economic impacts of the loss of the navigation industry or the job gains from increased sales to the rail and trucking industries. Estimates of navigation-related losses were developed by the Tri-Port Economic Impact Study (1997). Roughly 800 jobs would be lost in the navigation sector, 800 more jobs would be lost in related sectors, and about 3,000 jobs would be lost in industrial parks and related areas. No data are available about the offsetting increases in rail or trucking.

The Feasibility Study estimated sales, income and job losses that might be caused by increased electricity ratepayer costs following breaching of the Lower Snake dams. Over the entire four-state region, lost sales amount to about $400 million annually, more than 2,300 jobs would be lost, and more than $230 million of personal income would be lost. The regional analysis for the human effects analysis uses input-output (I-O) to estimate changes in the value of output, personal income, and employment. The use of I-O requires that several issues regarding the method be discussed.

I-O analysis estimates changes in output, income, and employment following a change in sales from the regional economy. These sales, called final demands in I-O terminology, cause additional rounds of sales in the regional economy, giving rise to the familiar economic multiplier effect.

I-O assumes constant returns to scale. As the scale (amount) of production increases, costs increase proportionately. If all individual operations are the same, and assuming perfect competition, I-O may imply that no economic surplus is associated with increased sales (output). This inference about producer surplus effects may not be true, however, if the regional technology differs from the total market technology such that the local economy has comparative advantage that generates economic rents, even if the local industry exhibits constant returns to scale.

I-O does not count amounts of regional resources used in production, yet it implies that resources are available to meet increases in demand according to the fixed-input technology. In fact, regional resources may not be available to meet increases in demand, and the necessary resources may need to be imported. This is one reason why changes in output, income, and employment are measures of regional activity, not necessarily benefits or costs to the region.

Changes in regional economic activity may have profound effects involving substitution among factors of production and/or price changes. I-O does not consider either of these economic phenomena.

Transfers of funds among industries, households, or other members of the regional economy generally have offsetting effects in that the increased rounds of expenditure at the receiving end are offset by decreased rounds of expenditure at the giving end. This principle is important to the Human Effects Analysis because most costs would be paid by regional residents.

Effects that are offsetting for the region as a whole may have important local implications. One goal of this analysis is to identify particular groups of people who may be most affected by the alternatives. Ideally, the human effects indicators could be applied to any group of people that may be affected. Due to data limitations, measures are possible only for specific geopolitical areas, such as counties, states, or groups of counties.

Economic multipliers measure direct effects and effects that occur through backwards trade linkages?the purchases of goods by consumers and production inputs by producers. Practical considerations also limit the extent to which forward linkages, price effects, wealth, and public services effects can be quantified.

Tables 5-11 through 5-14 provide an example of human effects estimates of major regional impacts by alternative. This example uses the economic coefficients and multipliers developed by the DREW regional analysis with direct economic effects estimated for the human effects analysis to estimate regional effects of the Framework alternatives. No positive fish and wildlife benefits are included in the example. Rather, the example counts payments and expenditures required to implement hydrosystem, facilities, and habitat strategies. The example is illustrative and preliminary.

Table 5-12 shows the direct economic effects included in the regional analysis. The direct effects are based on an earlier version of the Human Effects Analysis but are still similar to the values shown elsewhere in this final report. Some important assumptions are:

• Major annual direct effects related to hydropower costs include the increased sales for alternative power supplies and, on the other hand, the loss of BPA power sales and the loss of consumer spending due to higher replacement power costs,. These three items generally have offsetting effects on overall spending because, with inelastic power demand, the cost of the new power supplies equals the lost cost of the lost supplies plus the increased cost to consumers. Power sales are lost, but the expenditure for replacement power is larger, and the difference between these represents increased consumer costs. By assumption, increased costs result in reduced discretionary income for ratepayers and reduced expenditures in the regional economy.

This may not be true if there are differentials in import patterns between the power supplies; for example, if new thermal generation facilities were located outside of the region. Also, effects that are offsetting for the region as a whole may have important local implications.

• It is assumed that power customers also pay for breaching costs, facility modification costs, and one-third of habitat costs. Expenditures for these items are increased, stimulating regional economies, but increased costs for ratepayers reduce their discretionary income and offset the positive expenditures on a regional basis.
• In the transportation sector, negative effects include decreased navigation sales and decreased net income of farmers who use barge transportation. On the other hand, increased rail and trucking sales are about equal to the decreased barge sales plus the increased transportation cost.
• Habitat costs on private lands would be compensated and the costs would be passed to ratepayers and taxpayers. The net income loss results in reduced spending by ratepayers, not farmers. However, strategies that fallow a significant share of irrigated land would have adverse local effects even if the owners of the irrigated land are fully compensated because compensation is paid only for lost net revenues (the rent paid to the landowner), not total farming expenses. Farming expenses include payments to suppliers, labor, and other factors of production. A large loss of crop production has adverse local economic impacts as agricultural income and expenses are reduced and less product is stored, processed, and transported in the local economy. In the Human Effects Analysis, the value of production lost is assumed to be five times the compensation required to induce the farmer to cease irrigated production.
• Regional economies experience other effects. Increased expenditures for habitat improvements are a boost to the farm services sector but increased ratepayer and taxpayer costs are offsetting. Households in the states lose buying power because taxes and electricity costs would be increased to pay for two-thirds of habitat costs.
• Expenditures for forestry management practices in the timber industry are assumed to increase, but these increases are offset by increased taxpayer or ratepayer costs, reduced discretionary income, and decreased expenditure.

^{1 Thermal power construction and operating costs based on DREW regional analysis.
2 These effects occur just once. Other effects are essentially permanent effects.}

Net effects on spending in the long run are negative, but short-run effects are positive because some of the implementation expenditures are temporary. Construction expenditures are temporary, but rate increases to pay for them would be long term. Table 5-12 shows that the short-term construction impact on the economy could range from $3.8 billion to $9.2 billion for those alternatives with breaching. For some alternatives, increased hydropower production would reduce the need for construction of thermal generation facilities. Table 5-12 does not account for direct leakages of expenditures from the regional economy. In every sector, some of the direct impact would not occur because some of the persons or businesses involved are non-residents. Some power sales go out-of-region. Increased power costs in California, for example, would have a relatively small effect on expenditures in the Pacific Northwest states. Some residents spend their incomes for imports or take their money out-of-region. Major construction projects (for example, power plant construction or mainstem dam modifications, but probably not habitat restoration-related construction) are characterized by relatively large leakages because work often is conducted by non-resident contractors and workers.

Table 5-13 shows how direct effects were allocated to states. Some direct effects occur outside of the region. This is reflected by row totals that are less than 100 percent.
 

Given the initial output effects in Table 5-12, and shares of impact by state assumed in Table 5-13, data about employment and personal income per dollar of output (Table 5-14) can be used to estimate direct output, employment, and personal income impacts. In Table 5-14, the output multipliers are the ratio of direct plus indirect output to the direct output alone. The income and employment coefficients are the direct plus indirect income or employment per dollar of direct output effect. With economic multipliers for output, employment, and income, total (direct plus indirect) impacts can be estimated. Table 5-15 shows an example of results for Alternative 1.

These results should not be considered to be reliable for several reasons, but especially,

• The location of construction for new power facilities is unknown.
• The marginal patterns of expenditure for discretionary income are unknown.
• I-O does not account for induced technological change, changing returns to scale, price changes, resource availability, industrial production constraints, or substitution effects.
• Changes in recreational and fishery expenditures have not been counted.

Still, the analysis suggests that total effects of the alternatives in the region could be large. Implementation effects could be important in local economies. Many of the types of effects considered would be focused in or near the communities near the Lower Snake River and mid-Columbia. Effects on ratepayers and taxpayers would be diffuse. The location of most effects involving habitat expenditures is unknown.
 
 
 

5.4.1 Output

This human effects indicator includes the value of sales of goods and services net of intermediate goods.

Table 5-16 summarizes the available information about impacts of the alternatives on value of output. Dollars values, where given, are based on the preliminary regional analysis.
 

5.4.2 Personal income

Personal income is employee compensation, proprietors? incomes (including farmers), and interest, dividends, rents, gifts, and transfers from governments. Personal income often is measured by where it is generated as opposed to the residence of those receiving it. Economic procedures have been developed to account for income of residents as opposed to incomes paid by businesses located within the region.

Personal income effects are similar to effects described for value of output. Results are shown in Table 5-17. Dollars values, where given, are based on the preliminary regional analysis.
 

5.4.3 Employment

The distribution of employment impacts would have a pattern similar to the effects described above for the value of output. Impacts are shown in Table 5-18. Employment values, where given, are based on the preliminary regional analysis.
 

5.5 Risks Associated with Common Assumptions

Section 3.4.1 defined assumptions that are common to all alternatives. These assumptions define what would be assumed to happen if the actions specified in each alternative were not carried out. This could also be described as a base case. In general, these common assumptions are not forecasts of what is expected to happen. Rather, they are assumptions for analytical comparison and convenience.

Some of these assumptions simply allow the analysis to focus on changes from current policies and conditions. However, some of the assumptions have important implications for future fish and wildlife conditions. Uncertainty about the assumptions result in legal, ecological, and economic risks. The discussion below focuses on a few important assumptions that, if not true in the future, would have serious implications about the adequacy of actions taken in the various alternatives or for the costs and benefits that might be expected in various alternatives.

5.5.1 Clean Water Act Enforcement

The common assumptions on Clean Water Act (CWA) enforcement are that development and enforcement of total maximum daily limits would continue for municipalities. Aside from this clear trend, it is assumed that currents levels of enforcement of the CWA would continue. This implies that no major new investments would be required at dams to reduce water temperatures or dissolved gas.

Various actions taken under some of the alternatives will affect compliance with the CWA in these areas. The costs of increased compliance are included in the costs of alternatives that take actions to improve water quality. An alternative that does not improve water quality would not incur the costs of doing these actions and accordingly is less expensive than an alternative that takes significant actions that improve compliance with the CWA. However, if increased CWA compliance is mandated, compliance becomes a cost for all alternatives that can not be avoided. To the extent that one thinks that the CWA will require substantial investments in dams in the future, these costs become a risk to alternatives that don?t include such improvements.

To illustrate how this affects the comparison of two alternatives, consider one alternative which removes a dam, and another alternative that leaves the dam in place. Under the common assumption of no increased CWA compliance requirements, the dam removal alternative would have costs that are higher than the second alternative by the costs of dam removal. As a different scenario, suppose that significant increases in CWA compliance were included in the common assumptions. If the dam is left in place, significant changes would be required to meet CWA requirements. The costs of those changes would be incurred in the alternative that leaves the dam in place, but they would be avoided costs in the dam removal alternative. In this scenario, the costs of the dam removal alternative would be greater than the dam retention alternative by the difference between dam removal costs and the cost of dam modification to meet increased CWA requirements.

From a risk perspective, the alternative that leaves the dam in place may face a risk of increased costs if CWA compliance requirements were raised substantially. Or conversely, the alternative that removes the dam may face a smaller incremental cost than expected under the current set of common assumptions.

5.5.2 Trends in Fish Populations

Another common assumption that could have very significant implications for the policy conclusions drawn from comparison of alternatives is the assumption that fish and wildlife populations would stabilize under current policies and programs. This assumption is supported by the chinook salmon population estimates in Table 4-2, but there is currently little agreement about population trends. The analysis assumes that human population and activity would continue to grow in the region, but that current policies would be adequate to prevent further deterioration of fish and wildlife populations. Whether this assumption is true or not is unknown and the assumption could have important implications for the evaluation of alternatives.

Stock listings under the ESA have increased in recent years indicating that some stocks have continued to decline. However, fish and wildlife policies have also been enhanced recently in response. It is too early to tell how effective these changes may be. Projections of Snake River salmon and steelhead based on PATH analyses show the stocks exhibiting a stable trend under current policies. Similarly, the Framework analysis using the EDT model shows that stocks of natural salmon would increase over the long-run in Alternative 4, which has relatively modest changes in fish and wildlife actions. However, stable stocks at low levels may still pose a risk of extinction under adverse conditions.

Some recent studies have concluded that Snake River salmon, at least, face a significant threat of extinction under current policies (Monday, 1999). Species extinction would pose a risk of very significant loss of value. It is clear from various studies of passive use value, and from the existence of the Endangered Species Act, that a loss of species would be viewed as a large cost to society. These estimates incorporate little of the potentially catastrophic effects on Basin tribes should salmon harvests be lost?which are outlined in previous sections of this report.

By assuming that stocks would be stable in the absence of further changes in policies, the uncertainty in extinction risk among the alternatives are not addressed. Accordingly, to the extent that one considers there to be significant extinction risk in the current policies, increased value should be placed on alternatives that are expected to have larger positive effects on natural fish and wildlife populations.

In addition to the risk of extinction, there is uncertainty about the average trend in fish and wildlife populations. If fish and wildlife populations were to continue to decrease under current policies, the changes predicted for the seven framework alternatives would result in reduced absolute numbers of fish and wildlife in the future. The effect of the alternatives in terms of changes would not be altered, but the levels of population would be smaller. Since the adequacy and desirability of an alternative will partly depend on the absolute levels of fish and wildlife populations attained, the underlying trend assumption are important. For example, Layton et al. (1999) estimate that resident households in Washington State would be willing to pay an average of $332/year each to recover declining regional salmonid stocks to 2 million fish ? compared to $140/year each if salmonids were assumed to be at stable levels.

Another possibility is that populations generally increase and risk of extinction decreases with current programs and policies. This trend would result in generally opposite effects from those discussed above. The more costly alternatives would have generally less benefit.

The discussions in this section are intended as a further caution of the appropriate implications of the analysis of Framework alternatives.

5.5.3 Inability for Hydropower to Pay Assigned Costs

Reduced power sales and increased costs might reduce BPA?s ability to meet its financial obligations. In economic theory, inelastic demand means that increased prices will increase revenues because the increased price effect is more than the reduced quantity effect. If demand becomes elastic, then the percent reduction in quantity purchased exceeds the increase in price and revenue falls. Therefore, cost increases cannot be recovered when demand is elastic.

It is difficult to say what might happen if this occurred. Probably, a larger share of costs would be paid by the federal, state, and local taxpayers and private interests.

5.6 Mitigation/Transition

As stated at the outset of this report, the primary objective of the Human Effects Analysis has been to evaluate and display potential human effects of the Framework alternatives. These social, tribal, and economic effects are described throughout Section 4 and summarized in Table 1-2. Some of these effects, such as new construction, would occur in the relatively short run. Other effects, such as fundamental changes in transportation, would impact affected economies in the long run. Effects such as changes in water supply would impact primarily local or small regional communities. Other effects, such as increased cost of electricity, would have broader regional impacts. In short, effects would vary considerably over time and space.

As described, the effects of each alternative would be positive for some and negative for others. Generally, those impacted positively would support the actions resulting in those effects. However, those who are negatively impacted would likely raise serious questions about the actions. They might have significant concerns about their future and their ability to adjust to such impacts and need assistance in making these adjustments.

Understanding the potential negative impacts and concerns will likely be important to policy makers as discussion about the alternatives continues. This understanding can come in part from the experiences of others as they have responded to economic and social shocks of similar magnitude. It also can come from a more extensive analysis than presented here of who will be negatively affected, how they might respond, and how they might be helped.

The U.S. economy is obviously dynamic, particularly as it extends the current expansionary period. However, normal growth involves both positive and negative effects. Firms expand, contract, and sometimes close. Industries grow and contract. The technological boom that is underway only seems to increase such fluctuations. In addition to normal market forces, national or local policies can cause economic shocks. Closing military bases certainly has been a major impact to local communities. Limiting timber harvests on public lands has been another example of potential shock to local and regional communities. Changes in international trade agreements also have impacted jobs nationally.

There is an array of experiences as well as academic literature assessing the responses to market forces and major policy changes that can enlighten the assessment of potential negative impacts of the various alternatives. These assessments describe how individuals respond to loss of work, how long it takes for adjustment, and what the ultimate impact is after adjustment. Understanding these potential responses is an important ingredient in understanding the necessary adjustment to negative effects that have been enumerated in this analysis.

In the past, programs have been developed to ease economic transitions necessitated by some market forces and policy choices. Both federal and state programs have been used for specific as well as more general transition needs. Examples of such programs include the Timber Retraining Benefits Program to provide retraining for workers in natural resource jobs. The State of Washington assists workers terminated from employment with little likelihood of returning to those jobs. The U.S. Department of Commerce provides grants to distressed communities to encourage business activity. There are many examples of such programs that include help in finding new work, retraining to improve individual skills, or other incentives for economic activity.

To date, a limited amount of attention has been addressed to issues of potential mitigation. The COE includes a literature review about potential mitigation for employment impacts in its Social Analysis Report of DREW (Section 5.2). Trout Unlimited recently released (November 3, 1999) an economic study conducted by ECONorthwest. This study examines the economic impacts likely to result from the bypassing of the four federal dams on the Lower Snake River (comparable to strategies included in Framework Alternatives 1 through 3). Included in the DREW Social Analysis Report are descriptions of autonomous economic forces (DREW Appendix B) and characteristics of economic transitions (DREW Appendix C) that provide essential information about how people respond to economic shocks. The analysis itself builds upon work done by the COE in DREW and argues that such work was incomplete in describing effects. The analysis does not extend to the other strategies included in the Framework alternatives.

As policy makers explore the Framework alternatives and their effects, they will face the questions and concerns of those who potentially would be negatively impacted. They could learn from the experiences of others what actions were taken and how effective those actions were. These insights will be important to understanding the adjustments that some people would have to make and how they might be helped.

Policy makers also would need to explore what legal obligations, if any, exist to mitigate for negative impacts. Where such obligations do not exist, they would probably want to develop some principles to guide any mitigation proposals. For example, people who lose jobs normally take actions to find new work, whether by changing location or type of work. Should these people be assisted through retraining, relocation, or other efforts to ease the transition? How long should such help be provided? Who pays for the assistance?

So, policy makers pursuing consideration of the Framework alternatives probably would want to build upon work done to date. With an understanding of the potential negative effects of each alternative, lessons learned from others, and principles guiding future actions, policy makers would be prepared to address questions regarding mitigation. As this process continues, additional effort would be necessary to affect this preparation.