Draft Economic Analysis For Kaua`i Downplays Benefits of Critical Habitat

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Much of the speculation over the impacts of critical habitat designation, at least on Kaua`i, was supposed to have been answered by the draft economic analysis released to the public on May 28. The analysis, prepared for the Fish and Wildlife Service by Decision Analysts Hawai`i, Inc. (DAHI), and Research Solutions, LLC, addresses about a dozen specific areas where critical habitat might have an economic impact, from hunting and ranching to telecommunications and the military. But according to Earthjustice attorney David Henkin, the document is one-sided in its calculations.

He calls the 148-page document “extraordinarily deficient” and says it “does a real disservice to the public.” Under the Endangered Species Act, the service must weigh economic and other costs against the benefits of designation. The draft economic analysis “looked only at costs and completely ignored or failed to highlight in any way the benefits,” Henkin says. The analysis dedicates a mere eight pages (out of nearly 150) to the evaluating benefits and fails to quantify them in a way that allows them to be weighed against costs.

Altogether, the document estimates that costs attributable to critical habitat designation range from between $945,500 and $2,468,700 over a 10-year period. “These costs represent, in the worst case, about 0.02 percent of the total personal income of Kaua`i County over the same period.” Far and away the bulk of that cost would be borne by the Pacific Missile Range Facility, which would face costs of between $832,000 and $1.95 million, mainly related to project modifications and consultations required to avoid damaging critical habitat in the area of the facility.

The analysis also addresses concerns of landowners that a change in their property valuation could result from designation. On this point, the report covers all bases: “Even though land values would decrease if Agricultural land were redistricted to Conservation, property taxes could remain the same, or they could increase or decrease.”

As to hunters’ concerns that designation will cut back available hunting areas, the report is reassuring – to the hunters, anyway. “DAHI judges that the probability is slight that the state would adopt a policy to substantially reduce game-mammal populations in critical habitat units that overlap with state hunting units. This judgment reflects discussions with DLNR, others familiar with the subject, and decades of public testimony by hunters. Simply put, the scenario is not regarded as politically realistic.”

Missing from the analysis is any assessment of the benefits critical habitat has to society, such as the existence value of a species and its contribution to the protection of watersheds, Henkin says.

“You can do it either way, from a qualitative or quantitative approach. This economic analysis does neither. It does not look in any serious way at the benefits. That does a disservice to the public that is trying to understand why we’re interested in critical habitat,” he says.

And from a legal standpoint, he adds, it does a disservice to the designation process. “This is the document the service is going to rely on to decide where to exclude areas. If it only looks at costs and ignored benefits, then it’s legally deficient.”

When he asked about the deficiency, Henkin says, Bruce Plasch, principal of Decision Analysts, admitted to not having the expertise to quantify ecosystem service. “Then why are you doing the economic analysis?” Henkin asked him.

“This is the document the service is going to rely on to decide where to exclude areas. If it only looks at costs and ignored benefits, then it’s legally deficient.” – David Henkin, Earthjustice attorney

The analysis concedes that “social welfare benefits can result from the conservation and recovery of endangered and threatened species,” but it goes on to say that it is “not feasible É to fully describe and accurately quantify these benefits in the specific context of this economic analysis. For example, most of these studies in the economics literature do not allow for the separation of the benefits of listing from the benefits of critical habitat designation.”

Henkin suggested that Plasch could have applied the estimated value of O`ahu’s Ko`olau mountain range to Kaua`i. The Ko`olau range has been valued at “something on the order of $7 and $14 billion dollars. I wouldn’t expect all that value to be attributable to critical habitat itself, maybe it would represent 1 to 10 percentÉ Whatever it is, it’s a lot of money in terms of value.”

Plasch also could have used data on how much people would pay to know certain endangered species exist, Henkin says. Multiplying that number by households would give the plants an “existence value,” a certain percentage of which would be due to critical habitat designation.

Finally, Henkin raises the fact that critical habitat played a key role in getting $17 million in federal funds to protect the endangered palila bird, whose habitat was being affected by the realignment of the Big Island’s Saddle Road.

“Social welfare benefits can result from the conservation and recovery of endangered and threatened species.” – Decision Analysts Hawai`i, Inc.

In that case, “We don’t have to be theoretical on the value of ecosystem services, we have a price tagÉ Those are on-the-ground, concrete benefits the species is receiving. Without critical habitat, it would not have gotten one penny.”

Without making any attempt to give a cost figure to critical habitat-related benefits, “to the public, it means zero. To the FWS, it’s also zero,” Henkin says.

— Teresa Dawson

Volume 13, Number 1 July 2002

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