Value Destruction

The specter of invasive species looms over resources around the world.  Well known historic examples of the widespread devastation invasive species can cause include the decimation of the American Elm by Dutch Elm Disease or the loss of the American Chestnut to the chestnut blight.  Visible modern examples include the destruction of hemlock by the wooly adelgid up and down the east coast.  The loss of hemlock in Great Smoky Mountains National Park has been particularly devastating and threatens the very presence of the smokiness which gives the park its name.  This gets to the heart of the challenge of invasive species: how to sustain revenue from visitors when the natural features that drew them to parks like the Great Smokies no longer exist  How many people would visit Great Smoky Mountains National Park if it is no longer ‘smoky?’ Whether you care about the preservation of hemlocks or chestnut or elm for their own sake, the loss of economically valuable resources is a significant threat from invasive species.

But what does economically valuable mean in this case?  Or more accurately, how do you assess how much value a species like the hemlock – whose primary value is not in timber sales but in generating tourism revenue in places like the Smokies – actually adds to the economy?

This might seem an academic question but it has an important practical application: if the trees aren’t directly part of the economy why should we invest the money to fight the invasive species that are destroying them?  When it comes to assessing the costs and benefits of actions to preserve the resource the value of that resource is very relevant.  Is it worth spending millions to try and fight the wooly adelgid?

In the case of a second well-known modern invasive – the spread of Asian Carp in the Mississipi – the question of resource value has become very real; the Army Corp of Engineers has suggested spending $15 billion to close canals between the Mississippi and the Great Lakes in Chicago.  The Asian Carp is a large, aggressive species of fish known for jumping into passing boats. It was introduced in Arkansas in the 1970s to clean aquaculture ponds but during a period of flooding they were able to migrate from the ponds into the Mississippi River and have been spreading aggressively ever since.  Now they are posed to enter the Great Lakes and, as a result, threaten the native recreational fisheries there.  In order to prevent this, the Army Corp has suggested closing off the connection between the Missisippi and the Great Lakes.  Whether spending the $15 billion to do so is worthwhile depends in large part on how valuable the Great Lakes recreational fishery actually is.

The popularly cited estimate places that value around $7 billion annually which is seemingly more than  enough to justify a one-time expense of $15 billion to preserve.  But recent work by economists at Cornell University suggests that there is more to the story.

The $7 billion dollar figure is based off the total expenditure of individuals taking advantage of the fishing in the Great Lakes in a given year.  Using the amount that people spend to utilize a non-market resource is a commonly accepted method of valuing a resource but in this case it is insufficient. It is unlikely that Asian Carp will destroy the Great Lakes fishery so the relevant question is not determining the total value of the fishery (answered as $7 billion) but rather, discovering the value of a decrease in the quality of the fishery?  That is a much more difficult question to answer.

The work of the Cornell economists suggests that the actual answer lies somewhere between $200 million and $1billion annually.  This is much less than $7 billion and one that dramatically changes the cost-benefit analysis of a $15 billion project to protect the fishery.

More importantly, their project underlines the importance of measuring the correct thing when we’re talking about resource values.  Yes, the fishery might be worth $7 billion in total but that tells you very little about how much you should pay to prevent a change.  Rather, it tells you how much to spend to prevent the destruction of the fishery.  But resource problems are not always about total destruction.  Instead they deal with marginal quality changes.  Recognizing the difference is crucial for making accurate valuation assessments.

Invasive species undeniably pose a threat.  And in some cases – the wooly adelgid is a good example – they threaten the very existence of a resource.  In that case total value assessments are a useful tool.  But in many cases, the total destruction of a resource is not the real danger.  In these cases we need valuation tools that can recognize nuance and measure degrees of change.  Like everything, invasive species management is rarely a story of black and white, destruction or preservation, but rather one of quality with shades of grey.  Our valuation tools should reflect that reality.


Image Credit: Eric Engbretson


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