From Rural Technology Initiative's report, " Investigation of Alternative Strategies for Design, Layout and Administration of Fuel Removal Projects". Read the full report here : http://www.ruraltech.org/pubs/reports/fuel_removal
4.6 Market and Non-Market Values of Fire Risk Reduction
As a consequence of the large intense fires in the inland west over recent years, considerable public attention is being directed at addressing the question of how to reduce the hazardous fuel loads from the overly dense forests that characterize the region. Removal of the many small trees that make up these fuel loads is known to be costly. While large trees can be removed for lumber and other product values as reflected in the market, the market value for the smaller logs may be less than the harvest and hauling charges, resulting in a reduction in value for thinning operations that are needed to lower fire risk. However, failure to remove these small logs results in the retention of ladder fuels that support the transfer of any ground fire to a crown fire with destructive impacts to the forest landscape.
Unfortunately the market does not automatically reflect the costs of negative environmental consequences. If the negative impacts that result from crown fires were fully reflected in the market, there would be high motivation to avoid them, providing the necessary incentive to remove high fuel loads in spite of the cost. There are many market and non-market values associated with reduction of risk that should be important to forest managers and to society at large (Pfilf et al. 2002). For example, the cost of fighting fire could and should be considered a cost of not removing high fuel loads. Similarly, there is the value of avoiding facility losses and fatalities. Communities value a lower fire risk and reduced smoke. The United States Congress has historically placed a very high value on species protection (USDI Fish and Wildlife Service ESA 2003, USDA Forest Service NFMA 2003) yet irreplaceable habitats for threatened and endangered species may be lost when forests burn. Fires also reduce the carbon stored in the forest and the opportunity to produce long lasting pools of carbon stored in products. Fires consume biomass that otherwise could be used for energy conversion and green energy credits.
Regeneration after fires is problematic and costly, and there can be other rehabilitation needed to avoid serious erosion and water contamination from excessive sediment. Water consumed by overly dense forests could be saved for other uses such as habitat, municipal reservoirs, and irrigation. There are also foregone rural economic development benefits from the taxes and rural incomes that would result from fuel reduction activities. Since economic activity in these regions has been in decline as a consequence of lower federal timber harvests, any reduction in unemployment has higher than normal leverage on state and local finances by lowering assistance costs.
In contrast, there may be some negative impacts from removing hazardous fuels such as root damage to the trees left in the overstory or compaction to soils in skid trails that could offset the benefits. These costs need to be considered as well as the benefits of lowering the risk of infestations and disease caused by high stand densities. A complete cost/benefit analysis would attempt to determine if the value of fire risk reduction treatments more than offsets their cost.
The purpose of this study is to assist the design and management of fire risk reduction activities that integrate a suite of public values with strategies customized to local conditions. Rather than attempt to estimate these values for each local community, this project provides a coarse estimate and methodology to assist in the consideration of the broad set of values associated with reductions of hazardous forest fuels. Once the range of values for consideration has been established, a methodology for cost assessment and appraisal can be refined for local situations as necessary.
4.6.1 Reduced fire fighting cost
Fire cost data is generally available, but it differs from year to year, from fire to fire, and from one location to another. The most costly efforts are likely to be expended when facilities or other assets are in the path of a fire. Fire cost data from the FNF and the ONF appear to agree: the larger the acreage of a fire event then generally the lower the average per acre cost. Large fires have other costs such as losses of habitat and timber resources that can be considered in addition to fire fighting expenditures. Averages of historic fire fighting costs can be used to estimate the future benefit of lowering fire risk through fuel reduction activities. While precise risk assessments are impossible, approximations of the value trade-offs associated with investments today to avoid future risks are useful.
Stands thinned to remove fuel loads have been shown to be unlikely to experience crown fires (Omni et al. 2002). Accounting for the value of that reduced risk exposure must take into consideration both the consequences of not thinning and when those consequences (costs) might occur. With limited knowledge about the probability of when a future fire might occur in a specific location, the savings of future fire-fighting costs must be discounted to an expected present value based upon either a reasonable estimated time to fire or based upon a distributed risk probability.
The present condition of forested areas at risk is a result a century of logging and fire suppression in forests that historically had short fire return intervals (Agee 1993, Powell et al 2001). In 1999, the U. S. General Accounting Office (GAO) issued a report which concluded that "the most extensive and serious problem related to the health of national forests in the interior West is the accumulation of vegetation." The GAO estimated that 39 million acres of national forestlands were at high risk due to excessive fuel loads and that $12 billion would be needed between 1995 and 2015 to reduce excess fuel accumulations, an average expenditure of $725 million annually (GAO 1999). Since this 1999 GAO report, estimates of the acreage of forest considered at high risk have increased. In 2001, the Forest Service reported that 56 million acres of national forestlands were considered at high risk of catastrophic fire, primarily due to overcrowded trees (Powell et al. 2001). The challenge is to better understand the magnitude of this risk exposure and then to be able to translate that magnitude into a present value of risk that is useful for local as well as regional estimations of costs and benefit of fire risk reduction investments.
While analysis of data for this investigation has shown that very large areas of both the Fremont and the Okanogan National Forests (586,323 acres on the FNF; 721,344 acres on the ONF) are at high or moderate fire risk, no methodology has been offered to assess the temporal probabilities of when a forest fire might occur. Such a modeling exercise would be an extremely complex undertaking with output accuracy limited by the generous assumptions that would be needed to deal with multiple unknowns. On the other hand, it is reasonable to assume that at some time there will be a forest fire in high and moderate risk forests and that there is monetary risk associated with that inevitable event. We need estimates of the present value cost of fire risk exposure to understand the benefits of investments in fuels reductions today to reduce risk tomorrow. Creation of an output table that can be used to compare the relative magnitude of cost with the risk of ignition at different times could help define cost ranges. Present value calculations can be used to look at potential costs of future forest fires parametrically such that time, discount rate, and magnitude of event are definable variables readily customized for assignment of present values that fit a spectrum of local expectations. The calculations for two possible accounting approaches to assess the present value of future costs associated with fire in moderate to high risk classes are displayed in Figure 4.28. Method 1 is a calculation of the present (discounted) value of a fire fighting expenditure to be made at a known future date. Method 2 is a calculation that estimates the expected present value of a future fire fighting expenditure at an unknown time with an equal probability of risk for all years in a defined interval. For purposes of this approach, the risk of concern is the present forest condition and the time to fire. Additional risks/costs associated with post-fire re-burn or accumulation of future fuel loads from regeneration, while they are arguably real long term liabilities that add to forest management costs, are not considered for this valuation exercise.
In Table 4.15, cost estimates developed from the use of both methods are displayed. Fire fighting cost is assumed to be $1000/acre and the discount rate is 5%. These figures are offered here only as reasonable estimates. On the FNF and the ONF, the average cost/acre to fight forest fires has been over $1000/acre for the largest fires, and smaller fires can be much more costly (see Figures 4.21 and 4.22). An assumed inflation adjusted discount rate of 5% is common in financial analysis. Results from Method 1, the present value of a future cost at a specific time, show lower cost estimates than those of Method 2 because Method 1 assigns no value to risk probability that a fire could happen sooner than the specified time. Method 1 analysis shows that thinning a forest 30 years before it would have burned results in a present value savings of $231/acre. Considered another way this means that $0.23 is the present value saved today of every $1.00 of fire fighting cost that otherwise would have to be expended in thirty years. As the time to fire shortens, reductions from discounting decrease and the present value approaches the cost outlay. For example, if the forest fire would have occurred in 15 years instead of 30 years, the present value of the fire cost savings is $0.48 per $1.00 of fire fighting cost instead of $0.23.
Figure 4.28. Present Value Estimations of Future Fire Fighting Costs
Table 4.15. Parametric Present Value Estimations of Fire Risk Costs with Assumptions of $1000/acre to Fight Fire and 5% as the Discount Rate
Method 2 employs the use of a standard accounting formula for a terminating annual series (annuity) to estimate the present value of a future expenditure in a given time interval with an equal probability of risk for every year in the interval. For this methodology the cost (in this case $1000/acre) is divided by the number of years in the given interval such that each year has an equal share of the cost burden. The cost (risk probability) assigned to each year is weighted by the discounted interest per year through the time interval. The length of the interval may be considered a surrogate for anticipated risk. Since the time of a future fire event is unknown, Method 2 may be the more robust choice of methodology for the purpose of understanding the present value of expected future fire costs. However, Method 1 may be simpler for forest managers and interested publics to use, and it produces readily understandable results that should be considered conservative estimates of present value. It should be noted that the present value for a 30-year period under Method 2, which assumes a uniform fire probability over the interval ($512/acre) is almost the same as assuming the fire is in the middle of that interval (i.e. at 15 years) under Method 1 ($481/acre). One can use Method 1 for a conservative estimate of method 2 by reducing the middle of the Method 2 interval as the estimated year of a fire under Method 1.
For purposes of developing a user-friendly approach to present valuation of fire risk and other values this report will assume that high risk areas burn in 15 years (or as mentioned above, the mid point of a 30-year uniform fire probability), moderate risk areas burn in 30 years (or as mentioned above, the mid point of a 60-year uniform fire probability), and low risk areas incur no fire fighting costs. In high fire hazard areas, it is assumed that the present value cost for fire fighting is $481/acre (i.e. $0.48 of every $1.00 of future fire fighting cost). The corresponding value for the moderate fire risk areas is $231/acre ($0.23 of every $1.00 of fire fighting cost) and zero cost for the low fire risk areas.
4.6.2 The value of reduced facilities losses and fatalities
Facility losses and fatalities also contribute to the costs from fire above and beyond the direct cost of fighting fires. Like the cost of the fire, the present value of these benefits will be reduced by the likelihood of when the fire would have occurred. Fatalities from forest fires for the 1990-1998 averaged 4.5 persons per million acres of wildland fires (Mangan 99).
It is difficult to equate the value of lives lost to fire with the cost of fighting fires. The EPA has evaluated methods to estimate the value of reducing risk to human lives, and these estimates can be applied to the situation considered here. While estimates in the range of $3,000,000 to $6,000,000 value per person have been used, this report will adopt a recent estimate by the EPA of $3.7 million per person which is used to calculate the cost of regulations in comparison to expected health benefits (Associated Press 2003).
If the Method 1 approach is employed to estimate present value cost of fatalities, the estimated value of reducing fatalities though fuel removal would be $7.99 per acre for high risk areas and $3.83 per acre for moderate risk areas. While these estimates represent a much smaller contribution than the direct cost of fighting fire, when calculated against an estimate of 56 million acres of national forest at high risk (Powell et al. 2001), the present value of forest fire fatalities is $447,440,000.
Facility losses are highly variable depending on the location of structures relative to the forest. Data now available from four large Colorado fires of 2002 ( Rocky Mountain Insurance Information Association 2003 ) show insurance losses of $70 million from a total burned area of 225,000 acres which averages to $313 per acre. Using Method 1, the present value of preventing these losses would be $150.24 per high risk acre and $71.99 per moderate risk acre. Actual values could be substantially different though depending upon the location of infrastructure. The range of average cost for the four Colorado fires contributing to the above estimate was $250 to $1690 per acre.
4.6.3 The value of lost timber amenities
The loss in marketable timber value represents another opportunity loss even if the forest plan does not include a provision for harvesting, the implicit value in other amenities associated with the timber must be at least as high as the cost for not harvesting in order to justify the no-action alternative. Since these other amenities are lost if the timber is destroyed by a crown fire, the market value of timber lost can be used as a probable lower bound of the true value. Simulations based upon the net yields of the 12" and larger DBH trees from the FNF and ONF show that a conservative estimate of the average lost marketable timber value is $1605/acre. When discounted to produce a present value (Method 1) this figure becomes $772.01/acre for high risk or $370.76 for moderate risk stands.
4.6.4 Habitat losses
Since the passage of the Endangered Species Act (ESA) in 1973 and the subsequent listing of the snail darter ( Percina tanasi) in 1975 as an endangered species, a debate has been ongoing about what monetary value is appropriate to assign to species and their habitats. Thirty years after the passage of the ESA, a valuation agreement remains elusive.
In 1978, Chief Justice Warren Burger wrote the majority opinion for the U.S. Supreme Court in the precedent-setting case of the snail darter: "It may seem curious to some that the survival of a relatively small number of three-inch fish among all the countless millions of species extant would require the permanent halting of a virtually complete dam for which Congress has expended more than $100 million. We conclude, however, that the explicit provisions of the Endangered Species Act (ESA) require precisely that result " ( Mansfield 2000). Later that same year, however, Congress disagreed with the Supreme Court's valuation and exempted the Tellico Dam Project in Tennessee from the ESA.
Twelve years later, when the northern spotted owl ( Strix occidentalis caurina ) was listed as a threatened species, no exemption was to be forthcoming in spite of much higher public costs and social impacts. The dominant political perspective appeared to be that no cost ceiling was to limit maximum protections for spotted owls. For example, in 1994, Lippke and Conway estimated the economic impact of harvest reductions to protect 231 owl nests/circles located on state and private forestlands in western Washington . Harvest reduction was estimated to be 2.9 billion board feet for the first ten years resulting in a $448 million loss in personal income per year which adjusted for 2003 dollars becomes $587 million or $2.3 million per owl pair per year (Lippke and Conway 1994). If this circumstance is indeed a reflection of the policy consensus, then cost should not be a limiting factor for hazardous fuels reduction activities in areas where spotted owl habitats are at high risk of fire. In 1995 the USDI Fish and Wildlife Service concluded that large crown fires would be detrimental to the owl by reducing or eliminating nesting, roosting, and foraging habitat (USDI Fish and Wildlife Service 1995). The Forest Service has estimated that it could take 200 years to re-establish ideal conditions for owls following a large-scale catastrophic fire (USDA Forest Service Southwestern Region 1995).
Costly strategies for protection of species habitat have been launched for salmon and steelhead ( Oncorhynchus ). Five species of salmon and steelhead are listed as threatened or endangered under the ESA. A recent study to estimate the costs of salmon and steelhead recovery suggests that $2.879 billion was spent during the five years between 1997 and 2001 or $575.7 million per year (Landry 2003). In 1998 the Bonneville Power Administration (BPA) spent $342 million on salmon recovery. That year 856,000 salmon entered the mouth of the Columbia River meaning that the average cost per salmon was $399.14 (Bonneville Power Administration Fish and Wildlife Program 1999). Stream temperatures may increase during a forest fire and remain elevated for many years because of increased solar radiation due to the loss of shade generating foliage (Minshall and Brock 1997). Fire-related increases of sediment in streams can result in fish kills for several years after a hot forest fire (Bozek and Young 1994). Some fire-fighting chemicals may be toxic to endangered salmon (Buhl and Hamilton 1998). Forests at high risk of fire that contain salmon streams should be logical targets for fire risk reduction investments when fuel loads are high.
Given that habitats for threatened and endangered species may be lost when forests burn and that the United States Congress has historically placed a very high value on species protection, (USDI Fish and Wildlife Service ESA 2003, USDA Forest Service NFMA 2003), an elusive question has been what is a threatened or endangered species or its habitat worth? While some types of wildlife can safely escape wildfires, others will not. Long term vegetation changes result from fires in overstocked high risk forests. Habitats for many different species are lost when a crown fire consumes forest biomass, but habitats may also be increased for other species. Fire risk reduction treatments may have negative impacts such as soil compaction on habitat but these impacts are not as severe as those from a hot forest fire. The protection of habitat in shortest supply should be an adjunct focus of fuel treatment plans. In some cases protection of habitat may mean fuel removals in other areas; where high or moderate risk forests comprise unique habitats, fuels reductions could occur in adjacent forests to create fire breaks. While the net value of fuels treatments should be a plus for habitat, for this risk evaluation we can consider the value of the lost timber amenities as the lower bound proxy for the habitat value.
4.6.5 The community value of fire risk reduction
Experimental choice surveys, a specialized form of Contingent Valuation Analysis (CVA), provide a promising method for estimating the Willingness To Pay (WTP) for fire risk reduction. In Washington State , rural and urban families were the subjects of an experimental choice survey, as they selected the best of different forest management alternatives that altered forest attributes. They selected from different mixes of: (1) biodiversity and habitat, (2) aesthetics, (3) rural jobs, (4) cost, and (5) a brand label for the treatments (Xu et al. 2003). The result showed a substantial WTP for biodiversity/habitat and aesthetics restoration, as well as a willingness to accept (WTA) a level of cost and job losses to achieve these benefits. A willingness to pay of more than $100 per year per family for aesthetics and habitat restoration was not uncommon with the amount sensitive to the location of the family (urban/rural) and income. Fire risk would seem to be an even more tangible risk resulting in comparable if not greater WTP estimates.
Contingent values for protection from wildland fire have been estimated in other regions (Winter and Fried 1998a and b). Winter and Fried estimated a mean annual WTP for collective risk reduction of $57/household for rural Michigan populations with the amount sensitive to the level of risk. Presumably the fire risks in the Inland West region are greater, supporting at least as high a WTP. While rural families may be willing to pay more than distant urban families, it is the collective WTP that determines the benefit amount per acre. For better understanding of WTP in the FNF and ONF areas, local surveys would be required to provide estimates of the collective willingness to pay for fire risk reduction by reducing fuel loads. However, using the Michigan WTP of $57/household/year, the number of households in the counties (Lake and Kalamath) surrounding the FNF and the counties (Chelan and Okanogan) surrounding the ONF (U.S. Census Bureau 2003) and the number of acres in high and moderate risk in both forests (see Table 4.16; low risk acres remain fire safe at no cost), one can calculate a present value/acre of all theoretical annual household contributions. Since theoretically the WTP value of a forest protected from destruction is the present value of a perpetual annual series of payments (Figure 4.29) of $57/household/year, the value of reducing risk on an acre (high or moderate) is the same: $44.80/acre for the FNF and $81.60/acre for the ONF. For this report a mean value of $63.20/acre will be used. Adding the WTP benefit from more distant urban families would logically increase the value but has not been done for this presentation.
Figure 4.29. Present Value of a Perpetual Annual Series
Table 4.16. Present Value (PV)/acre of Theoretical WTP Annual Contributions from Households for Protection from Wildfire on the FNF and ONF (Note that PV is Less for FNF because of Less Population and More Acres at Risk)
4.6.6 Carbon credits
By international agreement, countries are attempting to lower carbon emissions (i.e. increase carbon sequestration) in order to slow down global warming. Forests play an important role as carbon is sequestered and stored in forests and wood products. Global carbon emissions can be reduced by biomass conversion to energy that reduces fossil fuel consumption. Wood products prevent carbon emissions by displacing the use of non-renewable, energy- intensive building products such as steel or concrete (Bowyer et al 2002). As demonstrated by carbon assessments for treatment alternatives in this investigation, carbon pools can be measured for any given treatment plan and compared to a No-action plan or a post fire scenario. The transition from a No-action alternative to a post fire alternative, using the FNF and ONF simulations as examples, is likely to result in an average release of 21.5 tons of carbon per acre (2000-2030) if the high and moderate risk forest burns. However, the alternative of thinning from below to 45 ft 2 basal area/acre (BA 45) has been shown to reduce the fire hazard effectively and at the same time provide a flow of wood products that displaces fossil fuel intensive products and energy while contributing to a cumulative carbon pool of as much as 80.5 tons per acre. Carbon markets are not well-developed but can be expected to grow with the value of carbon increasing as more emitters of carbon (primarily utilities) bid for carbon offsets. Some studies suggest the value of carbon will need to become much higher than $10/ton in order to reach future emission targets even though current prices are closer to $2. Even $4 per ton would result in an average carbon credit of $326 per acre for the BA45 treatment. If the carbon accounting rules took into consideration the likely impacts of fire risk reduction treatments, the discounted value would be $156.81/acre for high risk and $75.31/acre for moderate risk. However, the Kyoto protocol presently treats carbon flows in products beyond the forest as leakage. Even with this accounting convention, though, as long as the likelihood of fire is considered, the credit for just the carbon in the standing biomass could represent a discounted value of $41.37 per acre for high risk and $19.87 per acre for moderate risk.
The amount of potential carbon stored is also substantial. The difference between the total carbon stored under BA45 verses a wildfire could contribute 68 million tons of additional carbon by 2030.
4.6.7 Green energy credits
Like carbon credits, there are markets that credit green energy sources such that power purchasers pay a premium per kilowatt hour for power produced without fossil fuels and from renewable resources. This could be considered duplicatory with carbon credits and hence no credit is included in this investigation. However, there are emerging market opportunities with benefits for green power producers presently being developed through public utilities districts that may translate back to increased value for wood biomass from overstocked small diameter forests.
4.6.8 Electrical transmission cost reductions
Rural generated energy reduces the need for transmission lines. These cost reductions are likely to be regional-specific and perhaps smaller than many of the other benefits already noted. They could be quite important for some remote locations with a growing population. Rural generation plants also bring the additional benefit of economic development.
4.6.9 Regeneration and rehabilitation costs
Regeneration costs for commercially harvested forestland normally average $250 per acre (interviews 2002). Regeneration costs may be much higher and less successful after a hot forest fire (interviews 2002). Additional expenditures may be needed for rehabilitation activities to reduce erosion and protect water quality. Rehabilitation costs have been reported in the $0-$400 per acre range (interviews 2002). Increased regeneration costs and rehabilitation costs are likely to be site specific, hence for this valuation only an average regeneration cost
($250/acre) has been used to estimate present value of post-fire restoration investments ($120/acre for high risk areas and $58/acre for moderate risk areas).
4.6.10 Water quantity and quality
Dense, closed forest conditions result in lower water yields than forests with openings in the canopy (Covington1994). Research has shown that thinning forests increases snow pack water equivalency (SWE) and snowmelt runoff while decreasing water losses from evapotranspiration, resulting in increases in available ground and surface water (Troendle 1987, Shepard 1994, Stednick 1996). Increases in water yield from forested sites are proportional to the percentage of canopy removed by harvest (Macdonald 2002). Forest hydrologists have estimated that selective harvesting can result in 20%-40% increases of water yield from pre-harvest conditions and that these increases may last for decades (Troendle 1985, Swanson 1987).
Thinning of overstocked, forested areas at risk from wildfire can help insure future water quality as well as increase water availability. When significant precipitation occurs after a high severity forest fire, rapid surface runoff and peak flows may result in flash floods and erosion that can cause destruction to aquatic habitats and seriously affect water quality for human use (Newcomb and MacDonald 1991, Robichaud and Brown 1999, Scott 2001, Graham 2002).
Development of site-specific economic estimates for the contribution from hazardous fuels reduction treatments to increased availability of water quantities and protected water quality will be important for comprehensive assessments of the costs and benefits of fire risk reduction in overstocked forests. A valuation of estimated additional water yields summed with a valuation of an estimate of protected water quality will require a research effort beyond the scope of this investigation. However, scientists have agreed for some time that benefits can be real and consequential (Wilm and Dunford 1948, Oregon Forest Resources Institute 2000). For purposes of non-market assessments, this report will develop a conservative value estimate for water quantity and quality to be used as a placeholder until further research can better inform valuation decisions.
What is water worth? On the low end, irrigators in the Imperial Irrigation District (IID) in southern California have senior water rights on the Colorado River and get the water for free after paying a delivery charge of $15.50/acre-foot. An acre-foot is the equivalent of one acre of water one foot deep and is equal to 326,000 gallons. Recently the IID negotiated a sale of up to 200,000 acre-feet per year to the San Diego County Water Authority (SDCWA) at the rate of $249/acre-foot. However, the Metropolitan Water District of Southern California (MWD) calculates its untreated water rate at $349/acre-foot (Imperial Irrigation District 2002). In Washington state, Kris Kauffmann, Professional Engineer and the principle consultant of Water Rights Incorporated, reports that an average selling price for irrigation water rights in eastern Washington is $500/acre-foot.
By comparison, Seattle water consumers pay for water purchased from Seattle Public Utilities in units of 100 cubic feet. There are 748 gallons in one cubic foot and 436 cubic feet in one acre-foot. In a progressive rate system designed to penalize heaviest users, Seattle residents a base rate of $2.35-$2.75/cubic foot ($1025-$1199/acre-foot) depending upon the billing season. As consumption increases, graduated rates rise to as high as $9.75/cubic foot or $4251/acre-foot (Seattle Public Utilities 2003).
Fish need water also. In 2000, the Washington Department of Ecology (DOE) spent $405,000 to purchase water rights from a Walla Walla farmer so that the water might stay in the river (Associated Press 2000). At that time, DOE Director Tom Fitzsimmons announced that, "Buying water for fish is a key part of managing water in the 21 st century.Water has a price tag attached to it, even for fish."
In a study prepared by the Colorado State Forest Service entitled Proposing a Forestry Solution to Improve Colorado's Water Supply , authors used a value estimate of $100/acre-foot to calculate economic benefits from water yield increases associated with forest harvests. While admittedly future research will help refine this figure, $100/acre-foot will be used in this report to demonstrate the relative value of water availability increases from forest management. The value of protecting water quality is more elusive and for this report will be considered as part of the $100/acre-foot figure, insuring that this figure will be accepted as a conservative estimate of real value.
The Fremont National Forest (FNF) reports 10-20 inches of annual rainfall and the Okanogan National Forest (ONF) reports approximately twice as much annual rainfall of 20-40 inches. From the risk assessments conducted by this investigation, the high and moderate risk areas of the FNF are calculated to contain 721,344 acres. For the ONF the high and moderate risk areas are calculated to contain 586,323 acres. These are acres that for purposes of fire risk reduction simulations are considered eligible for treatment. If all acres considered at risk were treated on the FNF and ONF and resulted in 1 inch of annual precipitation (not lost from evapotransporation) being added to the available water supply then the volume of increased water would equal 60,112/acre-feet per year for the FNF and 48,860/acre-feet per year for the ONF. At $100/acre-foot the value of this increased water supply would be $6,011,200/year for the FNF and $4,886,000/year for the ONF. These calculations result in a conservative estimate of $8.33/risk-acre/year for the value of the increase to the local water supply from harvest. If this benefit of 1 inch of additional water exists for fifteen years until regeneration begins to result in reductions of available surface water, the present value of an $8.33/risk-acre/year benefit for 15 years is $86/acre.
4.6.11 Regional economic benefits
Rural communities, which are most at risk from forest fires, are often economically depressed. While fighting fires will induce some economic activity, much of that benefit goes to imported labor with little positive local impact. Fires also hinder some rural economic activities such as tourism and recreation. Fire risk reduction treatments, however, when scheduled over time, produce positive and sustainable contributions to the economies of local communities. Since many of these communities have lost jobs through the reduced sale of federal timber, the economic development aspect of thinning can be important.
The Freemont National Forest website quotes a harvest to jobs conversion estimate of 8 direct employees per million board foot of harvest and another 16 employees for indirect impacts. In order to convert this into economic activity and tax receipts, this report uses similar estimates tied to a Washington State model (Conway 1994) that were further customized to thinning treatments in Lippke et al. (1996). While the direct and indirect employment impacts are almost identical to the Freemont estimates, the Conway model shows nearly equal impacts broadly distributed to the non-rural parts of Washington State while also providing estimates of the benefits to the Gross State Product which can be extended to tax receipts. A typical thinning treatment of 1 acre each year could generate dynamic direct and indirect impacts of .04 rural employees, $386 State and Local tax receipts (at 11% of State Product) and $664 Federal Receipts (at 19% of State Product including some federal/state transfer duplication). If the government incentivizes fuel reduction treatment programs, much of this investment is recoverable to the Treasury from tax collections. In contrast the untreated acres that result in fire cause a much larger government expenditure (net of the tax collections) on fire fighting economic activity created with little benefit to the local communities. Estimated state and local tax receipts of $386/thinned acre will be used here as a measure of the public economic value generated from forest thinnings to reduce hazardous fuel loads.
4.6.12 Summary of Market and Non-Markets Values of Fires Risk Reduction
While the values assigned to the benefits listed below in Table 4.17 can rightly be considered coarse estimates, they have been shown to be legitimately defensible and intentionally conservative. These figures suggest that the benefits of fire risk reduction are of high value and generally of much higher value than any market losses resulting from thinning to reduce the fire risk.
Table 4.17. Summary of Total Values/Acre Estimations of Benefits Associated with Fire Risk Reductions
Even so, the costs of fire risk reduction should legitimately be considered. The most obvious cost is that of the operation itself. Tables 4.3 and 4.4 display the (positive or negative) net returns from thinning simulations for the FNF and ONF respectively. Net returns that are negative indicate that any financial benefit from the merchantable timber that may be removed is inadequate to cover the overall cost of the thinning operation. The highest treatment cost had a negative return of $374/acre, which resulted from the 9 and under treatment simulation with high costs assumptions on the FNF. On many of the treated areas, however, the 9 and under treatment failed to remove enough of the forest biomass to reduce the risk classification. The most effective treatment for average risk reduction was the BA 45 treatment. This treatment with high operational cost assumptions had a negative return of $168/acre for the FNF and $169/acre for the ONF. In contrast, the BA 45 treatment simulations with low operating cost assumptions produced positive returns on both forests. To ensure conservative accounting, the highest treatment cost of $374 per acre is used in Table 4.18 as a risk reduction cost estimate.
Consideration of the additional costs associated with the preparation of fuels reduction service contracts or timber sales is problematic and beyond the scope of this investigation. However, Forest Service Chief Dale Bosworth (2003) estimated an average cost for timber sales preparation during fiscal years 2001-2003 of $206/acre.
Other potential negative costs associated with harvest activities to reduce hazardous fuel loads might include environmental impacts of soil compaction, damage to leave trees, and road sediments. However, these costs are difficult to estimate and may be avoided with due diligence. Compromises to habitat quality for some species may result from fuel reduction treatments, but it is questionable whether habitat adjustments that result from fuel load reductions are less desirable for species protection than the habitat impacts of catastrophic wildfires ( USDI Fish and Wildlife Service 1995, USDA Forest Service Southwestern Region 1995) .
Table 4.18. Summary of Estimated Costs that Might be Associated with Fire Risk Reduction Treatments
For this coarse filter cost/benefit analysis, the benefits were intentionally estimated at the low end of their potential while operations costs were estimated at the high end of their potential. It is worthy to note that a subset of stands showed positive net returns after operations costs for all treatment alternatives presented in this investigation. Even with a net cost of fuel reduction operations, though, the results of this cost/benefit analysis show that the future risk of catastrophic fire is far costlier to the public than investments made today to protect against such an eventuality.