Demonstration of Trust Impacts from Management Alternatives to Achieve
Habitat Objectives on DNR Managed Lands
B. Bruce Bare, Bruce Lippke, Weihuan Xu, Chadwick D. Oliver, Jeffrey
Moffett, Thomas Waggener. 1997.
(236 pp) RE42 $25.00
A 1995 review of the Washington State Department of Natural Resources (DNR) proposed Habitat Conservation Plan (HCP) noted that no search for lower cost alternative treatments was provided and that no meaningful baseline assessment existed against which the proposed HCP option could be compared. Hence, the Department's claim that the proposed HCP was in the best economic interests of the trust beneficiaries was not valid. The reviewers proposed an approach that would be sufficient to determine if adequate habitat could be provided while contributing greater benefits to the trust beneficiaries. Since the Department did not respond to the identified inadequacies, the University of Washington and Washington State University commissioned a demonstration of the recommended procedures on the Westside acres managed by DNR (1.4 million acres).
Results summarized below demonstrate that management alternatives exist to meet habitat conservation goals at substantially lower cost than the strategy adopted in the DNR HCP -- producing as much as 80% more value and $300 million more revenue per year to trust beneficiaries. DNR's HCP contributes unnecessarily to reduced financial trust performance with indications that some trusts may be harmed, or at least do not equitably benefit from the gains that should be possible from collective management.
Simulating management alternatives and the DNR HCP: The difference in Net Present Value (NPV) between a simulated DNR HCP and the actual DNR HCP is shown to be insignificant. However, when the actual DNR HCP is compared with management alternatives to achieve minimum or better habitat goals, the NPV difference is substantial.
Impact of habitat goals and alternative management strategies
Asset Value
($billion)
* Plans that incorporate
Forest Practices Board (FPB) riparian buffers and
green
tree retention
15.1
* Plans that incorporate
addition of 1996 FPB murrelet and owl (SEA) habitat
requirements
(current minimums)
13.3
* DNR's HCP with nondeclining
harvest flow constraints (equivalent prices)
7.4
* Alternative plan demonstration
(ALTS) with more habitat and better inter-
generational
equity than DNR
13.3
(DNR HCP uses nondeclining flow constraints vs. +/-10% change per decade
for the other alternatives)
DNR's adherence to nondeclining harvest flow constraints in conjunction with habitat conservation set-asides produces intergenerational differences more than twice as large as the ALTS alternative. Revenues are also systematically lower due to a $5.9 billion loss in asset value. Sensitivity analysis identified seven major contributors to this inferior performance.
*DNR released sustainable harvest calculations
in October 1996, after the HCP public review period, with unexplained
harvest losses much larger than shown
here -- another loss to trust beneficiaries.
Cumulative improvement resulting from
ALTS relative to DNR HCP 80%
Each of the management differences identified above are contributing
significant losses to trust beneficiaries.
Explanation of differences: The DNR HCP losses are based
on set-aside or minimum management approaches. These approaches may
be sufficient to eventually reach habitat conservation goals, but are not
the only alternatives available and are economically less efficient in
meeting those goals. The demonstrated alternatives (ALTS) produce
almost four times as much late-seral forest structure (of importance to
multi-species habitat) per $ of cost (or loss) compared to the simulated
DNR HCP. DNR relied on a science team composed mostly of regulatory
and other public agency biologists who established end point ecological
conditions without consideration of silvicultural and economic alternatives.
A multi-disciplinary team composed of individuals having biological/habitat,
silvicultural, plus forest economic expertise (such as utilized by the
private sector for development of an HCP), and individuals having knowledge
of the State's fiduciary obligations to the trust beneficiaries would have
searched for lower cost alternatives like those demonstrated herein.
Demonstrating that an HCP is better than managing to minimum standards: Several habitat measures were used in ALTS to assure that the simulations met minimum standards and that the alternatives produced at least as much habitat as the DNR HCP. These measures included (a) Forest Practice Board definitions for Old, Sub-mature and Young Forest Marginal suitable owl habitat; Dispersal; and Murrelet habitat; and (b) the best available multi-species habitat measures from the Washington Forest Landscape Management project, including six stand structure classes and three multi-species habitat indices. Acreages for each of these biological measurement classes were developed for each treatment alternative, providing a richness in biological measures not found in the DNR HCP, but necessary for comparative evaluation.
In order for the HCP to be in the best interests of trust beneficiaries, the HCP should provide the lowest possible loss to the beneficiaries while meeting current and expected future regulatory requirements. The simulated current 1996 FPB minimum regulatory standards resulted in an NPV close to the ALTS-alternative but substantially higher than the simulated DNR HCP. As a consequence, to lower the risk that more restrictive regulatory actions in the future could further reduce the NPV, the strategies in the demonstrated alternative could be developed as a multi-species HCP.
The no-change baseline used by DNR for comparison to the HCP showed losses almost as high as their proposed HCP -- evidence that it was impacted by much more than minimum standards and that it was an invalid baseline for determining whether their HCP would be in the best interests of the trusts.
Fiduciary approaches for individual trusts: Although collective management may benefit some trusts, it is necessary to show that individual trusts are not harmed by such management. This requires a trust-by-trust analysis of minimum standards applied to each individual trust and provides a valid baseline for comparison. DNR did not provide such an analysis. For the most appropriate allocation of economic gains from collective management (gains that offset part of the losses from minimum standards) the study develops an equitable procedure that allocates regained benefits to the individual trusts proportionate to their losses.
Exceeding comparable conservation standards applied to the private sector: Forest practice regulations for green tree retention, adjacency greenup, and class 1-3 stream buffers (as included for all simulations in the report) produce losses estimated at 9.5% from a no regulation base. The minimum owl and murrelet standards under the 1996 Forest Practices Board were estimated to increase losses for DNR acres by 13% for a 21% total loss relative to no regulations. The proposed DNR HCP results in a total loss in excess of 50%. The demonstrated alternative (ALTS) results in a total regulatory loss of 20%. It also produces substantially more habitat than minimum standards, even more than the DNR HCP, and therefore probably reflects an unnecessarily high standard for habitat conservation. While no direct private sector HCP cost comparisons are available, some owners have found the requirements sufficiently costly to motivate their efforts to reduce losses by developing an HCP. Anecdotal evidence suggests their habitat goals and resulting costs are substantially lower than the DNR HCP, and therefore ALTS, such that goals closer to minimum requirements might be sufficient and therefore be in the best interests of the trusts.