Conservation Auctions in Manitoba: A Summary of a Series of Workshops

Currently, the effect of human impact on the environment is becoming increasingly apparent. The encroachment of human activity has inevitably resulted in the loss or impairment of ecological goods and services (EG&S) around the globe as well as in our own backyard. EG&S include features such as wildlife habitat, biodiversity, soil renewal, or nutrient cycling. The loss of such features has become a sobering reality for Manitobans in the face of the utrophication of Lake Winnipeg as a result of practices contributing to nutrient loading into the lake. Since EG&S are very important to Manitobans, efforts are being made to explore different vehicles to encourage their provision. In order to address some of the environmental issues transpiring in Manitoba, there has been discussion on the usefulness of Market Based Instruments (MBIs). In the past, a number of programs focused on the environment in agriculture have been put forward and administered, however these have not been overly successful in incenting producers or providing significant levels of EG&S. This report will provide a summary of a series of workshops developed to bring awareness to stakeholders on an MBI known as a conservation auction (which may also be referred to as reverse auction, procurement auction, or tender).Market based instruments, Conservation auction, Tender, Wetland restoration, Environmental Economics and Policy, D44, Q20, Q57,

Assessing the recreation values at risk from wildfire: an exploratory analysis

The levels of participation in various types of outdoor recreation in forested areas are substantial. Studies have shown that over 18.5 million days, representing approximately 80% of recreation user days, were spent by Canadians in recreational activities in forested lands. Furthermore, recreation has significant social and economic value that should be reflected in management decisions if sustainable forest management is to be achieved. The importance of recreation in forests has resulted in the selection of measures of recreation participation as one of the relevant indicators of sustainable forest management reporting in Canada. This suggests that recreation areas should be an important component of the values of forest at risk due to loss from wildfire. However, the presence of recreationists, who are considered to be the highest values at risk, dispersed on the fire prone landscape presents some issues for fire management agencies. These issues include the possibility of recreationists perishing in a wildfire and/or the possibility of fire starts as a result of recreation activities which are projected to increase into the future. For fire management agencies that strive to suppress all wildfires, the latter issue is particularly challenging when faced with resource constraints. Thus, a move away from suppression of all wildfires to suppression based on protecting highest values at risk is needed. An explicit incorporation of recreation values is advantageous in that these values are closely linked to the presence of recreationists. Therefore, during fire events, directing resources to high value recreation areas fulfill a fire management goal of protecting highest values at risk as well as identifying areas of the landscape where the suppression efforts are to be directed.Resource /Energy Economics and Policy,

MEASURING FOREST RESOURCE VALUES: AN ASSESSMENT OF CHOICE EXPERIMENTS AND PREFERENCE CONSTRUCTION METHODS AS PUBLIC INVOLVEMENT TOOLS

Human values arising from forests include market and non-market values. Timber values and values of non-timber forest products traded in markets (berries, wild rice, etc.) are considered market values. Among non-market values are recreation values and values associated with wildlife harvesting by Aboriginal People. These are considered non-market because participation in these activities does not require the purchase of market based permits; prices do not function as rationing devices in these activities. In addition to non-market values arising from activities, individuals may also have values associated with forest conditions (biodiversity, etc.). These are referred to as passive use values since the value is not associated with any specific use of the resource or activity related to the forest. Since forests in Canada are largely on public land, these passive use values are particularly relevant to Canadian forest management. These values reveal the preferences of the public for components of forest management. Eliciting these values is a form of public involvement in that the public is engaged in assessing forest management options and providing opinions and sentiments regarding these options. Ideally, values arising from forests would be collected from a broad range of the public and examined to provide guidance to forest managers. However, values over forest outputs and conditions may be very poorly formed when people have little experience with the range and complexity of forest ecology and management. In addition, eliciting values without framing them in a trade-off setting can result in misleading estimates. In this project we attempt to elicit passive use values in a manner that allows for poorly defined initial notions of value through an approach known as preference construction. Preference construction essentially provides for education and information processing in the development of passive use values. These estimates are also developed using a trade-off approach (choice experiments). The project focuses on the values of the local public within the NorSask forest. More formally, the objectives of this research are to: 1) ascertain the passive use values held by local people associated with forests in the NorSask Forest Management License Area; 2) explore differences in preferences based on the degree and frequency of formal preference construction exercises; and 3) evaluate this approach as a method of public involvement. A total of 43 individuals from the local community were involved in the valuation exercise. They participated in 3 groups or treatments, each with a different level of involvement in the valuation assessment. The first group was involved in three separate sessions, allowing for significant preference construction and information acquisition. The second group was involved in only one session and the third group was involved only minimally through a telephone contact and the completion of a survey delivered through the mail. The hypothesis being examined was that the degree of involvement in the exercise would affect the responses either in terms of the variances of the responses or the actual preferences. Not all forest values can be examined in a single valuation task. In this case values associated with key game species (moose), wildlife species reflecting biodiversity or threatened species (caribou), old age classes of forest, protected areas and local employment were assessed. These were selected based on the preference construction sessions with the first group. A general trend was found in the ranking of forest values. The values were highest for increases in older forest age classes and protected areas and lower for caribou and moose levels (expressed in percentage changes relative to current levels). The lowest value arose from the local jobs generated by forestry activity. Monetary measures of these values were also developed. The scenario choices made by the individuals revealed that a 5% increase in moose and caribou populations would be worth approximately $10 and$12 per year. A 5% increases in old age classes or protected areas was worth approximately 4 to 5 times as much. They were willing to pay approximately $7 per year in increased taxes for increases in local employment. The hypothesis that the group preferences would differ was not accepted. The preferences of the first and third groups, while expected to be very different, were in fact quite similar. The second group did appear to be different from these other two but it is possible that significant variation in demographic characteristics was driving that difference, rather than the level of preference construction effort. The sample in the third group did however exhibit more resistance to completing the exercise and registered more protests to the value assessment. In conclusion, the approach employed was successful in eliciting passive use values for components of forest management. These values alone provide interesting information for managers to consider in the development of management plans. Evidence supporting the hypothesis that preference construction approaches improve these valuation exercises was not found in this study although this result must be tempered by the limitations arising from sample size and demographic composition of the study groups.Resource /Energy Economics and Policy,

An Economic Evaluation of Woodland Caribou Conservation Programs in Northwestern Saskatchewan

The purpose of this study was to identify the values Saskatchewan residents place on their Woodland Caribou conservation programs. Using contingent valuation methods, individual values for maintaining caribou numbers within Millar Western-NorSask Forest Management Licence agreement area were estimated. Using these value estimates, societal benefits were estimated for the implementation of a woodland caribou maintenance program within the forest licence agreement area. The data used in this study were collected using a mailout survey to Saskatchewan residents. Two contingent valuation formats were used, the opened ended willingness to pay and the dichotomous choice. A number of question structures were employed in order to judge the sensitivity of the valuation to the design. In all, 9 different versions of the contingent valuation question were used in a randomized design strategy. The resulting welfare measures for the implementation of the caribou maintenance program were somewhat variable. The open ended format produced the lowest estimates, while the dichotomous choice estimates were higher and showed a higher degree of variability. This variability may be due to the presence of the ordering or whole-part effects. The values elicited for the conservation program using the open ended approach average approximately $15.00 per person per year. These values, when aggregated over the provincial population, result in an annual benefit of the woodland caribou conservation program of about$10M. These are the most conservative of the estimates, suggesting that woodland caribou conservation is very important to Saskatchewan residents.Environmental Economics and Policy, Resource /Energy Economics and Policy,

Accommodating Complex Substitution Patterns in a Random Utility Model of Recreational Fishing

We employed a cross-nested logit (CNL) model that permits a rich pattern of substitution among alternatives within a closed form choice model. The specification we employed is ideal for applications with many choice alternatives, such as the 431 fishing sites in this application. The CNL model provided a significant improvement over multinomial and nested logit model specifications at explaining observed recreational fishing site choices by residents of northern Ontario, Canada. Results from two scenarios illustrated the implications of using the CNL model on spatial substitution patterns and welfare measures associated with attribute change scenarios. The CNL model forecasts demonstrated that the relative change in fishing site use was lower at the most affected sites and higher at sites near the affected sites than was predicted by the multinomial logit model. No consistent pattern was found in mean or variance of welfare estimates associated with hypothetical attribute changes.Compensating variation, cross-nested logit, fishing site choice, random utility model, spatial substitution, Demand and Price Analysis, Institutional and Behavioral Economics, Q26,

A Random Utility Analysis of Southern Alberta Sportfishing

Resource /Energy Economics and Policy,

Real time nanogravimetric monitoring of corrosion for nuclear decommissioning

Monitoring and understanding of corrosion on nuclear sites plays a key role in safe asset management (predicting plant life, assessing efficacy of corrosion inhibitors for plant lifetime extension) and supporting informed choice of decontamination methods for steels due for decommissioning. Recent advances in Quartz Crystal Nanobalance (QCN) technology offer a means to monitor corrosion in-situ in radiologically harsh environments, in real time and with high sensitivity. Oxalic acid has been widely used in nuclear plants and installations as a corrosion inhibitor for carbon steels and as a decontamination cleaning agent due to its ability to remove rust from the surface of ferritic metals and alloys. As an exemplar system for decontamination, the corrosion behavior of mild carbon steel and pure iron samples in 1 wt% to 8wt% oxalic acid solutions have, for the first time, been measured and compared in real time and in situ using the QCN. Corrosion rates measured using the QCN are found to agree with those obtained using corrosion current (iCORR) measurements, with the added advantages of: (i) real time and potentially in situ and higher sensitivity measurement; (ii) reduced uncertainty in the conversion of the QCN measured frequency change to a mass change-based corrosion rate compared to the conversion of the icorr measured by LSV with Tafel extrapolation to similar; (iii) the provision of mechanistic insights into the action of oxalic acid on Fe-rich steels

AN ECONOMETRIC ANALYSIS OF DONATIONS FOR ENVIRONMENTAL CONSERVATION IN CANADA

As provincial governments in Canada trim budgets, fewer funds are available for environmental conservation programs. Many jurisdictions are letting private interests and/or users of the resource base help fund conservation projects. Thus funding for conservation is becoming more dependent on donations to environmental causes either through direct giving of funds or through memberships in organizations. This study explores some determinants of private contributions to environmental conservation activities through an econometric analysis of donations and memberships relating to wildlife habitat protection and enhancement. We use data from a 1991 survey conducted in the three prairie provinces that provides information on donation behavior, income, wildlife-related activity, household compositions, and a variety of other factors. A double-hurdle econometric model is used to allow independent variables to have different effects on the probability of donations and the level of donations. Our empirical results suggest that changes in the economy will be important to donation behavior. Declines in participation and recruitment in hunting will also have impacts on donations to conservation causes, but these impacts, although significant, may not be as large. However, consumptive and nonconsumptive activities may be influenced by management agencies and used to bolster environmental donations.Environmental Economics and Policy,

The Impact of Oil and Natural Gas Facilities on Rural Residential Property

This paper examines the impact of oil and gas facilities on rural residential property values using data from central Alberta, Canada. The influences are evaluated using two groups of variables characterizing hazard effects and amenity effects. A spatial error model was employed to capture the spatial dependence between neighbouring properties. The results show that property values are negatively correlated with the number of sour gas wells and flaring oil batteries within 4km of the property. Indices reflecting potential health hazards associated with rates of H2 S release (based on information from Emergency Response Plans and Zones) also have a significant negative association with property prices. The findings suggest that oil and sour gas facilities located within 4 km of rural residential properties significantly affect their sale price.sour gas; hedonic prices; property value impacts

Results from the Farm Behaviour Component of the Integrated Economic-Hydrologic Model for the Watershed Evaluation of Beneficial Management Practices Program

This report summarizes preliminary results from the Farm Behavior component of the South Tobacco Creek Integrated Modeling Project (STC Project) which is being undertaken as part of the Watershed Evaluation of BMPs (WEBs) Program. WEBS is a partnership between Agriculture and Agri-Food Canada (AAFC) and Ducks Unlimited Canada (DUC) established to evaluate the economic and environmental performance of BMPs for water quality at the watershed scale. Water draining from South Tobacco Creek eventually enters to Lake Winnipeg which is degraded from the cumulative effects of nutrient loading, particularly phosphorous. Many jurisdictions across the world, including Canada, use payments programs to encourage land owners to change land management practices in order to reduce non-point source pollution. BMP incentive programs in Canada, such as Greencover, rely on fixed payment schemes which pay producers a set amount for BMPs, regardless of costs or benefits. In order to improve the performance of payment programs many jurisdictions have instituted auction type mechanisms. The purpose of the Farm Behavior component of the STC project is to examine the performance of various types of payment programs for BMPs relative to reducing phosphorous loads from STC. Theoretical and empirical evidence from conservation auctions suggest that the performance of auctions depends on several factors which affect the bidding behavior of producers during the auction, and therefore the cost-effectiveness of auctions over other types of payment programs. In particular, some producers actually benefit from BMPs, however under certain auction rules these producers would be paid the same amount as high cost producers; alternatively, producers with low costs of adopting BMPs may not always provide the greatest benefits in terms of pollution abatement depending on their location in the watershed, and physical features of their land. We assessed the relative performance of different payment programs by developing producer response functions for adoption of Beneficial Management Practices (BMPs). Producer adoption responses under different incentive schemes were tested using experiments with student subjects and limited trials with producers. We examined four BMPs: construction of holding ponds, riparian management, forage conversion, and conservation till. The results of the adoption response experiments conducted under WEBS were used to draw preliminary observations on BMP policy design and form the basis for recommendations for further research. The farm behavior project focuses on addressing the following two questions: 1. Does BMP adoption at a given farm make the individual farm household better or worse off from an economic perspective? 2. How much will it cost the government to get farms to adopt BMPs under different payment programs? Since producer heterogeneity is key to understanding the performance of conservation auctions, we examined the costs and benefits of BMPs at the individual farm level and developed on-farm costs for each BMP for each producer in the watershed. The basic components of the model are described below, however the details including underlying assumptions regarding baseline farm behavior, are outlined within the body of the report. We used the on-farm cost model to generate aggregate cost functions for BMPs for the watershed and to parameterize the policy experiments related to conservation auctions. Preliminary estimates of environmental benefits of individual BMP adoption were provided by Dr. Wanhong Yang using results from a SWAT model developed under a separate component of the South Tobacco Creek WEBS project. Based on this information, we were able to evaluate the performance of various auction formats in terms of cost effectiveness, distribution of payments amongst producers, and environmental benefit. The results from the Farm behavior component of the South Tobacco Creek project are preliminary, and are currently being refined. Therefore it is difficult to draw generalized conclusions at this point. Further experiments are being conducted to complete the data collection during FY 08-09 through Interim WEBS funding. Nonetheless main findings to date are summarized below: 1. The four BMPs assessed differ in terms of their cost as well as their ability to deliver environmental benefits. Unfortunately, there is no BMP that dominates across farms at all abatement levels. Farms have heterogeneous costs in terms of BMPs, and some farms are cost effective at supplying abatement using one BMP, but not another. 2. This suggests that if water quality benefits (e.g. phosphorous reduction) can be quantified through modeling by BMP and by farm, then water quality should be the contracting unit for the auction rather than the BMP. This would allow producers to select the most cost effective BMP for supplying water quality benefits, and then decision makers could allocate contracts based on ranking the costs of abatement. 3. At the next stage of the research we will test for synergies between farms – ie., whether the joint production function for water quality between farms differs from the sum of individual production functions. This will have implications for how the payment scheme should be designed. 4. Incorporating „fairness‟ types of allocation rules for conservation dollars, such as maximum participation in conservation programs is inefficient in terms of cost and environmental benefits. If fairness, or using conservation payments as a form of extension to learn about on farm costs of BMPs is the goal of the auction, then fixed payment programs which are open to everyone may be more desirable. 5. The performance of the auction depends on the shape of the cost function for BMPs and/or pollution abatement, as well as whether uniform (pay everyone the highest bid) or discriminatory pricing (pay everyone their own bid) rules are applied. In future research we will be investigating to what extent we can generalize results about the performance of uniform versus discriminatory pricing rules in this context. In conclusion, this research has allowed us to investigate individually the performance of incentive payments for individual BMPs. The results of the analysis provide us with a baseline of information by which we can begin to assess more complex conservation program issues, such as how to optimally select multiple BMPs within the watershed, and whether/how to spatially target BMPs.watersheds, South Tobacco Creek, water quality, Environmental Economics and Policy, Land Economics/Use, Resource /Energy Economics and Policy, Q12,Q52,D44,