Alaskas Environmental Assets

1
Alaskas Environmental Assets
5 March 2008
2
Overview

• Economic importance today of healthy Alaska
  ecosystems
• Environmental assets and ecosystem services
• Value and the twin scissors
• Implications of global growth

3
Economic Importance What is it?

• Economic Significance Jobs and Income from a
  specified set of economic activities
• Net Economic Value An attempt to measure
  peoples willingness to pay for things like
  fishing, over and above what they do pay.

4
Willingness to PayWhat is it?

• An attempt to measure what people would actually
  do if confronted with the choice
• Not some economists idea of what something
  ought to be worth

5
Example WTPValue of Alaska Sport Fish

• ISER Results (1993)
• People actually paid 550 million
• People were willing to pay an additional 186
  million to fish
• 186 million is the net economic value of the
  sport fishery
• This is what the State of AK could, in theory,
  collect in additional fishing license fees

6
Summary of Findings Jobs (circa 2001)
7
Commercial Fishing (circa 2001)

• 19,928 Direct FTE jobs
• 14,000 Indirect jobs from economic multiplier
  effects
• Indirect jobs people who make or repair fishing
  nets or sell gasoline
• Induced jobs people whose jobs depend on the
  fishers purchasing power
• 1.0 billion total income
• Net Value (of fish in the water) 192-360
  million/yr

8
Sport Fishing (circa 2001)

• 6,635 Direct Alaska Jobs
• 2,600 Indirect / Induced
• 233 million total income
• 632 total expenditure in AK
• 215 additional willingness to pay (this is net
  economic value of the fish in the water)

9
Subsistence (circa 2001)

• Total cash expenditures on inputs 96.5
  million/yr
• These support 1,978 total jobs
• 61 million total cash income to providers of
  commercial inputs
• Net WTP for subsistence ranges between
• Zero (4/lb replacement value less cash and labor
  input)
• and
• 1.7 Billion /yr (EVOS studies)

10
Tourism (nonresidents bringing into AK
economy) (circa 2007)

• 1.6 billion of total expenditures generates
• 19,000 direct jobs / 28,000 total jobs
• 750 million total income
• Net WTP for experience unknown

11
Summary of Findings Net Economic Value (
million)
12
Environmental Assets and Ecosystem Services
13
Econ 101 What is an Asset?

• Anything that generates a flow of services
• your car provides transportation
• your house provides shelter
• your human capital provides a job, income, and a
  rewarding career
• your portfolio will (someday!) provide a stream
  of retirement income
• No services provided?
• No asset

14
Why is an undisturbed environment an asset?

• It generates a flow of ecosystem services
• renewable commodities (fish, timber)
• basic life support services (nutrient cycling,
  climate regulation)
• habitat
• recreation experiences
• beauty, solace, inspiration
• Remember no services?
• No asset!

simulations http//www.vets.ucar.edu/vg/CCM2T170/
precip.shtml
15
Ecosystem Services...

• Are a re-branding and re-packaging of an old list
• Are the brainchild of a smart, savvy Stanford
  professor named Gretchen Daily
• Humans should value nature much as we value any
  other economic or cultural asset based on flow
  of future services

16
So What?

• First, Mark Klassens Dilemma

www.valkyradventures.com
17
Total value depends on

• Number of people receiving the service
• Value received per person
• There is tension, already, between these two

18
Value per person depends on

• subjective tastes
• There is no accounting for taste
• But also on
• Circumstances and scarcity (water in the desert
  vs. water in Ketchikan)
• Skills and interests (piano, to Beethoven)
• Income

19
The going price (willingness to pay) for natures
services depends on the Twin Scissorsof
supply and demand(Alfred Marshall)
S
WTP
D
quantity
20
Supply side

• Alaska may be abundant to us, but increasingly
  scarce to everyone else
• Land They aint making any more of it
• 50 of global population lives in cities

http//www.alaskab4udie.com/
21
Demand side

• Population

22
Average annual growth rates

• Real per capita income, 1960-2000
• World 2.2
• Richest billion people 2.7
• China 4.3
• Real total income, 1960-2000
• World 4.1
• Richest billion people 3.8
• China 6.0

23
Educational attainment
Share of U.S. adults with some college or
more 1984 39 of adults 2001 53
24
Average annual growth rates

• Summer Visitors to Alaska
• 1989 - 2004 6
• Cruise passengers to Alaska
• 1989 2004 12

25
Recreation visits to AK National Parks
avg annual growth 7.6
Source http//www2.nature.nps.gov/stats/
26
Average annual growth rates

• Visitors to all Alaska national parks
• 1980 - 2004 7.6
• Visitors to pre-ANILCA parks1960-62
  2002-04
• Glacier Bay 15
• Denali 7
• Katmai 12
• All three together 9

27
Recreation visits by park
28
Case Study Seward Economy(ISER 2001)

• Seward wage and salary employment grew at 3.7
  per yr between 1980 and 2000, vs. 2.6 for entire
  State.

29
Implications

• Treat the environment as the asset that it is
• Invest in complements and green infrastructure
• Double-decker buses for the Denali Park Road
• More bear-viewing locations
• Tourism zoning

30
Implications

• Skate to where the puck is goingMake
  decisions with future growth in mind
• Maintain the ecosystem services that are most
  scarce these have highest potential future
  economic value

attributed to Wayne Gretzky aka The Great One.
31
Joni Mitchell theory preservation is easier than
restoration

• You dont know what youve got

Til its gone
32
Boston Reclaiming a park strip
Before Central Artery
During The Big Dig
33
Boston Reclaiming a park strip
AfterRose Kennedy Greenway
And the cost??
10 billion
34
Alaskas Environmental Assetswww.iser.uaa.alaska.
edusteve.colt_at_uaa.alaska.edu
5 March 2008