ENVIRONMENTAL VALUATION TECHNIQUES IN WATER RESOURCE

DECISION MAKING
By John B. Loomis1

ABSTRACT: Economic valuation of environmental uses of water resources has the potential to bring a more
balanced perspective to the allocation and management of water resources. Environmental valuation allows water
resource benefits received by nontraditional water users in society to be included in benefit-cost analyses. This
allows for a more formal consideration in the decision-making process that is on par with historic uses of water.
Some environmental valuation methods follow traditional economic approaches such as estimating the demand
curve for recreation as a function of water flow or water quality. Other environmental valuation approaches
utilize surveys to create simulated markets for public uses of water resources. These valuation methods are
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capable of monetizing the economic values of instream flow and water-based recreation as well as the value of
preserving habitat for endangered species. Government-agency use of these environmental values and techniques
in their resource analyses is presented. Several case studies illustrate how environmental valuation has been used
to evaluate hydropower regulation at Glen Canyon Dam, hydropower relicensing, dam removal, and public trust
benefits of water versus municipal uses.

INTRODUCTION
How valuable is the economic valuation work of economists
is a good question, and one frequently heard (Vatn and Brom-
ley 1994). Posed a different way, ‘‘Are the benefits of these
studies, in terms of more efficient use of water resources,
worth the costs of these studies?’’ This is a tough question,
one asked in many fields including weather forecasting and
flood prediction. Given that policy decisions are (and should
be) affected by many concerns in addition to economic effi-
ciency (e.g., distributional equity, sustainability, etc.), it is rare
to be able to point to any one information source in the policy
process and say it was the definitive factor. Nonetheless, the
increased scrutiny that environmental valuation techniques
such as contingent valuation surveys have received by the oil
industry and politicians suggests the results of these methods
must matter. But, lest one has the impression that environ-
mental valuation is the exclusive tool of natural resource pro-
tection advocates, industry uses environmental valuation when
it suits their needs as well. For example, large power compa-
nies such as Pacific Gas and Electric (PG&E) and Idaho Power
have relied upon environmental valuation techniques to pro-
vide some balance to the unconstrained demands of state agen-
cies for greater instream flows. Although valuation is not all
that should matter, valuation can contribute to improving so-
cial decision making by balancing one-sided recommendations
by industry or public agencies.
Environmental valuation techniques can also have a more
profound role in water resource debates; in many cases, these
valuation studies have changed the nature of those debates.
Perhaps the best example of this is in the public trust case
involving tributary water flows into Mono Lake in California
versus diverting such flows for municipal and industrial uses
in Los Angeles. These diversions were drying up tributary
streams and lowering the lake level. In 1983 the California
State Supreme Court required a reevaluation of the city of Los
Angeles’s 1941 water rights and required a balancing of the
public trust uses of water. The Los Angeles Department of
Water and Power cast the reevaluation debate in terms of ‘‘300
1
Prof. and Economist, Dept. of Agric. and Resour. Economics, Colo-
rado State Univ., Fort Collins, CO 80523.
Note. Discussion open until May 1, 2001. To extend the closing date
one month, a written request must be filed with the ASCE Manager of
Journals. The manuscript for this paper was submitted for review and
possible publication on June 14, 2000. This paper is part of the Journal
of Water Resources Planning and Management, Vol. 126, No. 6, No-
vember/December, 2000. 䉷ASCE, ISSN 0733-9496/00/0006-0339–
0344/$8.00 ⫹ $.50 per page. Paper No. 22293.
JOURNAL OF WATER RESOURCES PLANNING AND MANAGEMENT / NOVEMBER/DECEMBER 2000 / 339
Fish versus 28,000 People?’’ The implication was that provid-
ing water for fish in the tributary streams flowing into Mono
Lake deprived people of benefits. In addition to being an un-
productive way to view the issue, surveys of the California
citizenry showed this was a false dichotomy. People cared
about the fish and the birds as well as the Mono Lake eco-
system (Loomis 1987). Using the hypothetical market method
described below, the dollar sacrifice these people would make
to provide water for fish and birds could be quantified and
compared to the replacement cost of water from other sources
including agricultural and municipal water conservation.
The state of California’s Water Resources Control Board
was sufficiently impressed with the initial household survey
measuring the existence values from just knowing Mono Lake
would be preserved, that they required the contractor preparing
the state’s Environmental Impact Report to perform a far more
thorough hypothetical market analysis. The economic values
from that survey were published in the Environmental Impact
Report. These dollars of willingness to pay to protect the
Mono Lake ecosystem were counted dollar for dollar as equiv-
alent to hydropower and water supply benefits and costs in the
economic analysis of the different water allocation alternatives
(Jones and Stokes Associates 1993). In the end, the state or-
dered the flows into Mono Lake to be increased and Los An-
geles’s water rights to be reduced by nearly half (Loomis
1995). While air and water quality concerns were the driving
force in this decision, being able to show that such water real-
locations were not uneconomic probably aided in making such
a dramatic change. This is one of the many examples of the
utility of environmental valuation in water resource decision
making that will be provided in the remainder of the paper.
However, a description of the economic techniques used to
produce the estimates of environmental values will be given.
What Is Environmental Valuation?
Environmental valuation attempts to estimate the economic
value, in dollar terms, that members of society receive from
uses of natural resources that cannot be efficiently allocated
through markets due to their public good characteristics such
as being nonrival (one person’s use of instream flow does not
diminish another person’s use) and nonexcludable (once drink-
ing water quality is improved for one resident in a city, another
city resident cannot be precluded from enjoying this same im-
proved level of water quality). Yet recreational fishing and
boating at higher instream flows or improved water quality
provide an economic benefit to its participants even if a formal
market does not exist. It is a benefit for which they would, if

J. Water Resour. Plann. Manage., 2000, 126(6): 339-344

 they had to, pay more than the current nominal, administra-
tively set fishing license fee or boat launch fee. The fact that
they do not have to pay ‘‘what the market will bear’’ results
in the visitor retaining a ‘‘consumer surplus’’ as extra income.
Similar to irrigation water from publicly provided projects that
is not priced at its market clearing price, neither is recreation,
yet both have economic value.
In the case of recreation, economists can rely on visitor
travel behavior to statistically estimate a demand curve for
water-based recreation at a particular site. From the demand
curve, economists can estimate the additional amount a visitor
would pay, if required, for continued access to the water-based
recreation resource. Based on actual behavior, this approach is
referred to as the travel cost method (TCM). Because different
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visitors live different distances from the site, the analyst can
observe how the number of trips taken varies with variations
in travel costs to the site. Essentially, spatially varying prices
are observed. Thus the demand curve can be estimated by
multiple regression using this cross section data on travel costs
(as proxies for price) and number of trips taken each season.
By observing how recreation visitation changes with increased
river flows, higher reservoir levels, and improved water qual-
ity, economists can statistically estimate the demand shifts for
improved water resource conditions. From these demand
shifts, the additional dollar amount a typical visitor would pay
for the improved water resource condition can be calculated.
These incremental benefits can be compared to the opportunity
costs to other water resource users or to government agencies
for bringing about these improvements in water resource char-
acteristics. There are dozens of applications of the TCM for
estimating the economic value of instream flow and hundreds
of studies on the economic value of fishing [see Gillian and
Brown (1997), Loomis and Walsh (1997), and Industrial Ec-
onomics Inc. (1999) for summaries].
Recreation, however, is only part of the story. As mentioned
in the Mono Lake case, many individuals who may never fish
or boat still receive some benefits from just knowing that free
flowing rivers exist (Sanders et al. 1990) or that salmon mi-
grations will continue as part of the cycle of life in that region
(Olsen et al. 1991). The benefits realized by those that never
visit the natural environment or never actively participate in
on-site use of the resource are known as existence values or
passive use values (U.S. District Court 1989; Olsen et al.
1991). In these cases, many households would be willing to
pay (WTP) for protection of water resources. Today, these val-
ues are quantified through a hypothetical referendum, where
households are asked if they would vote in favor of a particular
resource protection action, if it cost their household $X. The
amount of $X varies across households, so that a demandlike
relationship can be statistically estimated. From this statistical
relationship, the sample average WTP is calculated. This ques-
tioning technique is one form of what is commonly referred
to as the contingent valuation method (CVM). CVM is based
on surveys, not actual consumption choices, and can be used
to value either recreation or existence values.
There is of course some skepticism regarding the reliability
of statements of WTP. As such, CVM has been subjected to
more testing and scrutiny than most empirical methods in ec-
onomics. For example, nearly every feature of survey design
has been tested to determine which approach yields the most
reliable results. For estimating the nonmarket benefits of rec-
reation, CVM results in estimates of WTP that are slightly less
than estimates based on actual behavior using methods such
as the TCM. This has been a fairly consistent finding over
dozens of CVM studies covering fishing, rafting, hunting,
camping, etc. (Carson et al. 1996).
The validity of CVM derived estimates of WTP for exis-
tence values or passive use values is less encouraging. In part,
340 / JOURNAL OF WATER RESOURCES PLANNING AND MANAGEMENT / NOVEMBER/DECEMBER 2000
J. Water Resour. Plann. Manage., 2000, 126(6): 339-344
this is due to the difficulty in relying upon cash contributions
in a public good experiment as a valid measure of an individ-
ual’s true existence value (Randall 1998). This difficulty is
inherent in the characteristics of a public good that makes
possible (even encourages) free-riding behavior on the part of
respondents. That is, why should you voluntarily contribute to
the good, if others will pay and provide it for you. This has
been long noted in the public goods literature (Samuelson
1954) and spoils attempts to use actual cash experiments to
validate existence values obtained from CVM (Randall 1998).
Nonetheless, the few experiments that exist result in stated
WTP amounts that may be two or more times higher than
actual contributions or payments. Recent developments have
suggested inclusion of additional questions in the CVM survey
that appear to allow calibration of stated WTP amounts to
actual cash contributions (Champ et al. 1997). However, con-
cerns with CVM WTP responses are not limited to only di-
vergence between actual cash and hypothetical WTP. Concerns
also exist as to whether the stated WTP is responsive to var-
iations in the amount of the public good provided (i.e., what
is known as sensitivity to scope). There are also concerns re-
garding the discouraging result that stated WTP is often sen-
sitive to the format of the WTP question (e.g., open-ended
versus closed-ended formats) and to the temporal duration of
payments (e.g., monthly versus annual versus lump sum). Thus
it is not surprising that decision makers often use results from
CVM surveys of the general public as indicative of their in-
tensity of preferences, but the exact dollar values may not be
as heavily relied upon as they are in recreation analyses.
The importance of existence values is evident in the fact
that they often dwarf the recreation use values and the oppor-
tunity costs of protecting water resources in valuation studies.
For example, in the original Mono Lake CVM analysis
(Loomis 1987), even the lower-bound estimate of the benefits
exceeded the cost by far more than the hypothetical bias pos-
sible in CVM (e.g., $1.525 billion in benefits versus
$26,500,000 in costs). The phenomenon of large benefits is
partly a result of what economists call the public good nature
of existence values. Small values per household of $30–$150/
year when multiplied by 10,000,000 households in California,
for example, result in substantial aggregate estimates of total
benefits. Recent empirical analyses suggest that for many nat-
ural resources, such as protection of salmon in the Pacific
Northwest, the benefits extend nationally to nearly
100,000,000 households (Loomis 1996).
AGENCY AND COURT ACCEPTANCE OF
NONMARKET VALUATION
Federal agencies were among the first government agencies
to adopt CVM for use in benefit-cost analysis of water resource
issues. Beginning in 1979, federal agencies such as the U.S.
Army Corps of Engineers (COE) and the U.S. Bureau of Rec-
lamation were required to use the TCM and CVMs to value
recreation benefits at projects with high visitation levels (U.S.
Water Resources Council 1979, 1983). During the 1980s the
COE had its economists attend training courses on TCM and
CVM. In addition, the agency published manuals on how to
perform the CVM (Moser and Dunning 1986). Since the early
1990s, the U.S. Forest Service has conducted annual training
sessions for its fisheries/wildlife biologists in nonmarket val-
uation theory and techniques. Today, the U.S. Bureau of Rec-
lamation maintains a staff of several economists who are
trained in and publish in the area of environmental valuation.
When Congress passed the Comprehensive Environmental
Response, Compensation and Liability Act (CERCLA) of
1980, the U.S. Department of Interior adopted TCM and CVM
as two methods for valuing the loss in recreation and existence
values from toxic waste sites and hazardous materials spills
 (U.S. Department of Interior 1986). The importance of using
CVM to measure existence values did not go unnoticed by
industry. Nonetheless, when industry challenged the use of
CVM, the Court of Appeals upheld CVM and ordered the U.S.
Department of Interior to broaden its use to measure existence
values (what the court called passive use values) even when
there was direct, on-site recreation use of the resource (U.S.
District Court of Appeals 1989). The court indicated that the
congressional intent behind CERCLA allowed recreation use
and passive use values to be summed together. Specifically the
Court of Appeals stated, ‘‘The statue’s command is expressly
not limited to use value; if anything, the language implies that
DOI is to include in its regulations other factors in addition to
use value. . . . Option and existence values may represent ‘pas-
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sive’ use, but they nonetheless reflect utility derived by humans
from a resource, and thus prima facie, ought to be included in
a damage assessment’’ (U.S. District Court of Appeals 1989,
p. 67).
The Exxon Valdez oil spill of 1989 put CVM in the spot-
light. Fearing damage estimates of several billion dollars,
Exxon spent heavily on economists, their studies, and a well-
orchestrated by invitation only workshop to try and discredit
CVM as a tool for measuring existence values. However, when
Congress passed the Oil Pollution Act of 1990, the responsible
agency, the National Oceanic and Atmospheric Administration
(NOAA), recommended that CVM be used to measure the rec-
reation and passive use values lost due to oil spills. Given the
controversy surrounding this recommendation, NOAA ap-
pointed a ‘‘blue ribbon’’ panel chaired by two Nobel laureates
to assess the reliability of the CVM for measuring passive use
values. In its report in 1993, the panel concluded that carefully
designed and implemented CVM studies could provide esti-
mates of passive use/existence values that would serve as a
useful starting point for administrative and judicial decisions
(Arrow et al. 1993). [See Jones (2000) for a more detailed
discussion of the use of nonmarket valuation techniques and
CVM in the natural resource damage assessment arena.]
EXAMPLES OF NONMARKET VALUATIONS USED IN
WATER RESOURCE POLICY ANALYSES
Glen Canyon Environmental Studies
One of the most prominent uses of CVM, sponsored by the
U.S. Bureau of Reclamation, occurred in an evaluation of the
economic effects of reregulating the flow releases from Glen
Canyon Dam on the Colorado River. Peaking power opera-
tions at the dam were having a deleterious effect on down-
stream fishing and rafting at Glen Canyon National Recreation
Area and Grand Canyon National Park. The central question
was about the worth of the recreation compared to the market
values of the peaking power. The first studies carried out used
CVM to quantify how the value of fishing in Glen Canyon
National Recreation Area and rafting in Grand Canyon Na-
tional Park would change with more even base flows as com-
pared to peaking power flows. Visitors were surveyed in the
mid-1980s. The economic effects were substantial, represent-
ing changes of $2,000,000 annually (Bishop et al. 1989). But
the impact of this analysis was greater considering the way it
helped change the perspective of the management issue than
for the numerical values it provided. Rather than recreation
versus hydropower, the report turned the discussion toward
finding a release pattern that increased the economic value of
all the multiple purposes, hydropower as well as recreation.
For a variety of reasons, even more releases were put in place
while the final environmental impact studies took place. Con-
gress formalized these flows when it passed the Grand Canyon
Protection Act of 1992.
The Glen Canyon recreation study also resulted in one of
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J. Water Resour. Plann. Manage., 2000, 126(6): 339-344
the first major passive use value studies being funded by a
federal agency. As it became clear that more than recreation
was at stake in reregulation of the dam, it also became more
obvious that citizens throughout the United States cared about
how dam operations affected the natural resources of the
Grand Canyon. In particular, people were concerned about en-
dangered species, erosion, native vegetation, and birds, which
were all being adversely affected by fluctuating flows resulting
from a peaking power operation at the dam and lack of high
spring flows. The U.S. Bureau of Reclamation funded a major
nonuse value study of households throughout the United States
to estimate their WTP for different flow regimes that would
protect the natural resources in the Grand Canyon. These re-
sults showed higher WTP for the steady flow regime (Welsh
et al. 1995). Although it is difficult to point to any one study
as definitively affecting the management of Glen Canyon
Dam, the public support combined with concerns over endan-
gered fish have resulted in substantial changes in the manage-
ment of the dam. For example, large spills were made during
the spring of 1995 to emulate the natural high spring flows.
Maintaining Reservoir Levels for Recreation
In the eastern United States, the Tennessee Valley Authority
operates a large number of dams for hydropower, flood con-
trol, and recreation. Historic operation involved operating res-
ervoirs primarily for hydropower and flood control. The result
was that reservoir levels typically peaked in the spring and
early summer and were drawn down to produce peaking power
in the summer (Cordell and Bergstrom 1993). This resulted in
reservoir drawdowns of 11–28 ft and 6–24% less surface area
during the mid- to late summer season. In addition to reducing
aesthetics of the reservoir for recreation and crowding existing
users into a smaller reservoir area, the drawdown made some
boat ramp and marina facilities inaccessible. The Tennessee
Valley Authority and North Carolina Division of Water Re-
sources commissioned a CVM study of the benefits of alter-
native water management levels in the reservoirs to provide
estimates comparable to foregone hydropower costs. The
CVM survey was conducted using photosimulations of the
lake at alternative levels. Visitors were asked if they would
pay for an annual recreation pass that would result in higher
water levels for 1 additional month, 2 months, and 3 months
of the summer season. Annual WTP increased from $42/year
with current early season drawdown to $75 with higher water
levels maintained for the full 3-month summer season (Cordell
and Bergstrom 1993, p. 255). Annual benefits to the four res-
ervoirs alone where the interviews were conducted was
$13,580,000. The authors concluded the gain in recreational
benefits at the four reservoirs from holding higher water levels
longer in the prime recreation season exceeded the hydro-
power generation losses but not the sum of these losses and
the costs of replacing the power generation capacity (Cordell
and Bergstrom 1993).
Federal Energy Regulatory Commission Relicensing
Decisions
Environmental valuation has also been used in the Federal
Energy Regulatory Commission’s (FERC) deliberations over
the level of minimum instream flow conditions to attach to 50-
year operating licenses. One of the strongest indications of the
difference that environmental valuation could make was in the
FERC case involving whether to permit construction of a dam
at Kootenai Falls in Montana. The economist who performed
the CVM analysis and presented it before the administrative
law judge in the court case wrote this about the outcome: ‘‘The
judge’s decision turned on the aesthetics and recreation values.
This is an interesting case in that not only was contingent
 valuation the primary method, but additionally, a compensa-
tion-demanded measure was apparently accepted as plausible.
The utility appealed the judge’s decision to the full Federal
Energy Regulatory Commission, which upheld the rejection of
the application. Our understanding is that this is one of only
two or three cases where FERC has not approved an appli-
cation for a major hydroelectric project’’ (Duffield 1992, p.
314). Duffield’s reference to ‘‘compensation demanded’’ mea-
sure of value is especially noteworthy, for this willingness to
accept the measure is a more inclusive measure of environ-
mental value as it is unconstrained by income, unlike WTP.
Because willingness to accept measures frequently exceed
WTP measures more than expected by theory, the large mag-
nitude of willingness to accept CVM responses are often
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viewed with some skepticism. Thus, a judge’s reliance on will-
ingness to accept is a strong endorsement of CVM.
PG&E in California has repeatedly relied upon environ-
mental valuation studies to estimate the recreation benefits as-
sociated with alternative instream flow requirements when
making its FERC license renewal applications. PG&E’s sub-
missions to FERC for relicensing two hydroprojects on the
North Fork of the Feather River have involved using a com-
bination of recreational fishing valuation based on the TCM
(Loomis and Cooper 1990) and transfer of values from other
river-based studies in the west for shore-based recreation and
potential rafting. These analyses presented the recreation ben-
efits at alternative flow levels and temperature modifications.
Attempts to reach agreement with the California Department
of Fish and Game on increasing minimum flows have been
contentious. An adaptive management approach has been pro-
posed to experimentally increase flows and then monitor vis-
itor use. As the consultant to PG&E states, ‘‘All sides agreed
that economic benefits and costs would be a major determining
factor’’ in what flows to make permanent (M. Feldman, per-
sonal communication, 2000).
Idaho Power Company commissioned a CVM study of the
economic benefits of alternative flow releases over Shoshone
Falls on the Snake River. The company’s intention is to eval-
uate whether the gain in recreation benefits from more water
passing over the falls is worth the power foregone from not
running the water through the turbines. Preliminary analysis
suggests that, during the summer months, triple the current
minimum 50 cfs of bypass flow is economically efficient
(Loomis and Feldman 1995). This, of course, illustrates the
‘‘double-edged sword’’ of nonmarket valuation. Although it
demonstrates that huge increases in minimum instream flow
requests are not justified, it also suggests some increases in
flows may enhance efficiency. Thus neither environmentalists
nor the utility may fully support the CVM results, as it may
be viewed alternately as too little or too much.
The importance of FERC relicensing for public natural re-
sources has resulted in a rare coordinated interagency (the U.S.
Fish and Wildlife Service and the U.S. Forest Service) effort
to force FERC to explicitly require environmental valuation in
its decision making. To facilitate the use of environmental val-
uation in FERC relicensing, the U.S. Fish and Wildlife Service
recently commissioned a comprehensive report that provides
detailed guidance on estimating the economic value of in-
stream flow and other water-related environmental resources
(Industrial Economics Inc. 1999).
Instream flow concerns are also important in eastern rivers,
and nonmarket valuation techniques have been employed there
as well. Bowker et al. (1996) applied TCM to estimate the
value of river rafting on the Chatooga and Nantahala rivers in
the southeastern United States. Roach et al. (1999) evaluated
the rafting benefits for alternative patterns of flow releases
from Long Falls Dam on the Dead River in Maine. The flow
levels had a statistically significant effect on the probability of
342 / JOURNAL OF WATER RESOURCES PLANNING AND MANAGEMENT / NOVEMBER/DECEMBER 2000
J. Water Resour. Plann. Manage., 2000, 126(6): 339-344
taking a rafting trip and on total rafting benefits. Their research
suggested that more frequent, but smaller flow releases might
generate more total rafting benefits than the current few, but
large releases from the dam.
Dam Removals for Fishery Benefits
As more and more anadromous fish species have been added
to the endangered species list, serious consideration has been
given to complete removal of dams blocking salmon migra-
tion. Not only do the dams block upstream migration of adult
salmon, but the reservoir pools behind the dams substantially
slow the migration of juvenile salmon to the ocean. Given the
dams’ contribution to the decline of this symbolic species in
the Pacific Northwest, there has been a groundswell of support
from newspaper editors in Boise, Idaho, to the governor of
Oregon to remove the dams.
The first dams to receive a formal environmental impact
analysis for removal are the Elwha and Glines dams on the
Elwha River on the Olympic Peninsula in Washington. These
are old dams and have no fish ladders. The 200-ft dams are
in such a narrow canyon that fish ladders are very costly and
likely to be ineffective. Given the age of the dams and the fact
they block migration of fish to 70 mi of pristine spawning
grounds in Olympic National Park, their removal could more
than triple salmon populations on the Elwha River.
However, biological efficiency is not the same as economic
efficiency. The cost to remove the dams and the 50 years of
sediment buildup behind the dams was estimated at
$100,000,000–$125,000,000. The recreational and commer-
cial fishing benefits alone would not likely offset these costs.
The National Park Service, U.S. Bureau of Reclamation, and
the Indian tribes requested a contingent valuation survey that
would estimate the existence and bequest values (benefits the
current generation receives from providing salmon to future
generations) from restoring the salmon stocks. The survey
asked households if they would vote in favor of removing the
dams and restoring the river so as to triple salmon populations
(illustrated using a bar chart). The cost each household was
asked to pay varied from $3 to $150. In addition to surveying
households in the state of Washington, households throughout
the United States were also surveyed.
The CVM survey was successful on a number of fronts.
The survey response rate in Washington was quite high at
68%, and it was 55% for the rest of the United States. The
internal validity of the results was indicated by the coefficient
on the dollar amount households were asked to pay being neg-
ative and statistically significant. This means that the higher
the dollar amount the household was asked to pay the less
likely they would agree to pay. This conforms to basic eco-
nomic theory and also indicates households considered the
dollar amount they were asked to pay quite seriously. The
average values per household ranged from $73 for Washington
households (90% confidence interval of $60–$99) to $68 for
rest of U.S. households (90% confidence interval of $56–$92).
Even just considering Washington residents, the $73/house-
hold times the number of households in Washington would
nearly cover the cost of removing the dams, restoring the river,
and providing the replacement hydropower produced by the
dams. Given the 86,000,000 households in the rest of the
United States, national WTP was in excess of a billion dollars.
Thus, even if there is an upward bias to the CVM estimates
of WTP, the estimated national benefits were far in excess of
the costs.
These results were included in the Environmental Impact
Statement (EIS) prepared by the National Park Service on dam
removal. The recommendation was to remove both dams and
restore the Elwha River. The Clinton administration included
in their 1999 budget request to Congress the money to pur-
 chase the dams from the private owners, with the intent to
request funds for dam removal and restoration in subsequent
fiscal years.
Two of the most controversial dam removal proposals to
date are those addressing four dams on the Lower Snake River
and Glen Canyon Dam on the Colorado River. The Lower
Snake River Dam removal study was requested by the Na-
tional Marine Fisheries Service as part of its biological opinion
about recovering several threatened and endangered salmon
species. As part of the EIS, the COE used the TCM to measure
reservoir recreation benefits that would be foregone with dam
removal. A survey-based contingent behavior TCM to measure
the benefits a restored free-flowing river might provide was
also implemented. The results of the contingent behavior TCM
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showed estimated visits with a restored free-flowing river of
462,450/year with annualized benefits of $80,000,000 (Loomis
1999). A CVM question to measure the existence values of
increasing salmon and returning the river to a free-flowing
state was included in the original survey that was pretested.
However, after the pretest, Senator Slade Gorton of Washing-
ton sent an official letter to the commander of the COE and
to Pacific Northwest region commanders stating ‘‘The Corps
of Engineers should abandon this survey . . .’’ (S. Gorton, per-
sonal communication, 1998). This political pressure on the
COE resulted in elimination of the CVM question regarding
existence value of salmon and dam removal. It is clear that
those who had publicly opposed dam removal, such as Gorton,
anticipated a large influence of the nonmarket valuation results
on the final decision. However, Gorton was unable to stop the
contingent behavior TCM recreation survey as it was essential
to several other portions of the economic analysis and the EIS.
CONCLUSIONS
Does valuation matter? A reasonable case can be made that
environmental valuation does matter in water resources deci-
sion making. The nature of the contribution is often case spe-
cific. In some of the cases reviewed above, the environmental
valuation changed the character of the debate from being a
‘‘people versus the environment’’ to one of recognizing people
care about the instream flows just as they care about inexpen-
sive drinking water or hydroelectricity. Thus, applications of
environmental valuation to water resource management con-
flicts involving traditional uses of water (e.g., hydropower,
municipal and industrial) versus environmental uses (e.g., in-
stream flow) illustrates that the impact of valuation was often
felt more in the way it offered a common metric showing that
both uses contribute to society than in the exact dollar values
it provided. In other cases, environmental valuation helped dif-
fuse the often heard mantra that ‘‘protecting the environment
is just too costly.’’ What the environmental valuation studies
often show is that protecting the environment provides more
benefits than the value of commodities foregone. Finally, in
the Elwha River Dam removal example, contingent valuation
was used to estimate the benefits to all citizens of the United
States from salmon restoration. This avoided viewing salmon
restoration narrowly as only increased commercial fishing rev-
enues or sport fishing benefits.
What is the value of valuation? The value lies in providing
a more complete accounting of all of the benefits and costs to
all of the people. For without valuation, the predictions of the
public choice economists are frequently realized: (1) Those
who would bear concentrated costs can more easily block wa-
ter resource management changes that would benefit society
as a whole; and (2) those few that stand to gain concentrated
benefits can spread even larger costs out over millions of tax-
payers. Valuation studies can make possible some considera-
tion of ordinary citizens through their benefits and costs, re-
gardless of how small those benefits may be per person.
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Without valuation studies, only those with sufficiently concen-
trated costs or benefits who attend hearings and committee
meetings or make large campaign contributions will be heard.
Valuation studies have the potential to provide an effective
way to diminish the often bemoaned role of ‘‘special interests’’
in the current policy process.
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