Final Economic Analysis of Critical Habitat Designation for the Topeka Shiner
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June 2004 FINAL ECONOMIC ANALYSIS OF CRITICAL HABITAT DESIGNATION FOR THE TOPEKA SHINER June 2004 June 2004 FINAL ECONOMIC ANALYSIS OF CRITICAL HABITAT DESIGNATION FOR THE TOPEKA SHINER Prepared for: Division of Economics U.S. Fish and Wildlife Service 4401 N. Fairfax Drive Arlington, VA 22203 Prepared by: Industrial Economics, Incorporated 2067 Massachusetts Avenue Cambridge, Massachusetts 02140 June 2004 TABLE OF CONTENTS EXECUTIVE SUMMARY.................................................ES-1 1 INTRODUCTION AND BACKGROUND ............................... 1-1 1.1 Description of Species and Habitat................................. 1-1 1.2 Proposed Critical Habitat ......................................... 1-3 1.3 Framework and Methodology ..................................... 1-8 1.4 Information Sources............................................ 1-17 2 SOCIOECONOMIC PROFILE AND BASELINE ELEMENTS ............. 2-1 2.1 Socioeconomic Profile of the Critical Habitat Areas .................... 2-1 2.2 Relevant Baseline Elements....................................... 2-5 2.3 Overlap with Other Listed Species ................................ 2-15 3 ACTIVITIES POTENTIALLY AFFECTED BY THE DESIGNATION OF CRITICAL HABITAT FOR THE TOPEKA SHINER ..................... 3-1 3.1 Categories of Economic Impacts Associated with the Designation of Critical Habitat................................................. 3-1 3.2 Estimated Administrative Costs of Consultations and Technical Assistance . 3-2 3.3 Project Modifications............................................ 3-3 3.4 Activities Affecting Topeka Shiner Critical Habitat Area ................ 3-3 4 ECONOMIC IMPACT OF CRITICAL HABITAT DESIGNATION ......... 4-1 4.1 Iowa......................................................... 4-1 4.2 Minnesota..................................................... 4-4 4.3 Kansas ....................................................... 4-8 4.4 Nebraska .................................................... 4-13 4.5 South Dakota................................................. 4-15 4.6 Total Costs Within Proposed Critical Habitat ........................ 4-28 4.7 Potential Impacts on Small Businesses............................. 4-34 REFERENCES .................................................... Ref-1 APPENDIX A: Costs for the Topeka Shiner per Watershed...............App A-1 APPENDIX B: Supplemental Economic Impact Analysis of Proposed Critical Habitat For the Topeka Shiner ........................ App B-1 June 2004 EXECUTIVE SUMMARY 1. The purpose of this report is to identify and analyze the potential economic impacts associated with designation of critical habitat for the Topeka shiner (Notropis topeka). This report was prepared by Industrial Economics, Incorporated, for the U.S. Fish and Wildlife Service’s Division of Economics. 2. The proposed designation includes 2,462 river miles in portions of: the North Raccoon, Boone, and Rock River watersheds in Iowa; the Kansas, Big Blue, Smoky Hill, Cottonwood Rivers, and Wildcat Creek watersheds in Kansas; the Rock and Big Sioux River watersheds in Minnesota; the Bonne Femme, Moniteau, and Sugar Creek watersheds in Missouri, and the Big Sioux, Vermillion, and James River watersheds in South Dakota. In August 2002, the U.S. Fish and Wildlife Service proposed designation of critical habitat for the Topeka shiner (Notropis topeka) in the states of Iowa, Kansas, Minnesota, Nebraska, and South Dakota. In February 2004, the Service proposed designating four additional units in Missouri and Kansas, and an additional stream segment in South Dakota. The main body of this report addresses the impacts to the areas proposed for designation in the proposed rule and Appendix B addresses the impacts of the areas proposed for designation in the supplemental rule. This executive summary discusses the results in total. 3. Section 4(b)(2) of the Endangered Species Act (the Act) requires the Service to designate critical habitat on the basis of the best scientific data available, after taking into consideration the economic impact, and any other relevant impact, of specifying any particular area as critical habitat. The Service may exclude areas from critical habitat designation when the benefits of exclusion outweigh the benefits of including the areas within critical habitat, provided the exclusion will not result in extinction of the species. KEY FINDINGS • The present value cost is forecast to be $16.1 million to $37.0 million over the next ten years (seven percent discount rate). • Road/bridge construction/maintenance and agriculture and ranching-related activities account for 66 percent of these costs. • The administrative cost of consultation and technical assistance efforts account for over 80 percent of the projected costs of this designation; project modifications represent the remaining 20 percent. • Federal, State, and local agencies will bear 70 percent of the costs; private entities will incur the remaining 30 percent. • Approximately 60 percent of the costs are expected to occur in 30 percent of the proposed designation; the highest cost units include the Raccoon River Watershed in Iowa, and the Big Sioux, Lower Big Sioux, Vermillion, Lower James, and Upper James River watersheds in South Dakota. • About 15 percent of the total costs are expected to occur in three percent of the proposed designation, 25 percent in seven percent of the designation, and 50 percent in 22 percent of the designation; considering the expected cost per river mile, the Bonne Femme and Moniteau Creek watersheds in Missouri are the three most costly units. • A significant economic impact on small businesses is not expected. ES-1 June 2004 Framework for the Analysis 4. This analysis is consistent with the designation as described in the proposed rule. As such, this analysis does not reflect potential changes to the proposed units in the final rule. Description of the habitat designation in the final rule may consequently differ from that presented in this analysis. 5. The primary purpose of this analysis is to estimate the economic impact associated with the designation of critical habitat for the shiner. This information is intended to assist the Secretary in making decisions about whether the benefits of excluding particular areas from the designation outweigh the benefits of including those areas in the designation.1 This economic analysis considers the economic efficiency effects that may result from the designation and addresses how the impacts of the designation are distributed, including an assessment of any local or regional economic impacts of the designation and the potential effects of the designation on small entities. This information can be used by decision-makers to assess whether the effects of the designation might unduly burden a particular group or economic sector. 6. This analysis focuses on the direct and indirect costs of the rule. However, economic impacts to land use activities exist in the absence of critical habitat. These impacts may result from, for example, local zoning laws, State and natural resource laws, and enforceable management plans and best management practices applied by other State and Federal agencies. For example, state water quality regulations provide protection to the shiner and its habitat. Economic impacts that result from these types of protections are not included in this assessment; they are considered to be part of the “baseline.” 7. This analysis describes impacts that are expected to occur above and beyond the baseline. In other words, it measures the costs of compliance with the Act that would not occur in the absence of constraints on activities engendered by section 7 of the Act. In addition, where appropriate costs associated with section 9 and 10 of the Act are considered related to the designation of critical habitat. 8. The measurement of direct compliance costs focuses on the implementation of section 7 of the Act. This section requires Federal agencies to consult with the Service to ensure that any action authorized, funded, or carried out will not likely jeopardize the continued existence of any endangered or threatened species or result in the destruction or adverse modification of critical habitat. The administrative costs of these consultations, along with the costs of project modifications resulting from these consultations, represent the direct compliance costs of designating critical habitat. Importantly, this analysis does not differentiate between consultations that result from the listing of the species (i.e., the jeopardy standard) and consultations that result from the presence of critical habitat (i.e., the adverse modification standard). 9. The designation may, under certain circumstances, affect actions that do not have a Federal nexus or are otherwise not subject to the provisions of section 7 under the Act. For the purposes of this analysis, these impacts are defined as indirect effects. For 1 16 U.S.C. § 1533(b)(2). ES-2 June 2004 example, although technical assistance is not a direct cost of section 7 of the Act, these costs are incorporated into the cost analysis when they are explicitly propagated by consideration of species and habitat conservation. Similarly, a State agency may request technical assistance from the Service as a precaution to ensure that activities without a Federal nexus, such as the issuance of National Pollutant Discharge Elimination System (NPDES) permits, adequately provide for particular species and habitats. In this case, costs of Service