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Economic Values of Wilderness

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Economic Values of Wilderness J. For. 113(❚):000–000 REVIEW ARTICLE http://dx.doi.org/10.5849/jof.14-136 economics A Synthesis of the Economic Values of Wilderness Thomas P. Holmes, J.M. Bowker, Jeffrey Englin, Evan Hjerpe, John B. Loomis, Spencer Phillips, and Robert Richardson Early applications of wilderness economic research demonstrated that the values of natural amenities and reveal broad underlying trends in the evolv- commodities produced from natural areas could be measured in commensurate terms. To the surprise of many, ing role of wilderness in American life. In the economic values of wilderness protection often exceeded the potential commercial values that might result particular, we are interested in describing from resource extraction. Here, the concepts and tools used in the economic analysis of wilderness are described, how economic analysis can be used to ad- and the wilderness economic literature is reviewed with a focus on understanding trends in use, value, and dress three fundamental questions: economic impacts. Although our review suggests that each of these factors is trending upward, variations in • Has the public’s willingness to pay for research methods plus large gaps in the literature limit understanding of long-run trends. However, as new data wilderness (both individually and in aggre- on wilderness use, visitor origins, and spatially referenced features of landscapes are becoming increasingly gate) changed during the past five decades? available, more robust economic analysis of both onsite and offsite wilderness economic values and impacts is • Have the characteristics of wilderness now becoming possible. users shifted over time? • Has the role that wilderness areas play Keywords: recreation use value, passive use value, ecosystem services, economic impacts in community development evolved? During the 1960s, scholarly and prag- matic interest in wilderness preservation he Wilderness Act (Public Law 88- ignated as such by Congress. Other catego- grew rapidly. In his classic treatise, Wilder- 577), creating the National Wilder- ries of land use, such as roadless areas or ness and the American Mind, Roderick Nash ness Preservation System (NWPS), other open spaces, are not included in our T (1967) traced the evolution of American was signed into law 50 years ago (1964). Sec- use of the term wilderness throughout this sentiment toward wilderness from a land- tion 2(c) of the Act provides the following article. scape-demanding transformation to a van- definition: A review of the economic values of wil- ishing remnant of the pioneer environment derness was recently published and provided A wilderness, in contrast with those areas that needed protection. Concepts of the where man and his own works dominate useful background for this article (Bowker et value of wilderness protection were neatly the landscape, is hereby recognized as an al. 2014). Our synthesis differs from that area where the earth and its community of summarized by the Outdoor Recreation Re- life are untrammeled by man, where man review in that we examine the suite of his- sources Review Commission (1962, p. 7) in himself is a visitor who does not remain. An torical wilderness economic studies for evi- three categories: recreational values, which area of wilderness is further defined to mean dence of long-run societal trends in the use, in this Act an area of undeveloped Federal arise from “deep personal revelations and ex- land retaining its primeval character and in- valuation, and economic impacts of wilder- perience of natural beauty,” social values, in- fluence… ness areas. In doing so, we emphasize that cluding scientific study; and knowledge that Wilderness, as used in this synthesis, economic models can be used to assess a wilderness exists. Subsequently, these value specifically refers to federal land that is des- complementary set of hypotheses that may categories were formalized into economic Received November 7, 2014; accepted May 11, 2015; published online June 18, 2015. Affiliations: Thomas P. Holmes ([email protected]), USDA Forest Service, Southern Research Station, Research Triangle Park, NC. J.M. Bowker ([email protected]), USDA Forest Service. Jeffrey Englin ([email protected]), Arizona State University. Evan Hjerpe ([email protected]), Conservation Economics Institute. John B. Loomis ([email protected]), Colorado State University. Spencer Phillips ([email protected]), Key Log Economics. Robert Richardson ([email protected]), Michigan State University. Acknowledgments: We gratefully acknowledge Susan Fox, Aldo Leopold Wilderness Research Institute, without whose encouragement and support this synthesis would not have been possible. Journal of Forestry • MONTH 2015 1 arguments for wilderness preservation by a Economic Concepts of Value several variants of the travel cost method in team of economists at Resources for the Fu- Wilderness areas are public goods, and the following decades and allowed econo- ture, led by John Krutilla (Krutilla and the amenity values provided by the preserva- mists to measure the economic “use” value Fisher 1975). tion of wilderness cannot be purchased in of wilderness and other natural areas. As the In developing an economic approach to established markets. Consequently, the name implies, use value refers to the onsite wilderness preservation, Krutilla thought value of wilderness protection must be mea- value obtained from direct contact with wil- that it was necessary to quantify both the sured using nonmarket valuation methods. derness (Figure 1). Studies of willingness to benefits of wilderness preservation and the The conceptual basis for measuring eco- pay for wilderness use are often holistic and costs in terms of foregone (or postponed) nomic values for public goods is found in the simply focus on the overall onsite value of a development of natural areas. In doing so, theory of welfare economics, and several the- recreational trip. However, as we discuss be- Krutilla (1967) recognized how the passage oretical measures that describe the economic low, economists are also interested in under- of time can influence the computation of the value, benefits, or willingness to pay for en- standing how specific wilderness character- benefits and costs inherent in decisions of vironmental amenities have been developed istics contribute to overall willingness to whether or not to preserve natural areas of (Flores 2003). It has been demonstrated that pay, and modern economic methods are well national significance. In particular, he ar- differences between these theoretical mea- suited to estimating the values of ecosystem gued that (1) wilderness areas represent sures, when applied to empirical estimates of characteristics. unique conditions that, once developed for environmental value, are small and are gener- The second main category of economic productive purposes, are largely irreproduc- ally less than the errors incurred by estimation value as applied to natural areas, first articu- ible, (2) the supply of natural environments (Willig 1976). Consequently, we use the terms lated by Krutilla (1967), is known as “pas- cannot be enlarged but can only diminish, economic value, economic benefits, and willing- sive use value.” This offsite value category (3) individual and aggregate willingness to ness to pay synonymously in this article. was originally depicted as being comprised pay for direct association with undisturbed An essential concept used to describe of three related concepts (Figure 1). Exis- natural environments will increase over the economic value of onsite wilderness ac- tence value is the value derived from know- time due to increasing levels of income, tivities is known as “consumer surplus” and ing that natural areas exist, even if one never education, and population and (4) over refers to the difference between the maxi- plans to visit those areas. Option value is the time, technological advancements will de- mum amount a consumer is willing to pay value of maintaining the option to visit a crease the reliance of society on natural re- for a consumer good and the amount actu- natural area sometime in the future. Finally, sources that may be extracted from pristine ally expended (e.g., for a historical review of bequest value is the value of passing on nat- natural areas. The interaction of these sup- this concept, see Currie et al. 1971). Con- ural areas to future generations. The sum of ply and demand factors led him to predict sumer surplus traditionally refers to how much use value and passive-use value is known as that the value of wilderness protection, rela- better off an individual is by consuming the total economic value (TEV). Use values, tive to the value of resources that might be chosen good rather than allocating the actual passive use values, and TEVs have been esti- mated for US wilderness areas (and are dis- extracted from such natural environments, expenditure to some other consumer good. cussed below). would increase over time. Although this During the second half of the 20th cen- tury, welfare economic concepts were re- We include a fourth offsite wilderness conceptual framework for wilderness preser- fined to include the valuation of natural en- value in our TEV typology that was not em- vation was then considered novel (Porter vironments. Based on a suggestion made by phasized either by the Outdoor Recreation 1982) and was subsequently applied to the Harold Hotelling to the Director of the Na- Review Commission (1962) or by Krutilla empirical analysis of a range of
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