Range Resident Population Part. Rate Damages Total Damage
(Millions) Per User ($ Millions)
Upper 3.4 X .259 X $5.53 = $4.87
Lower 3.4 X .259 X $3.52 = $3.10
example, receives a majority of its contributions from out of state and even from abroad; many contributors will never see a manatee in the wild — however, they are willing to pay to have this creature preserved. In the case of the Tampa Bay spill, the use damages represent only a small part of other damages, for instance, to wildlife and the functioning of the beach ecosystem.
The mean damage estimate of $3.98 million has been presented to the potentially responsible parties. In addition to the beach damages, the polluter would be asked to pay for clean-up operations. A joint settlement resolving all claims between the United States, the State of Florida and the parties responsible for the spill was approved and became final in May 1999. Under the settlement, the Trustees received $2.5 million in compensation for the lost recreational services of the injured beaches, waterways and shellfish beds. The $2.5 million settlement is about 37 percent lower than the mean esti- mates of the damage to injured beaches of $3.98 million. The trustees failed to recover damages for losses to out-of-state tourists during the oil spill.
The problem with this kind of a settlement is that the potentially responsible party is inclined to stall while the government lacks the proper incentives to exact a price by an out-of-court settlement or immediately go to court. The reason is the disconnect between those that were responsible and those who were affected by the oil spill, namely the stakeholders. In this case, it is not clear that the stakeholders know who they are. Remember that the government is estimating damages for literally thousands of beach goers who became stakeholders when the oil spill occurred. Since the spill was cleaned-up in a little over three weeks, it may be difficult for beach goers in the 16- county region to even identify themselves as stakeholders. Thus, there is little if no pressure on government to compensate them through a settlement. The government is restrained since it must go through a series of meetings with those stakeholders it can identify to determine how they wish to be compensated or if they agree with the level of compensation. In most cases, they are not likely to have knowledge of the random utility model — all of these are obstacles that cannot easily be overcome.
In a related case, three years before the Tampa Bay oil spill in 1993, the steam tanker American Trader spilled 416,598 gallons of crude oil off Huntington Beach, California. Similar in magnitude to the Tampa Bay oil spil, the trustees did not use the random utility model approach of this study, but a “benefits transfer” approach (see chapter 4), in which the use value of comparable beaches was taken from a study of Florida along with the number of estimated beach trips lost during the oil spill in California. Although occurring before the Tampa Bay oil spill, the American Trader case is the only damage in the United States to go through a jury deliberation. The Tampa Bay oil spill case was settled out of court. Lost recreational damages awarded by the jury in the American Trader case were $11.42 million. Although Huntington Beach in California was closed for 34 days, almost twice as long as Treasure Island in Florida, it appears that trial by jury may be a significant factor in gaining more damage payments from the principal responsible party. For more on the American Trader case, see
Chapman et al (1998).
By law, the funds collected in the Tampa Bay case are to be used to plan and imple- ment actions to restore, replace, rehabilitate or acquire resources or resource services like those that were lost. This plan will identify the restoration actions which are preferred for use by the Trustees to compensate for the recreational services of area beaches, shellfish beds and surface water which were lost as a result of the incident. The trustees might consider the beach attributes from the random utility function to ascertain the highest and best use of damages collected in terms of increasing the utilityof beach goers to the beach area affected by the 1993 spill. For example, addition- al parking or beach access may be provided through the use of the damages collected. Even though imperfect, the thrust of the process under CERCLA is to use monies col- lected as damages from the polluter and in some way compensate those individuals whose use of the damaged beaches was curtailed.
REFERENCES
Chapman, D. J. W., M. Haneman and P. Ruud, 1998. American Trader oil spill: A review from the beaches. AERE Newsletter 18(2).
Environmental Economics Research Group 1998. Natural Resource Damage Assessment for the Tampa Bay Oil Spill: Recreational Use Losses for Florida Residents. Unpublished report to the Florida Department of Environmental Protection, February, Tallahassee, Florida. Walsh, R., Johnson and J. McLean. 1990. Nonmarket values from two decades of research on
recreational demand. In Smith, ed. Advances in Applied Micro-Economics, JAI Press.
Restoration of ecosystems such as the Florida Everglades presents one of the most dif- ficult challenges in contemporary science and environmental decision making. In addi- tion to the technical challenges related to ecological restoration of such a complex ecosystem, the goals of restoration can also be problematic because of competing points of view on just what constitutes a restored ecosystem. One means of trying to assess public preferences and economic values for alternative restoration goals is mul- tiattribute utility analysis, a variation of contingent valuation methods, which can be used to help clarify decision making issues, assess public preferences for different objectives and relate measures of economic value to those objectives.
RESOURCE MANAGEMENT ISSUE
T
he Florida Everglades ecosystem stretches from south of Orlando to the Florida Keys and covers more than 69,000 square kilometers (Figure 7.1). This complex mosaic of hydrologically interrelated terrestrial, freshwater and marine systems was the focus of the federal interagency South Florida Ecosystem Restoration Task Forcecharged with presenting a plan to Congress in July 1999 to restore the ecosystem.1The essence of the planning problem was characterized in a study by the U. S. Army Corps of Engineers (1994): “The vision of the future wetlands in south Florida is influenced by different views of how we determine restoration goals for the system. The future
Kissimmee River, Lake Okeechobee, Everglades, Big Cypress, and Florida Bay ecosys- tems can be, to some extent, what we want them to be, based on our value systems, and our decisions about what conditions and components constitute a restored ecosys- tem.” At the same time, restoration planners must consider competing demands for
63
CHAPTER 7
EVERGLADES
RESTORATION
PLANNING:
MULTIATTRIBUTE
UTILITY
ANALYSIS
J. Walter Milon and Alan Hodges
1 Federal participation on the Task Force includes the Army Corps of Engineers, the Departments of
Agriculture, Interior and Justice, and the Environmental Protection Agency. Other official participation includes three state agencies as well as the Miccosukee and Seminole tribes. The Water Resources Development Act of 1996 (P.L. 104-303, Sec. 528) placed lead responsibility for developing the plan with the Army Corps of Engineers (Milon et al. 1998; Vogel 1998).
water from urban and agricultural users and the cost of redesigning one of the most extensive water management systems in the world (Vogel 1998).
A key factor in these considera- tions was determining the econom- ic implications of restoration options. One means for doing this is by multiattribute utility (MAU) surveys, a technique for measuring public preferences and economic values for alternative restoration plans. A variation of contingent valuation techniques (see Chapter 4), MAU surveys can be used to value environmental resources. MAU procedures have been used in a number of complex, multiple objective problems (Keeney and Raiffa 1976; Giocoechea et al. 1982; von Winterfeldt and Edwards 1986) but applications to ecosystem restoration planning have been limited. The next section provides a brief overview of MAU theory and describes the development of a MAU survey for the
Everglades/South Florida ecosys- tem restoration problem. This overview is followed by a discussion of results from the survey and an application of the results to evaluate alternative restoration plans. We conclude with some broad observations on the role of MAU surveys in other types of coastal and environmental decision-making. More complete details about the survey and results are available in Milon et al. (1999).