Thomas P. Holmes

Economic Impacts of Non-Native Forest Insects in the Continental United States

Reliable estimates of the impacts and costs of biological invasions are critical to developing credible management, trade and regulatory policies. Worldwide, forests and urban trees provide important ecosystem services as well as economic and social benefits, but are threatened by non-native insects. More than 450 non-native forest insects are established in the United States but estimates of broad-scale economic impacts associated with these species are largely unavailable. We developed a novel modeling approach that maximizes the use of available data, accounts for multiple sources of uncertainty, and provides cost estimates for three major feeding guilds of non-native forest insects. For each guild, we calculated the economic damages for five cost categories and we estimated the probability of future introductions of damaging pests. We found that costs are largely borne by homeowners and municipal governments. Wood- and phloem-boring insects are anticipated to cause the largest economic impacts by annually inducing nearly

Financial and ecological indicators of reduced impact logging performance in the eastern Amazon

1.7 billion in local government expenditures and approximately

A Comparison of Conjoint Analysis Response Formats

830 million in lost residential property values. Given observations of new species, there is a 32% chance that another highly destructive borer species will invade the U.S. in the next 10 years. Our damage estimates provide a crucial but previously missing component of cost-benefit analyses to evaluate policies and management options intended to reduce species introductions. The modeling approach we developed is highly flexible and could be similarly employed to estimate damages in other countries or natural resource sectors.

Economic Impacts of Invasive Species in Forests Past, Present, and Future

Abstract Reduced impact logging (RIL) systems are currently being promoted in Brazil and other tropical countries in response to domestic and international concern over the ecological and economic sustainability of harvesting natural tropical forests. RIL systems are necessary, but not sufficient, for sustainable forest management because they reduce damage to the forest ecosystem during the initial forest entry. If conditions were identified where RIL costs were clearly less than conventional logging (CL) costs, then a strong incentive for RIL adoption would exist. In this paper, a comparison of costs and revenues was made for typical RIL and CL operations in the eastern Amazon. An economic engineering approach was used to estimate standardized productivity and cost parameters. Detailed data on productivity, harvest volume, wasted wood and damage to the residual stand were collected from operational scale harvest blocks. Productivity and cost data were also collected using surveys of forest products firms. The major conclusion of the study was that RIL was less costly, and more profitable, than CL under the conditions observed at the eastern Amazon study site. Full cost accounting methods were introduced to capture the direct and indirect costs associated with wasted wood. The impact of wasted wood on effective stumpage price provided the largest gain to RIL. Large gains attributable to RIL technology were also observed in skidding and log deck productivity. In addition, investment in RIL yielded an “environmental dividend” in terms of reduced damage to trees in the residual stand and reduction of the amount of ground area disturbed by heavy machinery. Developing institutions that can monetize the value of the environmental dividend remains a major challenge in the promotion of sustainable forest management in the tropics.

Dynamic Learning and Context-Dependence in Sequential, Attribute-Based, Stated-Preference Valuation Questions

A split-sample design is used to evaluate the convergent validity of three response formats used in conjoint analysis experiments. We investigate whether recoding rating data to rankings and choose-one formats, and recoding ranking data to choose one, result in structural models and welfare estimates that are statistically indistinguishable from estimates based on ranking or choose-one questions. Our results indicate that convergent validity of ratings, ranks, and choose one is not established. In addition, we find that people frequently use ‘ties’ in responses to rating questions, and that the option not to choose any of the alternatives (‘opt-out’) affects some preference estimates. Copyright 2001, Oxford University Press.

Nonnative forest insects and pathogens in the United States: Impacts and policy options

Biological invasions by nonnative species are a by‐product of economic activities, with the vast majority of nonnative species introduced by trade and transport of products and people. Although most introduced species are relatively innocuous, a few species ultimately cause irreversible economic and ecological impacts, such as the chestnut blight that functionally eradicated the American chestnut across eastern North America. Assessments of the economic costs and losses induced by nonnative forest pests are required for policy development and need to adequately account for all of the economic impacts induced by rare, highly damaging pests. To date, countrywide economic evaluations of forest‐invasive species have proceeded by multiplying a unit value (price) by a physical quantity (volume of forest products damaged) to arrive at aggregate estimates of economic impacts. This approach is inadequate for policy development because (1) it ignores the dynamic impacts of biological invasions on the evolution of prices, quantities, and market behavior, and (2) it fails to account for the loss in the economic value of nonmarket ecosystem services, such as landscape aesthetics, outdoor recreation, and the knowledge that healthy forest ecosystems exist. A review of the literature leads one to anticipate that the greatest economic impacts of invasive species in forests are due to the loss of nonmarket values. We proposed that new methods for evaluating aggregate economic damages from forest‐invasive species need to be developed that quantify market and nonmarket impacts at microscales that are then extended using spatially explicit models to provide aggregate estimates of impacts. Finally, policies that shift the burden of economic impacts from taxpayers and forest landowners onto parties responsible for introducing or spreading invasives, whether through the imposition of tariffs on products suspected of imposing unacceptable risks on native forest ecosystems or by requiring standards on the processing of trade products before they cross international boundaries, may be most effective at reducing their impacts.

Does Question Format Matter? Valuing an Endangered Species

A hybrid stated-preference model is presented that combines the referendum contingent valuation response format with an experimentally designed set of attributes. A sequence of valuation questions is asked to a random sample in a mail-out mail-back format. Econometric analysis shows greater discrimination between alternatives in the final choice in the sequence, and the vector of preference parameters shifts. Lead and lag choice sets have a structural influence on current choices and unobserved factors induce positive correlation across the responses. These results indicate that people learn about their preferences for attribute-based environmental goods by comparing attribute levels across choice sets. (JEL Q23, Q26)

Timber Price Dynamics Following a Natural Catastrophe

Abstract We review and synthesize information on invasions of nonnative forest insects and diseases in the United States, including their ecological and economic impacts, pathways of arrival, distribution within the United States, and policy options for reducing future invasions. Nonnative insects have accumulated in United States forests at a rate of ~2.5 per yr over the last 150 yr. Currently the two major pathways of introduction are importation of live plants and wood packing material such as pallets and crates. Introduced insects and diseases occur in forests and cities throughout the United States, and the problem is particularly severe in the Northeast and Upper Midwest. Nonnative forest pests are the only disturbance agent that has effectively eliminated entire tree species or genera from United States forests within decades. The resulting shift in forest structure and species composition alters ecosystem functions such as productivity, nutrient cycling, and wildlife habitat. In urban and suburban areas, loss of trees from streets, yards, and parks affects aesthetics, property values, shading, stormwater runoff, and human health. The economic damage from nonnative pests is not yet fully known, but is likely in the billions of dollars per year, with the majority of this economic burden borne by municipalities and residential property owners. Current policies for preventing introductions are having positive effects but are insufficient to reduce the influx of pests in the face of burgeoning global trade. Options are available to strengthen the defenses against pest arrival and establishment, including measures taken in the exporting country prior to shipment, measures to ensure clean shipments of plants and wood products, inspections at ports of entry, and post‐entry measures such as quarantines, surveillance, and eradication programs. Improved data collection procedures for inspections, greater data accessibility, and better reporting would support better evaluation of policy effectiveness. Lack of additional action places the nation, local municipalities, and property owners at high risk of further damaging and costly invasions. Adopting stronger policies to reduce establishments of new forest insects and diseases would shift the major costs of control to the source and alleviate the economic burden now borne by homeowners and municipalities.

Spatially explicit forecasts of large wildland fire probability and suppression costs for California

A three-way treatment design is used to compare contingent valuation response formats. Respondents are asked to value an endangered species (the red-cockaded woodpecker) and the restoration of its habitat following a natural disaster. For three question formats (open-ended, payment card, and double-bounded dichotomous choice), differences in survey response rates, item non-response rates, and protest bids are examined. Bootstrap techniques are used to compare means across formats and to explore differences in willingness to pay (WTP) distribution functions. Convergent validity is found in a comparison of mean WTP values, although some differences are apparent in the cumulative distribution functions. Differences across formats are also identified in item non-response rates and proportion of protest bids. Overall, the payment card format exhibits desirable properties relative to the other two formats.

Economic and environmental impacts of conventional and reduced-impact logging in Tropical South America: a comparative review

Catastrophic shocks to existing stocks of a renewable resource can cause long-run price shifts. With timber, these long-run price shifts may be accompanied by a short-run price drop due to salvage. Hurricane Hugo damaged 20% of southern pine timber in the South Carolina Coastal Plain in 1989. To estimate the short- and long-run effects of the hurricane on the prices of timber stocks, we estimated an intervention model of the residuals of cointegration of South Carolina sawtimber and pulpwood stumpage prices with prices of similar products from other regions. Modeling revealed a 30% negative price spike due to salvage and a long-run enhancement effect, leading to prices that are 10% to 30% higher than they would have been had Hugo not occurred.