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Cost-Benefit Analysis Summary: Thompson & Chilcotin River Steelhead

Cost-Benefit Analysis Summary: Thompson & Chilcotin River Steelhead

Cost-Benefit Analysis Summary: Thompson & Chilcotin River Steelhead (PDF 2 MB)

Policy Branch, Economic Analysis
Fisheries and Oceans Canada
Pacific Region
July 2019

Steelhead Trout

Steelhead Trout (Thompson River DU)
Region: British Columbia
Populations: Thompson River Steelhead & Chilcotin River Steelhead
Scientific name: Oncorhynchus mykiss
COSEWIC Status: Endangered
SARA Status: Under consideration

Context

The Chilcotin River (CR) and Thompson River (TR) Designatable Units (DUs) of Steelhead Trout were both assessed as Endangered by the Committee on the Status of Endangered Wildlife in Canada (COSEWIC)Footnote 1 in an Emergency Assessment in January 2018. The COSEWIC assessment was based on population declines of 79% and 81% respectively over the last three generations. This was followed by Fisheries and Oceans Canada (DFO) and the province of British Columbia (BC) implementing additional management measures in 2018.

A cost-benefit analysis (CBA) has been completed to inform the decision by Governor in Council to list or not list the Thompson and Chilcotin Steelhead on Schedule 1 of SARA. The analysis considers incremental costs and benefits relative to a baseline of activity that accounts for management measures in place, such as those implemented in 2018, or known to be coming into force, in the absence of the proposed regulation (i.e. without vs. with listing).

2018 Management and Economic Profiles

Management of the freshwater recreational fishery for wild Thompson and Chilcotin Steelhead has been delegated to the province of BC. The recreational fishery for wild Thompson and Chilcotin Steelhead is exclusively catch and release.

Salmon fisheries (commercial and recreational) are managed by DFO under the Fisheries Act, and retention of Steelhead bycatch is not permitted. In addition, a number of recreational salmon closures exist in the Fraser, Chilcotin and Thompson Rivers. In 2018, DFO implemented additional closures with a series of rolling 27-day closures for commercial gillnet salmon fisheries (including Indigenous communal commercial, Economic Opportunity (EO), Excess Salmon to Spawning Requirement (ESSR) and demonstration (demo) fisheries) in marine and inland waters, as well as for tidal and freshwater water recreational salmon fisheries.

To create the baseline or “status quo” scenario for this analysis, an average of the data from 2013-2016 was used and adjusted to account for lost opportunities from the 2018 measures. Overall, the impact of the 2018 measures were estimated to be relatively small:

Management Scenarios

Management Scenarios were developed by Fisheries Management, DFO Pacific Region for both populations combined, as the identified measures would apply to both DUs. Two scenarios were provided, a Do Not List (Scenario 1) and List (Scenario 2).Footnote 3

Under the Do Not List scenario:

This scenario is essentially the baseline; as such, there are no incremental costs and benefits. However, if additional management measures are implemented as part of the Do Not List scenario, there may be additional costs and benefits as a result of those measures. As information on the potential new measures that may be implemented are currently not known, a detailed cost-benefit analysis of these measures could not be undertaken.

Under the List scenario, the general prohibitions of SARA would come into effect. The resulting management measures for listing either one or both DUs on Schedule 1 of SARA are as follows:

The CBA assesses the economic impacts of these measures relative to the baseline (status quo).

Costs of Listing (TR Only, CR Only or Both DUs)

Listing is assumed to occur in 2019, with impacts assessed over a 20-year period (i.e. to 2038). This is consistent with the timeframe considered in the Recovery Potential Assessment and is representative of approximately three generations for the CR and TR DUs. All monetary values are expressed in real 2016 Canadian dollars, and annualized and present values are calculated using a 7% discount rate, in accordance with Treasury Board guidelines.

The direct cost estimates are the same for all three listing alternatives (list CR DU, list TR DU or list both). Total monetized costs were estimated to range from $190.3-$254.0 million (present value) over the 20 year period, or $17.9-$24.0 million per year. In the commercial salmon fishery, which represents a majority of the cost impacts, listing would result in a reduction in landings and revenues of almost 25% from the 2018 baseline landed value of $60 million (i.e. gross value). The breakdown of the annual incremental costs to interested parties are as follows:

Additional groups could be affected as a result of their share in potentially affected commercial salmon fisheries.

Table 1 below provides a detailed breakdown of the costs to businesses and Canadians (including Indigenous groups).

Table 1: Incremental Costs Of Listing Thompson and Chilcotin Steelhead (Schedule 1 of SARA) (in 2016 million $, 20 years, 7% discount rate)

 

Present Value Annualized Average
Business / Industry Costs (lost profits)
Commercial Salmon Fishery (lost profits) 82.0 7.7
Indigenous Alternative Sale Salmon Fisheries (lost profits) 3.9 0.4
Seafood Processing Sector 4.8 0.4
Lodge / Charter Recreational Fishing Service Businesses (lost profits) 16.2 1.5
Costs to Canadians
Recreational Angling (freshwater) (consumer surplus) 0.9–4.5 0.08–0.4
Recreational Angling (tidal) (consumer surplus) 65.4–118.7 6.2–11.2
Indigenous FSC (food replacement costs only) 17.1–23.9 1.6–2.3
TOTAL COSTS 190.3–254.0 17.9–24.0

Benefits of Listing by DU

Simulations of growth and recovery probabilities for each of CR and TR Steelhead under three different levels of productivity show different potentials for benefits. However, according to the Recovery Potential Assessment model, simulations suggest increases in future abundances of both DUs are conditional on improvements in natural productivity. Exploitation rate (fishing mortality) reduction, whether or not undertaken under SARA, has the potential to lessen rates of decline if the most recent productivities observed continue in the future. However, eliminating exploitation alone will not result in population recovery.

As a result, in the absence of specific information on recovery potential, incremental benefits cannot be estimated. Instead, a breakeven analysis was conducted to establish a range of benefits, or willingness to pay (WTP) values, that would be needed to offset the monetized costs and demonstrate a net benefit. The WTP is estimated by dividing the total incremental cost of the listing scenario by the number of Canadian householdsFootnote 5. For the listing scenario, the benefits value would need to be $1.8 to $2.4/year, per Canadian household, to equal the monetized costs.

To validate these breakeven values, they were compared to a valuation study for steelhead protection and recovery in the US (Wallmo and Lew, 2010)Footnote 6. This study is considered representative of the management measures proposed for listing these salmon DUs under SARA, and is the most current research in this area. This study estimated the WTP value of steelhead recovery to range from CAD $69.4 to $79.6 per household (2016 dollars), after adjusting for inflation and exchange rateFootnote 7.

This analysis suggests that the breakeven values of $1.8 to $2.4/year are well below the range estimated in the Wallmo and Lew study, demonstrating that benefits of recovery, if achieved, could potentially be greater than costs.

Summary

Overall, the incremental costs under the three List combinations (i.e. List CR, List TR or List both DUs) are between $190.4 million to $254.0 million present value, with an annualized value of $17.9m to $24.0m. This is within the range of “high impact”, as defined by TBS. Benefits of recovery could exceed the monetized costs, provided the recovery objective is achieved.

In the event of a Do Not List decision, there would be no incremental costs or benefits under the status quo (i.e. 2018 management measures) scenario. However, if additional management measures are implemented as part of the Do Not List scenario, there may be additional costs and benefits as a result of those measures. As information on the potential measures that may be implemented are currently not known, a cost-benefit analysis of these measures could not be undertaken.

Contact Us

Fisheries and Oceans Canada
Economic Analysis and Statistics Directorate
Economic Policy and Research
InfoECON (DFO/MPO): DFO.InfoECON.MPO@dfo-mpo.gc.ca

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