diversity, water quality, and unique 

 features would have to be maintained. 

 Management decisions would be made with 

 long-range, basin-wide considerations 

 and would reinforce the natural function 

 of the wetlands. These ideas are 

 developed more fully in Craig and Day 

 (1981). 



The tax and subsidy approach is a 

 natural extension of the mitigation ap- 

 proach, which allows the added flex- 

 ibility of monetary exchange over direct 

 barter. The obvious advantage is that 

 revenues could be used for projects 

 designed to yield the maximum environ- 

 mental "return on investment," which may 

 not always correspond with a one-for-one 

 replacement of affected habitat. 



CUMULATIVE IMPACTS: DIRECT AND INDIRECT 



A primary prerequisite for either 

 management approach is an estimate of 

 the total direct and indirect impact of 

 proposed activities. Most human activ- 

 ities such as construction of navigation 

 canals, dredging and filling, petroleum 

 exploration, discharge of agricultural 

 and urban runoff into water bodies, have 

 both direct and indirect environmental 

 impacts. The direct impact of a primary 

 activity is often easily quantifiable. 

 For example, the amount of marsh loss 

 due directly to a particular canal can 

 be easily measured on a map. But with 

 each direct impact, a series of asso- 

 ciated indirect impacts can, in the 

 long-term, be more severe than the 

 direct impacts. If the total impact of 

 an activity is to be known, the indirect 

 impacts must also be "identified and 

 quantified. 



The habitat input-output tables 

 developed in the companion technical 

 report (Costanza et al. 1983) are in- 

 tended to provide a data base suitable 

 for the calculation of these indirect 

 impacts. While models based on these 

 data have yet to be fully exercised, the 

 estimation of indirect impacts is a 

 primary potential use of the collected 

 data. Indirect impacts are generally at 

 least as severe as direct impacts in 

 ecological systems (Patten 1982) and 



their quantification and inclusion in 

 management decisions is therefore cri- 

 tical . 



ECONOMIC-ECOLOGIC COSTS 



In addition to the direct and in- 

 direct physical impacts of proposed 

 alterations, both the direct regulation 

 and tax and subsidy approaches require 

 that the impacts be converted to common 

 units. In the regulatory approach this 

 conversion is implicit and often unac- 

 knowledged, but no less real and impor- 

 tant. Whenever regulatory decisions are 

 made, the act of drawing the line im- 

 plicitly weights the various costs and 

 benefits. For example, highway safety 

 standards implicitly place an economic 

 value on human life, and canal permit- 

 ting decisions implicitly place an 

 economic value on the affected habitat. 

 Valuation in the tax and subsidy system 

 is more explicit, in the form of the tax 

 or subsidy rate itself and the calcula- 

 tions supporting it. 



Subjective relative weights have 

 traditionally been used in balancing 

 economic-ecologic costs, but with the 

 level of ecological data now available a 

 more objective approach may be appli- 

 cable. Ecologic-economic input-output 

 models have been suggested as a means to 

 identify and quantify the unmarketed 

 services of the natural system and to 

 put them on equal footing with marketed 

 services (Daly 1968; Isard 1972; 

 Costanza 1979). A comprehensive, 

 detailed calculation of the value of 

 natural habitat components could then 

 replace the subjective weights currently 

 in use, and allow social cost-benefit 

 calculations, including environmental 

 costs, to be performed with speed and 

 ease (Day et al. 1980). This system 

 would allow calculation of the direct 

 and indirect changes that would result 

 from a unit change (primary activity) in 

 an ecosystem component. The models could 

 produce quantitative estimates of all 

 indirect impacts and calculate the value 

 of the estimated change in output, 

 broken down by short and long-term and 

 spatial components. This calculated 

 value could be an estimate of the 



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