The Office of Coastal Zone Management of the U.S. Department of Commerce 

 and the State of Oregon proposed, in the spring of 1974, that the south slough 

 of Coos Bay become the Nation's first estuarine sanctuary. The proposal would 

 allow the State to acquire 4,500 acres of wetlands and uplands, and commits $1.6 

 million to acquire the privately owned portion of the 4,500 acres. Friedman 

 estimates the costs and benefits of preservation of this 4,500-acre region as 

 an estuarine sanctuary. Unfortunately, some of the empirical data needed for 

 the estimation of the preservation benefits is lacking. 



The principal social opportunity cost of preservation is income foregone 

 from timber harvesting on the south slough; the present value of these lost 

 receipts is $1>,124 million. The market value of the private land and buildings 

 on the proposed site is $517,000, so the total social opportunity cost is $1,641 

 million (using an 8% discount rate). The author argues that the benefits of 

 preservation wijl grow over time due to increases in total demand for the 

 nonmarket outputs provided by the sanctuary. This growth in benefits stems from 

 two factors. First, the growth in demand will be generated by regional 

 population and "income growth. Second, the supply of amenity values provided by 

 the site is rigidly fixed (perfectly inelastic). 



The basic analytic framework for this argument was provided by Fisher, 

 Krutilla, and Cichetti (1972; The economics of environmental preservation, 

 American Economi*c Review 62(4) :605-619) . The author offers a set of detailed 

 calculations that show the decisive impact of the rate of growth in benefits on 

 the cost-benefits ratio of the proposed acquisition. If the rate of growth in 

 benefits is 0.205%, benefits equal opportunity costs. If the rate of growth in 

 benefits is 5%, the net value of preservation is $959,000. 



The argument by Fisher et al . is certainly plausible, but it also needs 

 some empirical testing. Growth in total (on-site plus off-site) benefits may 

 be limited by shifts in the income elasticity in the demand for the amenity 

 values offered by the sanctuary. Growth in on-site benefits may be limited by 

 congestion costs. Nevertheless, this argument by Fisher, Krutilla, and Cichetti 

 has not been sufficiently widely noted by environmentalists and resource 

 management professionals. Nonmyopic imputation of social marginal preservation 

 benefits of wetlands may have markedly more conservationist policy implications 

 than the conventional myopic estimates. 



19. Hill, D. 1977. Linear programming model to quantify economic, environ- 

 mental, and social values of a tidal marsh. Ph. D. Thesis. Columbia 

 University, New York. 137 pp. 



Hill assembles a linear programming model that could be used to derive the 

 socially optimal mix of market and nonmarjket outputs for coastal wetlands. The 

 known benefits of a typical coastal salt marsh are used to estimate the 

 coefficients of certain linear activities for the model. However, Hill admits 

 that since a number of the nonmarket benefits cannot be quantified, in practice 

 the model is used to estimate the range of values that nonmarket outputs must 

 assume if the preservation benefits of the coastal salt marshes are to equal the 

 market values of the resource. 



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