448 



Because much of the region's grain already moves by barge, little tunher 

 development of grain facilities is expected, even with no drawdown. 



j. Secondory Effects 



Each of the primary effects outlined above will result in further secondary 

 effects (i.e. multiplier effects) on the various sectors of the economy that provide 

 inputs to the directly affected sectors or that benefit from income generated in 

 these sectors. While such secondary effects will undoubtedly occur, it is notori- 

 ously difficult to estimate them with precision (see Hamilton, et al., reference 2). 



Many parties working to develop recovery plans for salmon have stated their 

 commitment to mitigate the adverse effects on various parties. Economists have 

 long debated both the necessity of and appropriate methods for compensating 

 losers in any economic reorganization. 



1 he conceptual difficulties in predicting the effects, as outlined above, will 

 make it difficult to target mitigation efforts. Mitigation can distort the economy 

 and is often an inefficient way to deal with problems. It is important to be 

 especially sure that mitigation to address short-term manifestations of a problem 

 does not inhibit long-run adjustment. If we could be sure that the effects would 

 be neither disastrous nor irreversible, it might make economic, if not political, 

 sense to do the drawdown, and see what happens, before trying to design mitiga- 

 tion. Litigation, where parties recover damages after the faa through the courts, 

 could be a form of mitigation although the litigation cost itself might be high. 



A continuing concern is the high degree of subsidization, historic and 

 current, in the existing river, road and rail system. (Of course the same can 

 be said of most of the other uses of the river including irrigation, recreation 

 and hydropower.) If mitigation adds to these subsidies, it may reduce economic 

 efficiency. Once continuing subsidies get capitalized into property values, it 

 becomes very difficult to terminate them. A study providing such information 

 should allow a better policy decision framework regarding subsidization 

 and mitigation. 



1 here appears to be political sentiment that mitigation ought to be in 

 the form of capital investments in facilities rather than operating subsidies. 

 However, there is no economic reason to favor one of these over the other. 

 Some mitigation possibilities being discussed at this time include the following: 



4. Mitigation Stroteoies 



