Effects of Roads on Nonmarket and Passive-Use Value

A comprehensive understanding of the economic effects of roads in National Forests must include both effects that can be measured in dollars (market effects) and those with no direct dollar values (nonmarket effects). The influence and importance of market values to land management decisions is obvious, and measuring and comparing effects of management decisions that affect market values are relatively simple. For example, the cost of building and maintaining a road into a forest can be readily compared to the income generated from harvesting the timber accessed by that road. Also important, but far more difficult to measure and compare, are the things people care about for which no market exists, such as access for hunting, bird watching, and wilderness experience.

Economists generally classify nonmarket values as either active or passive. The term "active-use value" applies to goods and services used in some activity like recreational fishing, skiing, or camping. The term "passive-use value" includes two categories (Peterson and Sorg 1987, Randall 1992): (1) things people appreciate without actually using them or even intending to use them (like a distant wilderness or an endangered plant or animal) are called "existence values"; and (2) things people want to remain available for others (such as their descendants) to use and appreciate are called "bequest values." Natural resource economists have invested much effort over the last several decades to develop and test methods for estimating nonmarket values. The methods can produce useful information, but the analyses are costly and their validity has not yet been demonstrated sufficiently to satisfy many economists (Arrow and others 1993, Cambridge Economics 1992, Mitchell and Carson 1989, Portney 1994).

People assign passive-use value to natural resources, especially roadless areas and natural areas with unique characteristics. And the passive-use value often exceeds the active-use value of road access (Bengston and Fan 1997, Brown 1993, Driver and others 1987, Driver and others 1996, Payne and others 1992, Walsh and others 1984, Walsh and others 1990). Building roads in roadless areas may reduce passive-use value significantly; decommissioning roads may increase such value.

Decisionmakers need to consider all these tradeoffs. Individuals and affected groups often disagree aggressively about the passive-use value of specific roaded and roadless areas and the effects of building or decommissioning roads (Bengston and Fan 1997). Thus, questions of equity must be considered: Whose desires should the Forest Service fulfill when stakeholders values conflict? What criteria should be used to decide among them? What approaches can be taken to resolve the conflict?

Forest Service officers responsible for road policy and management need to know various things: (1) the forest landscape conditions to which people assign passive-use or other nonmarket values, (2) how such values differ among individuals and groups of people, (3) the strength or significance of the value assigned, (4) how changes in the landscape affect the nonmarket values, and (5) how such values trade off with other forest-related values assigned by affected people. Under regulations of the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA), as amended, 42 U.S.C. 9651 (c), a United States Court of Appeals for the District of Columbia ruled in 1989 that passive-use values "...reflect utility derived by humans from a resource and thus, prima facie, ought to be included in a damage assessment." Thus, if Forest Service roads significantly alter passive-use value, whether positively or negatively, such value needs to be considered in road policy and management decisions. Failure to include these nonmarket values in an economic evaluation, when such values are judged to be important, could lead to inefficient and unfair allocation of resources.

The effects of roads on passive-use values differ by location and circumstance. Differences in the quality and uniqueness of landscapes modify the effects on passive-use value of building or decommissioning roads. The relation between supply and demand also affects the extent and strength of a passive-use value. For example, if many substitutes for a given roadless landscape exist, building a road in that landscape may have little or no effect on its passive-use value, just as the hunters killing of a single elk does not reduce the passive-use value of elk if the species is still abundant. Likewise, if an abundance of roads are provided to resources that people want for active use, decommissioning or closing one road will have little effect. People with strong attachments to a special place, use, or road may suffer loss, however, unless they can find and adapt to a substitute.

Validly and reliably measuring changes in passive-use and other nonmarket values are costly and can sometimes exceed the cost of being wrong. Managers of National Forest roads, however, must understand such values and the circumstances under which they are significant decision factors, to assure that the values can be included where appropriate. A survey-based method called contingent valuation can be helpful. Contingent valuation generally uses surveys or interviews to determine how much people say they would be willing to pay for some nonmarket good. Peoples willingness to pay for nonmarket values can provide a useful indication of their relative magnitude. Applying the method to passive-use value of public goods is, however, may produce flawed results, criticism, and controversy. Studies must be designed and applied carefully, and the results must be interpreted cautiously.

Other methods, such as value juries (Brown and others 1995), focus groups, public hearings, and other forms of public participation also can provide useful information. Quantitative measures should be taken only when the scale of the problem justifies sufficient investment for scientifically rigorous results. If fully and correctly disclosed, the cost of opportunities foregone by preserving a roadless landscape can serve as the price to be paid for the values served by preservation. Preserving a roadless area may sometimes cause an opportunity cost in the form of alternative uses foregone, such as timber harvest, developed recreation, or fire suppression. If the opportunity cost has been fully disclosed to the decisionmaker, a decision to preserve a roadless landscape is a policy acknowledgment that the value created exceeds the opportunity cost. In a decision about whether to designate an area as roadless, opportunity cost can sometimes serve as the price to be paid for whatever values, including intangibles, are served by the designation. Stakeholders and decisionmakers can then decide by judgment, negotiation, or analysis whether the gain is worth the price (Bell 1996, Fight and others 1978, Fight and others 1979, Randall and others 1979).

See also:  Economics of Roads