Rural System's

Modern Wild Faunal Resource System Management

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Assigning Value to the Faunal Resource

Never again say that no one can determine the worth of a duck.

Wildlife has value. That value can be measured or estimated by 25 methods (See Giles 1978:18-28).

Confusion or uncertainty exists about whether individual animals or populations should be valued.

Species value to people is a function of the area richness, a species exists within a context of other species (e.g., as in bird watching and the chance for seeing one of many... or few... species.

Annual values may differ greatly over the life expectancy of a land owner, the animal, or the probable presence of a population. An infinite horizon in present discounting should be considered for wild faunal populations.

Once a law protecting wildlife (a population or naimal) has been passed, that species is assigned by society inestimably large value. It shall be protected! ("At all costs" is implied.) That limit is rarely recognized or tested. (For use in computer models, I recommend $10 million.)

Rarely is dollar value truly needed; it only seems that way. The valuations may best be grouped as relative and monetary. The pressure for dollar valuations is spurious, and occasionally a pure diversionary tactic against the unsuspectinq wildlifer. Dollars are a poor measure; they are not of constant value - in time, space, due to interest, and vary with supplies available. Populations of people (publics) value them differently. No one will assert there is or likely to be a "free market" so that assumption is meaningless. Dollars are usually only a metric for deciding relative differences in daily resource allocations.

Only a few of the 25 valuation methods are emphasized herein.

Relative

1. Benefit lists - This area has more species than that.(Generally equal worth; the more the better.)
2. Maximum benefit - Each item secured (e.g. a deer shot, a warbler has great benefit to a person. The maximum is assumed, thus the larger the kill the better; the longer the bird list the better. This year was better than last; this area produced more benefits than that. Harvest or sightings, etc. are a proxy for value.
3. Assigned proxy value - Refuge benefit unit, each species is assigned a value relative to all others. WRAP (TVA) uses land-owner assigned relative value, tested for consistency by Churchman-Ackoff technique, then relates all to opportunity costs of squirrels (a climax-sere species).
4. Precise measures of all of the following are rarely needed because decision-making questions are phrased as:
   • Will providing for wildlife cost us much? (meaning: more than 5% of the project?; more than another problem like historic sites?; enough to make the project cost more than an allocated amount?)
   • Where shou1d I allocate most of my agency dollars?
   • What figures are defensible in court in the litigation to protect the wildlife related to project X?
   • Has the agency or company contributed from last year to the general economic good of the state?

Monetary

1. Added value
   • wildlife in the county increases the tax base by---dollars
   • wildlife on the land increases its value by ---dollars
   • wildlife on the farm increases the crop yield (reduces insect loss, etc.) by ---dollars
2. Direct worth - as at the shooting preserve
3. Parallel worth - as beef - equivalent price
   Bowling costs me $10; I like hunting 10 times more; hunting must be worth at least $100. (Note this is not the worth of wildlife but a wildlife-related opportunity.)
4. Assigned value - by expert appraisers; a minimum simulated market value.
5. Management cost - I spent $10,000 on the project and over 10 years it produced 100 birds. If rational, I (or whoever approved the project) must have thought them worth at least $10 each.
6. Destruction value - what will it cost to replace the function of wildlife if removed (a marsh acre is said to be worth $120 - 150,000 in terms of what must be done by other systems to stay equal.)
7. Replacement value - a court-assigned value
8. Damage and control cost - (negative worth)
9. Gross expenditures - so discredited it should not be used
10. License fees - so small as to be meaningless
11. User fees - rare but possible
12. Vacation time - use salary per day; a person decides among alternatives how to IIspendll a day. Rich area for work, especially in comparison to readily-priced alternative ways to spend a day. People probably are more attuned to the monetary worth of a day than anything else in society.
13. Willingness to pay - count the total costs of a hunt or wildlife-related experience.
14. Willingness to exchange - wildlife land acquisition costs (public or private willingness to buy land to achieve its wildlife). The animals must have been worth at least this much in land purchase price. The manager seeks areas that may be changed in wildlife value so that they will best meet faunal system users' demand over at least 150 years at the lowest present-discounted cost (purchase, depreciation, inflation, and management)
15. Consumer surplus - value above the willingness to pay. Most value estimates are minimums; this method seeks the extra. How much more value does it have? Technique requires questionnaires. Research is needed (see Giles 1978: 22-25).
16. Option demand - price to buy an option that might be exercised in the future (e.g. wilderness; endangered species).
17. Opportunity cost - benefits foregone to get other benefits. To have squirrels you must forego a timber sale; the worth of squirrels is at least the amount foregone.
18. Secondary opportunity costs - (negative worth) the losses from open gates, soil compaction, fires, litter foregone to allow hunting, etc.
19. Energy equivalents - compare acuta1 energy content or cost to produce each creature to oil or electricity energy values.
20. Unnamed, there must some day be recognized a concept of monetary profit made from a diverse private for-profit conglomerate (e.g., www.RuralSystem.com), profits that are conditional in part on the presence (in an area of operation) of the populations of wild faunal species. The land acquired or owned is the working platform. The "part" may be a proportion of the total system profits (for these are based on risk taking, human expertise, diversification, planned work over time, and other capital and structure).

Supply and Demand

Given conventional economic theory we may use the rare condition of a species for increased gains, for heightened valuation. Rarity may be preferered to heighten demand for tours, tour themes, research funding, propagation sources, photography sessions, public relations or image building, and other innovative ways (sale of animal-similar toys).

Present Discounting

A well known population equation is that of economics and compound increase to some future time t N_t = N₀ (1.0 + r)^t

present is 0 or time zero.

In population work the question may be "What was the starting or present-time population if there are now 1000, the rate of increase was about 0.2, and 3 years have lapsed?" The answer is 751.

Transpose the above equation to N₀ = N_t / (1.0 + r )^t and solve for N₀

Economists and resource managers make choices based values discounted back to a standard value that allows appropriate comparisons. That's called present or present-discounted value.

For example, which is the best buy, a coat that costs $150 that will last 10 years or one that costs $95 but will last about 5 years? Assume some constant interest rate (0.8) and do present discounting.

N₀ = $150 (1 + 0.08)¹⁰ = $69.48
N₀ = $95 (1 + 0.08)⁵ = $64.66

Select the lowest value.

Such an example is simple but "best" clearly has 3 dimensions.

When all 3 dimensions vary, as suggested by all possible points (in red) across the plane, intuition rarely works. Present discounting does.

Simple Discount

Find the present value of $100 discounted for 3 years at 10%.

V₀= V_n / (1 + (O.Op x N))
where N = years)

V₀ = 100/ (1 + (0.10 x 3))

V₀ = 100/1.3

V₀ = $76.92

1. What is the inital value of $5000 discounted for 30 years at 8 % ?

Compound Discount
V₀ = V_n / (1.0 + p)ⁿ
V₀ = 100 / (1.0 + p)ⁿ = 100 / (1.08)³⁰
V₀ = $1470.59

2. What is the initial value, using compound discounting, for the above problem (#1)?
Check: Is it $75.137

Present Value of an Annuity

V₀ = A ((1.0 + p)ⁿ - 1) / p x (1.0 + p)ⁿ
A = annual or periodic payment

3. Prove: Where A = $50 / year, at 4%, for 4 years = $181.49

4. What would I have to put in the bank at time zero to equal putting S200 in the bank every year for 19 years at 5 % interest? (an example of an annuity) Check: Is it $2417.06?

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Last revision January 18, 2004.