Elwha Watershed Information Resource

By the time the United States declared its independence from Britain, dams were already being built in the fledgling nation. Former Secretary of the Interior Bruce Babbitt once remarked that since that time "on average, we have constructed one dam every day." (Heinz Center 2002) There are currently more than 76,000 dams with a height of six feet or more in the U.S., with a combined capacity sufficient to hold almost a full year's runoff. Many of these dams have already begun to deteriorate, and are of limited economic value and questionable safety. In the coming decades, the country will face a large number of decisions about the repair, removal, or replacement of aging dams (Heinz Center 2002).

The Elwha and Glines Canyon dams, built in 1913 and 1927 respectively, provided hydropower that fueled economic development in the Olympic Peninsula. However, the dams also blocked the passage of ten different runs of anadromous fish that spawned in the upper watershed, including coho, pink, chum, sockeye and chinook salmon, along with cutthroat trout, native char and steelhead. When the relicensing of the hydropower units was considered in the 1980s, these aging structures faced much tougher environmental standards than when they were built (Olympic National Park 1997). Legal challenges and policy questions that arose during the relicensing process were settled by the U.S. Congress with the passage of the 1992 Elwha River Ecosystem and Fisheries Restoration Act. In response to this act, the Department of the Interior evaluated four scenarios:

• Removing both the Elwha and Glines Canyon dams
• Removing the Elwha Dam and adding a fish passage to the Glines Canyon Dam
• Removing the Glines Canyon Dam and adding a fish passage to the Elwha Dam
• Retaining both dams without fish passages

Considering Economic Tradeoffs

The authors of the 2002 Heinz Center report on dam removal note that "dam removal is not unambiguously good" Making good choices about dam removal requires consideration of the full range of both positive and negative effects, including potentially overriding concerns about the environment or safety. Economics provides a framework for evaluating the tradeoffs involved with dam removal and for making choices that provide the maximum benefit to society.

In assessing the relative merit of the four scenarios identified by the Department of the Interior, a number of tradeoffs were considered. The costs associated with the loss of hydropower and the removal of the dam, for example, were weighed against the benefits associated with the restored salmon runs and the recreational and cultural value of the restored watershed. To account for the total economic value of each alternative, both market and non-market values were considered. This was essential because many of the most important effects of dam removal are reflected in the market place imperfectly, if at all (Dixon and Pagiola ).

The market values associated with the four planning scenarios were simpler to estimate in monetary terms. These include:

• the costs associated with dam deconstruction and disposal, flood and water quality mitigation efforts, obtaining energy from an alternate source, and property taxes lost when the dams are removed; and
• the benefits associated with commercial harvesting of the restored fish runs and the income to local businesses from increased tourism drawn to the area by the improved quality of the watershed and by improved recreational opportunities (such as sport fishing (Battelle 2007).

Non-market values are more difficult to measure, especially in dollars. However, goods and services that are not reflected in the marketplace still have real economic value. For example, a day of fishing has real economic value whether one pays for it or not. Non-market outputs of dam removal on the Elwha River include:

• Renewed access to sites of cultural, historical, and religious significance for the Lower Elwha Klallam Tribe. This is so important to tribal members that they are unable to estimate its value--they consider it to be beyond pricing.
• Preserving genetic diversity within the salmon population. The economic value of genetic diversity cannot be directly measured. Instead, its value must be measured by considering indirect effects, many of which are not clearly understood. These indirect effects include, for example, the ability of salmon to fight off disease or to adjust to changes in their environment.
• Sport and subsistence fishing. Even though these activities may involve some market transactions (for example, buying equipment), their full value cannot be understood by examining these transactions (Battelle 2007).

The economic value of dam removal has both market and non-market components. For example, removing the dams will allow sediment to flow down the river to Ediz Hook, which is severely eroded because it has been deprived of sediments since the dams were constructed. The costs of erosion prevention are quantifiable, as is the extent to which the restoration of natural sediment flow will minimize those costs. It is estimated that $1 million will be saved in erosion control cost over the life of the project. However, the more readily observable market effects do not capture the full economic value of restored sediment transport, which will also produce important benefits to the overall ecological health of the Elwha River watershed (National Park Service 1996).

Both the 1996 Environmental Impact Statement (EIS) and the 2005 Supplement to the Final EIS included a comparison of market-based costs (Table 1) and benefits (Table 2). In addition to the cost of removing the dams, this project also requires modifications to the existing flood control levee that protects property on the Lower Elwha Klallam Tribe reservation lands, as well as a number of smaller flood protection measures ($17 million). The alternative also requires modifications to existing water supply intakes and sewage treatment facilities and measures that will ensure the quality of water from groundwater sources ($69 million). The total cost of removing both dams is $182.5 million (National Park Service 2005).

Dam Removal Feature	Cost
Flood Protection and Cultural Resources Mitigation	17.0
Modify Water Quality, Water Supply, and Flood Mitigation	69.0
Direct Dam Removal Costs and Other	96.5
Total	182.5

Table 1. Market costs of removing both dams (millions of 2001 dollars).

Total benefits over the 100 years following dam removal (the period of analysis for the EIS and SEIS) are almost two times the costs, at $355.3 million. A 3 percent discount rate was used for this analysis.

Type of Benefit	Benefit
Commercial Fishing (tribal and non-tribal)	36.7
Sportfishing Business	10.3
Ediz Hook	1.0
Recreation / Tourism	317.6
Total*	355.3

Table 2. Market benefits of removing both dams (millions of 2001 dollars).* Excludes sportfishing business net revenue to avoid double counting.

A 1996 study whose findings are reflected in the EIS found that the non-market benefits associated with removing the dams are substantially higher than the market benefits. In this study, a survey was sent to 2,500 households to estimate the willingness to pay for dam removal and the associated recovery of fish populations. The sample included 600 residents of Clallam County, 900 residents of Washington State outside of Clallam County, and 1000 households throughout the rest of the United States. The study estimates the non-market value of the dam removal to be between $3 billion and $6 billion, measured in 1994 dollars (Loomis 1996).

The majority of the economic impacts from a dam removal project are contained within the county within which the dam is located (Batelle 2007). In the case of the Elwha project, both dams are located in Clallam County, so most of the economic effects of the planned dam removal were assessed at that level. Most of those effects will be localized in the two population centers in the county that are closest to the Elwha River: Port Angeles and the reservation of the Lower Elwha Klallam Tribe. Economic impacts were also assessed at this local level when possible; however, many economic data sources are only available at the county level.

Reference

American Rivers. Dam Removal: Dam Removal Today.

Battelle Memorial Institute. 2007. Economic Support for the Elwha River Watershed: Final Economic Characterization Report with Monitoring Recommendations. Prepared for The Coastal Services Center, National Oceanic and Atmospheric Administration. Download.

Heinz Center. Dam Removal: Science and Decision Making. The Heinz Center for Science, Economics, and the Environment. Washington, D.C., 2002.

Dixon, J.and S. Pagiola. Economic Analysis and Environmental Assessment. The World Bank. Download.

Loomis, J. 1996. "Measuring the economic benefits of removing dams and restoring the Elwha River: Results of a contingent valuation survey." Water Resources Research. Volume 32, Number 2.

National Park Service. 1996. Elwha River Ecosystem Restoration, Draft Environmental Impact Statement. National Park Service, Olympic National Park, 600 East Park Avenue, Port Angeles, Washington, 98362.

National Park Service. 2005. Final Supplement to the Final Environmental Impact Statement. National Park Service. Olympic National Park, 600 East Park Avenue, Port Angeles, Washington, 98362.

Olympic National Park. Elwha Ecosystem Restoration.