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Recovery Plan for the Northern Spotted Owl - DRAFT

Recovery Plan for the Northern Spotted Owl - DRAFT

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V. Preliminary Evaluation of <strong>the</strong> EconomicEffects of Implementing <strong>the</strong> <strong>Spotted</strong> <strong>Owl</strong><strong>Recovery</strong> <strong>Plan</strong>558A. Economic Effects Covered by Preliminaiy EstimatesThe <strong>Recovery</strong> Team drew upon <strong>the</strong> studies summarized in Section IV, particularly<strong>the</strong> FWS analysis, to develop preliminary estimates of <strong>the</strong> economic costsof implementing <strong>the</strong> recovery plan. Estimates of <strong>the</strong> following indicators ofeconomic costs were made:* Reduction in federal timber sale volumes and revenues and <strong>the</strong> resultingeffects on U.S. Treasury and county budgets.* Reduction in employment levels.* Reduction in wage and salary income due to unemployment andreemployment at lower wages.Estimates were not made of o<strong>the</strong>r economic effects such as capital asset losses,recreation or <strong>the</strong> o<strong>the</strong>r benefits of <strong>for</strong>est preservation, and increased profits orharvest by private <strong>for</strong>estland owners. Quantitative estimates of social costs ofimplementing <strong>the</strong> recovery plan were not made.These preliminary estimates were not intended to provide a complete basis <strong>for</strong>final decisions on <strong>the</strong> implementation of <strong>the</strong> draft recovery plan. During <strong>the</strong>public comment period, <strong>the</strong> <strong>Recovery</strong> Team will work with <strong>the</strong> Forest Serviceand <strong>the</strong> BLM to refine <strong>the</strong> estimates of effects of federal timber sales based onmore site-specific data on potential timber yields. In addition, estimates will beprepared of economic effects not covered by <strong>the</strong> preliminary estimates.B. Analytical ConceptsThis section summarizes <strong>the</strong> basic analytical concepts needed to estimate andproperly account <strong>for</strong> <strong>the</strong> economic effects of reduced federal timber harvests.Next it summarizes <strong>the</strong> estimation methods and assumptions used <strong>for</strong> <strong>the</strong>preliminary estimates and presents <strong>the</strong> resulting estimates.This section provides an economic framework within which <strong>the</strong> various factorsthat affect <strong>the</strong> costs of achieving recovery can be related. The discussion ispresented in qualitative, non-ma<strong>the</strong>matical terms to facilitate a broader understandingand use of <strong>the</strong> concepts. The basic concepts are presented in a singleperiod, comparative static analysis <strong>for</strong> <strong>the</strong> sake of simplicity. For a comprehensiveanalysis of long-term effects, <strong>the</strong> concepts would be extended to dealwith many time periods. This would reflect <strong>the</strong> effects of timber growth and <strong>the</strong>concept that resource values realized sooner are worth more than <strong>the</strong> samevalue if realized later. It also would deal more explicitly with <strong>the</strong> dynamicprocesses through which local and regional economies adjust to <strong>the</strong> kind ofstructural economic change caused by policies restricting timber harvest. Thefollowing discussion takes a static approach to provide a more easily understandableanalytical framework.1. The Supply Curve.The supply curve <strong>for</strong> a commodity is one of <strong>the</strong> fundamental concepts ofeconomic analysis. It represents <strong>the</strong> rate of production <strong>for</strong> a commodity or

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