Recovery Plan for the Northern Spotted Owl - DRAFT

Careful examination of Figures H. 10, H. 11, and H. 12 shows that all of theareas representing price-induced gains to the federal government (Area B inFigure H. 10) and the private timber producers (Areas C and D in Figure H. 1 1)are part of Area E in Figure H. 12 representing losses to timber buyers. Thus,the price-induced gains to timber owners are achieved at the expense of timberbuyers. Moreover, the losses to timber buyers exceed the price-induced gainsto timber producers by Area F shown in Figure H. 13.Figure H. 13 shows the graphical representation of the total cost from loss intimber production due to habitat conservation. The total cost is the sum ofArea A, the loss of economic benefits on the federal timber that will not beharvested, and Area F, the net loss caused by timber price increases. Thesecosts reflect all of the effects on the national economy that occur in timbermarkets. If all of the costs of harvesting timber, including all environmentalcosts, such as lost recreational opportunities and effects on water quality, werepaid for by firms harvesting timber and were reflected in the supply curve, thenthe losses shown in Figure H. 13 would be the total national costs of protectingowl habitat. Because such costs are external to transactions in the timbermarket, the reduced environmental costs caused by reduced timber harvestmust be estimated separately.The economic effects of protecting owl habitat can be viewed from the regionalas well as the national perspective. This requires an accounting of the effectson the regional share of the national economic benefits created by timberharvesting as well as for the effects on regional income generated by thepurchase of labor, equipment, and services for the harvesting and processingof timber.The region shares in the benefits from timber harvesting, shown in Figure H.6,in several ways. First, counties receive 25 percent to 50 percent of federaltimber sales receipts. Second, firms that own forestland in the region earnprofits on timber they harvest. State governments also receive revenue fromtimber harvest on state lands. The effects of owl habitat protection on theseregional shares of the benefits from timber harvesting can be analyzed usingthe concepts shown in Figures H.9, H. 10, and H. 11._ IDCDE0)Pf0 +--AcooRate of timber harvest)i Qf Q 0/.1 .................... --- - I ---...-.111.1.111.1.11Figure H.13. Total economic losses from reduction infederal timber harvest.569