Recovery Plan for the Northern Spotted Owl - DRAFT

Further employment effects, called indirect effects, occur because of thechanges in income levels that are caused by changes in employment. Indirecteffects result from the reduced consumer spending that is caused whenunemployment reduces the income people have to spend. The total employmenteffects of reducing timber availability include direct, induced, and indirecteffects.5. Effects on the Value of Capital Assets.The two forns of asset most strongly affected by the reduction of timberharvest are sawmills and homes. Home asset losses result from the decline inincome of many residents in a community. Losses in the value of housingcause a transfer of wealth that can seriously affect people's lives, but suchlosses do not represent a significant loss to the output of the national economy.Losses in the value of real estate also cause a reduction in the tax base of localgovernments. When mills close because they cannot make a profit at thehigher timber prices that will result from owl conservation, the mill equipmentusually is scrapped. Capital equipment of this sort is valued for the profits itcan yield. Once the profits disappear, the value of the capital becomes negligible.Although the resulting loss in mill asset values reflects a loss in economicoutput in the national economy, that loss is already accounted for bythe reduction in timber consumers' surplus (that is, profits) discussed earlier.Thus, separate estimates of housing and mill asset losses are of interestprimarily because of their effect on the local or regional economy but theyshould not be added to the estimates of the underlying losses in the componentsof income that cause them.C. Estimating Economic Effects of Implementing theRecovery PlanAs noted earlier, the FWS, with assistance from the Forest Service and BLM,conducted an economic analysis of the critical habitat designation for thenorthern spotted owl (USDI 1992). As a part of this analysis it developedmethods to estimate the loss of federal timber harvest from various measuresto protect owl habitat. It developed methods for estimating the employmenteffects of the resulting harvest reductions in each of the affected counties. Italso developed methods to estimate the net effect on the U.S. Treasury and onthe timber revenues shared with the county governments. The analysisprovided a comparison of the effects of the original forest plans, the implementationof the ISC strategy and the effect of Endangered Species Act protectionsof the owl, including the designated critical habitat. To provide comparablepreliminary estimates for the draft recovery plan, the ISC strategy, and thecritical habitat designation, it was decided that the same methods of analysis.with some adjustments appropriate to the recovery plan, would be applied toestimate the economic effects of implementing the recovery plan.The methods used for making preliminary estimates of the effects of implementingthe recovery plan are summarized here.1. Estimating the Loss of Benefitsfrom Federal TimberHarvest.The estimation of the loss in the economic benefits from the federal timberharvest that will be foregone to provide owl habitat (Area A in Figure H. 13) isstraightforward. An estimate of the change in the annual harvest is multiplied573