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Alternatives for development of unreclaimed land in the kootenay river floodplain, creston, British Columbia.. 1971

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ALTERNATIVES FOR DEVELOPMENT OF UNRECLAIMED LAND IN THE KOOTENAY RIVER FLOODPLAIN, CRESTON, BRITISH COLUMBIA: A BENEFIT-COST ANALYSIS by GARY K. BOWDEN B.A., Univ e r s i t y of B r i t i s h Columbia, 1966 A THESIS SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF ARTS i n the Department of Economics We accept t h i s thesis as conforming to the required standard THE UNIVERSITY OF BRITISH COLUMBIA February, 1971 In p r e s e n t i n g t h i s t h e s i s i n p a r t i a l f u l f i l m e n t o f the r e q u i r e m e n t s f o r an advanced degree a t the U n i v e r s i t y o f B r i t i s h C o l u m b i a , I a g r e e t h a t t h e L i b r a r y s h a l l make i t f r e e l y a v a i l a b l e f o r r e f e r e n c e and s t u d y . I f u r t h e r agree t h a t p e r m i s s i o n f o r e x t e n s i v e c o p y i n g o f t h i s t h e s i s f o r s c h o l a r l y p u r p o s e s may be g r a n t e d by the Head o f my Department o r by h i s r e p r e s e n t a t i v e s . I t i s u n d e r s t o o d t h a t c o p y i n g o r p u b l i c a t i o n o f t h i s t h e s i s f o r f i n a n c i a l g a i n s h a l l not be a l l o w e d w i t h o u t my w r i t t e n p e r m i s s i o n . Department o f The U n i v e r s i t y o f B r i t i s h C olumbia Vancouver 8, Canada D a t e • T A g^ J l v ' S , \ q - | | A B S T R A C T This thesis i s an i n v e s t i g a t i o n of the economic p o t e n t i a l f or use of 15,000 acres of land i n the Kootenay River f l o o d p l a i n at Creston, B r i - t i s h Columbia. The Kootenay River flows north into Canada through t h i s f l o o d p l a i n and enters Kootenay Lake 20 miles north of the International Border. The t o t a l area of the f l o o d p l a i n between Kootenay Lake and the Border i s approximately 36,000 acres, of which 20,000 acres have been reclaimed for a g r i c u l t u r e . This study i s concerned with 15,000 acres which remain undeveloped, 10,000 acres being p r o v i n c i a l Crown land, and 5,000 being Indian Reserve. At present t h i s land i s inundated annually by the freshet of the Kootenay River. It provides an important l i n k i n the habitat require- ments of migratory waterfowl, i s used l i g h t l y by hunters and fishermen, and provides l i m i t e d grazing for beef c a t t l e before and a f t e r the f r e s h - et. The impending completion of Libby Dam, upstream on the Kootenay River at Libby, Montana, w i l l reduce the extent of annual flooding and the costs associated with more intensive use of the land. Consequently, there i s considerable i n t e r e s t i n intensive development of t h i s land, either f or a g r i c u l t u r e as with the rest of the f l o o d p l a i n , or as a w i l d - l i f e management area for the production of w i l d l i f e and use i n outdoor recreation. Resource managers face the problem of determining which of these a l t e r n a t i v e s represents the optimum land use. This i s a d i f f i c u l t prob- lem, and i t s so l u t i o n requires that the benefits and costs associated with each a l t e r n a t i v e be reduced to a common basis for comparison. This study attempts to make such comparisons on a rigorous basis through the use of benefit-cost a n a l y s i s . The f e a s i b i l i t y of each land use a l - ternative i s assessed, and comparisons made on the basis of the net pre- sent worth of benefits minus costs. The p r i n c i p l e s of benefit-cost analysis are well developed, and i t s a p p l i c a t i o n i s not d i f f i c u l t when project costs and benefits are adequately r e f l e c t e d i n factor p r i c e s . D i f f i c u l t i e s are encountered i n the present study, however, where the output from development for w i l d - l i f e and outdoor recreation i s not marketed and there are no p r i c e s to r e f l e c t the values created. In analysing the w i l d l i f e - r e c r e a t i o n a l t e r n a t i v e , values are im- puted to the r e c r e a t i o n a l opportunities using recently developed concepts i n evaluating non-priced resource uses. While values are established for d i r e c t r e c r e a t i o n a l use, other important aspects of the output under t h i s development are not valued (the production of w i l d l i f e independent of r e c r e a t i o n a l use, the preservation of rare species, the f u l f i l l m e n t of i n t e r n a t i o n a l obligations regarding migratory b i r d s ) . The analysis of t h i s a l t e r n a t i v e i s thus r e s t r i c t e d to a comparison between the f u l l costs and only those benefits which are expressed i n monetary terms. A further important issue i s that the relevant measure of bene- f i t s and costs may d i f f e r , depending on the 'referent group' from whose point of view the analysis i s conducted. To demonstrate the importance pf t h i s matter the analysis i n t h i s study i s conducted from the point of view of three referent groups, the l o c a l Creston economy, the province of British Columbia, and Canada as a whole. The outcome of a benefit- cost analysis may also be sensitive to the discount rate adopted, and the sensitivity is tested in this study using rates of six, eight and 10 per cent. Despite the d i f f i c u l t i e s of expressing a l l costs and benefits in monetary terms, a rigorous analysis is .undertaken and provides the basis for a clear choice of the optimum form of land use. Analysis of agricultural reclamation reveals i t to be feasible, with net present values of primary and secondary benefits ranging from $2.4 million from the local perspective to $2.2 million from the provincial and national points of view. Offset against these tangible net benefits are the i n - tangible costs associated with the destruction of existing wild l i f e habi- tat and wildlife species. Analysis of the wildlife-recreation develop ment produces widely varying results, depending on the referent group adopted. The net present value of primary and secondary benefits is estimated at $2.1 million from the local viewpoint, $4.6 million provin- c i a l l y , and $7.3 million from the point of view of Canada as a whole. In addition to these quantified values, this development w i l l produce important unmeasurable benefits. In comparing the two, the net benefits estimated for agricultural development can be interpreted as maximum values, ignoring as they do some of the costs associated with wildlife losses. The net benefits estimated from the wildlife-recreation development are regarded as mini- mum values, since important additional values associated with wild l i f e production are not quantified.. Viewed in this light the choice between alternatives favors the wildlife-recreation development from both provin- c i a l and national perspectives, but is less clear at the local level. Since a basic premise of the study is that the provincial viewpoint is appropriate for decision making, i t is concluded that the w i l d l i f e - recreation development represents the optimum land use. TABLE OF CONTENTS LIST OF TABLES v i i LIST OF APPENDICES v i i i INTRODUCTION . . 1 CHAPTER I THE UNDEVELOPED LAND AT CRESTON 4 II BENEFIT-COST ANALYSIS IN LAND USE PLANNING 15 III PRESENT USE OF THE UNDEVELOPED LAND 22 . IV AGRICULTURAL RECLAMATION AS A DEVELOPMENT ALTERNATIVE . . . 42N V WILDLIFE HABITAT AND OUTDOOR RECREATION AS A DEVELOPMENT ALTERNATIVE 65 VI THE ALTERNATIVES COMPARED: BENEFITS AND COSTS FROM AGRICULTURE AND FROM WILDLIFE AND OUTDOOR RECREATION . . .103 VII THE IMPACT OF ALTERNATE DEVELOPMENTS ON THE LOWER KOOTENAY INDIAN BAND 123 VIII SUMMARY AND CONCLUSIONS . . 130 LITERATURE CITED .136 APPENDICES 139 v l LIST OF TABLES Table Page 1 The Unreclaimed Land: Estimated Acreage . 5 2 Summary of Grazing, Unreclaimed Land,. 1968 24 3 Farm Operators by Number of Cat t l e Grazed 25 4 D i s t r i b u t i o n of Bird Hunting A c t i v i t y , 1968 30 5 Summary of Primary Benefit-Cost Comparison f o r A g r i c u l t u r a l Reclamation: By Area;; 5.1 6 The Benefits and Costs of A g r i c u l t u r a l Reclamation . . . 61 7 Summary of Present Values, Benefits From W i l d l i f e and Outdoor Recreation Development . 74 8 The Present Value of Primary.Costs, W i l d l i f e and Outdoor Recreation Development 85 9 Comparison of Primary Benefits and Costs by Referent Group 97 10 The Benefits and Costs of Wild l i f e - R e c r e a t i o n Development 101 11 Comparison of Al t e r n a t i v e s From the Local Viewpoint . . 105 12 Comparison of Alt e r n a t i v e s From the P r o v i n c i a l Viewpoint 107 13 Comparison of Al t e r n a t i v e s From the National Viewpoint . 109 14 The Al t e r n a t i v e s Compared on the Basis of Individual Units 116 LIST OF APPENDICES Appendix Page A Regional Income M u l t i p l i e r s . . . . . 141 B Size and Number of Farms and Present Pattern of Production, Reclaimed Land, Creston F l a t s 147 C The Economics of Farm Production, Creston F l a t s , 1968 . 151 D Reclamation Costs for A g r i c u l t u r e 165 E Q u a l i f i c a t i o n s to Basic F e a s i b i l i t y Analysis for A g r i c u l t u r e 190 F Recreational Use of the Creston F l a t s : The Case of Bird Hunting During 1968 212 G Estimated U t i l i z a t i o n of Recreation F a c i l i t i e s . . . . 239 H Present Value Calculations Benefits From Hunting, Fishing, Non-Consumptive Recreation, A g r i c u l t u r e and Trapping 257 I Unit Values for Outdoor Recreation i n Resource Development Projects 264 J The Present Value of Costs for W i l d l i f e and Outdoor Recreation ' 274 K The E f f e c t of Alternate Discount Rates on the Benefit- Cost Analysis, W i l d l i f e Development 286 L Estimated Gross Business Revenues Resulting From Spending Associated With Proposed W i l d l i f e Development 292 INTRODUCTION A problem of resolving c o n f l i c t i n g demands on a l i m i t e d resource base has existed for some time at Creston, i n the Central Kootenay region of B r i t i s h Columbia. The problem i s to determine the optimum use for 15,000 acres of undeveloped land i n the Kootenay River f l o o d p l a i n between the International Border and Kootenay Lake. Reserves held by the Lower Kootenay Indian Band comprise 3,000 acres of th i s land, while the remainder i s unalienated p r o v i n c i a l Crown land. Three possible uses for th i s land are relevant at present: i t can be l e f t i n i t s present undeveloped state; i t can be reclaimed and de- veloped for intensive a g r i c u l t u r a l production; or i t can be developed f o r intensive w i l d l i f e management and associated outdoor recreation. Present use of t h i s land i s l i g h t , and i t y i e l d s l i t t l e apparent benefit; with Libby Dam expected to provide flood control on the Kootenay River by 1973 there are growing pressures to put t h i s land to more intensive use, either as a g r i c u l t u r a l land or as a managed w i l d l i f e and recreation area. Selecting the optimum use for public land such as th i s can be very complicated. Unlike p r i v a t e l y owned land where the owner i s i n t e r - ested s o l e l y i n maximizing the net f i n a n c i a l return, public resource man- agers must consider resource uses where returns are not usually measured i n f i n a n c i a l terms. When competing a l t e r n a t i v e s are being considered, one of which y i e l d s a c l e a r l y i d e n t i f i a b l e f i n a n c i a l return, and the other does not, making a r a t i o n a l choice between them i s d i f f i c u l t . Determining the future use of the undeveloped land at Creston requires a choice of this nature. The returns to the land i f a l l o c a t e d to a g r i c u l t u r e can be i d e n t i f i e d with r e l a t i v e ease — a g r i c u l t u r a l out- put i s sold through normal markets and measures of f i n a n c i a l return are r e a d i l y a v a i l a b l e . The opposite occurs with development for w i l d l i f e and recreation. Measures of the value of the output are not r e a d i l y a v a i l a b l e , and i t i s often d i f f i c u l t to p r edict e i t h e r the production of w i l d l i f e or the extent of use by r e c r e a t i o n i s t s . Benefit-cost analysis i s an economic technique which can be em- ployed to deal with such problems. I t provides a framework through which the necessary information can be c o l l e c t e d and ordered so that consistent and r a t i o n a l decisions can be made. This thesis investigates the a l t e r n a t i v e s for development of the unreclaimed land at Creston and attempts, through comparative benefit-cost analysis, to determine the optimum future development. Chapter I describes the undeveloped lands, the objectives of development, and the economic considerations involved. The technique of benefit-cost analysis as i t i s applied to projects of t h i s kind i s outlined i n Chapter I I . Chapter III examines the present use of the land, and provides an estimate of the values generated by the land i n i t s present state. Chapters IV and V calculate the net economic value of intensive development for a g r i c u l t u r e and w i l d l i f e - r e c r e a t i o n purposes r e s p e c t i v e l y . The estimates- of benefits and costs under each a l t e r n a t i v e are compared i n Chapter VI. In Chapter VII the s p e c i a l economic implications of development for the Lower Kootenay Indian Band are investigated, and Chapter VIII i s a summary.of findings. To simpli- fy presentation, the detailed calculations supporting the analysis are omitted from the main body of the thesis and appear in Appendices A through L. CHAPTER I THE UNDEVELOPED LAND AT CRESTON The land which t h i s report i s concerned with adjoins the Inter- national Border at the southern end of the Central Kootenay area of B r i t i s h Columbia. By road i t i s approximately 470 miles east of Van- couver, and 325 miles west of Calgary. Access to the United States i s achieved through a border crossing at Rykerts; the highway leads into Idaho with connections throughout the P a c i f i c Northwest region of the United States. Economic a c t i v i t y i n the Central Kootenay region depends primar- i l y on an integrated forest industry, with mining, a g r i c u l t u r e , and tour- ism ranking next i n importance (Province of B r i t i s h Columbia 1966). In the immediate area of Creston service industries provide the largest source of employment, although forest i n d u s t r i e s , a g r i c u l t u r e and a small amount of manufacturing account for a greater t o t a l of gross i n - come (Province of B r i t i s h Columbia 1970). The Kootenay River Floodplain and the Undeveloped Land The Kootenay River.flows north into B r i t i s h Columbia at t h i s point, entering Kootenay Lake approximately 20 miles north of the International Border. The t o t a l area of the f l o o d p l a i n i n B r i t i s h Columbia i s approxi- mately 36,000 acres. During i t s spring freshet the Kootenay River overflows i t s banks and floods the surrounding lowlands (usually during May and June) for a period of up to eight weeks. Any development i n this f l o o d p l a i n thus requires the construction of dykes, and i n s t a l l a t i o n of pumping and drainage f a c i l i t i e s . To date approximately 21,000 acres of t h i s f l o o d - p l a i n have been put under a g r i c u l t u r a l c u l t i v a t i o n , behind the protec- ti o n of an extensive network of dykes. Approximately 15,000 acres r e - main undeveloped, and these lands constitute the subject of t h i s i n - v e s t i g a t i o n . The 15,000 acres which remain undeveloped are i n s i x p h y s i c a l l y separate areasoor u n i t s . These units are shown on the accompanying map, and the approximate acreage of each i s presented i n Table 1. TABLE 1 THE UNRECLAIMED LAND: ESTIMATED ACREAGE ESTIMATED UNIT ACREAGE W. H. Dale Unit 200 Indian Reserves (1, 1A, IB) 3,000 Corn Creek 1,400 Leach Lake 2,900 Six Mile Slough 2,650 Duck Lake 4,700 T o t a l : A l l Units 14,850 CRESTON BRITISH COLUMBIA KOOTENAY LAND DISTRICT Scale : I inch = 2 miles AREA DESIGNATIONS Are a 1 •• Indian Reserves 1, IA,IB Area 2 = Corn Creek Area 3= Leach Lake Area 4 = Six Mile Slough Aroa 5: Duck Lake Area 6 = W. A. Dale Unit /I / J The W. H. Dale Unit Approximately 200 acres i n s i z e , t h i s unit i s located immediately north of the International Border on the western edge of the f l o o d p l a i n . Except for the peak runoff period when i t i s flooded by both Boundary Creek and the Kootenay River, most of the land i n t h i s unit remains dry. Due to i t s small area, and the fact that i t i s cut by a seri e s of old stream channels, t h i s unit has l i t t l e a t t r a c t i o n for intensive a g r i c u l - t u r a l development, and would s i m i l a r l y have a very low p r i o r i t y as a w i l d l i f e development project. For these reasons this unit w i l l be omit- ted from d e t a i l e d analysis l a t e r i n t h i s report. Indian Reserves 1, 1A, and IB Indian Reserves 1, 1A and IB, t o t a l approximately 3,000 acres. The Kootenay River forms the boundary on the south and west, while the Goat River bounds the unit on the north. On i t s eastern border the area t e r - minates i n the L i s t e r behchlands, and i s also bounded by part of the Goat River f l a t s . Flooded annually by both the Kootenay and Goat Rivers, the area remains r e l a t i v e l y dry once the floodwaters recede. The Corn Creek Unit This unit l i e s on the western edge of the f l o o d p l a i n , west of the Nicks Island Dyking D i s t r i c t , and south of the Southern Trans-Provincial Highway. The area of t h i s unit i s estimated at 1,400 acres. In addition to the annual floodwaters of the Kootenay River, the runoff from the moun- tains to the west flows through the unit i n three major streams — Corn Creek, French's Slough, and Summit Creek. Although completely flooded during the spring runoff, most of t h i s unit remains dry throughout the rest of the year. The Leach Lake Unit The Leach Lake Unit i s immediately north of the Corn Creek area, and extends from the mountains i n the west to the Nicks Island Dyking D i s t r i c t and the Kootenay River. The e n t i r e area i s flooded every year when the Kootenay River i s at peak runoff, and the waters of Summit Creek also enter t h i s area from the west. While roughly one-half of t h i s unit i s dry except f o r the spring f l o o d , the rest remains under water a l l year and forms a shallow lake known as Leach Lake. To t a l area i n t h i s unit i s approximately 2,900 acres. The Six Mile Slough Unit This unit i s e s s e n t i a l l y a long narrow i s l a n d , bounded on the north by Kootenay Lake, and on the west and east by channels of the Kootenay River. The Canadian P a c i f i c Railway embankment forms a b a r r i e r across the north end of the u n i t , separating i t from Kootenay Lake. The area i n t h i s u n i t i s approximately 2,650 acres. Almost completely flooded during the spring freshet, approximately 1,200 acres of t h i s unit remains dry the r e s t of the year. The Duck Lake Unit Duck Lake, encompassing a t o t a l of 4,700 acres, l i e s on the east- ern side of the f l o o d p l a i n across the east channel of the Kootenay River from Six Mile Slough. The area i s protected from the Kootenay River by the peripheral dyke of the Duck Lake Dyking D i s t r i c t , although i t has never been reclaimed. The waters of Duck Creek, which enter the f l o o d - p l a i n from the east at Wynndel, are diverted north and enter Duck Lake at i t s southeast corner. With the exception of several hundred acres of land known as West Point, the e n t i r e area i s under water year round. Status of the Undeveloped Land Two forms of tenure apply to these unreclaimed areas. The Indian Reserves (1, 1A, and IB) are o f f i c i a l Indian Reservations held by the Lower Kootenay Indian Band. Their status i s defined under the f e d e r a l Indian Act. Except for the W. H. Dale unit the rest of the lands have remained as unalienated p r o v i n c i a l Crown land. In 1968 these areas were incorpor- ated under the Creston Valley W i l d l i f e Management Area Act (Province of B r i t i s h Columbia 1968) to be set apart f o r w i l d l i f e conservation, manage- ment and development. The Act provides for the establishment of a manage- ment authority representing both the B r i t i s h Columbia Fish and W i l d l i f e Branch and the Canadian W i l d l i f e Service. The W. H. Dale u n i t , formerly private land, was recently acquired by the B r i t i s h Columbia Fi s h and W i l d l i f e Branch. This land w i l l be i n - tegrated i n the Creston Valley W i l d l i f e Management Area. Implications of the Libby Dam Construction of Libby Dam on the Kootenay River near Libby, Montana was agreed to under the Columbia River Treaty between the United States and Canada. The primary function of the dam i s to generate h y d r o - e l e c t r i c power, and i t i s scheduled for completion by 1973. An important secondary function of t h i s dam w i l l be to provide flood control f o r reclaimed farm- lands i n the Kootenay River f l o o d p l a i n between Libby and Kootenay Lake. The effectiveness of the Libby Dam i n providing flood control bene- f i t s w i l l depend, however, on how i t i s used to meet power requirements. For t h i s reason a second dam downstream from the Libby Dam i s planned for the regulation of stream flow. The function of t h i s second dam w i l l be to c o n t r o l rapid f l u c t u a t i o n s i n the l e v e l of the Kootenay River which could r e s u l t from periods of peak drawdown on the Libby r e s e r v o i r . The combined e f f e c t of these dams i n regulating the flow of the Kootenay River i s the most important f a c t o r bearing on the p o t e n t i a l de- velopment of the f l o o d p l a i n at Creston. In the case of further a g r i c u l - t u r a l reclamation the existence of a degree of control over the Kootenay River reduces the expense;of dyke construction, and removes the r i s k of dykes being breached by unusually high runoff i n any year. In the same way the costs of development f o r intensive w i l d l i f e management are greatly reduced. As the date for completion of Libby Dam draws near, pressures fo r the development and use of the unreclaimed land become more intense. Opportunities for Development There are two r e a l i s t i c a l t e r n a t i v e s for development of the unre- claimed land. It can be brought under a g r i c u l t u r a l production as has been done with the other land i n the f l o o d p l a i n , or i t can be developed for w i l d l i f e and recreation as envisaged by the Creston Valley W i l d l i f e Management Area Act. In either case the physical structures required are s i m i l a r . Agricultural development requires the construction of dykes, de- velopment of drainage networks, and installation of pumps and other main- tenance f a c i l i t i e s . After Libby Dam i s built the capital cost of bring- ing a l l the land into agricultural production is estimated at $1.3 million. Development of the land for intensive wildlife and recreational use would closely parallel that of agricultural reclamation. Much the same structures in terms of dykes, drainage, and pumps w i l l be required, but they w i l l be developed more intensively and are much more costly. F u l l development for wildlife management would see each unit protected from the Kootenay River by a peripheral dyke, just as in agriculture. Behind these dykes water levels would be manipulated to meet the needs of w i l d l i f e and recreationists and an extensive network of cross dykes and pumps is planned so that habitat conditions can be varied within each unit. Construction of these cross dykes and additional pumping capacity adds significantly to the costs of wildl i f e development. In addition since the units w i l l remain under water most of the time, access has to be provided along the dykes. This requires a much wider and more expensive dyke than for farming purposes where access i s achieved by roads within each area. For these reasons the total capi- tal cost of the wildl i f e development plan, including the construction of an administrative centre, i s estimated at $1.96 million. In addition to these capital costs, maintenance and salary expenses w i l l be high, approximately $134,000 per year after 1978. The Objectives of Development Selecting the optimum form of development for this land requires careful analysis of each alternative in the light of explicit objectives. Two forms of development for this land are possible, and the incidence of benefits and costs under each w i l l differ significantly. In addition two forms of tenure apply to the land and the objectives to be served w i l l vary accordingly. The objectives which are adopted in this study are discussed separately for each form of tenure. These objectives are c r i t i c a l to the conclusions drawn from the analysis of the study. Development of Crown Land Development of Crown land in the Creston Valley Wildlife Manage- ment Area should proceed in the manner which maximizes the net benefits to the citizens of British Columbia, for whom i t is held in trust. In choosing between the two possible developments-the appropriate framework thus becomes that of the entire province. The development which maximizes net benefits to British Columbia may also be that which maximizes the net benefit to the local area or to Canada as a whole, but this w i l l not necessarily be the case. The relevant costs and benefits to be considered differ when the viewpoint is changed from one jurisdiction to another as is demonstrated in this study. Despite these differences a choice between the alternatives should be based on the net gains to British Columbia; considerations involving only the local economy, or the larger national economy, should not affect the choice of development. Development of Indian Reserves 1, 1A, and IB Unlike the undeveloped Crown lands, tenure over the Indian Reserves i s vested i n the Lower Kootenay Indian Band. This pattern of ownership removes the Indian Lands from the category of a p u b l i c l y owned resource and puts them on the same footing as any p r i v a t e l y owned land. A pr i v a t e owner would be expected to put h i s land to that use which maximized h i s net f i n a n c i a l return. The same type of behaviour would be expected from the Indians except f o r two reasons. The Indians themselves are not c u l t u r a l l y or s o c i a l l y conditioned to assume an en- t r e p r e n u r i a l r o l e i n terms of a major development project, and the Depart- ment of Indian A f f a i r s has retained a degree of control over f i n a n c i a l and land management a f f a i r s . While i t i s maintained that the Indian Band i s the appropriate referent group f o r s e l e c t i n g a development program, i t should be acknow- ledged at the same time that any development i s not l i k e l y to be under- taken by the Indians themselves, but by outside i n t e r e s t s . We would, therefore, expect the Indians to choose whatever development maximized t h e i r net gain — without regard to the impact on the l o c a l , p r o v i n c i a l or national economy. It i s d i f f i c u l t to forecast which form .of development would be chosen by the Indians as the extent to which they w i l l benefit from any a l t e r n a t i v e depends l a r g e l y on t h e i r strength i n bargaining with an outside:; developer. We can draw some inferences regarding the amount and type of benefit which the Indians might expect from the a l t e r n a t i v e s , but t h e i r share cannot be determined with any c e r t a i n t y . What we can be more c e r t a i n about i s the t o t a l benefit from ei t h e r development of the Indian lands and the respective impacts on other sectors of the economy. Taking these matters into account the approach adopted i n th i s study i s to assess th e . o v e r a l l d i s t r i b u t i o n of the benefits and costs of any development of the Indian Reserves — not the net gain to the Indians alone. While benefits to the Indians remain the basic c r i - t e r i o n f o r a choice among a l t e r n a t i v e s , we are able to estimate i n addition the net benefits which would accrue to other sectors from development of the Indian Reserves, and hence the o v e r a l l economic f e a s i b i l i t y of any investment. Summary: Prospects f o r the Undeveloped Land Completion of Libby Dam, expected by 1973, w i l l greatly enhance the prospects f o r further development i n the Kootenay River f l o o d p l a i n at Creston. This study w i l l examine two a l t e r n a t i v e uses f o r presently undeveloped land: a g r i c u l t u r e or w i l d l i f e - r e c r e a t i o n . The undeveloped land has a r i c h p o t e n t i a l and prospects are that e i t h e r type of development could y i e l d a sub s t a n t i a l l e v e l of net bene- f i t . Choosing the best or most desirable a l t e r n a t i v e requires that the respective benefits and costs of each be l o g i c a l l y ordered f o r compari- son. Benefit cost analysis w i l l be used f o r t h i s purpose and as a guide to decision making. Choosing between a l t e r n a t i v e s also requires a c l e a r understanding of the objectives to be met through development. The objectives adopted i n t h i s study vary due to the d i f f e r e n t forms of tenure over the unde- veloped land. For p r o v i n c i a l Crown land i t i s assumed that the objec- t i v e of development i s to maximize the net benefits to the Province of British Columbia. For the Indian Reserves i t is assumed that the objec- tive i s to maximize the net benefits to the Indians. In both cases the implications of the alternative developments for the local and national economies w i l l also be examined. CHAPTER II BENEFIT-COST ANALYSIS IN LAND USE PLANNING Planning the future use of the undeveloped land at Creston re- quires choosing from the technically feasible alternatives. The prob- lem is to choose that alternative, or combination of alternatives, which w i l l generate the greatest excess of benefits over costs for those in whose interest the resources are managed. Benefit-cost analy- sis i s a technique used to measure the economic f e a s i b i l i t y of invest- ment or resource development projects. The analysis of individual pro-- jects is carried out so that the results are directly comparable with analyses of other projects. When alternative uses for a basic land re- source are analyzed in this way, i t is possible to determine which use yields the greatest overall net gain to society. Measuring the total net gain to society requires that a l l costs and a l l benefits from any development be considered and set off against one another to measure the net gain (or loss). This implies taking a very broad view of any project and considering a l l the real costs and benefits, in addition to purely financial ones. Real costs or benefits include purely financial measures, but go beyond them to include other effects of a development not directly reflected in project costs or benefits. In the case of a hydro-electric development, for example, in addition to purely financial costs of construction, other real costs may be incurred i f recreational opportunities are destroyed or i f timber producing land is flooded. An adequate benefit-cost analysis, in con- sidering such factors, must be more comprehensive than a purely financial a n a l y s i s . By considering a l l r e a l costs and benefits i t i s possible that the conclusions of a benefit-cost analysis regarding the f e a s i b i l - i t y of any project could d i f f e r from the conclusions reached through a purely f i n a n c i a l a n a l y s i s . Only when a comprehensive benefit-cost frame- work i s used can we be assured of r e a l i z i n g the maximum benefit through development of our natural resources. Measures of Benefits and Costs When conducting an analysis from such a broad viewpoint i t i s im- portant that measures of cost and benefit are rigorously ordered and de- fined so that only appropriate benefits and costs are compared. To f a c - i l i t a t e t his economists c l a s s i f y the benefits and costs associated with a project i n two categories: primary and secondary (Sewell et at 1962, United States Government 1962, Prest and Turvey 1965). Primary costs and benefits are those d i r e c t l y associated with a project. They include such things as the d i r e c t costs of construction plus any other d i r e c t r e a l costs — benefits include a l l r e a l benefits which are created as the primary output of the project. Secondary costs and benefits are those which stem i n d i r e c t l y from,, or are induced by, the main project. I f , f o r example, a processing i n - dustry i s established to handle the primary output of a project, then that industry's output constitutes a secondary benefit while i t s opera- ting costs are secondary costs. Within these two categories the extent to which the benefits and costs are amenable to economic evaluation w i l l vary. Goods and services which are normally exchanged through the market pose no evaluation prob- lems. The value of such commodities i s registered by t h e i r p rices and they are referred to as tangible benefits or costs. Other goods and services are not usually exchanged through a market, although they may be measurable in monetary terms by procedures which attribute a value to them. Such benefits and costs are referred to as intangible. A third distinction is drawn for costs or benefits which are' considered unmeasurable since they cannot be quantified in monetary terms. (Sewell et di 1962, p. 6). These three distinctions, deriving from the extent to which benefits and costs are amenable to economic evaluation, apply equally at the primary and secondary levels. Comparison of Benefits and Costs To determine whether a project is feasible the estimates of p r i - mary and secondary benefits are compared with the estimates of primary and secondary costs. The objective of this comparison is to determine a) the net benefit (or loss) from a project, taken as total benefits minus total costs; and b) the relative efficiency of the project as measured by the ratio of total benefits to total costs. In making these comparisons the immediate problem which is en- countered is that benefits and costs may occur at widely varying times. The heaviest project costs are most often incurred i n i t i a l l y , followed by annual costs for maintenance and repair. The benefits of a project are seldom realized immediately. Benefits commonly accrue in annual i n - crements over a project's l i f e , frequently in an irregular pattern. The problem which must then be dealt with is one of comparing costs which are incurred in one pattern through time with benefits which accrue in a different time pattern. To deal with these problems, a l l estimates of costs and benefits are reduced to present values in a base year through the process of dis- counting. The discounting procedure allows for the fact that a dollar of benefit or cost in the future does not have the same value as a dollar of benefit or cost at present. Future values are therefore discounted back to their 'present value equivalents' so that costs and benefits occurring at different times in the future and in different amounts can be made directly comparable in terms of their values at the present. Selection of an appropriate discount or interest rate is an im- portant matter in any benefit-cost analysis. A low discount rate re- duces future values much less than a high discount rate. It is con- ceivable, therefore, that for a project requiring a heavy i n i t i a l capi- ta l outlay, with benefits dispersed over a long period of time, changing from a high to a low discount rate could alter the outcome of f e a s i b i l - ity studies. Proper selection of a discount rate remains largely a p o l i t i c a l decision, although for purposes of evaluating public projects, the interest rate paid by the relevant government on long-term bonds is often adopted as an acceptable proxy. Criteria for Decision Making When a l l benefits and costs have been estimated and discounted to an equivalent basis, they are then compared to determine whether or not a given project is feasible. Two basic measures result from this comparison: (a) a measure of net benefit (or loss) determined by sub- tracting total costs from total benefits; and (b) the benefit-cost ratio, determined by dividing total benefits by total costs. Many of the basic questions surrounding any natural resource development can be answered with the aid of these measures. Some of the questions which can be answered include: 1. The basic question of a project's f e a s i b i l i t y . 2. The optimum s i z e f o r any project considered by i t s e l f . 3. The most e f f i c i e n t a l l l o c a t i o n of a given allotment of funds over several development pro j e c t s . 4. The optimum choice between two competing projects or mutually exclusive a l t e r n a t i v e s f o r the same s i t e . The appropriate c r i t e r i a f o r answers to these questions may d i f f e r and can be quite involved. At t h i s point discussion w i l l be r e s t r i c t e d to the fourth question as i t summarizes the central object of t h i s study. The basis f o r choosing between competing projects or mutually exclusive a l t e r n a t i v e s f o r any p a r t i c u l a r resource should be the maxi- mum net benefit generated by each a l t e r n a t i v e (Prest and Turvey 1965, p. 704). By examining each of the t e c h n i c a l l y possible resource uses i n turn, i t i s possible to sel e c t that which makes the greatest net contribution to society's welfare. The Referent Group, or Viewpoint f o r Analysis A f i n a l important point i s the matter of therreferent group or the viewpoint from which a benefit-cost analysis i s undertaken. This i s important, p a r t i c u l a r l y i n the study of undeveloped land at Creston, since what constitute benefits or costs from the point of view of one region may not be similarly classed from the viewpoint of a different jurisdiction. The effect on the benefit-cost comparison of changing the referent group is demonstrated in this study by.assuming three different viewpoints, namely the local Creston area, British Columbia, and Canada. With the significant effect which changes in the viewpoint have on the outcome of the benefit-cost comparison, i t is c r i t i c a l that the appro- priate referent group be unequivocally established before any decisions are taken. Benefit-Cost Analysis in this Study In this study benefit-cost analysis is applied to the problem of selecting the best use for undeveloped land in the Kootenay River flood- plain at Creston, British Columbia. The alternatives are to leave the land in i t s present state, to develop i t for agriculture, or to develop i t for wildlife management and recreation. A brief investigation reveals that continuing with present use is an undesirable alternative — the range of choice being narrowed to agriculture or wi l d l i f e and recreation. Application of benefit-cost analysis to agricultural developments is a standard economic procedure. The capital costs of reclaiming the land and putting i t into production are estimated. The annual profits from agricultural production are estimated, discounted to present values, and compared with costs to assess the project's f e a s i b i l i t y . While prob- lems are encountered in estimating both costs and benefits, the procedure is relatively standard and represents nothing new in the application of economics to resource management problems. Using benefit-cost analysis in the case of the wildlife develop- ment alternative is much more innovative. The basic approach is the same, beginning with an estimate of the costs of development. Problems are encountered in estimating benefits to compare with costs, however, and new techniques must be employed. Recreational use is not easily predicted, and benefits are d i f f i c u l t to evaluate. We are forced f i r s t to derive estimates of use and then impute values to that:use. The evaluation of recreation remains a relatively undeveloped area in econo- mics, and the assumptions underlying the values adopted in this study are discussed at length in Appendix I. Emphasis here is restricted to•the fact that this represents a relatively new approach in the application of economics to resource management problems, and that i f anything i t f a i l s to give f u l l measure to the values associated with wildlife and recreation. Quantification and evaluation in this area remain d i f f i c u l t . In any case, quantifica- tion and evaluation is possible for only some of the values — many of the important values associated with wild l i f e remain as unmeasurable and are appended to the overall results. CHAPTER III PRESENT USE OF THE UNDEVELOPED LAND It was noted e a r l i e r that continuing with the present use of the undeveloped land does not present an a t t r a c t i v e a l t e r n a t i v e — u t i l i - zation i s l i g h t , and benefits apparently small. But the land i s used i n i t s present state, a l b e i t extensively, and any new regime involving i n - tensive development would displace present users. To the extent that present uses are displaced by new developments losses may be incurred. A complete assessment of any development would have to take such losses into account, deducting them from any benefits generated. S i m i l a r l y , where an intensive development involves the continuation and improvement of some aspects of present use the t o t a l output should not be credited to the development, only the incremental output. Thus, while continuing with present patterns of use may not be an a t t r a c t i v e a l t e r n a t i v e i n i t - s e l f , some knowledge of present use and the associated benefits and costs i s required for a comprehensive analysis of proposed developments. In i t s present state the undeveloped land affords seasonal graz- ing for beef c a t t l e and r e c r e a t i o n a l opportunities' for waterfowl hunters, fishermen and n a t u r a l i s t s . I t also provides a key stopover for large numbers of migratory waterfowl, and provides nesting habitat for some important w i l d l i f e species, such as the osprey. A d d i t i o n a l aspects of present use include a l i m i t e d harvest of furs (muskrat and beaver), and the p r o v i s i o n of water storage insofar as the area holds overflow water from the Kootenay River during i t s freshet. A summary of the extent and s i g n i f i c a n c e of these uses i s presented here to provide a bench- mark against which changes can be measured, and to in d i c a t e the losses which might be incurred by present users under a new form of use. Present A g r i c u l t u r a l Use Seasonal grazing of beef c a t t l e i s the only form of ag r i c u l t u r e at present on the unreclaimed land. Administration and management d i f - f e r s among the various u n i t s . Private negotiations are made between the graziers and landlords i n the case of W. H. Dale Unit and the Indian Reserves, while grazing i n the Corn Creek and Leach Lake areas i s under Forest Service permit. On Six Mile Slough the grazing i s covered by lease from the Lands Department, while grazing around Duck Lake i s trespass grazing. The t o t a l amount of seasonal grazing afforded by the unreclaimed land i s summarized i n Table 2. Approximately 1,200 c a t t l e are grazed on the unreclaimed land every summer, the length of the grazing season varying with weather conditions and water l e v e l s . TABLE 2 SUMMARY OF GRAZING,* UNRECLAIMED LAND, 1968 A R E A NO. CATTLE OF GRAZED NO. OF A.U.M.S** GRAZING D a l e 40 200 Indian Reserves 370 1,485 Corn Creek and Leach Lake 550 2,208 Six Mile Slough*** 100 500 Duck Lake 110 600 Total 1,180 4,993 * The few horses grazed are ignored in this summary. ** An animal-unit month (A.U.M.) of grazing is defined as one mature cow grazing for one month. Cows with calves under 6 months of age are considered as one animal unit. Yearlings or steers over 6 months constitute one animal unit. Average level of use in recent years. This overstates cur- rent use which has been affected by change in the ownership of the lease. Economic Implications of Extensive Grazing• Cattle grazing on the unreclaimed land i s not an intensive form of land use. Nevertheless, i t is important to those persons whose i n - comes are enhanced by i t , and i t does generate a small amount of econo- mic activity in the area. To assess the economic significance of this grazing, a brief survey of cattle graziers in the area was conducted in the f a l l of 1968. The results of this investigation w i l l be summar- ized very briefly. Size of herds.—Few of. the beef operations are of economic sig- nificance. Only 10 of the 32 farm operators grazing cattle on unre- claimed land grazed more than 50 head. The distribution of farm oper- ations by the number of cattle grazed is summarized in Table 3. TABLE 3 FARM OPERATORS BY NUMBER OF CATTLE GRAZED NO. OF CATTLE GRAZED NO. OF FARMS More than 100 2 50 - 100 8 21 - 49 9 10 - ,20 4 Less than 10 9 Total number of farms 32 Due to the scarcity of summer grazing in the Creston area, a l l operators depend heavily on this grazing to maintain cow-calf operations. A l l operators indicated that without this grazing they would have to abandon cow-calf operations, and i f they were to remain in beef produc- tion would have to switch to feed-lot operations. Income and investment.—Few farm operators depend heavily on their grazing-oriented beef operations as a source of income. Only 10 graziers depended solely on farming for their incomes, four of these depending entirely on beef cattle, the other six being in mixed farming including hay, grain, and dairying. Net earnings from these beef operations are generally very low, and in few cases does the farm operator earn enough to compensate for the value of his labor and pay a return on his investment. Total cur- rent revenue from the sale of cattle dependent on grazing the unre- claimed land is estimated at $124,770 in 1968. Of this, $85,090 or 68.2 per cent was required to meet current operating expenses, leaving a current profit of $39,680. This amount is available to farm oper- ators to pay a return on their investment and compensate for their labor." Investment in beef operations averaged $49,000 and ranged from $14,500 to $108,000. On the average 42 per cent of this investment was in land, 12 per cent in buildings, 17 per cent in machinery and equipment, and 29 per cent in the basic herd. Operators grazing more than 20 cattle on the unreclaimed land had a total of $927,000 invested in their beef operations in 1968. Net Economic Returns The current operating profit of $39,680 calculated above repre- sents a rate of return of 4.3 per cent on this capital, without allowing * With the exception of a few farms on the benchlands west of the Corn Creek unit, most of this investment is not irrevocably tied to a cow-calf type of beef operation. Buildings, machinery, and equipment could be adapted to alternative agricultural uses, as could most of f o r the value of the operators' labor input. This indicates that the farm operators i n fact incur a net economta loss by committing c a p i t a l to t h e i r beef enterprise. I f instead they had invested t h e i r c a p i t a l at the e a s i l y obtained rate of s i x per cent, they would have earned $15,940 more than the net p r o f i t from t h e i r c a t t l e enterprises. In ad d i t i o n , they would have been able to earn a return on the labor otherwise devoted to c a t t l e r a i s i n g by.seeking a l t e r n a t i v e sources of employment. It should be noted that these are t o t a l f i g u r e s , and conceal within them the range of p r o f i t a b i l i t y of various operations. However, they do point out the fact that i n t h e i r present form the beef c a t t l e operations depending on unreclaimed land for grazing provide no p o s i t i v e economic gain to the community — the output being worth l e s s , i n r e a l terms, than the inputs required to produce i t . Indeed, the figures pre- sented above probably understate the net loss as they do not include public expenses made for cattleguards and range management i n the Corn Creek and Leach Lake u n i t s . Findings such as these, with factors earning le s s than they could i n a l t e r n a t i v e employment, are not uncommon i n a g r i c u l t u r e where the industry has been very slow i n making long-run adjustments to chang- ing market conditions. A study of beef operations by the B r i t i s h Colum- b i a Department of A g r i c u l t u r e showed that i n 1967 the return on c a p i t a l the p r i v a t e l y owned land. Indeed, much of the land used i n these cow- c a l f operations appears to be more highly valued i n some a l t e r n a t i v e form of a g r i c u l t u r a l production. of less than $50,000 was -r5;60 per cent, on capital between $50,000 and $100,000 - 0.12 per cent, and on capital in excess of $100,000 2.28 per cent. Cow-calf operations showed a return to capital of -3.15 per cent (Province of British Columbia 1968a).' The low returns earned at Creston can be expected in view of.the fact that the area is not well suited to cow-calf operations, grazing is of poor quality, and the grazing is poorly managed and divided among small farm operations. Prospects of Continued Agricultural Use Extensive cattle grazing on the unreclaimed land yields no net benefit when the true economic costs are considered. After allowing for the real cost of capital and labor, i t can readily be demonstrated that the real cost of inputs exceeds the value of output. This conclu- sion is supported by other beef studies done in British Columbia. Were this grazing continued in i t s present form there is l i t t l e likelihood of any significant change in these relationships. A major reorganization of the available grazing might give scope for improved performance i f small inefficient operations could be eliminated, allow- ing expansion of well managed economic units. This appears highly un- li k e l y however, the farm operators are not very co-operative among them- selves, and the diverse forms of tenure over the land are not conducive to co-ordinated management. The effect of the Libby Dam on this form of land use is l i k e l y to be negligible. While the peak flood levels of the Kootenay River w i l l be reduced after Libby Dam is completed, without dykes the unre- claimed lands w i l l s t i l l flood annually. If, as appears l i k e l y , the period of flooding is prolonged but at lower levels after Libby Dam is completed i t may have the effect of reducing the area available for grazing, or the grazing season, or both. Present Recreational Use Many persons use the unreclaimed land on the Creston flats for recreational purposes. This recreation includes sporadic use by bird watchers and others for nature observation, warmwater sportsfishing in Duck Lake, and bird hunting during the f a l l season. While data on this recreational use i s far from precise, reasonably accurate e s t i - mates of use have been gleaned from several sources and are reviewed here. Bird Hunting Much of the unreclaimed land i s used by hunters during the f a l l hunting season each year. Hunters pursue migratory birds (ducks, geese, and doves) and a small resident population of pheasants. Hunting is done on private reclaimed farm land, as well as on the Indian Reserves and Crown land. No information was available on the extent of this hunting a c t i - vity in past years. To provide accurate data for an assessment of recreational use of unreclaimed land in the area, a mail survey was conducted of hunters using the area in the 1968 hunting season. De- tailed results of this survey are presented in Appendix F. The analy- sis of recreational use presented here is based on the findings of that survey. During the 1968 hunting season 661 persons hunted birds on the Creston f l a t s . Local hunters from the Creston area accounted, f o r 242 hunters, there were 391 non-local hunters from other centres i n B r i t i s h Columbia, and 28 hunters from the United States. These hunters spent a t o t a l of 6,350 hunter days at t h e i r sport i n 1968. Not a l l hunting was done, however, on unreclaimed land. Table 4 summarizes the d i s t r i b u t i o n of t h i s hunting a c t i v i t y among the various lands open to hunters. Hunting on private land accounted f o r 24 per cent of the t o t a l . Hunting on unreclaimed land was confined almost s o l e l y to Crown land, as only 105 hunter days were spent on the Indian Reserves. TABLE 4 DISTRIBUTION OF BIRD HUNTING ACTIVITY, 1968 ORIGIN OF HUNTERS CROWN LAND PLACE OF HUNTING ACTIVITY (Hunter Days) PRIVATE FARM LAND INDIAN RESERVE Local 2,055 906 88 Non-Local 2,394 641 15 Foreign 248 4 2 Tot a l Hunter Days 4,697 1,551 105 Warmwater Sport Fishing The warmwater sp o r t f i s h e r y i s confined to the waters of Duck Lake. Present u t i l i z a t i o n i s somewhat r e s t r i c t e d by the lack of easy access to the area, and the d i f f i c u l t y of launching boats. Fishermen are mainly residents of the l o c a l area, although some f i s h i n g i s done by non-residents during the t o u r i s t season. The f i s h sought include bass, perch, and sunfish, the season of use extending for about 25 weeks from May to October. Accurate data are not a v a i l a b l e on the extent of th i s f i s h i n g a c t i v i t y , and p r a c t i c a l d i f f i c u l t i e s prevented surveying fishermen as had been done with hunters. The best estimates of the extent of u t i l i - zation are based on personal observation by the s t a f f of the F i s h and W i l d l i f e Branch at Creston, supplemented by conversations with several persons who f i s h the area frequently. On th i s basis i t i s estimated that the f i s h e r y supports 28 fisherman-days of use per week over the 25 week period when fishermen are a c t i v e . Annual u t i l i z a t i o n i s thus estimated to be approximately 700 fisherman days. Bir d Watching and Nature Observation Further r e c r e a t i o n a l use of the unreclaimed land i s made by b i r d watchers and other persons f o r the simple purpose of observing nature. Even less i s known about the a c t i v i t i e s of these r e c r e a t i o n i s t s than i s known about sportsfishermen. The nature of such a c t i v i t y takes p a r t i c i - pants out of the range of ordinary observation and makes i t d i f f i c u l t to estimate the extent of t h e i r a c t i v i t y . There are two main a t t r a c t i o n s for such r e c r e a t i o n a l a c t i v i t i e s . One i s the annual migration of waterfowl through the area, highlighted by the presence of large numbers of wh i s t l i n g swans. A second a t t r a c - The Creston Valley i s often r e f e r r e d to as the "Valley of the Swans." t i o n i s the presence of a large breeding population of ospreys which can be observed with r e l a t i v e ease f i s h i n g i n the shallow waters of the unreclaimed land. In addition to these r e l a t i v e l y rare b i r d s , a wide v a r i e t y of the more common species can also be observed through- out the area. It i s estimated that the unreclaimed lands support approximately 150 days of r e c r e a t i o n a l use i n th i s form annually. This estimate i s presented on the basis of personal observation, and observations by Fi s h and W i l d l i f e Branch personnel at Creston. Economic Implications of Present Recreational Use Any discussion of the economic implication of outdoor recreation must be pursued with caution. When land i s set aside for r e c r e a t i o n a l use i t s 'product' consists of opportunities for recreational-enjoyment. Unlike most products i n our economy, we do not commonly s e l l opportu- n i t i e s f o r w i l d l i f e - o r i e n t e d recreation, so there i s no well established measure of t h e i r value. I f we are to t a l k about the primary b e n e f i t , or value, of r e c r e a t i o n a l opportunities we must estimate what these opportu- n i t i e s are worth to people who are not required to pay for them. The evaluation of non-priced r e c r e a t i o n a l opportunities has been the subject of considerable economic research i n recent years, and two main approach- es to the problem have evolved (Knetsch and Davis 1966, Pearse and Bowden 1969). In the survey of b i r d hunters on the Creston f l a t s , an attempt was made to determine the value of the hunting opportunities i n the 1968 sea- son. This i s reported i n d e t a i l i n Appendix F. Using the approach adop- ted i n t h i s survey, the average value of a day spent hunting i s e s t i - mated to be $4.50. By applying t h i s estimate of the d a i l y value of a r e c r e a t i o n a l opportunity to f i s h i n g and nature observation as well as hunting, we can estimate the primary benefit derived from r e c r e a t i o n a l opportuni- t i e s on the unreclaimed lands. A t o t a l of 4,802 hunter-days were spent on unreclaimed land i n 1968, i n addition to the estimated 700 fishermen- days and 150 days spent i n nature observation. This t o t a l of 5,652 days of recreation has an estimated value of $25,490. The primary costs associated with this recreation are n e g l i g i b l e . There are no d i r e c t costs i n connection with the 'production' of recr e - a t i o n opportunities. There w i l l be some small expense insofar as p o l i c - ing of hunters and fishermen i s required. Since F i s h and W i l d l i f e Branch s t a f f would be required at Creston even i f there were no f i s h - ing or hunting done on the f l a t s , the appropriate measure of expense i n t h i s regard i s the extra amount spent p o l i c i n g b i r d hunters and fishermen. This i s probably le s s than $500 per year. The value of the net primary benefit from r e c r e a t i o n a l use of the unreclaimed land i s thus approximately $25,000 annually. Assuming a constant l e v e l of use through time, t h i s has a present value of $312,000 when discounted A at eight per cent. Libby Dam w i l l not have any appreciable e f f e c t on r e c r e a t i o n a l use of unreclaimed land. The warmwater fi s h e r y i n Duck Lake i s pro- tected from the Kootenay River by dykes at present and w i l l not be Based on the preceding analysis of r e c r e a t i o n a l a c t i v i t y during 1968. This assumes that a c t i v i t y during 1968 was t y p i c a l , or represen- t a t i v e of an average year. affected by changes In the peak period flow, and the a c t i v i t y of b i r d watchers and others should also be unchanged. The Undeveloped Land as W i l d l i f e Habitat The examination of present use of the unreclaimed land has so far been concentrated on d i r e c t use by people for farming and recrea- t i o n . The r o l e which these lands play as key habitat 'for many, spe- cies of w i l d l i f e must also be considered as a very important "use." The unreclaimed lands provide important habitat for migratory water- fowl (ducks, geese and swans), a large colony of herons, a nesting population of ospreys, and many other species of w i l d l i f e . W i l d l i f e Habitat as a Form of Land Use At f i r s t glance i t may seem inappropriate to r e f e r to land which provides habitat for w i l d l i f e as being " i n use." Unlike the uses d i s - cussed previously, t h i s does not involve d i r e c t p a r t i c i p a t i o n by people, and we have become conditioned to considering land which i s not under d i r e c t u t i l i z a t i o n as 'waste' or 'barren.' But i t must be recognized that there i s a c e r t a i n value created by land which simply provides habitat or l i v i n g space for w i l d l i f e — and that t h i s i s a value over and above any values based on d i r e c t r e c r e a t i o n a l p a r t i c i p a t i o n . Expression of these values can be observed at many l e v e l s . In the government sector they are expressed i n the protection and manage- ment a c t i v i t i e s of W i l d l i f e Agencies — one of the basic functions of w i l d l i f e management being "the maintenance of c e r t a i n species at desired population l e v e l s , and the preservation of species from e x t i n c t i o n " (Wright 1968). In the private sector there are many organizations dedi- cated to the preservation of wild l i f e through habitat management, Ducks Unlimited being perhaps the best known in North America. A recent exam- ple specific to British Columbia involves the purchase by private c i t i - zens of land in the Okanagan Valley to provide wintering habitat for Bighorn sheep. In the case of migratory species, recognition and protection of these values requires international co-operation. The Migratory Birds Treaty between Canada and the United States which was signed in 1916 is designed to bring about co-operation in the management of migratory species between the two countries. Canada's fulfilment of her obliga- tions under this treaty is carried out under the Migratory Birds Con- vention Act of 1917. The contribution of the unreclaimed lands at Creston in maintaining wild l i f e populations, and providing key habitat for migratory birds^ srepresents an important factor in Canada's f u l f i l - ment of obligations under the Migratory Birds Treaty. This is another important aspect of the values associated with "using" land as wildlife habitat. Utilization by Wildlife Estimating the numbers of the various species of wild l i f e using the habitat at Creston is very d i f f i c u l t . Waterfowl use is almost ex- clusively during migration and as a summer staging area for moulting birds. Few ducks or geese nest successfully in the area, as most nests are destroyed by the annual flood of the Kootenay River. The few exceptions include tree nesting species (wood duck and goldeneye) and a few nests located above high, water mark. Migratory use is intensive, however. Whistling swans pass through in large numbers during their spring migration, returning in late f a l l and winter. At present approximately 3,000 swans use the area for an average of 60 days each — an annual total of 180,000 swanruse-days. Canada geese also make extended use of the area, with as many as 3,000 geese in the area at one time. Total goose-days of use is estimated at 180,000, an average of 60 days per goose. Duck use is much higher, during both spring and f a l l migrations. As many as 70,000 ducks may be in the area on any one day achieving a total u t i l i z a t i o n of 4,200,000 days at an average of 60 days per duck. Coots are also numerous in the area, with annual use of approximately 1,500,000 days by 15,000 coots. There is a relatively large osprey colony in the area, contain- ing approximately 25 nesting pairs. These birds are in the area for approximately six months each year, rearing an average of three young per nest. The total population of ospreys in this area appears to be relatively stable. There is also a large colony of herons in the area, with as many as 80 nesting pairs. As with the ospreys these birds appear to be rela- tively constant in number, having reached the carrying capacity of ava i l - able habitat. The Value of Wildlife Habitat We can recognize the values associated with such wild l i f e habi- tat, but i t is impossible to place an absolute estimate, in terms of dollars, on this value. It is possible to talk about the velat'ive values, based on the importance and scarcity of the different species using the area as habitat, but such relative values cannot be compared directly with the values created by other resource uses. The 'relative value' of maintaining additional numbers of a par- ticular w i l d l i f e species depends to a large extent on the overall abun- dance of that species. With a very common species, the value of one extra animal or bird is generally low. For rare species the value of an extra animal tends to be high as i t takes on a much greater s i g n i f i - cance in relation to "desired population levels." This i s exemplified by the Whooping Crane in North America where the value of an extra bird is unquestionably very high, both in relation to other wildlife species, and to other resource uses which might compete for their habitat. The relative scarcity of the bird species found at Creston is im-.< portant in describing the value of wildli f e habitat as a form of land use. The undeveloped lands provide excellent habitat for many birds, probably the most important of which are ducks, geese, swans, and ospreys. The relative abundance of these four species provides a good ill u s t r a t i o n of the importance of scarcity in determining the value of habitat use. Ducks are quite common throughout North America, and the value of an ex- tra duck, compared to other species, would be quite low. Geese are much less common than ducks, and an extra goose might be given a value as much as 15 to 20 times that of a duck.'. Swans in turn are even rarer.and the value of a swan relative to either ducks or geese would be very high. For each of these waterfowl species the unreclaimed lands at Creston pro- vide important habitat, and form a key l i n k i n t h e i r migration routes. The unreclaimed lands also provide important nesting habitat for a colony of ospreys, or f i s h hawks. Like many species of predatory birds the continental population of ospreys has declined d r a s t i c a l l y i n recent years (Peterson 1969). The natural r a r i t y of these b i r d s , plus t h e i r 'endangered' status, makes them exceptionally valuable. The un- developed lands provide i d e a l habitat for ospreys, and t h i s form of w i l d l i f e use gives the habitat a very high r e l a t i v e value. While these birds comprise the four major species u t i l i z i n g the undeveloped land, i t s importance to the heron colony, songbirds, shore- b i r d s , coots, hawks and owls, as well as deer, muskrats, mink and beaver should not be overlooked. Le f t i n i t s present state the land provides a p a r t i a l guarantee to the continued s u r v i v a l of many of these species. Loss of t h i s habi- tat would mean a s i g n i f i c a n t reduction i n the numbers of most waterfowl and the probable elimination of the osprey population. We are unable to a t t r i b u t e any absolute value to t h i s function of the land, other than a recognition of i t s r e l a t i v e l y high value given the species which depend on i t . In the same context preservation of t h i s habitat makes an important contribution to Canada's f u l f i l m e n t of obligations under the Migratory Birds Treaty. The impending completion of Libby Dam w i l l probably have l i t t l e e f f e c t on the u t i l i z a t i o n of t h i s habitat by w i l d l i f e . While extreme v a r i a t i o n s i n the l e v e l of the Kootenay River w i l l be reduced, the area w i l l s t i l l be inundated annually, and nesting habitat w i l l not improve. Migratory birds passing through the area i n . e a r l y spring and late f a l l w i l l not be affected, and summer residents such as os- preys and herons w i l l also be unaffected. Other Uses of the Undeveloped Land Other uses of the undeveloped land at present include a small annual fur harvest taken by trappers, and i t s function as a water storage area during high water on the Kootenay River each summer. Fur Production Fur bearing species on the undeveloped lands include beaver, muskrat, and mink, with muskrat most numerous. Utilization by trap- pers is slight. Data collected from several persons trapping in the area indicates that the gross value of furs harvested on the undeve- loped lands seldom exceeds $1,000 annually. Incomes from trapping have been low throughout British Columbia in recent years (Newby 1969) , and the returns from trapping at Creston are no exception. Disregarding the value of the labor input in trap- ping, the net income from the fur harvest on the undeveloped land i s approximately $800 per year. Water Storage In another present function the unreclaimed lands provide water storage by absorbing flood waters during the annual freshet of the Kootenay River. As the river rises during runoff i t overflows and inundates the unreclaimed land. Dispersal of the freshet waters over this area relieves part of the pressure.on-'dykes'in the Creston area and also lowers the floodcrest for areas downstream. While Duck Lake does not absorb water from the Kootenay River d i r e c t l y , i t does contain the runoff from Duck Creek and serves the same purpose of r e l i e v i n g pressure on downstream areas. The value of t h i s storage depends on many factors within the whole watershed ( K r u t i l l a 1961, 1967). It i s the increment i n water storage or flood protection afforded by a p a r t i c u l a r area, i n r e l a t i o n to t o t a l r i v e r basin needs, that i s important i n determining i t s value. A f t e r the completion of Libby Dam the incremental storage provided on the unreclaimed lands w i l l be of l i t t l e s i g n i f i c a n c e to o v e r a l l r i v e r basin needs. For p r a c t i c a l purposes the value of water storage, i f pre- sent land use i s continued, can safe l y be ignored. Summary. Present Use of the Undeveloped Land This chapter reviews the extent to which the undeveloped land i s used at present and provides a benchmark against which the gains or losses of a l t e r n a t i v e developments can be measured. Present patterns of use y i e l d l i t t l e measurable net b e n e f i t . In the case of c a t t l e grazing there i s a c t u a l l y a net loss when a l l economic costs are con- sidered, and the net gain from recreation i s small — approximately $25,000 per year. The exception to th i s assessment i s the use of the unreclaimed land as w i l d l i f e habitat. While there i s no way of measur- ing the absolute value of t h i s form of land use, i t i s asserted that the s c a r c i t y of the various species r e l y i n g on th i s habitat gives i t a very high r e l a t i v e value. The completion of Libby Dam w i l l enhance the f e a s i b i l i t y of alternative, more intensive, uses of this land. Since the net benefits from present use are low;, any move toward a form of u t i l i z a t i o n which yields a significant net benefit is to be desired. In assessing the f e a s i b i l i t y of alternatives, this discussion of present use should not be regarded as irrelevant. To determine whether in fact a development generates a net benefit i t s impact on present use must be considered. While there would apparently be no net economic loss from the elimina-. tion of cattle grazing, there would be a serious and substantial loss were the w i l d l i f e habitat destroyed. These factors w i l l be considered in analysis of the overall f e a s i b i l i t y of the alternatives for develop- ment . CHAPTER IV AGRICULTURAL RECLAMATION AS A DEVELOPMENT ALTERNATIVE Further reclamation and a g r i c u l t u r a l production on the undeveloped land at Creston i s t e c h n i c a l l y f e a s i b l e . Assessing the economic f e a s i b i l - i t y of further reclamation projects requires that the benefits generated be compared with the costs. The c a p i t a l costs of reclamation w i l l be i n - curred over a very short time at the commencement of any project, while the benefits generated, w i l l accrue through the future i n the form of annual p r o f i t s from the sale of farm produce. Estimating the future l e v e l of annual benefits i s d i f f i c u l t , and the most f r u i t f u l approach at Creston i s to examine the benefits which accrue from presently reclaimed land. These benefits can then be used as the basis for estimates regarding further reclamation and a g r i c u l t u r a l production and compared with r e c l a - mation costs to determine the f e a s i b i l i t y of such undertakings. These comparisons are made i n t h i s chapter. Data r e l a t i n g to the net incomes.of farms on presently reclaimed land are compared with the estimated costs of reclamation. Such comparisons are awkward; i n addi- t i o n to e a s i l y measured tangible benefits and costs some important e f f e c t s of a g r i c u l t u r a l reclamation are i n t a n g i b l e , although monetary values are a t t r i b u t e d to them, and further e f f e c t s are unmeasurable (Sewell et at 1962, p. 6). Furthermore, while tangible primary, benefits and costs can e a s i l y be compared for i n d i v i d u a l reclamation u n i t s , i n t a n g i b l e and unmeasurable e f f e c t s are not r e a d i l y d i v i s i b l e on the same basi s . In an attempt to draw some order out of the r e s u l t i n g chaos com- parisons f o r each unit w i l l be based on .tangible primary benefits and costs only. While this constitutes only a p a r t i a l b enefit-cost compari- son such measures are the only f i r m estimates which can be compared on th i s basis, and they do r e f l e c t the basic f e a s i b i l i t y of reclaiming each unit as w e l l as demonstrating the d i f f e r e n t merits of i n d i v i d u a l u n i t s . Q u a l i f i c a t i o n s to these comparisons are then introduced, before turning to i n t a n g i b l e and unmeasurable primary benefits and costs and secondary benefits and costs. These l a t t e r e f f e c t s are discussed f o r the e n t i r e unreclaimed land and the aggregate benefit-cost r e l a t i o n s h i p i s then demonstrated from the viewpoint of the l o c a l economy, British.Columbia, and Canada. Productivity, of the S o i l s Of the many assumptions underlying the analysis of this chapter perhaps the most important i s that p r o d u c t i v i t y of new farms w i l l be sim- i l a r to that i n e x i s t i n g reclamation units — an assumption that s o i l -types are uniform.throughout the f l o o d p l a i n . There has been no intensive s o i l survey on the Creston f l a t s . The.only s o i l map which i s a v a i l a b l e was completed i n January of 1949 for the B.C. Department of. Agriculture by C. C. K e l l y , Surveyor, and J. S. D. Smith, A s s i s t a n t . This map c l a s s i f i e d most of the s o i l as Kuskanook, a s i l t y clay s o i l , while some, pri m a r i l y i n the Goat River outwash, i s classed as Wigwam Mix, having more gravel and sand than the Kuskanook s o i l . While s l i g h t v a r i a t i o n s i n these s o i l types were observed throughout the area, they were not f e l t to be s i g n i f i c a n t f o r mapping purposes. S o i l s throughout the reclaimed areas have proven to be f e r t i l e , and produce heavy crop y i e l d s (see Appendix C). There i s , however, a s l i g h t decline i n f e r t i l i t y and s u i t a b i l i t y f o r a g r i c u l t u r e the further north the s o i l s from the International Border. S o i l s i n the south are older, contain more humus, and are better drained than the more recently deposited s o i l s near Kootenay Lake, which tend to be of a heavier clay. Were there an active market f or land i n t h i s area, these differences might be r e f l e c t e d i n land values; however, land changes hands so i n - frequently that no systematic measure of t h i s difference i s a v a i l a b l e . For t h i s analysis the i n i t i a l assumption w i l l be that s o i l s i n the unreclaimed areas are uniform and of the same q u a l i t y as presently reclaimed s o i l s . Insofar as the data pertaining to productivity, are based on an average of a l l present reclamation units this, assumption i s v a l i d . Later, discussion w i l l deal with q u a l i f i c a t i o n s to t h i s assumption and v a r i a t i o n between s o i l s i n the undeveloped areas. Comparison of Primary Benefits and Costs by Area Determining the economic f e a s i b i l i t y of proposed reclamation pro- j e c t s requires that the present worth of a l l expected benefits be compared with the present worth of a l l costs. I f the benefits exceed the costs the project i s economically f e a s i b l e . F e a s i b i l i t y can be measured i n terms of the net benefits (the excess of the present value of benefits over the present value of costs) or i n terms of a benefit-cost r a t i o ( r a t i o of the present value of benefits to the present value of costs). Both of these measures are employed in examining the economic f e a s i b i l i t y of reclamation on the five areas of unreclaimed land. As explained, these comparisons are based on estimates of tangible primary costs and benefits only. Tangible Primary Benefits Tangible primary benefits w i l l consist of increases in net i n - comes of farmers using the land and w i l l be realized annually through- out the l i f e of the project. These benefits must be discounted to a pre- sent value to be comparable with reclamation costs which are incurred in the i n i t i a l year of the project. Choosing the appropriate discount rate is of major importance. In this analysis a rate of eight per cent is used. Selection of this rate, and the sensitivity of the results to changes over a range from six to ten per cent, is discussed in Appendix E. To prepare estimates of primary benefits from further agricultural reclamation data was obtained on the current production and income struc- ture of farms on reclaimed land. The inherent assumption is that future production on additional unreclaimed land w i l l be similar in nature to that on presently reclaimed land. While the presentation of most of this data has been relegated to appendices (Appendices B and C), the important results are reviewed here. Several methods of estimating the net return to farm enterprises are outlined in Appendix C. The estimated net returns per acre vary widely between different crops. After allowing for an eight per cent return on invested capital, net returns per acre range from $17 under barley to $93 in clover seed (see Table C-4). Correspondingly, the prer sent worth of these net annual incomes varies from a low of $212 to a high of $1,162, when discounted at eight per cent. A more meaningful presentation of this data is achieved by reducing these various estimates to the basis of a typical or representative acre. Assuming that the present pattern of production w i l l remain relatively con- stant, a typical acre is expected to yield a net return of $30.06 after de- ducting a l l costs, except the value of the farm operator's labor. When the cost of operator's labor has been accounted for, net returns per acre are $26.31, equivalent to a present value of $329 (see Appendix C). Several other methods were used to estimate the net worth of an acre of cropland. While the estimates derived from these methods do not coincide exactly with the figures given above, they do support the r e l i a - b i l i t y of the estimates. Analysis on the basis of complete farm enter- prises, not individual crops, indicated a present value of $350 per acre. Information on the sale and rental value of land, while not available on a consistent basis, nevertheless tends to support the earlier estimates of present value. On the basis of these investigations the annual net income per acre on presently reclaimed land after allowing for the value of operator's labor income is estimated to be $26.31, having a present discounted value of $329. This forms the basis of estimated primary benefits for compari- son with estimates of reclamation cost. This value is based on an acre of reclaimed land, already in pro- duction. As such, i t is not directly applicable for comparison with the costs of further reclamation. This i s because there w i l l be a lag of at lea s t one year between the time reclamation costs are incurred and the f i r s t annual benefits begin to accrue. This time lag has a s i g n i f i c a n t e f f e c t on the comparison of bene- f i t s and costs, and can be incorporated i n the analysis i n two ways. In- terest can be charged on reclamation costs up to the time that the f i r s t b enefits accrue, the present value of benefits at that time being compared to the i n i t i a l cost plus i n t e r e s t . A l t e r n a t i v e l y , the present value of the stream of future benefits can be discounted over the time lag to be comparable to costs at the time they are incurred. This l a t t e r approach i s adopted here — the present value of benefit streams i s calculated i n the year i n which benefits commence and then further discounted to allow for a time lag of one year. This has the e f f e c t of reducing the present value of an acre of land which w i l l be reclaimed to $305. Tangible Primary Costs The main d i r e c t costs of a g r i c u l t u r a l reclamation are the tangible primary costs of constructing dykes and i n s t a l l i n g pumps, drainage f a c i l - i t i e s , and some access structures. These costs are estimated i n d e t a i l for each unit i n Appendix D. C a p i t a l costs per acre vary s i g n i f i c a n t l y between u n i t s , the lowest estimate being $37 for Indian Reserves 1, 1A and IB, the highest $191 for the Corn Creek u n i t . A d d i tional costs for removal of e x i s t i n g vegetation and ground breaking average $10 per acre, with the range of t o t a l c a p i t a l costs per acre thus being from $47 to $201 (see Table D-3). The Timing of Reclamation A g r i c u l t u r a l reclamation can be completed i n a very short time, and i t i s assumed that crop production would begin i n the year following i n i t i a t i o n of reclamation. In the case of Duck Lake reclamation could begin i n 1970 and estimates of both,the benefits and costs can be taken as 1970 present values. For the remaining areas reclamation would not begin u n t i l 1973 when.Libby Dam.provides e f f e c t i v e c o n t r o l over the Kootenay River. To be comparable with the Duck Lake estimates, and the estimated benefits and costs of the a l t e r n a t i v e w i l d l i f e - r e c r e a t i o n de- velopment, the present value of the benefits.and costs of a g r i c u l t u r a l reclamation i n these areas i s further discounted to allow for the time elapsed between 1970 and 1973. The Indian Reserves.—Reclamation of the Indian Reserves would commence i n 1973 and bring 2,070 acres into c u l t i v a t i o n . With a present worth per acre of $305, t o t a l primary net benefits are estimated at $631,000. Comparing t h i s with the t o t a l of reclamation and s o i l preparation costs of $97,000 (Appendix.D, Table D-3) indicates the f e a s i b i l i t y of reclaiming this land. Benefits exceed costs by $534,000 and the r a t i o of benefits to costs i s 6.5:1. As t h i s area would not be reclaimed u n t i l 1973 these values are further discounted to 1970 equivalents. This.has the e f f e c t of reducing the estimates of benefits to $501,000, costs to $77,000 and net benefits to $424,000; the benefit-cost r a t i o remains unchanged. Corn Creek.—As with the Indian Reserves, reclamation of t h i s area would begin i n 1973. Comparison of benefits and costs, f o r t h i s area y i e l d s a d i f f e r e n t r e s u l t depending on whether reclamation of part of Indian Reserve 1C i s included .in the project (see Appendix D). By inclu d i n g part of Indian Reserve 1C i n the reclamation project, an a d d i t i o n a l 180 acres are brought into c u l t i v a t i o n , r a i s i n g the t o t a l c u l t i v a b l e acreage to 1,440 from 1,260 and thus increasing the bene- f i t s generated. Reclamation costs are estimated to be $275,000 whether the Indian Reserve i s included or not (see Table D-3), but t o t a l costs vary a f t e r including the per acre allowance f o r s o i l preparation. With part of Indian Reserve 1C included i n the reclamation, net benefits are approximately $119,000, while without the Reserve they are $77,000 (1970 values). While these figures i n d i c a t e that reclamation of the area i s f e a s i b l e , net benefits are not large, and the benefit-cost r a t i o s are low. This assessment involves the assumption that the adjoining Leach Lake unit-would be reclaimed i n conjunction with the Corn Creek unit (see Appendix D). Leach Lake.—Assuming that the Corn Creek unit would be re- claimed concurrently, the t o t a l cost of reclaiming t h i s area and pre- paring the s o i l for c u l t i v a t i o n i s estimated at $196,000 (Table D-3). With 2,600 acres i n c u l t i v a t i o n the present worth of primary net bene- f i t s i s $793,000 i n d i c a t i n g an excess of benefits over costs of $597,000. As t h i s area would not be reclaimed u n t i l 1973 discounting these e s t i - mates further to 1970 values reduces them to $156,000, $630,000 and $474,000 r e s p e c t i v e l y . The ben e f i t - c o s t r a t i o i s 4.0:1, c l e a r l y estab- l i s h i n g the economic f e a s i b i l i t y of. further a g r i c u l t u r a l . r e c l a m a t i o n i n th i s area. Six Mile Slough.—The estimated cost of constructing access to this area, d i t c h i n g , dyking, and s o i l preparation, i s $199,000 (Table D-3). The present worth of primary benefits i s $732,000 based on 2,400 acres i n c u l t i v a t i o n at $305 per acre. Benefits exceed costs by $533,000, the benefit-cost r a t i o being 3,7:1. This area, too, would not be reclaimed u n t i l 1973, and discounting these estimates to allow f o r this lag reduces the estimate of net benefits to $423,000, costs being $158,000 and bene- f i t s $581,000. Duck Lake.—The c a p i t a l cost of reclaiming an a d d i t i o n a l 3,000 acres i n Duck Lake has been estimated at $240,000. S o i l preparation costs w i l l r a i s e t h i s by $10 per acre to a t o t a l of. $270,000 (Table D-3). In comparison with these costs the present worth of primary net benefits i s estimated at $915,000, y i e l d i n g a net benefit of $645,000, and a bene- f i t - c o s t r a t i o of 3.4:1. Summary of Benefit-Cost Comparisons The benefit-cost comparisons presented above indi c a t e that f u r - ther a g r i c u l t u r a l reclamation i s economically f e a s i b l e f o r a l l the areas under study. These comparisons and the r e s u l t i n g estimates of net bene- f i t s and benefit-cost r a t i o s are summarized i n Table 5. For a l l areas the benefit-cost r a t i o s are favorable, ranging from a low of 1.3:1 i n the Corn Creek area to 6.5:1 i n the Indian Reserves. Net benefits range from $77,000 for the Corn Creek area to $645,000 i n the case of Duck Lake. . TABLE 5. SUMMARY OF PRIMARY BENEFIT-COST COMPARISON FOR AGRICULTURAL RECLAMATION: BY AREA RECLAMATION PRESENT COST, WORTH OF A R E A PRESENT VALUE BENEFITS 1970 1970 (C) (B) BENEFITS BENEFIT- MINUS COST COSTS RATIO (B-C) B/C 1. The Indian Reserves $77,000 $501,000 $424,000 6.5:1 2. The Corn.Creek Unit: Indian Reserve 1C included 229,000 348,000 119,000 1.5:1 Indian Reserve 1C excluded 228,000 305,000 77,000 1.3:1 3. Leach Lake 156,000 630,000 474,000 4.0:1 4. Six Mile Slough 158,000 581,000 423,000 3.7:1 5. Duck Lake 270,000 915,000 645,000 3.4:1 *Note: Tangible primary benefits and costs only are compared. Supplementary Considerations The analysis presented above has indicated that there would be su b s t a n t i a l tangible primary net benefits from further a g r i c u l t u r a l r e c l a - mation on the Creston f l a t s . The benefit-cost r a t i o s f o r i n d i v i d u a l re- camation projects are very favorable, with those f o r some units being par- t i c u l a r l y high. These r e s u l t s are unusual f o r an analysis of agriculture, i n B r i t i s h Columbia and the v a l i d i t y of the analysis should be c a r e f u l l y examined before i t i s accepted. ?S2 The most s i g n i f i c a n t f a c t o r i n determining the cost of reclamation, and hence the f e a s i b i l i t y , i s the l e v e l of.the Kootenay River a f t e r Libby Dam. The e f f e c t of the Libby Dam i s to almost eliminate the need for pro- t e c t i v e dyking against waters of the Kootenay River — making highly pro- ductive farmland a v a i l a b l e at a minimum cost (see Appendix D). More than any other factor t h i s explains the very favorable r e s u l t s of the analysis of further reclamation p r o j e c t s . Many other, factors could a f f e c t the f i n a l outcome or true net gains from a reclamation program. Market forces of course do not remain s t a t i c , and changes i n the r e l a t i v e costs of a g r i c u l t u r a l inputs and out- puts are expected- through time — with consequent r e s u l t s f o r the f e a s i - b i l i t y conclusions reached above. P r e d i c t i n g : e i t h e r the degree or d i r e c - t i o n of these r e l a t i v e changes beyond the immediate future i s very uncer- t a i n , however. Furthermore, many p h y s i c a l r e l a t i o n s h i p s r e s u l t i n g from the new regime on the Kootenay River w i l l only be f u l l y apparent i n a decade or so. Among the many a d d i t i o n a l considerations that may a f f e c t the gains to be expected from a g r i c u l t u r a l reclamation, the following were judged to warrant s p e c i a l i n v e s t i g a t i o n : 1. Increased dyke erosion due to the reduced sediment load of the Kootenay River below Libby Dam. 2. Kootenay Lake l e v e l s . a f t e r Libby Dam. 3. V a r i a t i o n i n . s o i l c a p a b i l i t i e s . 4. S e n s i t i v i t y of the r e s u l t s to changes i n the . discount rate. 5. The e f f e c t of changes i n crop practices and managerial i n t e n s i t y a f t e r Libby Dam. 6. Long-run trends i n the prices of a g r i c u l t u r a l output. 7. The e f f e c t of a time lag between the i n i t i a t i o n of reclamation and f i r s t harvest. 8. The feed f r e i g h t subsidy and i t s e f f e c t on the appropriate measure of b e n e f i t . Detailed discussion of these factors has.been relegated to Appendix E. The major conclusions from examination of these factors are reviewed b r i e f l y here. The f i r s t four factors can be discounted as of l i t t l e or no prac- t i c a l s i g n i f i c a n c e . Possible changes i n the regulation of Kootenay Lake l e v e l s a f t e r Libby Dam were examined, and while the proposed changes are of a conjectural nature, they are not expected to have a . s i g n i f i c a n t e f f e c t on further reclamation projects. The basic premise of f e a s i b i l - i t y was found to be i n s e n s i t i v e to changes i n the discount rate over a range of s i x to ten per cent. The e f f e c t of a two-year time lag between reclamation and r e a l i z a t i o n of the f i r s t commercial harvest was also examined. While this resulted i n both lower net benefits and b e n e f i t - cost r a t i o s , there was no s i g n i f i c a n t , e f f e c t on the f e a s i b i l i t y of r e - clamation. P r o v i n c i a l . f e e d f r e i g h t subsidies were considered and shown to have a n e g l i g i b l e e f f e c t on the benefit-cost a n a l y s i s . The remaining factors are s i g n i f i c a n t , however, and.could play an important r o l e i n determining the f i n a l , f e a s i b i l i t y , of reclamation. One such f a c t o r i s the p o s s i b i l i t y of,increased bank erosion by the Kootenay River which.will.be carrying a greatly reduced s i l t load a f t e r Libby Dam. While the extent of such erosion i s again speculative, i t could be extremely important. The main fa c t o r responsible f o r the very favorable r e s u l t s of the benefit-cost analysis i s the e f f e c t of Libby Dam i n minimizing reclamation, costs. If extensive erosion protection becomes necessaryy -„ much of. this b e n e f i t may be negated. This f a c t o r could s i g n i f i c a n t l y a l t e r the costs of reclamation and hence the e n t i r e benefit-cost a n a l y s i s . Another s i g n i f i c a n t factor i s the v a r i a t i o n i n s o i l , p r o d u c t i v i t y among the unreclaimed areas. While the main analysis assumed a uniform pro d u c t i v i t y , there i s some i n d i c a t i o n that this may not be so. I t appears that the Indian Reserves are s i g n i f i c a n t l y above average i n f e r - t i l i t y , while the Corn Creek area and Duck Lake may be below average. I f the Corn Creek area s o i l s are s i g n i f i c a n t l y below average p r o d u c t i v i t y i t could render reclamation of t h i s area i n f e a s i b l e — o f the f i v e areas being considered i t has the lowest net benefits and the lowest b e n e f i t - cost r a t i o . Long-run expectations for grain prices are not good. A permanent decline i n the value of farm output would reduce both the net benefits of further reclamation and the r a t i o s of benefits to costs. O f f s e t t i n g the rather bleak outlook f o r grain markets i s a strong trend away from grain production which i s expected a f t e r the completion of Libby Dam. With the flood threat removed.flats farming i s expected to become.more intensive, and to s h i f t toward crops which y i e l d ..a higher net return than grain. Such a trend would have the e f f e c t of enhancing the f e a s i b i l i t y of further reclamation. In an o v e r a l l assessment i t must be concluded that further a g r i - c u l t u r a l reclamation on.the Creston f l a t s i s economically f e a s i b l e . In t h i s regard the summary presented i n Table 5 witk a t o t a l present value of tangible primary net benefits from $2,043,000 to $2,085,000 should be considered as the best approximation of the present value of the benefits and costs involved. It i s recognized that several factors could cause the f e a s i b i l i t y to deviate s i g n i f i c a n t l y from these e s t i - mates. Due to the nature of the factors involved i t i s not possible to estimate t h e i r s i g n i f i c a n c e without exhaustive t e c h n i c a l studies which are beyond the scope of t h i s i n v e s t i g a t i o n . Intangible and Unmeasurable Primary Benefits and Costs It i s assumed that there w i l l be no intangible or unmeasur- able primary benefits associated with a g r i c u l t u r a l reclamation on the Creston f l a t s . There w i l l , however, be major primary costs of both types as a r e s u l t of the destruction of important w i l d l i f e habitat and the loss of opportunities for outdoor r e c r e a t i o n . Outdoor recreation at present includes the warm water sport f i s h e r y i n Duck Lake, b i r d watching and nature observation, and water- fowl hunting. The extent and value of t h i s r e c r e a t i o n a l use i s the sub- j e c t of Appendix F, and i s also treated i n Chapter I I I . The value of_ r e c r e a t i o n a l opportunities afforded by the unreclaimed land i s estimated to be $25,000 annually. These opportunities have a present value of $312,000, assuming constant future u t i l i z a t i o n . Destruction of t h i s w i l d l i f e habitat by a g r i c u l t u r a l reclamation would eliminate•these oppor- t u n i t i e s , representing a l o s s , or i n t a n g i b l e primary cost of $312,000. Perhaps more important than the l o s s of opportunities for recreation would be the loss of wi l d l i f e as a result of the elimination of key habitat. The significance of this habitat for many important waterfowl species, plus breeding populations of both ospreys and herons is discussed in Chapter III. There i s no way of estimating the value of this habitat in i t s more passive role of simply providing living space for w i l d l i f e . Loss of the habitat would mean loss of the wild-' l i f e , however, constituting a significant real loss, and one which we are committed, through national policy, to avoid (Wright 1968). Such losses must be considered as unmeasurable primary costs when an attempt is made to measure the true gains from agricultural reclamation. While i t was possible to compare the tangible primary bene- f i t s and costs for each reclamation area, i t i s not possible to estimate either the intangible or unmeasurable primary costs on this basis. With- in the unreclaimed areas the distribution of recreational activity varies from year to year, and the wildli f e which provides the basis for such recreation depends on a l l areas for total habitat requirements. Recla- mation of one area which supports only slight recreational use could s t i l l result in a large recreational loss in other areas due to the dis- ruption of habitat and destruction of w i l d l i f e . The same d i f f i c u l t i e s arise in any attempt to attribute the unmeasurable costs to individual areas. Because intangible and unmeasurable costs cannot be e s t i - mated for individual areas they were omitted from the comparison of p r i - mary benefits and costs on an area basis. These costs are brought into the benefit-cost analysis on an aggregate basis when the total benefit- cost relationship is demonstrated. Secondary Benefits and Costs As pointed out in Chapter II, secondary costs and benefits stem indirectly from, or are induced by, a development project. An example was given of a processing industry established to handle the output of a project — i t s output constituting secondary benefits, i t s costs being secondary costs; A comprehensive benefit-cost analysis requires that a l l these costs and benefits be considered in conjunction with primary benefits and costs. Secondary benefits and costs are important mainly when a project is being analyzed from a regional point of view. While they may measure a project's impact on a given area, they are of much less interest from a broader viewpoint. As a general rule i t can be argued that projects which are similar in nature would have approximately the same secondary impact i f undertaken elsewhere in the nation. It is argued, therefore, that emphasis should be on efficient u t i l i z a t i o n of the basic resources, as measured by primary benefits and costs, rather than on secondary im- pact (Ciriacy-Wantrup 1969, Sewell et at 1962). It is unlikely that any new processing industries would be estab- lished at Creston to deal with production from further reclamation. What would be expected i s an increase in the business of existing processing and distribution centers, and in a l l businesses serving the farm sector. In attempting to measure the "net value" of this secondary impact, there is a danger of serious confusion. Matters such, as employment created, incomes (usually ill-defined), business revenues, and taxes paid, are often stressed as important second- ary benefits. But most of these are "gross" measures, generally costs rather than benefits, and do not i n any way reflect on .the net gain from the secondary activity. For this- reason a very narrow definition of net secondary benefits — the net economic gain, or the value of the secondary product or service over and above the costs of inputs — is adopted for this analysis. Discussion of net secondary benefits f i r s t requires an estimate of the total amount of secondary business activity which would be gener- ated by reclamation of an additional 11,500 acres at Creston. From these estimates the true net annual gain can be derived and then dis- counted to a present value equivalent. The detailed calculations required for these estimates are rele- gated to Appendix A. The f u l l "multiplied" impact on secondary business revenues w i l l vary between the local, provincial and national levels after allowing for the non-export content of Creston agricultural out- put at each level and the different regional multipliers. It is e s t i - mated that with further reclamation at Creston the increase in annual secondary business revenues, which would not occur in the absence of reclamation, would be in the order of $1,310,000 in the local economy, A A $1,320,000 within British Columbia and $1,264,000 throughout Canada; The export-base thesis and i t s significance for regional multi- pli e r analysis i s reviewed in Appendix A. A A Only export content has been considered relevant in determin- ing, the degree to which secondary business revenues which would not occur otherwise are attributed to further agricultural reclamation. This accounts for the lower level of secondary spending at the national level. These are estimates of gross business revenues which would be generated by agricultural spending. But only a small part of this w i l l be a net gain, because of the costs involved i n providing the goods and services purchased. Net gains w i l l exist only to the extent that i n - comes w i l l be higher as a result of the agricultural development than they would be i f the labor and capital at the secondary level were otherwise employed. Net benefits must therefore take the form of i n - come in excess of the normal earnings which these inputs would earn in other employment. Since these alternative earnings tend to be re- flected in the costs (wages, rent, interest, etc.) of the business en- terprises, net gains are manifested in the form of income in excess of costs — business profits after the operators have allowed a normal rate of return for their own capital and labor input. With the degree of competition which exists in the r e t a i l and service sectors of the economy, such profits tend to be low. Profits as a proportion of sales are probably in the order of two to three per cent, and a rate of three per cent is adopted in this study. Applying a rate of three per cent to the estimates of business revenues above, the net secondary benefit per annum i s estimated as follows: within the local economy, $39,300; at the provincial level, $39,600; within Canada as a whole, $37,900. Discounted at a rate of eight, per cent the respective present value equivalents are $490,000, $495,000 and $474,000. The Aggregate Benefit-Cost Relationship This, chapter has investigated the benefits and costs of agricul- tural reclamation at the primaryvand secondary levels. The findings at these levels are integrated in an aggregate comparison in Table 6. The table indicates the results of the analysis from three viewpoints: the local community, the province of British Columbia, and Canada. Agricul- tural reclamation is feasible from a l l points of view, although the mag- nitude of net benefits that can be expected varies. The unquantified loss that would result from the destruction of present wildlife habitat forms an important qualification to these conclusions. Tangible primary benefits and costs are identical from each viewpoint. The present value of annual profits from agricultural pro- duction is estimated at $2,975,000, while the present value of recla- mation costs is $890,000. Since the costs of reclamation and the values generated under agriculture would a l l be incurred by local interests, their magnitudes remain constant in each referent group. Intangibles and unmeasurable costs and benefits are included in Table 6. No intangible or unmeasurable benefits are expected from agri- cultural reclamation, but significant costs are expected from the loss of w i l d l i f e habitat and opportunities for outdoor recreation. A present value of $312,000 has been placed on recreational use of the unreclaimed land and i t s loss represents an intangible primary- cost, • With half of the present recreational use by local residents the loss to the local referent group is given as $156,000, while the f u l l loss of $312,000 is appropriate from the point of view of.British Columbia and Canada. TABLE 6 THE BENEFITS AND COSTS OF AGRICULTURAL RECLAMATION (Present Discounted Values, 1970) REFERENT GROUP, OR VIEWPOINT LOCAL COMMUNITY BRITISH (CRESTON) COLUMBIA CANADA B E N E F I T S Primary b e n e f i t s : Tangible $ 2,975,000 Intangible n i l Unmeasurable n i l Secondary benefits: Total benefits: $16,375,000 $19,350,000 $ 2,975,000 n i l n i l $16,500,000 $19,475,000 $ 2,975,000 n i l n i l $15,800,000 $18,775,000 C O S T S Primary costs: Secondary costs: Total costs: * Net Benefits . Tangible $ Intangible Unmeasurable 890,000 $ 890,000 $ 890,000 156,000 312,000 312,000 loss of w i l d l i f e habitat and w i l d - l i f e species "small" value " l a r g e " value "very large" to l o c a l r e s i - to a l l B r i - value to dents t i s h Columbians Canadians $15,885,000 $16,931,000 $ 2,419,000 $16,005,000 $17,207,000 $ 2,268,000 $15,326,000 $16,528,000 $ 2,247,000 As discussed i n the text, unmeasurable costs must be set o f f against t h i s measure of net benefit to provide a true measure of net gain. Unmeasurable primary costs are also incorporated in Table 6. It is not possible to estimate the absolute value of the wi l d l i f e habitat to the various referent groups, but some inferences are drawn regarding i t s relative value between these groups.. Such non-consumptive bene- f i t s accrue in relatively small degree to local residents. The mainte- nance of continental waterfowl habitat and the protection of rare species is largely the concern of the federal government, and to a lesser extent the provincial government. Thus the value of the existing habitat i n - creases as the point of view broadens from the local community to the province and fi n a l l y to Canada as a whole. Secondary costs and benefits vary between the referent groups, due to the effect of the various multipliers, and the different export content of agricultural spending when assessed from three different points of view. The annual gross receipts of secondary business are discounted to present values and presented as secondary benefits in Table 6, and the present value of annual business costs is given as secondary costs. On balance the present values of net secondary bene- f i t s are small, only $490,000 in the local community, $495,000 within Bri t i s h Columbia, and $474,000 in Canada. When a l l the relevant costs and benefits are brought into bal- ance in this way some conclusions can be drawn regarding the f e a s i b i l - ity of further agricultural reclamation at Creston.. Taken together, tangible-primary and secondary benefits represent a net gain with a present value of approximately $2.6 million. Offset against this is the loss of intangible recreational opportunities with a present worth of approximately $312,000 and an additional unmeasurable loss of im- portant w i l d l i f e species through, the destruction of their habitat.' On the basis of those benefits and costs which are evaluated the overall net gain from agricultural reclamation appears to be $2.3 million. This gain would have to be set off against the wild l i f e losses which are not evaluated. Whether the overall balance would favor agri- culture or not depends on the value of this••,wildlife. If the w i l d l i f e is worth more than $2.3 million society as a whole would suffer a net loss by permitting further reclamation. If the wildlife has a value less than $2.3 million there would be an overall net gain by sacrificing i t in favor of agricultural development. The value to society of the w i l d l i f e supported by the undeveloped land remains the c r i t i c a l link in determining the overall f e a s i b i l i t y of reclamation for agricultural purposes. If agricultural development is feasible, however, the key question in determining whether i t is the most desirable form of use for the land must be the net gains which would be generated by alternative uses. Consideration of the other development possibility, w i l d l i f e and recreation development, is the subject of the next chapter. Comparison of the net gains from these alternatives w i l l then provide a basis for selecting the optimum use for the presently undeveloped land. The Distribution.of Net Benefits Under Agricultural. Development A basic question which is not addressed i n the usual context of benefit-cost analysis concerns the distribution of net benefits. In the preceding a n a l y s i s , for instance, we have concluded that con- siderable net benefits would be generated i f the unreclaimed land were put into i n t e n s i v e a g r i c u l t u r a l production. We have not given any con- s i d e r a t i o n to the d i s t r i b u t i o n of these b e n e f i t s , however —- simply assuming that both the benefits and the costs would be borne by the entrepreneurs undertaking reclamation. T h e ' d i s t r i b u t i o n of these b e n e f i t s , i n addition to t h e i r absolute l e v e l , should be taken into account when comparing a l t e r n a t i v e uses f o r the land i n t h i s study ( K x u t i l l a and Eckstein 1958). The primary bene- f i t s which have been estimated from a g r i c u l t u r a l reclamation would accrue to a small group of entrepreneurs. R e d i s t r i b u t i o n of part of t h i s benefit to the resource owners, B r i t i s h Columbia and the Lower Kootenay Indian Band, could be achieved through s a l e , lease, or r e n t a l . This contrasts with a w i l d l i f e and recreation development where most benefits would be d i s t r i b u t e d i n the form of non-priced r e c r e a t i o n a l opportunities. These d i f f e r e n t patterns of d i s t r i b u t i o n w i l l be r e - ferred to further i n Chapter VI where the a l t e r n a t i v e s are compared. CHAPTER V WILDLIFE HABITAT AND OUTDOOR RECREATION AS A DEVELOPMENT ALTERNATIVE Development of the unreclaimed land to improve i t s q u a l i t y as w i l d l i f e habitat and increase i t s usefulness for outdoor recreation i s planned as an a l t e r n a t i v e to a g r i c u l t u r a l reclamation. The phy s i c a l structures required for this development were discussed b r i e f l y i n Chap- ter I. While t e c h n i c a l l y f e a s i b l e and r e l a t i v e l y simple from an engineer- ing standpoint, i t i s d i f f i c u l t to assess the economic f e a s i b i l i t y of t h i s development. When examining the f e a s i b i l i t y of a g r i c u l t u r a l reclamation, predictions of y i e l d s and incomes were based on experience on almost i d e n t i c a l land which had been reclaimed. In the case of w i l d l i f e - o r i e n t e d development we do not have such a convenient basis for p r e d i c t i o n . The development which i s planned w i l l be the f i r s t of i t s kind i n B r i t i s h Columbia. While s i m i l a r projects have been undertaken i n the United States and elsewhere.in Canada, the conditions d i f f e r s i g n i f i c a n t l y , and provide l i t t l e . m o r e than.general guidelines.to what may be achieved. The exact d e t a i l s of management i n the Creston project cannot be s p e c i f i e d i n advance as an optimum management regime w i l l only be known a f t e r experi- mentation with l o c a l conditions. S i m i l a r l y , the exact timing of develop- ment cannot be predicted as i t , too, depends on a c e r t a i n degree of exper- imentation and experience with l o c a l conditions. Given these q u a l i f i c a t i o n s , t h i s chapter w i l l f i r s t discuss the nature of primary benefits which could be r e a l i z e d through the develop- ment plan and the area's•capacity for such benefits. The extent to which this capacity w i l l be used, and the use expected in each future year is estimated, and values placed on this use where possible. Analysis then turns to quantification of primary costs, followed by a review of second- ary benefits and costs. Benefit-cost relationships are then considered at both the primary and secondary levels, with the f i n a l section of the chapter dealing with the distribution of net benefit and the separate implications of the project for. the local community, British Columbia, .. and Canada. Primary Benefits The primary benefits which would be generated through the wild- life-recreation project are diverse. The benefits that can be expected are classified as follows: 1. Provision of habitat and production of fish and w i l d l i f e . 2. Education and research. 3. Outdoor recreation. 4. Agricultural production. 5. Commercial fur production. 6. Water storage. This classification of benefits encompasses tangible, intangible, and unmeasurable benefits. Tangible benefits include agricultural produc- tion, commercial fur production, and water.storage. The output in each of these classifications is. normally sold at a price. For this study imputed values are assigned !.to the output of outdoor recreation. The f i r s t two categories of primary, benefit, the provision of habitat and production of f i s h and w i l d l i f e , .and education and research opportunities, are classed as unmeasurable since they cannot be quantified in monetary terms. Quantifiable Primary Benefits Recreational opportunities are the most significant primary bene- f i t s which can be quantified in monetary terms. As measures of value are not readily available for these intangible benefits, values must be assigned to the recreational output of the project. This output and i t s estimated values are discussed f i r s t in the following paragraphs. Tangible primary benefits are then discussed, and a brief summary draws together the total estimated value of quantifiable primary benefits. Outdoor Recreation One of the most important, and certainly the most easily identi- fied benefit from the development of a wild l i f e management area w i l l be the opportunities created for outdoor recreation. Opportunities w i l l be improved for warmwater sportsfishing, hiking and t r a i l walking, bird watch- ing and nature photography, and waterfowl and upland bird hunting. While a l l of these activities take place in the area at present, the intensity of use is expected to increase dramatically as the area is developed. One of the major factors restricting use of these areas at pre- sent is the lack of access. Provision of adequate access for recreation- is t s w i l l lead to the realization of significant recreational benefits. At the same time this may lead to management problems in trying to balance the number of different types of recreationists in an area at any one time, and the requirements of wild l i f e for undisturbed habitat. This people-wildlife "conflict could become particularly severe and i t s resolu- tion requires a carefully worked out compromise between desires to serve people or wi l d l i f e . There w i l l be three major types of outdoor recreation as a result of the wildlife-recreation plan — warmwater sportsfishing, waterfowl and upland bird hunting, and non-consumptive recreation including hiking, bird watching, nature interpretation, and photography. Warmwater sportfishing.—Present development plans c a l l for warm- water sportfishing to be restricted to approximately 3,000 acres on Duck Lake with the rest of the area developed solely as nesting habitat. It is f e l t that the maximum capacity of the area would be 60 fishermen per day (one fisherman per 50 acres) over a six-month season from May through October or a total of 10,800 fisherman-days of use annually. Full use of this capacity for sportfishing i s not expected until 1984; the pattern of increase in use is described in detail in Appendix G. The procedure adopted to estimate the value of this recreation i s re- viewed in Appendix H, where the value of warmwater sportfishing is e s t i - mated at $4.00 per fisherman-day. Applying this value to the estimated future pattern of use of the fishery, and discounting the expected annual values at eight per cent, yields a capitalized present worth of sportfish- ing opportunities of $301,000 (see Table H-l). Waterfowl and upland bird hunting.--After development i t is ex- pected that about four^fifths of the area or approximately 10,670 acres w i l l be open for hunting-each year. It is assumed that development plans for wi l d l i f e habitat w i l l result in a net of 90 per cent of the area being usable after dykes and Hunting w i l l be the least intensive of a l l recreational uses. Hunters can easily overcrowd an area so that the quality of every hunter's experience deteriorates. The usual consequence of overcrowded hunting areas is poor hunting practice? leading to high crippling loss, and waste of gamebirds (Anderson 1961, Bednarik 1961). At present i t is f e l t that the saturation point for hunters w i l l be reached with a concentration of one hunter per 100 acres, with two 'shifts' a day of about four to five hours each. This indicates a capa- city to support approximately 215 hunters in the area per day. Over a hunting season of 10 weeks duration (70 days), the capacity of the area would then be in the order of 15,000 hunter-days per year. The unreclaimed lands (Crown and Indian Reserves) presently support about 5,000 hunter-days of use annually (Appendix F), and f u l l development of the area w i l l provide opportunities to increase this use by 10,000 hunter-days. As a result of increased populations of birds in the area, addi- tional hunting opportunities w i l l arise on private land adjacent to the management area. It is d i f f i c u l t to estimate the number of days of hunter ut i l i z a t i o n which may be realized on this land. Landowners w i l l be re- luctant to permit uncontrolled public hunting, and may find i t necessary to levy fees for hunting. Most of the farm operators on the flats live in the town of Creston and not on their farms, and administration and control of hunters on private property w i l l be d i f f i c u l t . Additional access construction, the same assumption as was employed for agriculture. However, the entire area of Duck Lake w i l l be usable for w i l d l i f e pur- poses, as w i l l the W. H. Dale Unit. This increases the net usable area to 13,340 acres, four-fifths of which w i l l be used by hunters. constraints w i l l be imposed by the types of crops grown, and yearly var- iations in the time of harvest. At present approximately 1,500 hunter-days are realized on private land on the Creston flats (Appendix F). Assuming a significant increase in bird populations after habitat improvement and a convenient adminis- trative arrangement for private land owners, this use may increase to 5,000 hunter-days annually, an increment of 3,500 hunter-days. Full use of the hunting capacity of the area w i l l be reached by 1977. Appendix H presents the estimated pattern of growth in hunting activity. Based on a study of waterfowl hunters at Creston (Appendix G) the value of hunting after the project is complete is estimated at $8.00 per hunter-day. When this unit value is applied to the expected annual pattern of growth in hunting activity and discounted at eight per cent, the capitalized present worth of hunting opportunities is estimated at $640,000. Hiking, use of nature interpretation t r a i l s , bird watching, and photography,r-These activities w i l l probably account for the bulk of on- site recreational use. The upper limit to this use of the area w i l l be determined by the tolerance of wild l i f e to human presence, and the toler- ance of people to the presence of other people. It is expected that dur- ing the nesting season access to some marshes may have to be restricted. Major attractions for these activities w i l l be the rarer bird species such as ospreys, swans and geese. At the same time there w i l l be a great abundance of more common species of birds, and i t is no exag- geration to claim that the richness and diversity of w i l d l i f e w i l l be un- equalled in North America. With, f u l l development of f a c i l i t i e s for photography, bird watch- ing, nature interpretation t r a i l s , and picnic sites the area could easily support 250,000 visitor-days per year by persons interested in these pur^- suits. The pattern of growth in u t i l i z a t i o n of non-consumptive recrea- tion f a c i l i t i e s is estimated in Appendix G. It is estimated that capacity would be f u l l y utilized by 1985, with the level of use remaining constant thereafter. The value of non-consumptive recreation is estimated at $5.00 per visitor-day. Applying this value to the estimated pattern of future use and discounting at eight per cent yields a capitalized present worth of non-consumptive recreation of $10,088,000 (see Table H-3). Agricultural Production Present plans c a l l for approximately 30 per cent of the area to be developed for agricultural production complementary to the management of w i l d l i f e habitat. This may take the form of grazing for cattle, or the production of selected crops, and w i l l occupy about 3,500 acres. It is assumed that productivity on this land w i l l be the same as on presently reclaimed land. Gross productivity per acre w i l l average $105, with an average annual net productivity of $26. (See Appendix C, page C-14). On 3,000 acres this w i l l mean an annual gross output of $315,000, indicating a p r i - mary benefit of $78,000. The f i n a l distribution of this production may differ from that on presently reclaimed land. Land devoted to crops w i l l be under a share- crop agreement, with the Management Area's share (approximately one-third) l e f t in the f i e l d as feed and cover for w i l d l i f e . This portion of crop production becomes a d i r e c t input i n game management, and does not pass through the normal market channels. The share l e f t for w i l d l i f e does not enter c a l c u l a t i o n of the primary benefit of a g r i c u l t u r a l production. Rather, i t represents a cost of w i l d l i f e management which i s not d i r e c t - ly r e g i s t e r e d . The net values i n a g r i c u l t u r a l production are estimated on the same basis as employed i n the analysis of a g r i c u l t u r a l development i n Chapter IV. The present value of a g r i c u l t u r a l production on 2,300 acres (2/3 of the t o t a l acreage used for a g r i c u l t u r e ) i s estimated to be $549,000. Values would increase i n each year from 1971 through 1983, remaining constant a f t e r that time (see Table H-4). Commercial Fur Production Habitat development and water l e v e l control w i l l create oppor- t u n i t i e s f or an increased harvest of furs for the commercial market. The values i n commercial fur harvests w i l l not be large. I t seems un- l i k e l y that the gross value of the annual harvest of furs would exceed $10,000 and w i l l more l i k e l y be i n the neighbourhood of $5,000. Of t h i s , approximately $4,000 would be expected as net returns to trappers and r o y a l t i e s on furs, comprising the primary benefit from trapping. The c a l c u l a t i o n of present values a r i s i n g from this harvest is.summarized i n Table H-5. This constitutes a minor benefit, the present value i n 1970 being $37,000. Water Storage The portions of the area which are dyked and maintained as im- poundments for waterfowl may also serve as water storage areas. Bene- f i t s r e s u l t i n g from water storage are i n the form of downstream flood protection, and s t a b i l i z a t i o n of downstream power generation. R e a l i z a - t i o n of such benefits w i l l depend on the manner i n which these impound- ments are managed. Downstream benefits w i l l only be generated i f water l e v e l s i n the impoundments are raised during the freshet on the Kootenay River, and drawn down l a t e r i n the year. This w i l l not be the case, however, since the object of dyking and e s t a b l i s h i n g impoundments i s to s t a b i l i z e water l e v e l s throughout the nesting season. With .water l e v e l s held con- stant there w i l l , i n f a c t , be no benefit from storage during the c r i t i c a l freshet period. Thus primary benefits i n the form of water storage are expected to be i n s i g n i f i c a n t . In any case, a f t e r the completion of Libby Dam water storage values must be rel a t e d to the incremental contribution to o v e r a l l r i v e r - basin needs. With the storage and downstream protection provided by Libby Dam the incremental value of storage on.the unreclaimed lands w i l l be n e g l i g i b l e ( K r u t i l l a 1961, 1967). The e f f e c t s of water storage are therefore not considered further i n . t h i s a n a l y s i s . Summary: Quantifiable Primary Benefits The present value estimates presented above are summarized i n Table 7. In making t h i s summary two points should be emphasized. F i r s t , the benefts which have been evaluated are the incremental benefits d i r e c t - l y a t t r i b u t a b l e to the proposed development — not the t o t a l output of the area. This i s of consequence only f or f i s h i n g and hunting where some u t i l i z a t i o n presently takes place i n the absence of any development. Secondly, these values are only f or those types of 'output' for which values can be quantified i n monetary terms. They therefore omit the benefits associated with the provision of habitat and production of f i s h and w i l d l i f e (except insofar as t h i s generates the recreation measured), and the benefits from educational and research use. These benefits are dealt with subsequently i n the category of unmeasurable b e n e f i t s . TABLE 7 SUMMARY OF PRESENT VALUES, BENEFITS FROM WILDLIFE AND OUTDOOR RECREATION DEVELOPMENT B E N E F I T PRESENT VALUE, 1970 Intangible: F i s h i n g $ 301,000 Hunting $ 640,000 Non-Consumptive Recreation $10,088,000 $11,029,000 Tangible: A g r i c u l t u r a l Production Trapping $ $ 549,000 37,000 $ 586,000 Present Value of Intangible and Tangible Benefits, 1970 $11,615,000 As discussed, t h i s summary includes tangible and intangible primary benefits only. Unmeasurable Primary Benefits I t i s not possible to assign monetary values to some of the im- portant aspects of the project's output — benefits which accrue beyond those r e a l i z e d through on-site p a r t i c i p a t i o n . Such benefits remain as unmeasurable — they include the p r o v i s i o n of habitat and production of f i s h and w i l d l i f e , and educational and research opportunities. Unmeasurable benefits are p a r t i c u l a r l y important i n a project of t h i s nature and are discussed i n the following paragraphs. Pro v i s i o n of Habitat and Production of F i s h and W i l d l i f e This category of unmeasurable benefits a r i s e s from the w i l d l i f e - r e creation development independent of on-site r e c r e a t i o n a l or other use. There w i l l be important benefits from the habitat development which w i l l increase the production of w i l d l i f e — such benefits being p a r t i c u l a r l y important with rare or endangered species. Further benefits accrue from the maintenance and improvement of flyway habitat for migratory species not "produced" on-site, i n c l u d i n g the f u l f i l m e n t of i n t e r n a t i o n a l treaty o b l i g a t i o n s . Waterfowl production.—The proposed habitat development w i l l greatly increase the on-site production of waterfowl, including geese and swans as w e l l as ducks. In the past the on-site production of waterfowl has been almost n e g l i g i b l e . S t a b i l i z a t i o n of water l e v e l s and development of nesting habitat w i l l , lead to the establishment of l o c a l breeding populations. The area can be expected to support high population densities as i t has a very f e r t i l e s o i l and.will create i d e a l growing conditions f o r aquatic feed. Under f i n a l development, i t i s estimated that the area w i l l pro- duce 5,000 ducks annually, comprised mainly of mallards, widgeon and. t e a l . Production by tree-nesting species such as wood ducks w i l l be enhanced by the i n s t a l l a t i o n of nesting boxes, but they w i l l form a minor portion of the t o t a l nesting population. Control of water l e v e l s and creation of nesting islands should enable the establishment of a large resident population of Canada geese. Annual production of young i s expected to be i n the order of 2,000. This w i l l be p a r t i c u l a r l y important i n replacing production l o s t on the Duncan Marshes which have been destroyed by the Duncan Dam r e s e r v o i r . Whistling swans are common to the area, passing through i n large numbers during t h e i r spring migration, and returning i n l a t e f a l l and winter. While some d i f f i c u l t y can be encountered i n developing a breed- ing population at Creston, i t i s hoped that o v e r a l l enhancement of the habitat w i l l eventually lead to t h i s . Annual production of 100 cygnets i s estimated. Production of upland game b i r d s . — U p l a n d game birds such as pheasants, grouse and mourning doves w i l l also benefit from habitat de- velopment. These benefits w i l l be i n c i d e n t a l to a g r i c u l t u r a l u t i l i z a t i o n aimed at providing food and cover, with s t r i c t c o n t r o l over the use of p e s t i c i d e s and chemical sprays. Birds such as pheasants w i l l benefit greatly from s t a b i l i z e d marsh l e v e l s , and an annual production of approxi- mately 500 i s expected. Source of estimates, D. D. Moore, Supervisor, Creston Valley W i l d l i f e Management Area. Other birds.—Many other species w i l l f i n d a managed habitat a t t r a c t i v e . Marsh, water and shore birds such as great blue herons, k i l l d e e r , b i t t e r n s , sandpipers, coots, g u l l s and terns can be expected to increase i n number, as can jays, kingbirds, woodpeckers, dippers and various sparrows. Predatory birds such as owls and hawks w i l l also i n - crease. Of s p e c i a l s i g n i f i c a n c e i n t h i s regard i s the breeding popula- t i o n of ospreys i n the area. W i l d l i f e management w i l l play a s i g n i f i c a n t r o l e simply i n securing t h e i r habitat against human encroachment. There i s a d e f i n i t e p o s s i b i l i t y that the population may a c t u a l l y increase as the production of f i s h i n the shallow lakes and marshes increases. While such an increase might only be i n the order of one. or two breeding p a i r s , this i s nevertheless s i g n i f i c a n t f o r such a rare species.. Furbearing animals.—Muskrat populations can be expected to i n - crease as water l e v e l s are s t a b i l i z e d and more aquatic vegetation i s introduced. Beaver and mink may also f i n d the habitat a t t r a c t i v e . Production of 15,000 muskrats and 400 mink per year i s expected a f t e r f u l l development Big game.—Benefits to big game animals are not expected to be of major s i g n i f i c a n c e . There may be some s l i g h t use by deer as a winter- ing area, but no s i g n i f i c a n t increase i n production i s expected. F i s h p r o d u c t i o n . — F i s h produced within the area w i l l consist main- l y of warmwater s p o r t s f i s h such as black bass, perch, and sunfish. These f i s h are presently found i n Duck Lake, Six Mile Slough and Leach Lake. Development and management of the area f o r w i l d l i f e and waterfowl habitat w i l l greatly enhance the production of these fish due to the stabiliza- tion of water levels. Flyway habitat.-^-The benefit from wildl i f e management in this case w i l l not be in the nature of direct waterfowl production, but rather i n the provision of temporary habitat for/migrating birds. The unreclaimed lands presently serve in.this function, meeting the habitat requirements of migratory waterfowl in three distinct ways. These are: (a) as a staging area for spring migrants en route to northern breeding grounds; (b) a summer moulting and staging area for ducks from widely scattered areas;, and (c) a staging area for f a l l migrants en route to southern wintering areas. Migratory stopovers [(a) and (c) above] on the unreclaimed lands vary greatly from year to year depending on the weather, habitat condi- tion, and continental waterfowl populations. At present i t i s estimated that migratory u t i l i z a t i o n by ducks averages 4,200,000 days of use per year (70,000 ducks at 60 days per duck). With intensive management i t is f e l t that this can be raised to approximately 15,000,000 days of use — an increase of roughly 11,000,000 duck-use-days. Total goose-days of use at present averages 180,000 annually (3,000 geese at an average of 60 days) and use by migratory swans is in the same order — 180,000 swan-use days by about 3,000 swans. Geese respond readily to new habitat condi- tions and i t is estimated that usage may exceed 1,000,000 days annually after development, an increase of roughly 800,000 days. While migrating swans are less responsive to habitat changes i t is f e l t that use by them may double to 360,000 days. At present, both Duck Lake and Leach Lake receive considerable use by ducks which are undergoing t h e i r summer moult [(b) above]. Use i s mainly by males of the various species which depart from the breeding grounds while females are on the nests and seek. out. s u i t a b l e habitat for th e i r e c l i p s e moult. At th i s time they become f l i g h t l e s s and vulnerable to predators f o r about a month. Male diving ducks make greatest use of expanses of open water on these lakes, while males of dabbling species r e l y more heavily on the marsh areas and protection of emergent vegeta- t i o n . In addition to. this summer moulting use by adult males, the un- reclaimed lands act as l a t e summer staging and gathering areas f o r females and young ra i s e d on nesting grounds which may be many miles away. To the extent that use.of t h i s area f o r moulting and lat e summer staging i s made by birds which nest elsewhere, i t i s d i f f i c u l t to argue that improving the habitat w i l l increase o v e r a l l use. Increased nesting populations w i l l increase use by l o c a l b i r d s , but unless nesting areas elsewhere i n the flyway expand, use by non-local birds f o r moulting can- not be expected to increase. One e f f e c t of improved habitat, however, may be to increase the s u r v i v a l rate of birds moulting i n the area. Fulfilment of International Obligations The continental nature of benefits from the management of water- fowl populations i s recognized i n the Migratory Birds Treaty of 1916 be- tween Canada and the United States. Canada has undertaken to f u l f i l her treaty obligations through the Migratory Birds Convention Act of 1917. The contribution of the development at Creston to the f u l f i l m e n t of these obligations i s an additional benefit which must go unmeasured and un- valued, but which is nevertheless important. Such international o b l i - gations are a formal recognition of the benefits which are classed as "provision of habitat and production of fish and w i l d l i f e " — recogniz- ing their importance and interdependence between nations as well as their internal importance to .Canada. Educational and Research Use There w i l l be many.opportunities for sci e n t i f i c research within the management area. The study of many species of waterfowl and upland game birds w i l l provide information of value in game management. Research and i t s benefits should not be restricted to game management alone — there w i l l also be opportunities for ecological and environmental re- search in such fields as pesticides- and herbicide control which w i l l be of wider significance. The. value of such basic research li e s in the general applicabil- ity of findings and their use in improving standards of living. There is no satisfactory means of assessing the value of past research of this nature and i t would be foolish to try to estimate the value of future research. Nevertheless, there may be significant values in education and research as part of the wildlife-recreation development and these values form an important benefit. Summary.of Primary Benefits The preceding discussions indicate the significance of primary benefits generated under development of the unreclaimed land for.wildlife management and outdoor recreation. Preparing a summary i n which these benefits can be t o t a l l e d and t h e i r r e l a t i v e importance established i s not possible. Primary benefits which are quantified i n monetary terms have a t o t a l present value of $11,615,000 of which r e c r e a t i o n a l bene- f i t s are by f a r the most important, accounting for $11,029,000. But the unmeasurable benefits associated with t h i s development may be of equal or greater importance,vas they provide the.basic purpose for the development (Province of B r i t i s h Columbia 1968b). These l a t t e r bene- f i t s cannot be q u a n t i f i e d i n monetary terms, and as a consequence, the t o t a l value of primary benefits cannot be estimated. This repre- sents a serious shortcoming of the analysis, and when benefit-cost com- parisons are made for this development, these important benefits can only be appended as q u a l i t a t i v e amendments.to the monetary comparisons. Primary Costs Improving the unreclaimed land for w i l d l i f e and recreation re- quires the construction of dykes and the i n s t a l l a t i o n of pumping capa- c i t y which w i l l provide a means of regulating the water l e v e l s i n the marshes. A l l primary costs of the w i l d l i f e - r e c r e a t i o n development are tangible costs, c o n s i s t i n g of goods and services normally priced i n market transactions. No primary costs which are e i t h e r intangible or unmeasurable are i d e n t i f i e d with the w i l d l i f e - r e c r e a t i o n project. Nature of the Wildlife-Recreation Project Fluctuating water l e v e l s are the l i f e blood of the marshes — marshes continue to e x i s t only because a stable equilibrium i n water level and plant,communities is not established. "A marsh survives and is productive only because of the ins t a b i l i t y of i t s water levels. Were the marsh held stable, the edges would gradually invade the middle and there would be nothing but a vast bed of Phragmites" (Hochbaum and Ward 1964). Despite the fact that fluctuating water levels are necessary i f a marsh is to exist at a l l , the fluctuation which occurs in nature may be excessive and prevent optimum ut i l i z a t i o n by wildlife. "Water — even good, clean water — is often of reduced value to waterfowl i f the level is constantly stable or i f water levels change at the wrong time" (Green et al 1964) . Such is the case with the unreclaimed land at Creston. The sea- sonal rise in water levels during the waterfowl nesting season destroys virtually a l l the nests which have been established except for some tree- nesting species. When spring and f a l l migrants arrive in the area water levels have receded and only a fraction of the total area is available for use. Habitat development has two basic objectives. These are to make the area suitable for nesting waterfowl, and to increase i t s capacity to support migratory birds. The methods of achieving these objectives differ and are discussed separately below. Improving nesting habitat.-—For successful nesting, waterfowl re- quire-; both .a stable water level and a suitable shoreline (Moore 1969). Water levels on.the unreclaimed land can be stabilized by dyking against the Kootenay River freshet, and installing pumps and control structures so that evapotranspiration losses can be offset. Suitable shoreline can be created by constructing islands or broad shallow ditches. The e s s e n t i a l requirement i s that water l e v e l f l u c t u a t i o n be minimized during nesting. Increasing the capacity to support migratory b i r d s . — T h e carrying capacity for non-nesting waterfowl can best be increased not so much by s t a b i l i z a t i o n of water l e v e l s , but through manipulation of water l e v e l s at c r i t i c a l times. Plant species and undesirable vegetation or algae can be c o n t r o l l e d by p e r i o d i c drawdown of water l e v e l s . By promoting the growth of preferred food species, and regulating the. water surface area, the carrying capacity of the marshes can be g r e a t l y increased. To meet both the above objectives, peripheral dykes to protect the marshes from the Kootenay River freshet are e s s e n t i a l . Further deve- lopment i n the form of i n t e r n a l cross dykes w i l l serve to compartmentalize the u n i t s , allowing for v a r i a t i o n i n habitat conditions to meet the r e - quirements of d i f f e r e n t waterfowl species. F a c i l i t i e s f o r outdoor r e c r e a t i o n . — I n addition to improvements to the w i l d l i f e h abitat, a major part of the proposed development w i l l be con- cerned with providing access and other amenities for outdoor r e c r e a t i o n i s t s . These f a c i l i t i e s w i l l include such things as t r a i l s and footpaths for h i k - ers, blinds for b i r d watching and photography, canoe " t r a i l s " , boat launch- ing points and possibly permanent blinds f o r waterfowl hunters. Timing of Development and the Present Value of Costs The s i g n i f i c a n c e of Libby Dam f o r future development of the unre- claimed lands has already been emphasized. There would be no point i n be- ginning extensive c a p i t a l construction on these lands before Libby Dam i s operative — i t would be p o i n t l e s s to construct dykes capable of withstand- ing present Kootenay River levels i f their required l i f e i s only two to three years. It is expected that the f i r s t effect of Libby Dam w i l l be f e l t in 1972, with f u l l control expected in 1973. Thus with the exception of Duck Lake and some aspects of Leach Lake, no major capital outlays are expected before 1973. Capital costs w i l l not a l l be incurred in the i n i t i a l year of development. To calculate present values these costs are discounted back to their worth in 1970. Timing of the Duck Lake development w i l l be an exception. Duck Lake is already protected from the Kootenay River by dyke, and capital construction and installation of necessary pumps can proceed regardless of the completion of Libby Dam. The present values of capital costs for each area are summarized in Table 8. Annual maintenance costs w i l l depend on the extent of develop- ment, reaching maximum annual levels only after f i n a l development. To calculate the present value of maintenance costs i t has been assumed that they increase in direct proportion to the extent of capital develop- ment each year. Salary and management costs w i l l also increase in rela- tion to the extent of development, reaching an upper limit in 1976 of $75,000 per year. The present values of annual maintenance and salary expenses are also included in Table 8. Calculation of the present values summarized in Table 8 i s presented in detail in Appendix J. TABLE 8 TEE. PRESENT VALUE OF PRIMARY COSTS, WILDLIFE AND OUTDOOR RECREATION DEVELOPMENT I T E M PRESENT VALUE OF CAPITAL COSTS PRESENT VALUE OF ANNUAL MAINTENANCE Indian Reserve 1A $ 20,000 $ 19,000 Indian Reserves 1, IB 223,000 62,000 Corn Creek 78,000 53,000 Leach Lake 330,000 119,000 Six Mile Slough 149,000 56,000 Duck Lake 594,000 208,000 TOTAL $1,565,000 $581,000 Salaries $833,000 Present value of capital costs $1,565,000 Present value of annual costs $1,414,000 In Table 8 a l l future costs are discounted back to 1970 values using a discount rate of eight per cent. The present worth of annual costs and salaries has been calculated assuming a stream of annual ex- penditures in perpetuity. The present value of a l l costs is estimated at $2,979,000, of which. $1,565,000 C53 per cent) is the present value of capital costs, and $1,414,000 (47 per cent) represents the present value of annual costs. The simplest interpretation of these present values is that they represent the amount which would be required in a lump sum.at the pre- sent to meet a l l future costs. Thus, i f a total of $2,979,000 was i n - vested today at eight per cent a l l future capital and operating costs could be met from i t . Present values have been presented as of 1970 although for most areas there w i l l be l i t t l e development until 1973. The development of Duck Lake w i l l begin in 1970 as the f i r s t step in the overall develop- ment. 1970 is thus regarded as the commencement date for the entire project and a l l costs have been discounted back to this basis. Secondary Benefits and Costs The nature of secondary benefits and costs was discussed in Chap- ters II and IV. The definition of net secondary benefit applied in Chap- ter IV — the net economic gain, or the value of the secondary product or service over and above the cost of inputs — is adopted here. Second- ary benefits from this development w i l l result from spending by recreation- is ts and others in conjunction with u t i l i z a t i o n of the area. Discussion of these net secondary benefits requires that the total amount of secondary business activity which would be generated by the pro- ject be estimated. The true net annual gain can then be derived from these estimates and discounted to a present value. The calculations necessary for such estimates are presented in Appendix L. A variety of factors w i l l operate in determining the magnitude and distribution of secondary benefits from this project. The major force w i l l be recreationists' spending, but in addition spending w i l l be generated through agriculture and trapping. Secondary benefits w i l l develop slowly, not being f u l l y realized until 1985 when recreational u t i l i z a t i o n reaches the f u l l capacity of the area. Estimates of this impact are d i f f i c u l t due to the different tim- ing assumed for the various types of u t i l i z a t i o n . It is estimated that business revenues w i l l reach a maximum by 1985 when spending by recreation- i s t s , farmers, and trappers w i l l be about $2,000,000. Secondary Benefits in the Local Economy In dealing with the net benefit resulting from this spending refer- ence is made to the discussion of income and employment multipliers in Appendix A. The analysis in Appendix A follows from the export base the- sis in which only new income to a region is considered relevant i n deter- mining the multiplied impact of new investments. At the local level, spend- ing by Creston residents for recreation does not represent new income to the region — simply a spending of income already earned in the local economy. We assume that Creston residents would spend the same amount in the area even i f the particular recreation opportunities were not developed. Therefore, to measure the net secondary impact attributable to development we deal only with recreational spending by non-local persons, plus spending generated by agriculture and trapping. These are the cate- gories of spending which would not occur i f there were no development. Taking account of these factors reduces the appropriate measure of i n i t i a l secondary business receipts as of 1985 to $1,960,000. The local impact of this spending w i l l be expanded through, the multiplier to approximately $3,058,000. Of this, approximately three per cent, or $92,000, can be taken as net secondary benefit. This i s a measure of the net secondary benefit for the year11985 only, however. Allowing for the annual i n - crease in benefits up to this l i m i t , and a constant level beyond, the present value in 1970 is $731,000. Secondary Benefits at the Provincial level To be consistent with the export base thesis spending considered at the provincial level includes only spending by recreationists from outside British Columbia. We assume that British Columbia residents would spend the same amount in British Columbia in the absence of recre- ational opportunities at Creston. Agricultural spending is also adjusted to take account of non-export content. When these adjustments are made i t is estimated that gross receipts of secondary businesses would be i n - creased by $3,237,000 in 1985 as a direct result of the proposed develop- ment at Creston ($1,413,000 in the i n i t i a l or f i r s t round; $3,237,000 in total after the multiplier effect). Net secondary benefit in this year would be approximately $97,000, remaining constant thereafter. The pre- sent value of net secondary benefit at the provincial level, allowing for annual increments to 1985 is estimated to be $773,000. Secondary Benefits at the National Level Expanding the analysis to the national level further reduces the secondary benefit whichtis considered relevant. At this level only ex- penditures by non-Canadians are relevant, under the assumption that Cana- dians who spend money on recreation at Creston would spend the same amount in Canada even i f the w i l d l i f e development did not take place. Appropri- ate adjustments are also made to agriculturally generated spending to allow for non-export content at the national level. When these adjustments are made i t Is estimated that the gross receipts of businesses in Canada in 1985 would be increased by $1,790,000 due to the wi l d l i f e development at Creston. Net benefits in this year would be approximately $54,000, the present value of a l l net secondary benefits being $431,000. These are interesting estimates, as they are only slightly more than half of the comparable estimates when the referent group i s British Columbia. This is due to the fact that at the national level only spend- ing attracted to Canada from outside the national borders is considered relevant. At the provincial level a l l spending attracted from outside British Columbia was relevant, representing a much larger amount. This illustrates very aptly that secondary impact i s mainly of interest when a project is being analyzed from a narrow regional view- point. These measures are of l i t t l e interest from a national point of view — at this level i t can usually be\argued that a similar project would have the same secondary impact i f undertaken elsewhere in the nation. A second reason for emphasizing this point is that i t should focus attention on the importance of primary benefits in resource deve- lopment. Most of the primary benefits of this particular project accrue to people from outside the local community, and in this case the estimated primary benefits increase as the viewpoint of the analysis-is broadened. To summarize, net secondary benefits are defined as the true eco- nomic gains from business activity generated by recreational and other uses under the proposed wi l d l i f e development. The present value of these benefits to the Creston economy i s estimated at $731,000, to the pro- v i n c i a l economy $773,000 and n a t i o n a l l y $431,000. Such benefits are mainly of i n t e r e s t from the l o c a l (Creston) perspective,.being of less i n t e r e s t at the p r o v i n c i a l and na t i o n a l l e v e l s . Benefit-Cost Relationships and the D i s t r i b u t i o n Among Referent Groups The economic f e a s i b i l i t y of the w i l d l i f e - r e c r e a t i o n project can be assessed by comparing the present value of benefits with the present value of costs. Estimates of the present value of costs and be n e f i t s , at both the primary and secondary l e v e l s , were presented i n the preced- ing sections of th i s chapter. In comparing benefits and costs the net assessment of the project's f e a s i b i l i t y depends on the viewpoint adopted for the an a l y s i s . In the following discussion the benefit-cost compari- sons are summarized from the point of view of the three referent groups adopted i n th i s study. Primary Benefit-Cost Comparisons The present value of primary costs was summarized above i n Table 8, and the present value of primary benefits (except unmeasurable bene- f i t s ) was summarized i n Table 7. These are general summaries, however, and ignore the d i s t r i b u t i o n of primary costs and benefits among the var- ious referent groups. Present proposals c a l l f o r primary costs to be shared between the B r i t i s h Columbia Fish.and W i l d l i f e Branch, the Canadian W i l d l i f e Service, and Ducks Unlimited (Canada). Ducks Unlimited w i l l pay for the c a p i t a l costs of developing the Leach Lake and Six Mile Slough areas, xvlth a to- t a l present value of $479,000. C a p i t a l costs of developing the Indian Reserves and Corn Creek, having a t o t a l present value of $321,000, w i l l be borne by the Canadian W i l d l i f e Service, and the B r i t i s h Columbia Fis h and W i l d l i f e Branch w i l l bear the costs of Duck.Lake and the Admin- i s t r a t i v e Centre, with present values of $765,000. Annual maintenance and salary costs, having a t o t a l present value of $1,414,000, w i l l be shared equally by the p r o v i n c i a l and f e d e r a l governments. The d i s t r i b u t i o n of the present value of primary costs between the p a r t i c i p a t i n g bodies w i l l be as follows: Ducks Unlimited (Canada) $ 479,000 Canada (Canadian W i l d l i f e Service) $1,028,000 B r i t i s h Columbia (Fish and W i l d l i f e Branch) $1,472,000 T o t a l $2,979,000 The p a r t i c i p a t i o n by Ducks Unlimited provides an i n t e r e s t i n g point i n a benefit-cost analysis such as t h i s . Ducks Unlimited i s a private, non-profit organization dedicated to the conservation of North American waterfowl resources by preservation and development of breeding habitat i n Canada. Ducks Unlimited was incorporated i n the United States i n 1937, and the organization of Ducks Unlimited (Canada) completed i n 1938. Ducks Unlimited (Canada) provides a.means by which donations and pr i v a t e funds from the United States can be spent on habitat improvement i n Canada (Gavin 1964). Insofar as t h i s money comes from outside Canada, the development of the Leach Lake and Six Mile Slough areas i s e s s e n t i a l l y costless to Canadians. Therefore, whether the referent group i s the l o c a l area, B r i - t i s h Columbia, or Canada, the costs of these developments (estimated at $479,000, present value 1970) are appropriately omitted from a n a l y s i s , while any benefits accruing to Canada from these developments are i n - cluded. In the same way that primary costs are spread between the d i f f e r - ent referent groups, primary recreation benefits may also be widely d i s - persed. Recreationists using the area may be l o c a l residents, residents from elsewhere i n B r i t i s h Columbia, Canada, or the United States. I t i s thus p a r t i c u l a r l y important that the project's f e a s i b i l i t y i s examined from the perspective of the d i f f e r e n t referent groups. The l o c a l economy: primary costs and b e n e f i t s . — C o s t s would be incurred by the l o c a l area only i n s o f a r as i t contributes to p r o v i n c i a l and f e d e r a l general revenue. I t i s d i f f i c u l t to argue that any p a r t i c u - l a r f r a c t i o n of the costs borne by eit h e r the Fi s h and W i l d l i f e Branch or the Canadian W i l d l i f e Service can be traced to revenues from the Creston area. I t could be argued on one hand that no costs are borne by the l o - c a l area, since a l l funds w i l l come from higher l e v e l s of government. An a l t e r n a t i v e argument might be that l o c a l c i t i z e n s contribute to the costs on an equal per capita basis with other c i t i z e n s of B r i t i s h Colum- b i a and Canada. On this basis costs borne l o c a l l y are i n s i g n i f i c a n t , having a present value of roughly $5,000.* Creston area population i s 1/3 of one per cent of B.C. popula- tion, 1/30 of one per cent of Canadian population. T o t a l expenditures by B.C. Fi s h and W i l d l i f e Branch w i l l be $1.5 m i l l i o n , by Canadian Wild- l i f e Service $1.0 m i l l i o n . On a per.capita basis the l o c a l content of p r o v i n c i a l expenditure would be $4,950, of Canadian W i l d l i f e Service expenditure approximately $330. While costs r e l a t i v e to the l o c a l economy are hard to i d e n t i f y , i t i s a r e l a t i v e l y straightforward matter to i d e n t i f y the benefits to the l o c a l area. I t i s assumed that a l l the benefits from a g r i c u l t u r e ($549,000) and a l l the benefits from trapping ($37,000) accrue to l o c a l persons. In terms of hunting,, approximately 50 per cent of the benefit, or $320,000 i s expected to .accrue to l o c a l residents. S i m i l a r l y , i t i s estimated that approximately 50 per cent of the benefit from the warmwater sport f i s h e r y , or $150,000 would accrue to l o c a l fishermen. For non-consumptive recreation the proportion of l o c a l use w i l l be very low — not i n excess of two to three per cent. The population i n the Creston area i s low and use by l o c a l residents w i l l c e r t a i n l y not keep pace with use by others. A b e n e f i t i n the order of $300,000 i s thus appropriate f o r non-consumptive recreation. T o t a l l i n g these figures the primary.benefits accruing to the l o c a l area have a present.value of approximately $1,356,000. When these benefits are compared to the almost n e g l i g i b l e estimate of primary costs a net benefit estimate of $1,350,000 appears i n order. B r i t i s h Columbia: primary costs and benefits.—When the r e f e r - ent group i s expanded to include the.entire province of B r i t i s h Columbia, a l l costs borne through the F i s h and W i l d l i f e Branch become relevant. These costs have a t o t a l present value of $1,472,000 as discussed above. The relevant benefits i n t h i s case include a l l benefits accru- ing to c i t i z e n s of B r i t i s h Columbia. Again, i t . i s assumed that a l l At present l o c a l hunters account for 48.per cent of the u t i l i - zation on the Creston f l a t s . This i s expected to increase to 50 per cent a f t e r development, with l o c a l residents being i n a p r i v i l e g e d p o s i - t i o n with respect to access to hunt on p r i v a t e land. benefits from a g r i c u l t u r e and trapping accrue to B r i t i s h Columbians ($549,000 and $37,000 r e s p e c t i v e l y ) . In terms of hunting, the en t i r e benefit — $640,000 — i s assumed to accrue to B r i t i s h Columbians. Approximately 65 per cent of the u t i l i z a t i o n of the warmwater sport- f i s h e r y may be by B r i t i s h Columbians, having a present value of $196,000. Both f i s h i n g and hunting tend to be r e p e t i t i v e outdoor recreation a c t i v i t i e s and a high degree of u t i l i z a t i o n by B r i t i s h Columbians i s ex- pected. Estimating the amount of non-consumptive recreation taken by B r i t i s h Columbians i s more d i f f i c u l t . Such recreation i s l a r g e l y non- r e p e t i t i v e , with most v i s i t o r s (outside l o c a l residents) probably making at most one t r i p to the area.per year. A f t e r reviewing figures r e l a t i n g to park attendance i n B r i t i s h Columbia (Appendix G), i t appears u n l i k e l y that more than 35 per cent of the u t i l i z a t i o n i n non-consumptive recreation w i l l be by B r i t i s h Columbians from outside the l o c a l area. Combined with three per cent u t i l i z a t i o n by l o c a l residents, t o t a l use by B r i t i s h Columbians i s 38 per cent, with a present value of $3,833,000. B r i t i s h Columbians.presently account for 96 per cent of the hunting i n the area and hunters from the United States four per cent. Af t e r expansion and development there w i l l be s u f f i c i e n t pressure from B r i t i s h Columbians to u t i l i z e a l l opportunities. ** This may be a conservative estimate. I t implies that i n the year 1985 about 95,000 v i s i t o r - d a y s would be taken by B r i t i s h Columbians. If our population grows at eight per cent per year i t . w i l l t o t a l about 7.5 m i l l i o n i n 1985. 95,000 v i s i t o r - d a y s represents a one day v i s i t by 1.3 per cent of the population of B r i t i s h Columbia. While t h i s may appear low, i t should be noted that Creston i s a considerable distance from B r i - t i s h Columbia•s population centre, and . that B r i t i s h Columbians face many high q u a l i t y r e c r e a t i o n a l a l t e r n a t i v e s . The t o t a l present value i n 1970 of a l l benefits accruing within the B r i t i s h Columbia referent group i s thus $5,652,000, composed as follows: Benefits to B r i t i s h Columbians from: A g r i c u l t u r a l production $549,000 Trapping 37,000 Hunting 640,000 Fis h i n g 196,000 Non-consumptive recreation 3,833,000 To t a l $5,255,000 When compared with the present value of costs borne by B r i t i s h Columbia of $1,472,000 this y i e l d s a net b e n e f i t estimate of $3,783,000. Canada: primary costs and benefits.—When the referent group i s Canada a l l costs and benefits accruing within the country become relevant. A l l costs except those borne by Ducks Unlimited are included i n the analy- s i s , increasing the measure of t o t a l costs to $2,500,000 (present value 1970). The main e f f e c t on benefits w i l l be to increase the r e c r e a t i o n a l benefits included i n the comparison with costs. Hunting benefits accrue 100 per cent to Canadians ( B r i t i s h Columbians), and we expect the propor- t i o n of f i s h i n g benefits to increase from 65 per cent for B r i t i s h Columbians to approximately 80 per cent, with a present value of $240,000. Referring again to the campground attendance figures i t appears that as much as 40 per cent of the non-consumptive r e c r e a t i o n a l use could be by Canadians from outside of B r i t i s h Columbia. This would increase t o t a l u t i l i z a t i o n by Canadians to 78 per cent, the present value of which is $7,869,000. The remaining u t i l i z a t i o n and benefit would accrue to non-Canadians, almost a l l of whom would be from the United States. For both agriculture and. trapping a l l benefits accrue to local residents and hence to Canadians.. The total present value in 1970 of a l l benefits accruing in Canada is estimated to be $9,335,000, composed as follows: Benefits to Canadians from: Agricultural production $549,000 Trapping 37,000 Hunting 640,000 Fishing 240,000 Non-consumptive recreation 7,869,000 Total $9,335,000 Compared with the present value of total costs accruing within Canada of $2,500,000 net primary benefits are estimated to be $6,835,000 (present value 1970). Summary: Primary Benefit-Cost Comparisons The preceding analysis establishes the economic efficiency of the proposed wildlife development. The f e a s i b i l i t y estimates are summarized in Table 9 which indicates the significance of changes in the referent groups. TABLE 9 COMPARISON OF PRIMARY BENEFITS AND COSTS. BY REFERENT GROUP CRESTON (LOCAL ECONOMY) BRITISH COLUMBIA CANADA Present value of primary benefits (B) $1,356,000 $5,255,000 $9,335,000 Present value of primary costs (C) 5,000 1,472,000 2,500,000 Net primary benefits (B-C) 1,351,000 3,783,000 6,835,000 Primary benefit-cost ratio (B/C) 271:1 3.6:1 3.7:1 In presenting this summary, i t should f i r s t be reiterated that unmeasurable primary benefits are not included in this analysis. For this reason we have only a partial comparison•of primary benefits with the f u l l measure of primary costs and the fe a s i b i l i t y estimates must be interpreted accordingly — they understate the true degree of feasi- b i l i t y . It is expected that the magnitude of unmeasurable primary bene- f i t s w i l l vary between the referent groups. While such benefits are not included in this summary, they are integrated in the total benefit-cost comparison later in this chapter. Secondly, this summary provides an excellent i l l u s t r a t i o n of the way in which the f e a s i b i l i t y of a project varies depending on the refer- ent group adopted. For the local economy net primary benefits are e s t i - mated at $1.35 million, the ratio of benefits to costs being 271:1. This illustrates aptly that benefits to a local area tend to be dispro- portionate when most costs of a development are borne by outside bodies. The province of B r i t i s h Columbia i s responsible f o r roughly 50 per cent of the development costs, but c i t i z e n s of B r i t i s h Columbia w i l l r e a l i z e only 45 per cent of the benefit . This i s r e f l e c t e d i n the f a c t that the benefit-cost r a t i o i s lowest when the referent group i s B r i t i s h Columbia. At the nationa l l e v e l , Canadians other than B r i t i s h Columbians w i l l reap a larger share of the r e c r e a t i o n a l benefits r e l a t i v e to the costs borne by the Canadian W i l d l i f e Service. A t . t h i s l e v e l we encounter a higher benefit-cost r a t i o , i n d i c a t i v e of the f a c t that some of the spending by the B r i t i s h Columbia F i s h and W i l d l i f e Branch w i l l generate benefits to Canadians outside B r i t i s h Columbia. Eighty-four per cent of the t o t a l costs are borne within Canada, and 81 per cent of t o t a l benefits r e a l i z e d within Canada. I t i s expected that costs and benefits not accounted f o r within the Canadian referent group w i l l accrue almost e x c l u s i v e l y to residents of the United States. Discussing, the r e l i a b i l i t y or accuracy of these findings i s a d i f f i c u l t task. Many aspects of the project w i l l be.experimental, and i t i s a pioneering e f f o r t i n B r i t i s h Columbia — basic t e c h n i c a l r e l a t i o n - ships between input and output are therefore very d i f f i c u l t to estimate. Compounding this i s the fac t that almost the ent i r e output (except a g r i - c ulture and trapping) w i l l consist of non-marketed goods and services — w i l d l i f e , and opportunities f o r outdoor recreation. These factors have made analysis d i f f i c u l t and frequently laborious. Despite these problems, i t i s f e l t that the assumptions regard- ing the output from this project, and i t s value, are r e a l i s t i c and i f they are i n error i t i s an error of understatement. Recent experience with attendance and participation at similar f a c i l i t i e s throughout.North America supports this view. While i t is impossible to submit the estimates of this analysis to any tests other than that of judgement, one aspect which can be tested is the effect of the discount rate on the outcome of the analysis. The analysis summarized above is based on values discounted to 1970 at a rate of eight per cent. The analysis has also been carried out with discount rates of six and ten per cent and the results of this are summarized in Appendix K. Due to the varied distribution of costs and benefits through time, these alternative discount rates alter the degree of f e a s i b i l i t y , although only slightly. A six per cent rate deals less harshly with benefits in the future and hence increases the f e a s i b i l i t y , while a rate of 10 per cent discounts future benefits more severely and .reduces the estimated present value of net benefits. These changes are not significant, how- ever, and the project remains feasible over the range of discount rates from six to ten.per cent. The significance of the discount rate is discussed further when comparisons are drawn between the agricultural and wil d l i f e development alternatives. Secondary Benefit-Cost.Comparisons Secondary benefits and costs were treated thoroughly earlier in this chapter. At the secondary level a l l benefits and costs are tangible, and no problems arise from either intangible or unmeasurable secondary effects. Estimates of the present value of net secondary benefits vary among the referent groups. At the local level they .are estimated as $731,000, $773,000 provincially, and $431,000 nationally. Secondary benefits and costs are incorporated in the total benefit-cost compari- sons of Table 10. Annual: gross receipts of secondary businesses are discounted to present values and presented as benefits, and the present value of annual business costs is given as secondary costs. Total Benefit-Cost Comparisons A total benefit-cost comparison incorporating both primary and secondary benefits and costs is presented in Table 10, with separate comparisons for each referent group. Net benefits which are quantified in monetary terms total $2,082,000 within the local referent group, $4,556,000 within British Columbia and $7,266,000 within Canada. In- corporating unmeasurable primary benefits renders the total comparison rather awkward, and the total net benefit estimates must be qualified accordingly since they understate the true net benefits of the w i l d l i f e - recreation project. Under the wildlife-recreation development a l l un- measurable effects f a l l in the primary benefit category, the opposite of the proposed agricultural development where a l l unmeasurable effects were primary costs. When a l l real costs and benefits are compared in this manner,.it is clear that the proposal for wildlife and outdoor recreation develop- ment represents a feasible investment project. This analysis alone, however, does not answer the question of the most efficient use for the undeveloped land. This question can only be answered through a compari- son of the f e a s i b i l i t y estimates for the two alternatives, agriculture and wildlife-recreation, which is the task of the next chapter. TABLE 10 THE BENEFITS AND COSTS OF WILDLIFE-RECREATION DEVELOPMENT REFERENT GROUP? OR VIEWPOINT LOCAL COMMUNITY BRITISH (CRESTON) COLUMBIA CANADA B E N E F I T S Primary benefits: Tangible $ 586,000 $ 586,000 $ 586,000 Intangible $ 770,000 $ 4,669,000 $ 8,749,000 Unmeasurable pr o v i s i o n of habitat and production of w i l d l i f e species. "small" value " l a r g e " value "very large" to l o c a l area to a l l B r i - value to t i s h Colum'^ Canadians bians Secondary be n e f i t s : $24,364,000 $25,764,000 $14,365,000 To t a l b e n e f i t s : $25,720,000 $31,019,000 $23,700,000 C O S T S Primary costs: Tangible $ 5,000 $ 1,472,000 $ 2,500,000 Intangible n i l n i l n i l Unmeasurable n i l n i l n i l Secondary costs: $23,633,000 $24,991,000 $13,934,000 Tot a l costs: $23,638,000 $26,463,000 $16,434,000 Total.-Net Benefits* $ 2,082,000 $ 4,556,000 $ 7,226,000 As discussed, unmeasurable benefits must be added to these net benefit estimates to provide a true measure of net gain. The D i s t r i b u t i o n of Benefits This chapter has paid l i t t l e a ttention to the basic issue of using a p u b l i c l y owned land resource (excepting of course the Indian Reserves) to benefit a p a r t i c u l a r group i n society, mainly outdoor r e c r e a t i o n i s t s . The d i s t r i b u t i o n of costs and benefits between the l o c a l , p r o v i n c i a l , and n a t i o n a l economies was analyzed, but beyond this the more basic question of whether the users of the land (recreation- i s t s ) w i l l compensate the owners of the land .(the public at large and the Lower Kootenay Indian Band) has not entered i n t o this a n a l y s i s . Again we face the question of the f i n a l d i s t r i b u t i o n of the net b e n e f i t , not i t s t o t a l amount. Of p a r t i c u l a r i n t e r e s t are the types of arrangements which can be made for r e c r e a t i o n a l use of the Indian Reserves. Whatever the arrangements they do not a f f e c t the l e v e l of net benefit, only i t s f i n a l d i s t r i b u t i o n . D i s t r i b u t i o n a l considerations of this nature may be important and are discussed at greater length i n the next chapter when the development a l t e r n a t i v e s are compared. CHAPTER VI THE ALTERNATIVES COMPARED: BENEFITS AND COSTS FROM AGRICULTURE AND FROM WILDLIFE AND OUTDOOR RECREATION The preceding chapters have examined the economic f e a s i b i l i t y of continuing with present land use on the Creston f l a t s , of reclaiming the land for agricultural production, and of developing It for wild l i f e and outdoor recreation purposes. A brief investigation of present land use revealed i t to be an unattractive alternative, and i t is dismissed from further discussion. For both the agricultural and wil d l i f e alternatives the investigations reveal fundamental economic f e a s i b i l i t y , with s i g n i f i - cant net benefits generated in each case. The object of this chapter is to compare these two alternatives and.decide whether either can be clear- ly established as a superior development. Use of the Benefit-Cost Framework for Comparison and Choice Benefit-cost analysis of the two alternatives has so far answered only the very basic question of the fe a s i b i l i t y of each. Both alternatives are shown to be feasible, and measures of net benefit and benefit-cost ratios are available for each. To choose consistently between the two projects on the basis of this information requires that the appropriate basis for the decision be clearly established. The different applications of benefit-cost analysis were referred to briefly in Chapter IX. The question which must be answered in this instance is very clear, and f a l l s into the fourth category identified, "the optimum choice between the two competing projects or mutually ex- clusive alternatives for the same'site." The appropriate criterion for a decision of this nature is also very clear: the choice should be based on the maximum net benefits generated by the respective projects. Thus, for the comparisons which follow,the basis for establishing the superiority of one project over the other w i l l be the net benefits generated, discounted to present values in 1970. The Alternatives Compared: Local, Provincial, and National Referent'Groups In the case of the wildlife-recreation development, changing the referent group in the analysis has important implications for the present value of net benefits. In the case of agricultural development the re- sults vary only slightly. The measures of net gain Cor loss) derived in Chapters IV and V are compared below for each of the three relevant view- points or referent groups. Comparison of Alternatives from the Local Viewpoint Analysis from this viewpoint i s the narrowest in scope. A l l p r i - mary benefits from agricultural production are included as i t is assumed that local residents w i l l undertake.''any development of this nature. Only a fraction of the primary benefits from the wildli f e development w i l l be included, however, as most beneficiaries are expected to come from out- side the Creston area. To f a c i l i t a t e discussion,-"the various measures of net benefit or cost f o r the two a l t e r n a t i v e s are summarized i n Table 11. This table should be regarded as a rough balance sheet s e t t i n g out the r e l a t i v e merits of the two al t e r n a t i v e s from the l o c a l viewpoint. f i t s (tangible and intangible) from the a g r i c u l t u r a l development exceeds the corresponding value from the w i l d l i f e - r e c r e a t i o n development by approx- imately $0.58 m i l l i o n . This follows as a d i r e c t r e s u l t of the narrow scope implied by th i s viewpoint, thereby omitting most of the benefits from the w i l d l i f e - r e c r e a t i o n a l t e r n a t i v e . At t h i s l e v e l the present value of quantified primary net bene- TABLE 11 COMPARISON OF ALTERNATIVES FROM THE LOCAL VIEWPOINT ESTIMATED VALUE OF: AGRICULTURAL DEVELOPMENT WILDLIFE-RECREATION DEVELOPMENT A. Net Primary Benefits Tangible ) Intangible ) $1,929,000 $1,350,000 Unmeasurable (COST) destruction (BENEFIT) en- of habitat and loss of rare w i l d - l i f e species hancement of habitat, i n - creased produc- t i o n of w i l d l i f e , education :-and r e - search use B. Net Secondary Benefits $ 398,000 $ 731,000 The present value of net secondary benefits is greatest In the case of the wildl i f e development, exceeding the comparable measure in agriculture by $0.33 million. This i s explained by the fact that in the long run spending generated by recreationists w i l l exceed that generated through agriculture by a significant margin. Differences between the two projects are most pronounced at the level of unmeasurable benefits or costs. The wi l d l i f e development would create important unmeasurable benefits through the on-site production of w i l d l i f e , enhancement of habitat., and provision of educational and research opportunities. For the agricultural development there are no unmeasurable benefits, but serious unmeasurable costs. These costs arise from the destruction of habitat and loss of rare wild l i f e species. The balance between the alternatives from the local point of view is d i f f i c u l t to determine. The scales are tipped in favor of agriculture by the measures of net primary and secondary benefits which exceed the corresponding measures from wildlife development by a total of $0.25 million. Offsetting this advantage, however, are the unmeasurable costs associated with the agricultural development, in opposition to unmeasurable benefits from the wildlife-recreation development. A choice between the two projects at this level hinges on these unmeasurable benefits and costs. If the local community places l i t t l e value on the production of wi l d l i f e and protection of rare, species, a choice made at this level would favor the agricultural alternative with i t s preponderance of net measurable benefits. The preferences of the local community alone, however, do not provide a satisfactory basis for such a choice. A larger community of interest is more appropriate when such values are involved. Comparisons from the point of view of the province and the nation follow. Comparison of Alternatives from the Provincial Viewpoint Broadening the scope of analysis to the province as a whole has a marked effect on the comparison of the two alternatives. At this level recreational benefits.included in the analysis w i l l encompass a l l those accruing to persons who are residents of Bri t i s h Columbia, not just residents of the Creston area. The various measures of bene- f i t s and costs at this level are summarized in Table 12. Regarding this again as a rough balance sheet, i t can be seen that shifting the view- point to the provincial level w i l l also shift the choice in favor of a wildlife-recreation development rather than agricultural development. TABLE 12 COMPARISON OF ALTERNATIVES FROM THE PROVINCIAL VIEWPOINT ESTIMATED VALUE OF: AGRICULTURAL DEVELOPMENT WILDLIFE-RECREATION DEVELOPMENT A. Net Primary Benefits Tangible ) Intangible ) $1,773,000 $3,783,000 Unmeasurable (COST) Destruction of habitat and loss of rare wild- l i f e species (BENEFIT) enhance- ment of habitat, increased produc- tion of wi l d l i f e , education and re- search use B. Net Secondary Benefits $ 413,000 $ 773,000 At this level the present value of quantified primary net bene- f i t s (tangible and intangible) from the wil d l i f e development exceeds that from the agricultural alternative by $2.01 million. In terms of net secondary benefits the wildl i f e project again appears superior with an estimated present value of $0.36 million greater than that for agri- culture. Differences between the two projects are again pronounced i n terms of unmeasurable benefits or costs. While these factors are of the same nature as when discussed in the local context, they w i l l be of greater weight when the viewpoint of a l l British Columbians is considered rele- vant. Thus, the unmeasurable benefits from the wildli f e project would be given a greater emphasis, adding to the project's favorable balance, while the unmeasurable costs associated with the agricultural develop- ment would also receive greater emphasis, detracting from i t s level of benefits. The uncertainty which surrounded a decision at the local level is removed when the alternatives are assessed from the provincial per- spective. A l l measures clearly favor the wildlife-recreation develop- ment. Net primary and secondary benefits have a combined present worth which exceeds that in agriculture by $2.37 million, while the balance of. unmeasurable benefits also favors the wil d l i f e development. Choosing between the alternatives at the provincial level results in the unequi- vocal selection of the wildlife^recreation development as the most appro- priate land use. Comparison of Alt e r n a t i v e s from the National Viewpoint From a nat i o n a l viewpoint the benefits accruing to a l l Canadians from the proposed developments become relevant, as do a l l costs incurred within Canada. This has the e f f e c t of increasing the present value of quantified primary net benefits (tangible and intangible) from the w i l d - l i f e and recreation development to $6.89 m i l l i o n . In the case of the a g r i c u l t u r a l development the primary benefit-cost comparison remains as i t was i n analysis at the p r o v i n c i a l l e v e l . Table 13 summarizes com- parisons at the national l e v e l . TABLE 13 COMPARISON OF ALTERNATIVES FROM THE NATIONAL VIEWPOINT ESTIMATED VALUE OF: AGRICULTURAL DEVELOPMENT WILDLIFE-RECREATION DEVELOPMENT A. Net Primary Benefits Tangible ) Intangible ) $1,773,000 $6,835,000 Unme as ur ab1e (COST) Destruction of habitat, loss of rare w i l d l i f e species, (BENEFIT) en- hancement of habitat, i n - creased produc- t i o n of w i l d l i f e , f u l f i l m e n t of i n - t e r n a t i o n a l o b l i - gations, education and research breach of internation a l obligations B. Net Secondary Benefits $ 401,000 $ 431,000 At the national l e v e l t h i s comparison reinforces the conclusion reached from the p r o v i n c i a l perspective — the s u p e r i o r i t y of the w i l d - l i f e development i s c l e a r l y established. Primary net benefits are almost four times as great as i n agri c u l t u r e ($6.84 m i l l i o n versus $1.77 m i l l i o n ) . Net secondary benefits are roughly comparable at th i s l e v e l , and both are deflated below previous l e v e l s due to" the.-re- moval of "non-export" spending. Comparison of unmeasurable benefits or costs again y i e l d s the same r e s u l t as from the p r o v i n c i a l viewpoint. The unmeasurable costs associated with the a g r i c u l t u r a l development are s i g n i f i c a n t and c o n s t i - tute a reduction i n the l e v e l of t o t a l b e n e f i t s . For the w i l d l i f e de- velopment on the other hand important unmeasurable benefits must be counted i n addition to those quantified i n monetary terms. Unmeasurable benefits are p a r t i c u l a r l y s i g n i f i c a n t from the national point of view. Maintaining continental waterfowl habitat and protecting rare w i l d l i f e species i s l a r g e l y the concern of the federal government which has commitments i n th i s regard under the Migratory Birds Treaty. The w i l d l i f e - r e c r e a t i o n development at Cres- ton w i l l make an important contribution to these i n t e r n a t i o n a l commit- ments, i n addition to the importance of such unmeasurable benefits to many people throughout Canada. Summary: The Alt e r n a t i v e s Compared The preceding comparison of the benefits and costs generated by the a l t e r n a t i v e developments produces an i n t e r e s t i n g r e s u l t . At the I l l n a tional and p r o v i n c i a l l e v e l the w i l d l i f e development i s superior i n a l l regards to a g r i c u l t u r a l development. However, no d e f i n i t e conclu- sions can be drawn from the comparison at the l o c a l l e v e l . The a g r i c u l - t u r a l development appears c l e a r l y superior i n terms of net primary and secondary ben e f i t s , i t s only drawback being the unmeasurable costs. This arises when r e c r e a t i o n a l benefits accruing to persons from outside the Creston area are excluded from the f e a s i b i l i t y analysis of the wi l d - l i f e a l t e r n a t i v e . This r e s u l t makes the s e l e c t i o n of the appropriate referent group very important i n determining the best pattern of development for th i s land. If the objective of land development i s to maximize net benefits to the l o c a l area only, a g r i c u l t u r a l development appears to be s l i g h t l y superior to the w i l d l i f e - r e c r e a t i o n development. But a firm con- cl u s i o n cannot be drawn i n t h i s regard without exhaustive i n v e s t i g a t i o n of the s i g n i f i c a n c e at the l o c a l l e v e l of the unmeasurable costs associated with a g r i c u l t u r a l development. If the objectives of development are to maximize the net benefits within some larger framework ( B r i t i s h Columbia or Canada), the choice i s clear and the land should be developed for w i l d l i f e and r e c r e a t i o n a l purposes. It was suggested i n Chapter II that the appropriate referent group for any decision regarding the development of p r o v i n c i a l Crown land i s the province of B r i t i s h Columbia as a whole. This argument i s put forward on the basis that Crown lands of t h i s nature are the prop- erty of a l l B r i t i s h Columbians, and as such, should be developed to the greatest advantage of.the entire province, not some segment of the province. On this basis, i t has been clearly established that the optimum use of the unreclaimed provincial Crown land would be under the proposal for wild l i f e and outdoor recreation development. Not a l l of the unreclaimed land is provincial Crown land, with Indian Reserves 1, 1A and IB comprising 3,000 acres, about one-fifth of the total. This land is the property of the Lower Kootenay Indian Band and i t was suggested that they formed the relevant referent group with respect to the development of their land. Within the context of the preceding analysis of benefits and.costs, i f the Indians are con- sidered as members of the various referent groups then the conclusions drawn w i l l hold. Treatment as an independent referent group for the development of reserves 1, 1A and IB requires a different approach with different objectives, however, and is touched on in Chapter VII. Analysis of the benefits and costs to British Columbia and to the Indian Band is appropriate where the referent group is indicated by ownership of the resource. But the costs of the w i l d l i f e develop- ment w i l l be shared with sources outside these referent groups -- the Canadian Wildlife Service representing the government of Canada, and Ducks Unlimited (Canada) consisting of private contributions from the United States. It is assumed that those responsible for the investment of Ducks Unlimited funds are satisfied with their prospects of returns, or the investments would not. be made. From the point of view of the government of Canada, the question must be raised as to whether participation in the w i l d l i f e development represents an e f f i c i e n t use of funds. The preceding analysis suggests that i t does. At the n a t i o n a l l e v e l net primary benefits have a pre- sent value of $6.84 m i l l i o n and the r a t i o of benefits to costs i s 3.7:1. While this indicates that the project at Creston i s an e f f i c i e n t i n vest- ment, i t does not i n d i c a t e whether the project at Creston represents the most e f f i c i e n t use of f e d e r a l funds a v a i l a b l e for investment i n w i l d l i f e . To answer t h i s question the project at Creston would have to be compared with a l t e r n a t i v e .investment opportunities elsewhere i n Canada, an under- taking e n t i r e l y outside the scope of the present study. The A l t e r n a t i v e s vCompa'red on the Basis of Individual Units The preceding comparison of a l t e r n a t i v e s has been based on the assumption that a l l the undeveloped land would be used ei t h e r i n a g r i c u l - ture or i n w i l d l i f e and r e c r e a t i o n . But the t o t a l devotion of the area to one use or the other i s not necessary — there are f i v e p h y s i c a l l y separate units and the p o s s i b i l i t y of some combination of a g r i c u l t u r e and w i l d l i f e should also be considered. For a g r i c u l t u r e the f e a s i b i l i t y of reclamation was assessed for each p h y s i c a l unit, and the r e s u l t s were found to vary s i g n i f i c a n t l y (see Chapter IV, Table 5). Reclamation of the Corn Creek unit appears l e a s t desirable, while reclamation of the Indian Reserves would be the most desir a b l e . When compared with the w i l d l i f e development on an aggregate basis the i n d i v i d u a l differences i n a g r i c u l t u r a l f e a s i b i l i t y disappear and the comparison i s then based on the average e f f i c i e n c y . This means of compari- son i s not e n t i r e l y s a t i s f a c t o r y , but i t i s employed because of constraints imposed by the nature of the wil d l i f e alternative. When.analyzing the wil d l i f e and recreation alternative i t is d i f f i c u l t to consider any one unit as a separate entity due to the close- ly interrelated functions of each in the overall plan. While the output or production of the total area can be identified, the actual location of various activities within the overall development may vary from year to year. Areas which are reserved as sanctuaries one year may be open to recreational use in the next and in addition the location and extent of agricultural use w i l l vary to meet the needs of wil d l i f e management. Therefore, while i t was possible to establish the total f e a s i b i l i t y of the wil d l i f e project, i t is very d i f f i c u l t to estimate the f e a s i b i l i t y of developing any particular segment on i t s own. The costs for each unit can be identified, but the benefits may not be specific to the area. Despite the problems associated with making comparisons on the basis of individual units, a brief attempt at such a comparison is made here. This is done to rectify the shortcomings of the comparison on an aggregate basis which overlooked the variation in agricultural f e a s i b i l - ity between units. Making such a comparison becomes very.complex, due to the re- currence of problems associated with the referent groups in the wil d l i f e development. The incidence of benefits and costs creates no problems in the case of agricultural analysis where a l l costs and benefits are borne locally. In the case of wildlife-recreation development, maintenance and salary costs w i l l be divided equally between the provincial and federal governments, while capital costs w i l l be met from a variety of sources (see Chapter V). To compare the alternatives for any unit thus entails sorting out the r e l a t i v e costs and benefits f o r each referent group i n the case of w i l d l i f e , and comparing them with those from a g r i c u l t u r e . This has been done f o r B r i t i s h Columbia and Canada as referent groups, and the r e s u l t s are summarized.in Table 14 which compares the a l t e r n a t i v e s on the basis of net primary benefits (tangible and intangible) f o r each u n i t . To make these comparisons i t was assumed that the w i l d l i f e - r e creation benefits a t t r i b u t a b l e to each unit would be i n d i r e c t propor- t i o n to i t s area. Thus Duck Lake, with 32 per cent of the t o t a l area under development i s assigned 32 per cent of the benefits at both the fed e r a l and p r o v i n c i a l l e v e l s . A s i m i l a r procedure was adopted i n d i s - t r i b u t i n g general salary and personnel costs between the f i v e u n i t s . The t o t a l costs of the Administrative Centre was apportioned between units i n t h i s manner also, with the d i s t r i b u t i o n of t h i s p a r t i c u l a r cost between B r i t i s h Columbia and Canada following that given i n Chapter V. The comparisons presented i n Table 14 w i l l be given only a b r i e f review. The estimated net primary benefits i n a g r i c u l t u r e are given i n the f i r s t column, and these estimates remain constant f o r both the pro- v i n c i a l and natio n a l viewpoints. The second column summarizes the net primary benefits of the w i l d l i f e - r e c r e a t i o n development from the provin- c i a l viewpoint, while the t h i r d column presents the same estimates from the natio n a l perspective. Comparing each unit i n t h i s manner bears out the e a r l i e r conclusions based on an aggregate comparison of the a l t e r - natives. In a l l cases, the w i l d l i f e - r e c r e a t i o n development represents the optimum use for the unreclaimed land. TABLE 14 THE ALTERNATIVES COMPARED ON THE BASIS OF INDIVIDUAL UNITS WILDLIFE-RECREATION U N I T S AGRICULTURE PROVINCIAL NATIONAL VIEWPOINT VIEWPOINT 1. THE INDIAN RESERVES Net Primary Benefit $ 361,000 $ 910,000 $1,371,000 2. THE CORN CREEK UNIT Net Primary Benefit 101,000 413,000 657,000 3. LEACH LAKE Net Primary Benefit 403,000 858,000 1,517,000 4. SIX MILE SLOUGH Net Primary Benefit 360,000 811,000 1,440,000 5. DUCK LAKE Net Primary Benefit 548,000 791,000 1,850,000 6. ALL AREAS Net Primary Benefit 1,773,000 3,783,000 6,835,000 These comparisons are based only on estimates of the net p r i - mary tangible and intan g i b l e benefits from each a l t e r n a t i v e . Unmeasur- able costs and benefits are ignored since they can only be appended as q u a l i f i c a t i o n s and would make comparisons f or each unit awkward. In c l u - sion of unmeasurable costs or benefits would serve to enhance the super- i o r i t y of the w i l d l i f e - r e c r e a t i o n a l t e r n a t i v e i n each area. The present values of primary net benefits i n a g r i c u l t u r e are below those given i n Chapter IV because inta n g i b l e costs have been i n - cluded i n c a l c u l a t i n g net b e n e f i t s . Final Qualifications: Comparison of Alternatives Through Benefit-Cost Analysis This report has aimed at comparing the relative merits of two alternatives for undeveloped land in the Kootenay River floodplain at Creston through a comparative benefit-cost analysis. The results of this comparison, as outlined in this chapter, consistently favor the investment in w i l d l i f e and recreation over the alternative investment in agricultural development. Performing the analysis, however, required many simplifying and sometimes arbitrary assumptions. The effect of these assumptions on the outcome of the analysis cannot.be tested, but i t is believed that the assumptions are r e a l i s t i c and the results of the analysis are valid. Nevertheless some f i n a l qualifications to the outcome of this analysis are appended here. A. Changing Relative Values The analysis of benefits arising from both the recreational and agricultural development has been based on current values for the two types of output. The. prices of agricultural produce are readily observed and easily adopted to estimate the value of output. The value of recre- ational output i s not so easily observed, and our analysis was based on imputed values in this case. Consideration of the likelihood of changes in the.relative value of these two outputs leads to a.qualification of the conclusions. Aside from changes in the general price level, i t i s entirely likely that there w i l l be pronounced changes in the relative values placed on agricultural ouptut and recreation opportunities in the future. Improvements i n a g r i c u l t u r a l technology and increased e f f i c i e n c y i n production mean, that a g r i c u l t u r a l output i s becoming cheaper r e l a t i v e to other goods and services. With an abundance of a g r i c u l t u r a l output i n Canada the value placed on increases i n production-will .be s t e a d i l y d e c l i n i n g , r e l a t i v e to scarcer goods and services which could a l t e r n a t i v e l y be produced. This trend has already been strongly apparent i n Canada, and w i l l increase i n the future. On the other hand, opportunities for outdoor recreation are growing inc r e a s i n g l y scarce r e l a t i v e to the population and the produc- tion of other goods and s e r v i c e s . The value placed on increases i n the a v a i l a b i l i t y of such opportunities w i l l r i s e i n the future, r e l a t i v e to the value placed on other goods and services. Based on s t a t i c , or current values, we have estimated that net benefits under a w i l d l i f e development w i l l exceed those of an a g r i c u l t u r a l development by s i g n i f i c a n t margins. The implications of t h i s q u a l i f i c a t i o n are that these margins can be expected to widen s i g n i f i c a n t l y as the r e l a - t i v e value of the two outputs changes through time. B. E f f e c t of the Discount Rate on Comparison of A l t e r n a t i v e s The importance of the discount rate i n benefit-cost analysis has already been stressed, and the s e n s i t i v i t y of the r e s u l t s for each a l t e r - native was tested for rates of s i x , eight, and ten per cent. While chang- ing the rate over this range automatically had a bearing.on the r e s u l t s , i n no case were the basic conclusions regarding f e a s i b i l i t y of i n d i v i d u a l projects a l t e r e d . But due to the d i f f e r e n t d i s t r i b u t i o n of costs and benefits through time i n the two a l t e r n a t i v e s the p o s s i b i l i t y remains that com- paring alternatives at different rates could change the results of the comparison. While this pos s i b i l i t y is not investigated in great detail i t can be checked by comparing the analysis of Appendix.E with respect to discount rates with that in Appendix K. Such a comparison reveals that the results obtained when the alternatives are compared with d i f - ferent discount rates are not changed. It i s concluded that the basic results of this analysis, are in no way changed by selecting discount rates over the range of six to ten per cent. C. Problems in Wildlife and Recreation Evaluation The problems involved in evaluation of recreation and wildl i f e resources have already been discussed. In the case of the wildlife and recreation development we were able to place values on most of the output (recreation, agriculture and trapping), but were unable to do so for educational and research use, the provision of habitat and produc- tion of wil d l i f e , and the satisfaction of international treaty obliga- tions. These factors tend to drop from sight in the course of the benefit-cost analysis as dollar values are not attached to them. They represent additional benefits from a wildl i f e development, however, and as such should not be ignored. Considering these additional factors i t seems appropriate to treat the value estimates derived from the other forms. of.output as minimum values created by w i l d l i f e and recreational development. This qualification is especially important when the deve- lopment is being compared with an alternative such as agriculture where dollar values can be attached to the entire output. D. Distributional Aspects of the Alternatives When the alternatives are compared i t should be recognized that the distribution of benefits and costs varies significantly between the two projects. In the case of agricultural, reclamation the direct on- site costs would be borne by farmers, and primary benefits in the form of agricultural incomes would also accrue to them. This analysis cannot estimate the extent to which this net benefit might be redistributed from farm operators to the landowners (the citizens of British. Columbia, and the Indian band), and in any case, redistribution does not reduce the level of net benefit. In the case of the wi l d l i f e and recreation alternative the pattern of benefit and cost distribution (ignoring those benefits aris- ing from agriculture and trapping) is much different. While develop- ment costs would be borne by citizens at large through, the provincial and federal governments, the benefits in the form of recreational oppor- tunities would be distributed free of charge to the users. With this form of distribution the benefit is not 'captured' in the normal sense, and not available to be redistributed. This should be an important consideration in an analysis of this nature. Yet within the benefit-cost framework i t s e l f there is no means of giving weight to such matters. Benefit-cost analysis is concerned with measuring the net gain to a particular referent group from any pro- ject •— not the distribution of benefits and costs within that group. The actual incidence of benefits and costs within the referent group does not affect the measure of net benefit, or the benefit-cost ratio, a f a c t which i s frequently overlooked when applying the r e s u l t s of b e n e f i t - c o s t analysis ( K r u t i l l a and Eckstein 1958). In choosing the appropriate form of development for the un- reclaimed land at Creston, these d i s t r i b u t i o n a l patterns should at l e a s t be acknowledged. A g r i c u l t u r a l reclamation y i e l d s benefit which would accrue to a small group of farmers, with the p o s s i b i l i t y of some of that benefit being r e d i s t r i b u t e d to the c i t i z e n s of B r i t i s h Columbia at large (including the Indian Band). Under the proposed w i l d l i f e and recreation development the major benefits would be of a non-marketed nature, with d i s t r i b u t i o n r e s t r i c t e d to a large number of r e c r e a t i o n - i s t s from many areas, and l i t t l e or no opportunity to 'capture' t h i s benefit for r e d i s t r i b u t i o n . E. P r e c i s i o n of Estimates for Comparative Purposes In attempting to draw p o s i t i v e conclusions from the r e s u l t s of an analysis such as t h i s , one should not be misled by the apparent pre- c i s i o n of the r e s u l t s . For both projects a l l costs and benefits l i e i n the future and precise magnitudes are d i f f i c u l t to a scertain. Although the majority of costs would be incurred i n the i n i t i a l stages of e i t h e r project, cost estimation i s d i f f i c u l t . Even with ex- tensive t e s t i n g and i n v e s t i g a t i o n the true cost of such undertakings i s often known only when the project has been completed. Even greater d i f f i - c u l t i e s are encountered when dealing with the estimation and evaluation of b e n e f i t s . In this p a r t i c u l a r a n a l y s i s , the normal problems are mag- n i f i e d by the non-market nature of the benefits generated through w i l d - l i f e development. While values were imputed f o r most of the output associated with the wildlife development, some output defies evaluation and as a result is omitted from the direct benefit-cost comparison. Consequently, this analysis should not be regarded as certain within a narrow range of precision. Instead, the results should be i n - terpreted as the best estimates possible, given the present uncertainty about future values. In the event that the two alternatives were found to be closely comparable this analysis would have to be regarded as i n - sufficient to support a choice on one side or the other. However, in this particular study there are significant differences between the alternatives, and these differences are great enough to warrant a de- cision. On the basis of investigations carried out the proposal for wildlife and outdoor recreation development appears to be superior in a l l regards to an undertaking aimed at further agricultural recla- mation. CHAPTER VII THE-IMPACT OF ALTERNATE DEVELOPMENTS ON THE LOWER KOOTENAY INDIAN BAND The Indian Band as A Referent Group The need for clearly defined development objectives and refer- ent groups was.stressed in Chapter I. That discussion noted that Indian Reserves 1, 1A, and IB constituted a special case with respect to selection of the referent group. These Reserves are not Crown land, as is the case with the rest of the unreclaimed land, but are the property of the Lower Kootenay Indian Band. As such, the Indians constitute the appropriate referent group in analysis of development alternatives for their land. But the analysis to this point has not focused on the Indian Band as a referent group. Instead, the alternatives of wildl i f e or agricultural development have been analysed from the broader perspective of the Creston economy, British Columbia, and Canada. While this analy- sis has indicated the relative desirability of developing the Indian Reserves from the point of view of these larger interest groups, i t has not shed any light on the relative impact of the alternatives on the Lower Kootenay Indian Band. Such an analysis represents a d i f f i c u l t undertaking within a standard economic framework. Perhaps the most meaningful form of bene- f i t which the Indians might realize from development of their land would be in terms of social "involvement" or cultural integration. But the degree to which such benefits may be realized i s practically im- possible to predict and in any case they are not benefits which econo- mists are capable of quantifying. What we can indicate within the context of this analysis is the extent to which more easily measured benefits such as incomes and employment, might accrue to the Indian Band. With rough approximations of the impact to be expected in these more conventional terms i t is then possible to speculate on the likelihood of significant "social" benefit following from land development. Incomes and Employment Under Agriculture Under the alternative for agricultural development incomes could accrue to the Indians in two forms. Band members could engage directly in the business of farming and earn incomes in that way, or income could arise from rents paid for the land by Creston area farmers. Given the present levels of s k i l l and managerial a b i l i t y of the band members, i t is f e l t that the f i r s t alternative is highly unlikely, and that the only r e a l i s t i c approach to agricultural development of these Reserves is through some form of a rental or lease agreement with Creston area farmers. While employment creation in i t s e l f i s not considered a net benefit within a broader social context, in the case of the Irldian Band where unemployment is one of the most serious.social problems, the creation of jobs can be taken as a direct form of benefit. Income to the Indians would then depend on the rental or lease arrangements made. These arrangements in turn would depend on who assumed responsibility for dyking and reclaiming the Reserves. Recla- mation could be undertaken by the Indian Band (or the Department of Indian Affairs and Northern Development on their behalf), or i t could be done by the farmers who intended to rent the land. In either case, the net impact on the Indian Band w i l l be essentially the same — the only difference being in the shifting of responsibility for reclamation. Incomes w i l l accrue to the band in the form of annual rental payments, and w i l l be available for whatever purposes the Band Council desires. These Reserves are the most f e r t i l e of a l l the unreclaimed land for agricultural purposes and.as such would earn relatively high rental or lease payments. Assuming annual rentals in the order of $15 per acre, with 2,070 acres i n cultivation, the Indian Band could expect approximately $31,000 annually. While the generation of incomes to the Indian Band should be considered an important benefit from agricultural reclamation, the creation of employment opportunities for the band members is probably of equal importance. Given the present s k i l l s of the Band members, the possibility of.Indians engaging directly in farming has already been discounted. It is equally unlikely that opportunities for em- ployment on farms would be available to Indians, At the present moment there are no Indians capable of main- taining a full-time farm job. Chief Zachary Basil has estimated that there are about 15 adult males capable of employment and training, but at present they are unreliable and poor farm workers. While they may have the potential to be trained and employed, i t is unlikely that Creston area farmers would be willing to assume the duties of this training. As long as non-Indian farm labor can be hired in" the local area, there i s no reason to expect that Indians would be offered em- ployment on farms. This contention is supported by examining the conditions on presently reclaimed flatlands. There are already several Indian Reserves which are included i n dyking dis t r i c t s and are being farmed (Indian Reserves 1C, 2, 3, 4 and 5). Yet no employment is generated for Indians on these lands, or on any other reclaimed lands. There is no reason to expect that the situation would be any different with respect to Indian Reserves 1, 1A, or-IB. To summarize, reclamation of Indian Reserves 1, 1A, and IB for agricultural purposes would probably have l i t t l e significant impact on the members of the Indian Band. It is unlikely that the Indians them- selves would operate farms on the land, and equally unlikely that they would receive employment opportunities from farmers renting the Reserve lands. Redistribution of net benefits from the farmers to the Indians in the form of annual rentals would generate incomes which could be used as the Band Council desired. The impact of this income (approximately $31,000 annually) on individual band members would probably, be negligible in terms of social and economic development. Incomes and Employment Under Wildlife and Recreational Development It i s d i f f i c u l t to forecast what the Indians might expect in terms of annual incomes from a wildl i f e and recreational development on their Reserves. The Canadian Wildlife Service i s presently leasing these Reserves for $50,000 per year, and this can be taken as a rough guide to the payments which might be expected under a permanent wildl i f e development. In addition, the Indians could anticipate receipts from the sale of hunting permits yielding as much as $5,000 per year when the area i s f u l l y developed. Opportunities for employment under this alternative might be slightly better than under agricultural development, but would s t i l l not be significant. There would probably be some opportunities for the Indians to work on maintenance and development of the wildl i f e habi- tat, and the possibility of providing guiding services for hunters and other tourists. While work of this nature might be better suited to the temperament of the Indians than farming, i t s t i l l remains unlikely that full-time employment equivalents for more than two or three persons would be created. The Alternatives Compared From The-Perspective of the Indian Band In the preceding discussion we have been unable to identify any significant benefit to the Indians from either development alternative. Under either form of development the Indians would expect to receive a rent or lease payment for the use of their land, but the magnitude of such payments is d i f f i c u l t to estimate. Annual cash returns i n the order of $55,000 might be expected from a wildlife and recreational development, versus approximately $31,000 under agricultural develop- ment. While the income prospects are significantly greater under a wil d l i f e and recreational development, in neither case are the incomes significant relative to the needs of the Indian Band. Employment prospects are almost certainly non-existent i n the case of an agricultural development, as witnessed by the current lack of employment for Indians in Creston agriculture. In the case of a wildli f e and recreation development there are prospects of a small amount of i n i t i a l employment with later opportunities rendering tour- i s t services. The extent to which Indians would be assimilated into such work i s , of course, open to speculation. It is d i f f i c u l t to draw any definite conclusions as to the most desirable development of Reserves 1, 1A and IB from the point of view of the Lower Kootenay Indian Band. It appears that actual cash flows and employment opportunities w i l l be small under either alter- native, although there w i l l be greater advantages under a wildl i f e and recreation development than under agriculture. Similarly, the prospects for social "involvement" or cultural integration as a re- sult of development of the land are poor. While, these prospects are not encouraging, they should not be surprising. Both of the alternatives, which have been discussed are concerned with development and u t i l i z a t i o n of the basic land resource; neither alternative i s concerned with development of human resources. It appears from our investigations that any project which, is concerned with development of the land resource alone w i l l have l i t t l e impact on the Indian people. CHAPTER VIII SUMMARY AND CONCLUSIONS This report presents the findings of an economic investigation into possible patterns of development for 15,000 acres of land in the Kootenay River floodplain at Creston, British Columbia. Three alter- natives for the future use of this land were considered in this study. These alternatives are: (a) continuation of present patterns of use; (b) reclamation and development for agriculture; and (c) development as wildlife habitat for intensive outdoor recreation use. Present patterns of use are investigated, in some detail in Chapter III. This chapter assesses the feasibility, of continuing with the present regime and provides a benchmark for measuring the value of present resource uses which might be sacrificed under more intensive developments. Continuing with present use on the unreclaimed lands is an un- attractive alternative. The intensity of use is low and the land yields a negative economic return under cattle grazing. Annual flooding with extreme variations in water levels produces habitat conditions which are far from optimum for waterfowl production or recreational use. While the completion of Libby Dam would reduce the variation, in water levels, i t would have l i t t l e effect on the quality of the habitat for waterfowl production or recreational use and there is a possibility that i t would reduce the season of use for cattle grazing. With the f e a s i b i l i t y of more intensive forms of land use greatly enhanced by Libby Dam i t is concluded that continuing with present use is an unacceptable alter- native . The two development alternatives are investigated in Chapters IV (Agricultural Reclamation as a Development Alternative) and V (Wildlife Habitat and Outdoor Recreation as a Development Alternative). Both alternatives are technically feasible, and benefit-cost analysis has been used to provide a logical framework for assessing the economic implications of these alternatives and for choosing between them. Selection of the most economically desirable alternative is made on the basis of the net primary benefits generated within the relevant referent groups. The magnitude of these measures varies widely depending on the 'referent group' or point of view from which a decision is to be made. Before a meaningful decision can be reached on the basis of these econo- mic measures, i t is thus necessary to ensure that they relate to the appropriate referent group. Three referent groups, the local area (Cres- ton), the province of British Columbia, and Canada are suggested in this study and the f e a s i b i l i t y of each alternative is examined and compared within those frameworks. Optimum Land Use From The Local Viewpoint Agricultural reclamation has been successfully carried out on 21,000 acres of land adjacent to the land under study. Considered from the point of view of the local economy, reclamation and agricultural de- velopment of the entire 15,000 acres (with the possible exception of the Corn Creek unit) appears economically feasible. Investment in this un- dertaking would y i e l d net primary benefits having an estimated present value of $1,929,000. A d d i t i o n a l secondary benefits i n the form of pro- f i t s i n secondary businesses have an estimated present value of $398,000. Offset against these estimated benefits from a g r i c u l t u r a l re- clamation are costs created by d i s p l a c i n g present land uses. These costs include the destruction of w i l d l i f e habitat, and elimination of rare spe- cies of w i l d l i f e . From a purely l o c a l viewpoint, the net primary and secondary benefits would probably outweigh such losses, rendering a g r i - c u l t u r a l reclamation f e a s i b l e on t o t a l balance. However, a decision to proceed with a g r i c u l t u r a l development would only be r a t i o n a l i f a comparison had f i r s t been made with the net gains to be expected from the a l t e r n a t i v e development for w i l d l i f e and outdoor recreation. At the l o c a l l e v e l , net primary benefits from the w i l d l i f e development have an estimated present value of $1,350,000 while the present value of net secondary benefits i s estimated at $731,000. While a g r i c u l t u r a l development entailed the loss of habitat and elimina- t i o n of w i l d l i f e species, such values would be preserved and enhanced under this a l t e r n a t i v e . Present l e v e l s of grazing could also be accommo- dated within the needs of w i l d l i f e management. Choosing between these a l t e r n a t i v e s from the point of view of the l o c a l community i s very d i f f i c u l t . D i r e c t l y measured gains from an a g r i c u l t u r a l development are greater, although not to a s i g n i f i c a n t de- gree, than they would be from the w i l d l i f e development (net primary and secondary benefits t o t a l l i n g $2,327,000 compared to $2,081,000). But the destruction of w i l d l i f e species r e s u l t i n g from a g r i c u l t u r a l reclamation could tip the scales in favor,of a wild l i f e development. The results of the present analysis must therefore.be considered inconclusive from the local point of view. Without extremely detailed and exhaustive investigations i t is impossible to conclude that either alternative is clearly superior. The Provincial Viewpoint and Optimum Land Use While comparison of the development alternatives was inconclusive from the local viewpoint, such is not the case when the broader provincial perspective, is adopted. From this point of view the estimated present value of net primary benefits under the wild l i f e development is more than twice as great as under agriculture ($3,783,000 vs. $1,773,000). Net secondary benefits also have a much higher present value under the wildlife development ($773,000) than they do in the case of agricultural development ($413,000). On the basis of these estimates alone the choice clearly fav- ors the wild l i f e and recreational development. Consideration of addition- al factors associated with the preservation of rare wildlife species serves to reinforce the choice. From the provincial point of view, selection of the optimum land use is therefore quite clear — on a l l counts the wild l i f e development appears clearly superior. Optimum Land Use From The National Point of View From the national point of view, choice between the alternatives is even.more clear than at the provincial level. It is estimated that the present worth of primary net benefits under the wild l i f e development w i l l be $6,835,000, as compared with an estimate of $1,773,000 under agricultural development. From the national perspective net secondary benefits are not important under either.alternative — $431,000 under wil d l i f e development, $401,000 with agriculture. Again, these estimates alone clearly indicate the wild l i f e and recreation development as the optimum form of land use. Preservation values associated with the wild l i f e development take on a greater . signi- ficance at the national level than they did provincially, and inter- national obligations to maintain waterfowl populations reinforce the choice of the'wildlife alternative for development. Adopting Canada.as a whole as the referent group for a decision again produces an unequivo- cal choice — development of the land for wild l i f e and outdoor recreation is clearly the superior alternative. Conclusions This study embodies an innovative approach in using economic analysis to select the optimum use for undeveloped land at Creston, B r i - tish Columbia. Analysis of the agricultural alternative is traditional and straightforward.as the value of a l l output is readily measured. Analysing the wild l i f e and recreation development presents serious problems, however, as this represents a non-marketed form of resource use the "product".of which must be carefully defined and can only partly be valued. Despite these problems, a comparative analysis of the two alternatives has been carried out, and the results appear sufficiently reliable to indicate the optimum choice between alternatives. In a comparative analysis of th i s nature, i t i s important to determine c l e a r l y i n whose i n t e r e s t any development should be under- taken. To demonstrate the s i g n i f i c a n c e of th i s point the analysis i n this report has been c a r r i e d .out from three l e v e l s — from the point of view of the l o c a l community (Creston), the province of B r i t i s h Colum- bi a and Canada. Insofar as most of the land under study i s Crown land, held i n trust f o r the c i t i z e n s of B r i t i s h Columbia, the net benefit accruing to the province as a whole provides the appropriate basis f o r decision making. On .this basis, s e l e c t i o n of the w i l d l i f e and r e c r e a t i o n a l de- velopment i s c l e a r l y superior. This i s an important d i s t i n c t i o n , for i f the land were to be developed only i n the i n t e r e s t of the l o c a l commu- ni t y , the choice between the a l t e r n a t i v e s i s not cl e a r . On a purely l o c a l basis, the a g r i c u l t u r a l development appears to be of roughly equal merit when compared with the w i l d l i f e development. When p a r t i c i p a t i o n i n development by the fede r a l government i s considered and the national point of view adopted, the w i l d l i f e and out- door recreation development i s again c l e a r l y superior. LITERATURE CITED Anderson, J . M. 1961. Quality recreation on public lands. Proceedings Fifty-first Convention of the International Association of Game* Fish, and Conservation Commissioners, pp. 45-50. Bednarik, K. E. 1961. Waterfowl hunting on a controlled public area. Ohio D i v i s i o n of W i l d l i f e , P u b l i c a t i o n W - 127. Ciriacy-Wantrup, S. V. 1964. Benefit-cost analysis and public resource development. In Economics and public policy in water resource de- velopment (Smith and Castle eds.). Iowa State U n i v e r s i t y Press, Ames. Gavin, Angus. 1964. Ducks Unlimited... In Waterfowl Tomorrow ( J . P. L i n - duska ed.). U.S. Dept. of I n t e r i o r , Washington, D.C. Green, W. E., L. G. McNamara and F. M. Uhler. 1964. Water o f f and on. In Waterfowl tomorrow ( J . P. Linduska ed.). U.S. Dept. of I n t e r i o r , Washington, D.C. Hochbaum, H. A. and P. Ward. 1964. The Delta Marsh: problems associated with its management, planning a course for future action. Unpublished report, Delta Waterfowl Research Station, Manitoba. Knetsch, Jack L. and Robert K. Davis. 1966. Comparison of methods for recreation evaluation. In Water . research (Kneese and Smith eds.). Johns Hopkins, Baltimore. K r u t i l l a , John V. and Otto Eckstein. 1958. Multiple purpose river de- velopment. Johns Hopkins Press, Baltimore. K r u t i l l a , John V. 1961. Columbia River development: some problems of i n t e r n a t i o n a l cooperation. In Land and water: planning for economic growth. U n i v e r s i t y of Colorado Press, Boulder. K r u t i l l a , John V. " 1967. The Columbia River Treaty3 the economics of an international river basin development. Johns Hopkins Press, Baltimore. Moore, Dwight D. 1969. A development plan for the Indian Reserve lands 13 1A and IB and the Creston Valley Wildlife Management Area Creston B.C. mimeo report, Creston. Newby, N. J . • 1969. The British Columbia trapping industry and public administrative policy. Unpublished M.A. Thesis, U n i v e r s i t y of B r i t i s h Columbia. Pearse, Peter H. and Gary K. Bowden. 1969. Economic evaluation of re c r e a t i o n a l resources: problems and.prospects. Transactions thirty-fourth north american wildlife conference. W i l d l i f e Management I n s t i t u t e , Washington, D.C. Peterson, Roger T. 1969. The osprey endangered world c i t i z e n . National Geographic. 136(1):52-67. Prest, A. R. and Ralph Turvey. 1965. Cost-benefit analysis: a survey. Economic Journal. 73(3):683-735. Province of B r i t i s h Columbia. 1966. Regional index .of British Columbia. Department of I n d u s t r i a l Development Trade and Commerce, Economics and S t a t i s t i c s Branch. . 1968a. Farm .business: beef 1967. Department of Ag r i c u l t u r e , Farm Economics D i v i s i o n . . . 1968b. An act to establish the Creston Valley Wildliue Management Area. B i l l No. 65. 1970. The Central Kootenay Region an economic survey. Department of I n d u s t r i a l Development Trade and Commerce, Economics and S t a t i s t i c s Branch. Sewell, W. R. D., John Davis, A. D. Scott, and D. W. Ross. 1962. Guide to benefit-cost analysis. Ottawa, Queen's P r i n t e r . United States Government. 1962. Policies standards and procedures in the formulation, evaluation, and review of plans for use and develop- ment of water and related land resources. Report by the President's Water Resources Council, 87th Cong., 2nd sess., S.Doc. 97, Wright, J. M. 1968. Performance indicators and program evaluation for wildli f e management. . Transactions of the thirty-second federal provincial wildlife conference. Ottawa, Queen's Printer. A P P E N D I C E S A P P E N D I X A APPENDIX A REGIONAL INCOME MULTIPLIERS Regional income multipliers have developed from the export base thesis which assumes that the economic growth of a region depends on i t s earnings from export industries (by definition no region i s self-sufficient). Export or basic industries s e l l products outside the region, or in the case of services s e l l to non-residents, thereby bringing new incomes to the area. Part of this new income i s respent within the region and has a 'multiplied' effect on incomes. Regional income multipliers are used to estimate the effect of changes in basic industries on the total incomes within a region. As a general rule income multipliers w i l l vary directly with the size of the region being considered (Archibald 1967, Rosenbluth 1967). Small regions which rely heavily on imports retain l i t t l e of the income which accrues to basic industries in the region and hence income multipliers are small. Conversely for larger regions with more diversified economic activity the share of income retained from basic industries is higher and the total impact on incomes i s much greater. For any region the multiplying effect of successive rounds of re- spending applies only to the fraction of expenditures that remains in the area after the f i r s t round of spending in the basic industry. This fraction, the local spending component of gross industry receipts (L), w i l l vary between basic industries, and in this study w i l l be estimated separately for agri- culture and recreation-tourism. The size of the multiplier which acts on this local income component depends on (i) the proportion of any increase i n regional incomes that i s spent within the region (MPSr), and ( i i ) the pro- portion of regional expenditure that accrues as income to residents of the region (Y r). The formula used to determine the value of the multiplier i s : 1 1 - (MPSr)(Yr) In this study multipliers are required for two basic industries in three 'regions' corresponding to the referent groups adopted. For each of these regions the factors which determine the multiplied effect of new incomes (L, MPSr, Y r) w i l l vary. Regional multipliers for the two basic industries and each of the three referent groups are derived below. When applied they must be related only to that part of output which is an export vis-a-vis the relevant region. Regional Multipliers in Agriculture Local Multipliers In the Creston economy the value of MPSr i s estimated at .7 (Asimakopulos 1965) and the value of Y r at .24 (Dominion Bureau of Statistics 1966). The local multiplier thus has a value of 1.20. At the local level the value of L i s estimated to be ,9 of the i n i t i a l receipts by farm enter- prises. Farm operators w i l l pay out 69 per cent of their receipts to local businesses and retain 31 per cent as payment to hired and operator's labor (Josling and Trant 1966, pp. 59-60). Since only 70 per cent of labor earnings are spent locally the total spending in Creston businesses w i l l be equal to 90 per cent of the gross farm receipts. * Asimakopulos reports a proportion of income spent of .8, but since not a l l incomes w i l l be spent locally this i s reduced to .7 for the Creston area, It is assumed that the composition of spending i s 87% on r e t a i l purchases having a 20% local income component and 13% on services with a local income component of 50%. On balance the proportion of regional expenditure which accrues as local income (Y r) is thus ,24. The effect of the multiplier w i l l be to further increase this local spending by 20 per cent beyond the i n i t i a l round. An increase in farm receipts of $100,000 would have the following effect on Creston businesses: i n i t i a l spending by farmers and employees $90,600, total spending after multiplier effect (1.20) $108,900. Provincial Multiplier The provincial multiplier for agriculture i s estimated in the same manner as the Creston multiplier, but new values are adopted for L, MPSr and Y r to correspond to the new 'region' - the province of British Columbia rather than the Creston area alone. At this level L i s estimated to be .94, while the product of MPSr and Y i s estimated to be ,45 (Price Waterhouse and Company 1968), resulting in a multiplier of 1.8. The impact on the province of British Columbia of a $100,000 increase in farm incomes at Creston would thus differ significantly from the impact on the Creston area alone. Non-farm business revenues would increase by $93,800 i n i t i a l l y and expand to $169,000 as a result of the multiplier. National Multiplier Within Canada L w i l l remain the same as i t was provincially, .94, but the multiplier acting on this spending w i l l be much higher, approximately 2.8 (Price Waterhouse and Company 1968). At this level non-farm business revenues would increase by $93,800 i n i t i a l l y , expanding to $263,000 with the fi n a l multiplied impact. Regional Multipliers In Recreation Local Multiplier Multipliers to estimate the impact of spending by tourists and recreationists are derived in the same manner as for agriculture, with the only changes being i n the magnitude of L for the various regions. The value of L for the Creston economy in this case i s estimated at .51. In the local economy the impact on business revenues of a $100,000 increase i n spending by recreationists would develop as follows: wages and profits would account for 30 per cent of the i n i t i a l spending, 70 per cent of which, or $21,000, would be spent in Creston. Of the remaining $70,000 approximately $30,000 would be spent In Creston, with $40,000 going directly to outside suppliers. The I n i t i a l respending in the Creston economy would thus be roughly $51,000, The regional multiplier of 1.2 w i l l expand this to a f i n a l impact of $61,200. Provincial Multiplier For the province in the case of recreation-tourism the value of L i s estimated at .84 ($24,000 spent from wages and profits, $60,000 spent within British Columbia for supplies). The multiplier has the same value as that used in the case of agriculture, 1.8. At this level a $100,000 increase i n recreation spending would lead to a further increase i n revenues of $84,000, reaching $151,000 after successive rounds of respending. National Multiplier From the national perspective an i n i t i a l increase i n tourist revenues of $100,000 would lead to first-round respending of $97,000. Acted on by a multiplier of 2,8 this would eventually reach $272,000. REFERENCES. APPENDIX A Archibald, G.C. 1967. Regional multiplier effects i n the U.K. Oxford Economic Papers (New Series). 19(1):22-39. Asimakopulos, A. 1965. Analysis of Canadian Consumer Expenditure Surveys. Canadian Journal of Economics and P o l i t i c a l Science. May, 1965. Dominion Bureau of Statistics. 1966. Census catalogues 97-602, 97-603, 97- 643, and 97-647. Ottawa, Queen's Printer. Josling, JvT, and G.I. Trant, 1966, Interdependence among agricultural and other sectors. Publication No. 2, Agricultural Economics Research Council of Canada. Price Waterhouse and Company. 1968. The growth and impact of the mining industry in British Columbia. Vancouver. Rosenbluth, Gideon. 1967. The Canadian, economy and disarmament. Toronto, Macmillan of Canada. A P P E N D I X B APPENDIX B SIZE AND NUMBER OF FARMS AND PRESENT PATTERNS OF PRODUCTION, RECLAIMED LAND, CRESTON FLATS Table B-l gives the distribution of farms by size on presently reclaimed land on the Creston f l a t s . A total of 19,382 acres are cultivated in 39 different holdings. The average size of farm i s 497 cultivated acres, TABLE B-l* DISTRIBUTION OF FARMS BY NUMBER OF CULTIVATED ACRES , CRESTON FLATS No. of Cult. No. of Farms Total Cult. % of A l l Cult. Acres Acres . , .'. Acres 1,500 or more 3 5,451 28.1% 1,000 - 1,499 1 1,024 5.3 500 - 999 10 ' 6,424 33.2 300 - 499 10 4,066 21.'0 200 - 299 6 , 1,310 6.7 1 - 1 9 9 9 1,107 5.7 TOTAL 39 19,382 100.0% * Source - W, Wiebe, District Agriculturist, Creston. Data collected in survey, spring, 1968. Not a l l of these holdings support a f u l l time farm operation. Several of the smaller holdings are cropped on a share basis, or under custom agreement, the owners being employed elsewhere in the local economy. In addition several farmers who operate dairy or beef farms on the benchlands at Lister and Erickson hold land on the flats which forms a part of their farm unit. Taking these factors into consideration i t i s estimated that holdings on the flats form the basis of 30 farm operations, and are an important part of an additional 5- farms with land on the surrounding benchlands. Data in Table B-l are based on acres in cultivation, and do not include farm yards, roads, ditches, etc. Table B-2 presents the existing pattern of crop production on the Creston f l a t s , based on seeded acreage in the spring of 1968, Grains are the most important crop, with wheat, oats, and barley accounting for 66.8 per cent of the cultivated acreage. Next in importance are clover seed and hay with 11.9 and 10.7 per cent respectively. Pasture, potatoes, summer fallow and other miscellaneous crops account for the rest of the acreage. It i s believed that this pattern of production has been consistent over the past five or six years. The acreage i n seed peas has declined due to lower market prices and higher costs of production. At the same time the production of clover seed on the flats i s relatively new, having been introduced only in 1962. While the grain crops do not yield as high a return (gross or net) per acre as some of the other crops, such as clover and potatoes (see Appendix C), they have nevertheless been the dominant crop on a l l farms. This i s likely a result of two factors: a) once accustomed to growing grain, farmers have been slow or reluctant to change to other crops, and b) growing grain minimizes the loss in times of flood. Given the flood risk, a grain crop which has very low seeding costs in comparison with a crop like potatoes, represents a much lower potential loss. TABLE B-2* DISTRIBUTION OF CROPS. BY SEEDED ACRES. CRESTON FLATS.'1968 Crop Seeded Acres % of Total Seeded Acres Wheat r Spring - Winter . 4,044 1,485 21.0 7.6 Oats 4,008 20.7 Barley 3,392 17.5 Clover Seed - White - Red 2,268 40 Hay 2,066 .10.7 Pasture 951 4.9 Potatoes 425 2.2 Summer Fallow 392 2.0 Seed Peas 288 1.4 Swede Turnip Seed 5 (-) Corn 4 (-) Miscellaneous 14 0.1 TOTAL 19,382 100.0% Source: W. Wiebe - data collected in survey, spring, 1968. (-) less than one tenth of one per cent (.001), A P P E N D I X C APPENDIX C THE ECONOMICS OF FARM PRODUCTION, CRESTON FLATS,,1968 Several procedures can be used to measure the p r o f i t a b i l i t y of agricultural enterprises on the Creston f l a t s . Estimates can be made of the net returns from individual crops on a per acre basis, or data on farm enter- prises as a whole can be analysed and converted to a per acre basis. A further check can be made by comparing such data with the rental value of farm land, or with land values when land i s sold. Net Returns Per Acre. Individual Crops The three basic steps i n this analysis include measuring per acre yields for each crop, obtaining reliable data on the prices of these crops, and measuring the costs of production; Yields Per Acre While crop yields may vary greatly from year to year, i t i s neverthe- less possible to derive reliable estimates of average yields. Such estimates have been prepared for crops grown on the Creston f l a t s , based on records of farmers who have been producing them for a number of years. These estimates represent the average per acre production which a farmer would expect in the various crops. This information has been summarized in Table C-l. The estimated yield which would be consistently expected on an average acre, given present levels of farm management, i s given i n the f i r s t column. These estimates" are averages of data provided by cooperating farmers, and are weighted by the number of acres of each crop grown. In the second and third columns the range of yields reported for each crop i s presented, TABLE C-l PER ACRE YIELDS. CROPS ON CRESTON FLATS Yield Per Lowest Highest Crop Acre Estimate Estimate Wheat - Spring 47.5 bu. 40 bu. 55 bu. - Winter 74.5 bu. 70 bu. 80 bu. Oats 94 bu. 80 bu. 103 bu. Barley 62 bu. 50 bu. 73 bu. Clover Seed 530 lbs. 500 lbs. 700 lbs. Hay 5 ton 4 1/2 ton 5 1/2 ton Potatoes 10 ton 10 ton 10 ton Figures providing an 'output-per-acre' are not available for land presently used as pasture (951 acres), as the pasture forms a direct input in the production of beef. Since the summer grazing season on the reclaimed land tends to be short, and supplemental feeding i s done in f a l l and winter, measuring output on a per acre basis i s extremely d i f f i c u l t . Returns per acre for beef enterprises w i l l be estimated by analysing farm operations, and converting profits to a per acre basis. Prices Received, and Gross Returns Per Acre Prices received for various crops fluctuate from year to year depending on general market conditions. Grain prices i n 1968-69 are lower than previous years, but prices for other crops are at or near long run averages. In Table C-2 prices received for crops i n recent years are presented where reliable data could be obtained. Prices quoted for the 1968 crop are given in the f i r s t column, and prices received i n previous years are in the second through f i f t h columns. TABLE C-2 CROP PRICES. CRESTON Crop Wheat - Spring - Winter Oats Barley Clover Seed Hay Potatoes 1968 1967 Year 1966 $ 1.70 bu. $ 1.75 bu. $ 1.70 bu. $48/T. $48/T. $54/T. $40/T. $36/T. 40c lb. $24/T. $50/T. $48/T. $45/T. 32e lb. $22/T. $45/T. $43/T. 30C lb. $22/T. 1965 $54/T. $45/T. $42/T. 27C lb, $25/T. 1964 51c lb. (historical data inconsistent) On the basis of this information an average price for each crop has been derived, and these figures are presented in Table C-3. These prices represent an average of market prices in recent years, In the absence cf severe changes in market conditions, they would form the basis of short term expectations for future prices. These prices are applied to the yields estimated in Table C-l, to give an estimate of the gross return per acre under each crop, TABLE C-3 CALCULATED GROSS RETURN PER ACRE FOR INDIVIDUAL CROPS Crop • Price Yield/Acre Gross Return/ Acre Wheat - Spring $ 1.72 bu. 47.5 bu. $ 82. - Winter $52.50/T. 74.5 bu. $118. Oats $44.50/T. 94 bu. $ 71. Barley ' $41.50/T. 62 bu. $ 62. Clover Seed 36<? lb. 530 lbs. $191. Hay $23/T. 5 T. $115. Potatoes $50/T. 10 T. $500. These figures are rounded to the nearest dollar. Costs of Production , and Net Returns Per Acre The f i n a l step in this analysis involves the calculation of costs of production for the various crops, and net returns per acre. Data for these calculations were provided by cooperating farmers and are summarized in Table C-4. Costs of production in Table C-4 include a l l current operating cost, dyking taxes, provincial land taxes, and depreciation on machinery and equipment. Not included i n these costs i s the 'opportunity cost' or income foregone on money invested i n machinery and equipment. Capital required for production of these crops i s estimated at $100 per acre, which, i f invested at 8 per cent would earn $8 per year. This expense Is deducted from the current operating profit to give a measure of the true return per acre under various crops. Capitalizing this net" return at 8 per cent yields a measure of the present worth of an acre of land i n each crop. This i s presented i n the f i n a l column of Table C~4. ' TABLE C-4 COSTS OF PRODUCTION. AND NET RETURNS PER ACRE Crop Est. Gross Ret. Per Acre Prod. Cost . Per Acre Net Ret. Per Acre Net Ret. , Less 8% on Capital Present Discounted Value Wheat - Spring - Winter $ 82. $118. $ 53. $ 88. $ 29. $ 30. $ 21. $ 22. $ 262.50 $ 275.00 Oats $ 71. $ 44. $ 27 $ 19. $ 237.50 Barley $ 62. $ 37. $ 25. $ 17. $ 212.50 Clover Seed $191. $ 90. $101. $ 93. $1,162.50 Hay $115. $ 87. $ 28. $ 20. $ 250.00 Potatoes $500. $400. $100. $ 92. $1,150.00 * An average cost, farmer growing a weighted by the number of acres of particular crop. crop grown for each A wide variation i n returns per acre between the various crops is noted in Table C-4. After allowing an 8'per cent return on capital as an expense, net returns range from $17 per acre i n barley, to $93 per acre i n clover seed. Net returns i n grain and hay are grouped between $17 and $22 per acre however, while both potatoes and clover seed show net returns exceeding $90 per acre. Discounting these net returns at a rate of 8 per cent yields present values per acre which range from $212 for land producing barley to $1,162 for land producing clover seed. This wide variation in return under each crop, and the consequent range of present values, i s more meaningful i f presented i n terms of an 'average' acre. This i s done i n Table C-5, where the returns to an 'average' acre are calculated by weighting the per acre returns under each crop by the number of acres presently i n that crop. It must be noted that this data i s based on information pertaining to the crops itemized i n Table C-l only, and does not include pasture, seed peas, or other miscellaneous crops as a basis for computation. TABLE C-5 AVERAGE COSTS AND RETURNS PER ACRE. ALL CROPS Net Gross Production Net Return, Present Return Cost Return Less Worth, 8% on @ 8% Capital A l l Seeded Acres $106.76 $67.93 $38.83 $30.83 $385.38 A l l Cultivated Acres Including $104.62 $66.56 $38.06 $30.06 $375.75 Summer Fallow When the data are presented in this manner, an 'average' acre under crop on the Creston flats i s seen to yield a gross return of $106,76, and a net return of $30,83 after allowing for a l l costs. However, these figures are for acres i n crop only, and do not take account of the fact that two per cent of the cultivated land i s i n summer fallow. Including acres i n summer fallow i n the calculations gives a true picture of the costs and returns on an 'average' acre. This i s done i n the bottom row of Table C-5, and has the effect of reducing the net return on an 'average' acre to $30,06 having a present value of $375,75. Analysis of Farm Enterprise Data As a second method of measuring the p r o f i t a b i l i t y of agricultural enterprises on the Creston f l a t s , data on farm units taken as a whole was analysed and converted to a per acre basis. This data includes land used for pasture and summer fallow, as well as the crops analysed in Tables C-l through C-4. Calculations of this nature are less precise than those made on a per acre basis for several reasons. The analysis of farm units was possible only on the basis of current records, and not over a time series as was done with the analysis of individual crops. Thus unusual or non-recurring features of any one operation may bias the results. Further, many farm units include expenses and receipts associated with custom work, feedlot operations for hogs or beef, grain milling, and other associated activities which do not reflect the productivity of the land per se. Separating the returns to those associated enterprises from returns to the land i s d i f f i c u l t , and has been done on a very arbitrary basis. Despite these qualifications to the data, they do provide a measure of per acre returns, and as such provide a check on the calculations made on the basis of individual crop analysis. Calculations on this basis were made possible by cooperating farmers, and current operating profits per acre were calculated which ranged from $26 to $65, and averaged $36 per acre. Investment in machinery and equipment and storage f a c i l i t i e s on these farms was estimated as closely as possible, and estimates ranged from $94 per acre to $120 per acre, with the average being $100 per acre. Allowing a charge of 8 per cent for interest on this capital introduced an additional cost of $8 per acre, which reduces the estimated net return to $28 per acre. Under these calculations the present value of an acre i s $350,00 when discounted at 8 per cent. These figures correspond quite closely to those derived earlier by analysing individual crops, where the net return on an 'average' acre was estimated to be $30.06, and the present value of an acre $375.75. The Rental and Sale Value of Land Rental Value In a competitive market for the rental of farm land, rents bid for land should closely reflect i t s net earning power. Data pertaining to the present rental market for reclaimed land i n the Creston area Is sketchy, and not available from any one source. However, some information was obtained on land presently being rented, and indicated that rents vary from $13 per acre to $32 per acre. Land under lease from the Indian band i s presently sublet for $10 per acre, and in addition a direct levy to the Indian band of $3 per acre i s paid, indicating a total rent of $13 per acre. In another case rental equal to $15 per acre i s being paid on land rented on a sharecrop basis. Another farmer had formerly rented land for $19 per acre, but has since ceased to do so, as he felt he was only making a very slight profit after paying the rent. Land producing a l f a l f a i s currently renting for $32 per acre, with the land owner being responsible for dyking and land taxes, thus earning a net rent of approximately $26 per acre. With the exception of the a l f a l f a land, rentals for which information was obtained are generally below $20 per acre, and closer to $15 per acre. These figures are considerably below the estimated net earning power of the land, and this discrepancy merits investigation. Several possible explan- ations are explored below: a) In the case of land on the Creston flats the assumption of a competitive market for land rentals i s open to question. There are relatively few farm operators in the area who are in a position to bid for the rental of land, and land tends to be concentrated in large holdings (see Table B-l), Thus there is relatively l i t t l e opportunity for a system of competitive bidding to draw forth the maximum rental values of land, b) Many rents have been established over a relatively long time period, and may reflect past conditions more than those of the present. c) Rental land tends to be devoted to grain growing, which has a lower net return than other crops such as potatoes and clover seed. d) Rented land for which data were obtained may have s o i l or locational disadvantages, or for other reasons may not be typical of most farmland on the f l a t s . e) Rentals paid may be below net earnings by a premium to allow for the flood risk. f) Part of the discrepancy allows for the value of the farm operator's labor input. Rental currently being paid for a l f a l f a producing land is an interesting exception to the above cases. Land in a l f a l f a typically rents for $32 per acre, with the land-owner receiving a net per acre of approx- imately $26 after paying taxes. This appears to be closer to the true earning power of the land, and suggests that competition i s more effective in the rental of hay land than in grain. There are several reasons why this may be so. Recent cessation of hay cutting on Crown land managed by the B.C. Forest Service has forced many beef growers in the West Creston area to look elsewhere for hay supplies, and they have been competitive in bidding for the rental of hay lands. Dairy and beef producers on the benchlands around Erickson and Lister have also been seeking additional hay supplies, and have contributed to the competitive nature of the market. Further, since this i s a recent market occurrence prices paid more closely reflect current market conditions than those paid for grain land. Sale Value The price paid for land in a competitive market should reflect the discounted value of i t s future stream of net earnings. While this would hold in a competitive market, the land market on the Creston flats does not appear to be effectively competitive. Land changes hands infrequently, and market values are not clearly established. Persons queried about the value of land generally f e l t i t t o b e worth from $250 to $350 per acre. Assuming a dis- count rate of 8 per cent this reflects a net earnings stream ranging from $20 to $28 per acre. These figures correspond f a i r l y closely with cal- culations made earlier on an individual crop basis. A farm on the flats currently offered for sale i s quoted at approx- imately $400 per acre, and a recent sale was reported with a value of approximately $325 per acre. It i s d i f f i c u l t to determine whether these prices are based on the current earning power of the land alone, or include a speculative premium due to the impending influence of the Libby Dam. In any case, prices in the region of $250 to $400 per acre, given an imperfect market and the existence of uncertainty, are not inconsistent with the earlier calculations on individual crops and farm enterprises. Summary It has been the purpose of this appendix to shed some light on the economics of agricultural production on reclaimed lands on the Creston f l a t s . Individual crops were investigated* on a per acre basis, and i t was con- cluded that an 'average' acre on the Creston flats had a net earning power of $30.06 per year. Discounted at 8 per cent this indicates a present value, per acre, of $375.75. These calculations were checked against an analysis based on complete farm units which indicated a net return of approximately $28 per acre. A further check included a brief investigation of the rental and sale value of reclaimed land. These results, although tending to support the earlier findings, were inconclusive due to the scarcity of reliable data. It i s concluded that under present cropping practices and levels of farm management an 'average' acre of reclaimed land on the Creston flats has an annual net earning power of $30.06 and a present discounted value of $376, The preceding calculations of net returns per acre included as costs, non-cash charges to cover depreciation and interest on average investment in equipment and buildings. No charges were deducted to cover the value or "opportunity-cost" of the farm operator's own labor input. The net return per acre of $30.06 thus represents the combined earnings of the land and the farm operator's labor. This i s the normal measure of financial return or profit used by farm operators. In deter- mining the earning power or value of the land alone, a further deduction must be made to account for the value of the operator's labor. Imputing a value to operator's.labor i s d i f f i c u l t . The value which is sought should measure the income which a farm,operator could earn i f he were alternatively employed. This i s d i f f i c u l t to estimate, and at Creston w i l l vary greatly on a per acre basis, depending on the size of the farm operation. One method of approximation is to estimate the average number of hours of operator's time per acre, and charge for this time at an hourly rate. Assuming an hourly rate of $2.50 and an annual input, on the average, of 1.5 hours per acre, this introduces an additional charge of $3.75 per acre. Deducting this cost reduces the net return per acre to $26.31, and the present value of-an acre of land to $329, as compared to $30.06 and $376 when no allowance i s made for the operator's labor input. The- differences in these figures should be stressed. Net earnings of $30.06 It i s assumed that farmers could earn $2.50 per hour i f they were not farming. The estimate of 1.5 hours per acre i s an average for a l l farms. On farms of 2,000 acres and more this probably overstates the input, while on farms under 1,000.acres it.may be an under-estimate. per acre represents the return to land and labor. Earnings of $26.31 are the return to land alone. The latter figure. $26.31 per acre, equivalent to a present value of $329. w i l l be used i n this study. The object of our analysis i s to estimate the net productivity of land under agricultural production. This measure must be "net" of the value of a l l Inputs, and the value of the farm operator's labor cannot be excluded from the cost of inputs. A P P E N D I X D APPENDIX D RECLAMATION COSTS FOR AGRICULTURE Reclamation Costs: An Overview At present 21,000 acres of land have been reclaimed and are farmed i n the Kootenay River floodplain at Creston. The 15,000 acres which remain unreclaimed are physically similar to those which are now being farmed. Reclamation of these lands for agricultural purposes Is feasible from a purely technical point of view, and i n the case of Duck Lake the unreclaimed land i s already protected from the Kootenay River by dyke. In estimating reclamation costs there w i l l be substantial differences in cost depending on whether reclamation is done by local contractors or dyking d i s t r i c t s , or by outside contractors. Local dyking districts have done a l l the reclamation i n the area to date, have sufficient machinery and equipment to undertake further reclamation, and enjoy a distinct cost advantage over outside contractors. It i s estimated that i f reclamation work i s contracted locally, i t can be done for between 1/3 to 1/2 the cost of having the work done by out- side contractors. Local contractors (dyking districts) are experienced at building dykes In the area, and this alone gives them a distinct advantage over outside contractors. They already have a l l the necessary equipment for reclamation, and i t is essentially on-site. Furthermore, local con- tractors enjoy a significant advantage i n labor costs. By using local labor (farm employees during the winter months when farm demands are slack), labor costs are reduced below those faced by outside contractors hiring union workers. Figures supplied by the United States Fish and Wildlife Service support this argument. While pointing out that costs vary depending on materials, distance to haul, specifications of dyke, etc., the following figures are applied as general guides for reclamation costs: If the Fish and Wildlife Service undertakes the work using their own equipment, dirt can be moved and dykes built for approximately 20<: per cubic yard. If work is done by contract, costs are 75<? per cubic yard, provided mats are not required under draglines; i f mats are used under draglines, costs are approximately 90<? per cubic yard. Due to the differences i n the cost of both capital and labor between Canada and the United States, these figures cannot be assumed to represent the actual cost of dyke construction at Creston. They are useful however insofar as they i l l u s t r a t e the significant variation i n costs which can be expected depending on who carries out reclamation work. Reclamation Costs. Creston In the past dykes have been constructed in the Creston area for as l i t t l e as 180 per cubic yard, although average costs have been approximately 27£ per cubic yard.** There have been no major reclamation projects in recent years however and i t i s estimated that current costs for dyke construction In a letter to Dwight Moore, Supervisor, Creston Valley Wildlife Management Area, ** Source: Mr, V. Mosher, P. Eng, engineer i n charge of reclamation. are 80£ per cubic yard. In the following estimates i t i s assumed that material for the con- struction of dykes w i l l be obtained on-site, and no hauling charges w i l l be incurred. Dirt w i l l be dredged from outer perimeters and pulled back into each unit to build dykes. For agricultural reclamation a dyke with a 10 foot width at top and a 3 to 1 slope i s assumed. This meets the s p e c i f i - cations of both the International Joint Commission and International Power and Engineering Consultants Ltd. (IPEC). Clearing the river bank in preparation for dyking can be an additional cost. In most areas the river banks are built up i n natural levees, and support a heavy growth of cottonwood trees. These trees and their roots must be removed to prepare for coring and construction of dykes. Assuming that a strip 132 feet wide must be cleared, It w i l l be necessary to clear 16 acres per mile of dyke. Cost of clearing i s estimated at $500 per acre, or $8,000 per mile. In some areas the growth of trees is light and clearing costs may be lower, but this figure i s used as an average cost. Pumping and Maintenance Maintenance costs on the reclaimed land include the repair and maintenance of dykes and ditches and pumping of seepage and runoff. These costs are currently approximately $3 per cultivated acre, although they vary between dyking d i s t r i c t s . Maintenance work i s carried out by the respective dyking districts and financed by a per acre tax on-, reclaimed land. Dykes recently constructed by the C.V.W.M. Authority have varied i n cost from 60£ to $1.00 per cubic yard, 80<? per cubic yard i s used here as an average cost. Maintenance costs w i l l be considered i n estimating future reclamation costs. Maintenance costs have already been included in estimating the net earning power of land under agriculture (Appendix C) and to include them again would be double-counting. Net Reclaimable Area An additional consideration involves the loss of land to dykes, A ditches, and roads. Persons experienced i n reclamation at Creston estimate that this loss w i l l be approximately ten per cent of the gross area of any unit being reclaimed. After reclamation 90 per cent of the land area w i l l be available for cultivation. Libby Dam A c r i t i c a l matter which w i l l affect both the type and cost of dyke construction i s the effect of the Libby Dam on the annual freshet of the Kootenay River. Currently under construction at Libby, Montana (upstream from Creston) the primary function of Libby Dam i s hydro-electric power generation. However, an important secondary function w i l l be the provision of flood control for reclaimed land i n the Kootenay River floodplain. Management for flood control i n the United States w i l l provide similar benefits for farmland on the floodplain at Creston, Much of the effectiveness of Libby Dam for flood control w i l l depend on how i t i s used to meet power requirements. For this reason there is a possibility that a second dam may be constructed downstream from Libby Dam to regulate stream flow. This dam would control rapid fluctuations in river Messrs, A, Staples, W. Piper Jr., and V. Mosher. flow which, could result from periods of peak, drawdown, on the Libby reservoir. To date the best estimates available indicate that the effect of Libby Dam w i l l be to reduce the high water level at times of peak runoff by about ten feet. The estimated high and low water levels at various points from the United States border to Kootenay Lake are presented i n Table D-l. TABLE D-l ' ESTIMATES OF KOOTENAY RIVER LEVELS AFTER LIBBY DAM Location High Water 100% of 90% of time time below below Low 100% of time above Water 90% of time above (elevation i n feet above sea level) P o r t h i l l (U.S. border) 1756.6' 1752.6* 1738.6' 1739.6' Goat River 1755.0 1751.7 1738.4 1739.4 Creston Ferry 175.4.9 1751.6 1738.4 1739.4 Corn Creek 1753.9 1750.9 1738.3 1739.3 Kuskanook (Kootenay Lake) 1752.0 1750.0 1738.1 1739.1 These estimates are based on work done by the Water Rights Branch, Department of Lands, Forests and Water Resources, Victoria, and presented in correspondence to Dr. J. Hatter, Director, Fish and Wildlife Branch, April 15, 1969. The estimates as presented are amended in accordance with a later letter to D.D, Moore, Supervisor, Creston Valley Wildlife Management Area. There i s a slight drop in elevation moving north from P o r t h i l l to Kuskanook, After Libby Dam construction of dykes with a two foot leeway or freeboard would require a dyke of 1759' elevation on the Indian Reserves. Further north at Six Mile Slough a dyke of elevation 1754' would be sufficient. To deal with historic river levels dykes on reclaimed land i n the south are presently built to an elevation of 1770', while those at Duck- Lake, in the north, are b u i l t to 17641. The Impact of Libby Dam w i l l thus be to greatly reduce dyking require- ments and costs compared to those incurred i n the past. Reclamation Costs for Individual Areas The Indian Reserves The combined area of Indian Reserves 1, 1A and IB i s estimated at 3,000 acres (see Map). Until recently most of this land presented the potential for agricultural reclamation, and previous estimates of the costs of reclamation were based on developing the entire area. With any reclamation plan the most d i f f i c u l t aspect is the control of the Goat River which flows into the Kootenay River and forms the northern boundary of Reserve IB, The banks of the Goat are low and irregular, and levees are poorly formed. Soils i n this area are very porous and deep coring under dykes would be necessary to prevent seepage. Despite these problems previous reclamation plans envisaged development of the entire area of these Indian Reserves. Within the last two years however the problems associated with the Goat River have become far more serious. The Department of Highways has diverted a major part of the flow of the Goat River into a more southerly Reference here i s to an independent and intensive study by Wm. Piper Jr., of Creston 1964-1965, and to estimates conveyed to Dr. W.J.D, Stephen of the Canadian Wildlife Service by Underwood McLellan and Associates of Edmonton, January 29, 1968.  channel where i t crosses the highway to the east of Reserve IB, This has resulted i n serious channelization and erosion throughout the northern half of Reserve IB. As a result of this diversion of the Goat River any development plan being prepared at present would not consider this portion of the Indian Reserves as a potential area for agricultural reclamation. The additional problems created by having two branches of the Goat River to contain, severely channeled and eroded land, plus the repercussions which any development would have on private land to the east, have rendered this area unattractive for further agricultural reclamation. The alternative would be to construct a dyke across Indian Reserve IB to the south of the area affected by the Goat River, as indicated with a dotted line on the map. This would preclude approximately 700 acres from development but is the only feasible alternative, given recent diversion of the Goat River. For reasons given above the reclamation plan considered i n this study i s based on an area of 2,300 acres only. After dykes, roads, and ditches are built i t i s assumed that.90 per cent, or 2,070 acres' could be put into agricultural production. Estimates of dyke requirements and costs are based on Kootenay River levels as given in Table D-l Dyke requirements along the Kootenay River, which forms the western boundary of the reserves, w i l l be minimal. The Kootenay River w i l l not exceed 1756.6' at the south end of the Indian Reserves (Porthill) or 1755.0' in the north (Goat River). Allowing a two foot freeboard on dykes in this area requires a top elevation of 1759' i n the south, f a l l i n g to 1757' at the northern end. At present the rtverbank i n this area i s consistent at elevations between 1760' and 1762', with small gaps i n only three places. With the exception of these gaps the natural, levee is broad and well established and with gaps f i l l e d i n would serve as a more than adequate dyke with a leeway of 6 to 8 feet above maximum river levels. Dyking costs along the Kootenay River would thus be minimal - consisting only of the cost of f i l l i n g the gaps i n the levee - at the most $10,000. A second dyke w i l l be required across the north of this area to con- tain the Goat River. The required dyke, as outlined earlier, w i l l be about 9,000 feet long with a top elevation of 1758' at i t s eastern end, f a l l i n g to 1757' at the west end. Construction of this dyke w i l l require approximately 36,000 yards of f i l l , costing approximately $36,000. Additional costs for internal ditching and installation of pumps, approximately $30,000, brings the total capital costs of reclamation to $76,000. On a per acre basis, with 2,070 cultivable acres, this amounts to $37. Under historic conditions there have been problems i n some areas where water has seeped through porous s o i l under dykes and saturated soils in low lying areas of reclamation units. Seepage i s prevented by "coring" or digging a trench into the porous s o i l under the dyke and r e f i l l i n g with non- porous material. While seepage problems might have been expected were the Indian Reserves reclaimed under historic conditions, they are not likely to occur after Libby Dam. Kootenay River levels w i l l only be above the lowest areas i n the Indian Reserves by about 4 feet and pressure would be insufficient to cause seepage. It i s assumed therefore that there w i l l be no costs for coring along the Kootenay River, ** Costs of $1 per yard are assumed after considering the need to haul f i l l and the distances involved. A similar although much shorter dyke con- structed recently i n the southern part of the Indian Reserves had costs of $1 per yard. The Corn Creek. Unit There are approximately 1,400 acres i n the Corn Creek unit up to elevation 1758' and terminating at Summit Creek i n the north. The cost of reclaiming this area depends on the methods used to control Summit Creek In the north, and Corn Creek i n the south. These streams enter the area from the mountains to the west, and meander extensively through the floodplain, with a considerable streamflow during spring-runoff. Both of these streams would have to be controlled, and It i s assumed that canals would be dug to * carry them across the floodplain to the Kootenay River. In addition to con- t r o l l i n g Corn and Summit Creeks the canal banks would act as dykes against the waters of the Kootenay River. There are two alternatives for controlling Corn Creek, These alter- natives depend on whether that portion of Indian Reserve 1C which li e s on the west bank of the Kootenay River can be included i n the reclamation unit. There are approximately 200 acres i n this portion of Indian Reserve 1C; 100 acres at the south end of Nick's Island, outside the dyking d i s t r i c t , and an additional 100 acres on the west bank of the Old Kootenay Channel. If i t were possible to include this portion of Indian Reserve 1C i n the Corn Creek area, the simplest approach would be to extend the dyke along the eastern side of the Island to a point near the southern t i p . A f i l l dyke could then be placed across the Old Kootenay Channel; Cora Greek wquld be most effectively controlled by digging a canal which would carry i t east This has recently been done with Summit Creek as part of a develop- ment program for Leach Lake. Summit Creek was diverted into a canal which enters the Kootenay River north of the Nick.' s Island dyking d i s t r i c t at a cost of approximately $150,000. N I C K S I S L A N D from the point where It enters the floodplain, to enter the Old Kootenay Channel just south of the proposed f i l l dyke. This altnernative would, bring an additional 200 acres into the area, bringing the total acreage to approximately 1,600 acres. If these portions of Indian Reserve 1C were not included i n the reclamation project, the alternative would be to place a f i l l dyke across the Old Kootenay Channel just north of Indian Reserve 1C, and adjoining the existing dyke at that point. Corn Creek could then be confined to a canal which would skirt the Indian Reserve and enter the Old Kootenay Channel south of the proposed crossdyke. An important assumption in both of these alternatives i s that any new dykes could be joined to the existing dykes of the Nick's Island Dyking District which l i e s to the east of the Corn Creek area. This would eliminate the need to construct a dyke along the eastern boundary of the Corn Creek unit, and by combining with the Nick's Island Dyking D i s t r i c t , annual main- tenance costs could be reduced. Whether Indian Reserve 1C i s Included i n this reclamation or not, the cost of controlling Corn Creek w i l l be approximately equal. The advantage of including Reserve 1C i n the reclamation area l i e s i n increasing the area of cultivable land and significantly reducing per acre reclamation costs. With control of both Corn and Summit Creeks the dykes thrown up to contain streamflow would also serve as barriers to high water from the Kootenay River. Pressure from the Kootenay would be light however, given the river levels of Table D-l. Most of the land within the Corn Creek unit lies between 1752'-1754'; the Kootenay River i s not expected to exceed 1753.9' at i t s maximum in the Corn Creek area, and 90 per cent of the time w i l l be below 1750-.9*. To be effective against the Kootenay River dykes would have to be bu i l t to an elevation of 1756', and* any dykes b u i l t to control Corn or Summit Creeks would exceed this elevation. The cost of diverting and channelization for both streams i s estimated to be $300,000. If the Corn Creek area were reclaimed independent of any work in Leach Lake (immediately to the north) then the entire cost of con- t r o l l i n g both streams would be attributable to the Corn Creek reclamation. If reclamation of Corn Creek were carried out i n conjunction with develop- ment of Leach Lake however only one-half of the cost of Summit Creek control would be charged to the Corn Creek, area. Thus capital costs for control of these two major streams could be either $300,000, or $225,000, depending on whether or not a joint reclamation of Leach Lake were undertaken. In addition;, a peripheral ditch would be required along the western edge of the unit to collect the runoff from several small streams draining the adjacent benchlands. Cost of this ditch, plus necessary internal ditching, and the installation of limited pumping capacity would be $50,000 at the maximum. The total capital cost of reclaiming this unit would thus vary from $275,000 to $350,000 depending on the status of Leach Lake development. If the portion of Indian Reserve 1C discussed above is included in this area, 1,440 acres would be cultivable after reclamation. If Indian Reserve 1C i s not included, 1,260 acres would be available. Estimated capital costs per acre vary from $191 to $278, as summarized i n Table D-2. Work presently underway to control Summit Creek i s expected to be completed for $150,000. Control of Corn Creek, would cost approximately the same amount. TABLE D-2 ESTIMATED TOTAL AND PER ACRE RECLAMATION COSTS. CORN CREEK AREA Per Acre Costs Capital I.R. 1C Included I.R. 1C Excluded Costs (1,440 Acres) (1,260 Acres) Reclamation Independent of Leach Lake $350,000 $243 $278 Reclamation i n Conjunction with Leach Lake $275,000 $191 $218 The Leach Lake Unit There are approximately 2,900 acres in this unit which would yield 2,600 cultivable acres after reclamation. As with the Corn Creek area, the future course of Summit Creek i s important, as i t forms the southern boundary of the Leach Lake unit. Again i t i s assumed that Summit Creek i s taken directly across the floodplain to the Kootenay River by digging a canal, and i n this case the north dyke of the canal w i l l form the dyke for the south end of the area. The cost of controlling Summit Creek i n this manner i s approximately $150,000. If reclaimed i n conjunction with Corn Creek only one half of this, $75,000, would be attributed to Leach Lake reclamation costs. The Leach Lake area i s bounded by the Kootenay River for 6 miles on the west and north. After Libby Dam the Kootenay River w i l l not exceed 1753,9' i n this area (reading given for Corn Creek which i s upstream from L E A C H L A K E Leach Lake). For agricultural purposes dykes would have to crest no lower than 1755.9', allowing a two foot freeboard. Throughout most of the area at present the natural riverbank and levee has an elevation varying from 1758' to 1760' and dyking would not be required. The only exception i s i n the extreme north west edge of the area where there i s a break in the levee for 1/4 mile. This would require dyke construction, and there are several other areas where irregularities i n the levee may have to be straightened as well as one area where severe bank erosion would have to be arrested. A l i b e r a l estimate of the cost of these works would be $25,000. Ditching within the unit and installation of a pump to handle internal drainage, including small creeks from the benchlands in the west, would cost an additional $70,000, Total reclamation costs would thus be $170,000 i f work i s carried out i n conjunction with Corn Creek reclamation, $245,000 i f carried out independently. Per acre costs would vary from $65 to $94. Six Mile Slough The Six Mile Slough area i s an island bounded by the east and west channels of the Kootenay River immediately south of Kootenay Lake, At the north end of the area the Canadian Pacific Railway embankment provides a barrier to the waters of Kootenay Lake. Estimates place the area up to the 1758' contour at 2,650 acres. At the north end of this unit (Kuskanook) the Kootenay River w i l l not exceed 1752,0' after Libby Dam, while i n the south, a distance of six miles, i t could be expected to reach 1753'. Effective protection for agriculture would require a dyke built to top elevation of 1755' in the south, f a l l i n g to 1754' i n the north.  At present the periphery of the unit i s consistent between elevations 1756' to 1758' along the east side. Elevations along the west side of the unit are also from 1756' to 1758' except for approximately 3,000 feet i n the north end where the elevation i s only 1754', and 1,000 feet where i t i s only 1752'. There Is also a very short break in the levee on the west side where water flows out of the area when the Kootenay River i s low. Across the north end of the unit elevations are generally low (17441 to 1752'). The C.P.R. railway embankment forms the northern boundary of the unit and acts as a barrier to Kootenay Lake. While i t would protect the unit from wind and wave erosion, i t i s constructed of quarried rock and would not prevent water seepage. Effective protection of the unit for agricultural purposes would require closing the small gap on the west side, raising 1,000 feet of the levee by two feet to elevation 1754', and building a dyke across the north end of the unit inside the railway embankment. Cost of building the dyke across the north end of the unit to a crest elevation of 1754' i s estimated at $55,000. Cost of raising 1,000 feet of levee on the west by two feet and closing the narrow gap in the levee i s estimated at $12,000. The cost of internal ditching and i n s t a l - lation of pumping capacity would be minimal as the area i s an island and does not have any mountain runoff to pump. The area slopes consistently toward the centre so that any drainage system could take advantage of the natural drainage which exists. The cost of ditching and installation of necessary pumping capacity i s estimated at $30,000. 68,740 cubic yards of f i l l , at 80<? per cubic yard. Total reclamation costs are thus in the order of $100,000, equal to $42 per acre for 2,400 cultivable acres. An important additional cost i s involved i n planning to reclaim and farm Six Mile Slough. This involves the provision of access to the area. The area i s an island and at present has no road access. Access in the past has been by means of a small private ferry which i s used mainly to transport livestock to the area for summer grazing. This ferry would not provide adequate access to the area i f i t were being farmed intensively. A Bailey bridge adequate to carry farm trucks and machinery would cost approximately $75,000, or a small cable ferry could be installed. While the i n i t i a l cost of the ferry might be less than that of the bridge annual operating and maintenance costs would probably make i t a less desirable alternative than a bridge in the long run. It i s assumed here that access i s provided by means of a bridge at a cost of $75,000. This has the effect of increasing capital costs to $175,000, or $73 per acre. Duck Lake Unlike the other areas of unreclaimed land, Duck Lake i s already protected by dyke from the Kootenay River as i t l i e s within the Duck Lake Dyking District, Duck Lake lies at the north end of the Dyking District and i s used to store the spring runoff of Duck Creek which enters the flood- plain at Wynndel,. Duck Lake i s separated from the cultivated land in the District by a cross dyke with a crest elevation of 1752.0'. Water level fluctuations within the lake are presently kept within six feet (El. 1742' to E l . 1748') by outlet pumps at the north end of the lake which pump the stored water into Kootenay Lake. Planimetry estimates place the total area of unreclaimed land up to the 1758' contour at 4,671 acres. However, not a l l of this land i s potentially arable. Persons farming i n the Duck. Lake Dyking District estimate that only about 3,000 acres of this land would be suitable for farming, The rest of the land i s f e l t to be too low, and to have such a heavy clay s o i l that i t would not be suitable for cultivation. The major problem in reclaiming further land in this area w i l l be the control of Duck Creek. This would be best achieved by constructing a con- t r o l dyke along the eastern edge of the area, commencing at the point of the existing cross dyke. This dyke would prevent the waters of Duck Creek from inundating further reclaimed land. An east to west cross dyke would then be necessary at the north end of further reclaimed land. Construction of such a control and cross dyke would be relatively inexpensive, as the dykes would not have to withstand the pressure of the Kootenay River, and no preparatory clearing would be required. It may be necessary however to rip-rap the dyke facing on the remaining unreclaimed area to prevent wave erosion. In a l l between 3.5 and 4 miles of dyke would be required, costing an estimated $80,000. Additional pumping capacity would be required to pump the runoff from Duck Creek into the Kootenay River. Based on the cost of new pumps currently being installed by B.C. Hydro, this would require a capital out- lay of $160,000. With these estimates, the total capital cost of reclaiming an additional 3,000 acres in Duck Lake is placed at $240,000; $80,000 for * Two el e c t r i c a l l y powered 150 h.p. 30 in. pumps, each having a capacity of 30,000 gallons per minute.  dyking, and $160,000 for pumps. This involves an i n i t i a l capital outlay of $80 per acre. It has been suggested as an alternative to this reclamation plan that further reclamation i n Duck Lake could be achieved without the con- struction of new control or cross dykes. This alternative assumes that the installation of additional pumping capacity w i l l make i t possible to reclaim more land simply by lowering the level of Duck Lake. If this were so, and an additional 3,000 acres reclaimed, then the i n i t i a l capital out- lay would be reduced to $160,000 or $53 per acre. It i s doubtful that this i s a r e a l i s t i c alternative however, as i t i s f e l t that cross and con- t r o l dyking would be required to control the flow of Duck Creek, and to protect additional reclaimed land from the remnant of Duck Lake. Summary of Estimated Reclamation Cost for Individual Areas The preceding estimates of reclamation costs for individual areas are assembled and summarized in Table D-3. Capital costs per acre vary from a low of $37 in the Indian Reserves to a high of $218 for the Corn Creek Unit (I.R. 1C excluded). This wide variation i n costs between areas can be attributed to differences in the size and physical aspects of the areas. Per acre costs in the Corn Creek area are far in excess of those for other areas. The Corn Creek area i s the smallest reclamation unit being considered, and the need to control the runoff from Summit and Corn Creeks makes i t relatively very costly. Per acre costs for the other areas are more uniform, as they TABLE D-3 SUMMARY OF ESTIMATED RECLAMATION COSTS FOR INDIVIDUAL AREAS* AREA AND ESTIMATES ACRES IN CULTIVATION AFTER RECLAMATION CAPITAL COSTS TOTAL PER ACRE COST OF INITIAL SOIL PREPARATION ($10/ACRE) TOTAL COST (SUM OF CAPITAL COSTS PLUS INITIAL SOIL PREPARATION) Total Area Per Acre 1. INDIAN RESERVES 1, 1A, IB 2. CORN CREEK UNIT Indian Reserve 1C Included Indian Reserve 1C Excluded 3. LEACH LAKE 4. SIX MILE SLOUGH 5. DUCK LAKE 2,070 1,440 1,260 2,600 2,400 3,000 $76,000 $ 37 275,000 275,000 170,000 175,000 240,000 A A 191 218 65 73 80 $20,700 14,400 12,600 26,000 24,000 30,000 $ 97,000 $ 47 289,400 287,600 196,000 199,000 270,000 201 228 75 83 90 A A The c a p i t a l costs summarized here for both Corn Creek and Leach Lake assume that development of these two areas would be undertaken i n conjunction. Includes cost of bridge access to area. are generally twice as large as the Corn Creek unit and do not face the same Internal drainage problems. Cost of I n i t i a l Sdil Preparation In addition to these direct capital costs for reclamation there w i l l be an i n i t i a l cost in preparing the s o i l for cultivation. This w i l l include such things as burning off marsh vegetation, brush and tree; removal, and the f i r s t s o i l breaking. For most areas these costs w i l l be low. The land that has been in marsh and overlain with water supports relatively l i t t l e vegetation. If the areas are dried out and most of the vegetation burned off there would be l i t t l e involved in the i n i t i a l plowing and disking. In some areas brush and tree removal may add to these expenses. In estimating these costs we must consider the extent to which they represent costs in excess of normal cultivating costs. Even on cropland that has been in cultivation for some time there i s an annual expense for plowing and cultivating. I n i t i a l s o i l breaking costs should be considered as a separate expense only to the extent that they exceed normal cultivation I costs. With this in mind i n i t i a l s o i l preparation costs are estimated to average $10 per acre for further reclaimed land at Creston. These costs are included in Table D-3 in the summary of overall reclamation costs. A P"?P E N D I X E APPENDIX E QUALIFICATIONS TO BASIC FEASIBILITY ANALYSIS FOR AGRICULTURE This appendix discusses several important factors which might bear on the f e a s i b i l i t y of further investment in agricultural reclamation on the Creston f l a t s . Increased Dyke Erosion by the Kootenay River With Libby Dam protection the Kootenay River w i l l not reach the flood peaks which i t has in the past, but i t w i l l remain at high levels for a longer time due to the gradual release of the runoff, Libby Dam w i l l reduce the sediment load of the Kootenay River and this may result i n accelerated erosion below the dam due to the increased carrying capacity of the river. At present no studies have been undertaken which give any indication of the probable magnitude of increased erosion. We are dealing in conjecture in trying to assess the impact which this may have on further reclamation projects. Two problems could result from the Kootenay River being at high levels for a prolonged period. One involves increased water seepage and the other increased erosion. The probability of serious crop damage as a result of seepage appears relatively low. With Libby Dam the river levels w i l l not be high enough, relative to the land being cropped, to create sufficient pressure to cause extensive seepage,' While this remains l i t t l e more than a guess, we w i l l discount at this point the probability of increased water seepage following Libby Dam, Of more consequence Is the question of increased erosion due to the reduced sediment load of the Kootenay River. If this should prove to be serious i t may require extensive rip-rap along the outer side of dykes, Rip- rap would have to be hauled to the site and would be very expensive. This could be a significant factor i n affecting the f e a s i b i l i t y of further reclamation. Areas which do not require a dyke may s t i l l have to be cleared and the banks graded for the placement of rip-rap, an expense which would not otherwise be incurred. It i s impossible to do anything other than qualify the earlier si f e a s i b i l i t y estimates to allow for the probability of this expense. There is no substantive information on which to base estimates. Duck Lake can be excepted from such qualification, as further reclamation i n this area would not require additional protection against the Kootenay River. For the other areas rip-rap costs could be considerable and would reduce the level of net benefit to be expected from reclamation. However, for a l l areas except Corn Creek reclamation appears very favorable and the "erosion threat" can only be taken as a limited qualification to the basic f e a s i b i l i t y estimates. Kootenay Lake Levels After Libby Dam Another "variable" which may bear on the long run f e a s i b i l i t y of agricultural reclamation i s the level of Kootenay Lake. At present the levels of Kootenay Lake are controlled within limits by West Kootenay Power-and Light Company's dam at Bonnington Falls. The maximum authorized storage level of the lake i s 1745.32' although flood peaks of course exceed this. The levels of Kootenay Lake have a significant effect on the water level in the Kootenay River immediately south of the lake, and hence on the unreclaimed land in the floodplain. After Libby Dam i t i s expected that the flood peaks on Kootenay Lake w i l l be reduced as a consequence of the reduced peak on the Kootenay River. Studies indicate that flood peaks on Kootenay Lake would not exceed 1752,0* * after Libby Dam. On the basis of this information i t appears that the levels of Kootenay Lake w i l l not have any adverse effects on the level of Kootenay River or the f e a s i b i l i t y of further reclamation in the flood- plain. It has been suggested that after the completion of Libby Dam the Water Rights Branch and the International Joint Commission may be asked to authorize a two foot increase i n the maximum storage level of Kootenay Lake. If this increase i s authorized i t w i l l have l i t t l e impact on reclamation. The c r i t i c a l period for reclamation projects i s the annual freshet when river and lake levels are at a peak far in excess of the authorized levels for storage. Increasing the authorized storage level w i l l have l i t t l e effect during this c r i t i c a l period, and during the rest of the year lake levels w i l l s t i l l be too low to have any adverse effect. Again we are dealing in conjecture, as a decision on this matter i s not expected u n t i l Libby Dam has been: i n operation, and there is no indication as to whether or not increased storage would be authorized. In Computer studies by the U.S. Army Corps of Engineers for each flood season of the years 1928-1958 indicate that the highest level of Kootenay Lake would have been E l . 1752.0* on the 18th and 19th of July, 1954 with Libby Dam regulation. While higher levels could occur the probability i s very small. SOURCE: Contained in a letter from the Water Rights Branch, Victoria, B.C., to D.D. Moore, Supervisor, Creston Valley Wildlife Manage- ment Area. arty case i t appears unlikely that increased storage would have any adverse effect on the fe a s i b i l i t y of further reclamation. Variation in Soil Capabilities The estimated returns from further reclamation are based on a study of farms on presently reclaimed lands. Applying these estimates to further reclamation assumes, as discussed earlier, uniform productivity and capability of soils* This i s f e l t to be a reasonable assumption as the presently reclaimed land encompasses the same type of soil s as would be expected on further reclamation projects. This assumption too should be questioned - although to do so is d i f f i c u l t as there have been no com- prehensive s o i l studies made on the Creston f l a t s . Observations by persons familiar with the undeveloped areas indicate that there i s a considerable variation between the soils of the unreclaimed areas. It Is generally agreed that the s o i l in the Indian Reserves i s the most f e r t i l e in the valley and would be considerably above average in productivity. In the Corn Creek unit large areas of poor sandy s o i l are encountered and the soils are probably below average in productivity. Soils in the Leach Lake unit probably are close to average in pro- ductivity. At the south end of the unit they are f a i r l y well built-up while in the north they have remained covered by the shallow waters of Leach Lake. Soils at the bottom of Leach Lake are at approximately the same elevation as those now farmed on the Duck Lake Dyking Di s t r i c t . Again in the Six Mile Slough area soils would be close to average in productivity. At the south and around the perimeter of the area soils tend to be well developed, while in the center they are lower and covered by water. Low productivity" soils would be encountered i n further reclamation of Duck Lake. The soils here are low and tend toward a heavy clay which is not well suited to grain crops. They are adaptable however to crops such as clover seed, and could probably be improved"considerably by t i l l i n g and legume crops. These discussions indicate that we might expect s o i l capabilities to be above average on the Indian Reserves, approximately average in Leach Lake and Six Mile Slough, and below average in the Corn, Creek and Duck Lake units. Such assessments are really l i t t l e more than conjecture as there have been no rigorous studies of the soils In the area which would substantiate them. We would expect s o i l capability to have an.adverse effect.oh the f e a s i b i l i t y of further reclamation only i n the Corn Creek and Duck Lake areas. In the Duck Lake area the net benefit and benefit cost ratios are both high, and while a lower productivity might reduce these estimates i t would not alter the basic conclusion regarding f e a s i b i l i t y . , . ' Sensitivity to Changes in the Discount Rate Selection of the appropriate discount rate for benefit cost analysis has received considerable attention (McKean 1958, Marglin 1963). The problem is to identify the appropriate borrowing or lending rate for the agency whose point of view i s adopted in the analysis. This is d i f f i c u l t in the present analysis, as benefits and costs are being compared from the point of view of three "referent groups" - the Creston area, the province of British Columbia, and Canada. Furthermore the overall analysis involves two different types of projects, agriculture and wi l d l i f e development. Agricultural development is essentially a private undertaking the benefits of which accrue to those undertaking the develop- ment. Wildlife development i s a public investment, the benefits of which w i l l accrue to a much broader group of people than agricultural benefits. Nevertheless both farmers and persons who w i l l benefit from wildlife development are members of the various referent groups, and benefits which accrue to them must be considered benefits to the referent groups. Considering these factors, selecting an appropriate interest rate for use in this study is very d i f f i c u l t . So that the respective benefits and costs of the development alternatives can be properly compared the same interest rate should be used throughout. Selection of the proper "social discount rate" is largely a p o l i t i c a l decision. In the absence of direct p o l i t i c a l guidelines i t has been the custom in the past to adopt the interest rate paid by the relevant government on long term bonds. At the present time the yield on various long term government bonds runs from 7 to 8.4 per cent. A rate of 8 per cent is used in this study to discount future benefits from both agricultural and wild- l i f e development. This i s f e l t to be a satisfactory approximation of the yield on government bonds, and in the case of agriculture corresponds to the rate at which loans for land purchases are made by the federal government under the Farm Improvement Loans Act. We must recognize however that the result of a benefit cost analysis w i l l be altered i f different discount rates are adopted. The higher the rate used, the more severely are future values reduced in calculating their present values. For projects such as agricultural reclamation where costs are incurred over a short i n i t i a l time and benefits accrue over a long time period lower discount rates w i l l enhance f e a s i b i l i t y while higher rates w i l l reduce i t * To ensure that the basic f e a s i b i l i t y conclusions are independent of the choice of discount rate i t i s customary to test the sensitivity of the results to changes in this rate. Discount rates of 6 and 10 per cent are used here to test the sensitivity of the benefit cost comparisons for agriculture. Six Per Cent Discount Rate With a discount rate of 6 per cent the present value of benefits w i l l be substantially higher than calculated earlier with a rate of 8 per cent. The present vaiue of the net annual earnings per acre ($26.31) when dis- counted at 6 per cent i s $438, compared with $329 when the rate i s 8 per cent. Discounting this value to account.for the time elapsed between reclamation and the f i r s t harvest results in a per acre value of $413. This has the effect of greatly increasing both the net benefit and the benefit cost ratios, as summarized in Table E - l . Ten Per Cent Discount Rate The present value of net benefits per acre i s $263 using this dis- count rate and i t i s further discounted to $239 to allow for the one year lag between reclamation and harvests. Net benefits, and benefit cost ratios are lower with this discount rate than with 8 per cent. In the case of the Corn Creek unit a discount rate of 10 per cent renders the project marginal at best. Net benefits and benefit-cost ratios are so low that this unit presents a very unattractive investment opportunity. TABLE E - l THE EFFECT OF SELECTED DISCOUNT RATES ON BENEFIT COST RESULTS IN AGRICULTURE 6 Per Cent 8 Per Cent 10 Per Cent Area Net Benefit (B-C) Benefit- Cost Ratio (B/C) Net Benefit (B-C) Benefit- Cost Ratio (B/C) Net Benefit (B-C) Benefit- Cost Ratio (B/C) 1. Indian Reserves (2,070 Acres) $758,000 8.8:1 $534,000 6.5:1 $398,000 5.0:1 2. Corn Creek Unit i (1,4AO Acres) 306,000 2.1:1 150,000 1.5:1 55,000 . 1.2:1 i i (1,260 Acres) 233,000 1.8:1 97,000 1.3:1 14,000 1.05:1 3. Leach Lake (2,600 Acres) 878,000 5.5:1 597,000 4.0:1 425,000 3.2:1 4. Six Mile Slough (2,400 Acres) 792,000 5.0:1 533,000 3.7:1 375,000 2.9:1 5. Duck Lake (3,000 Acres) 969,000 4.6:1 645,000 3.4:1 447,000 2.7:1 Summary The preceding calculations, summarized i n Table E - l , have shown the benefit cost comparisons for further agricultural development to be insensitive to changes over a broad range in the interest rate. While the low rate of 6 per cent substantially improved the f e a s i b i l i t y and the high rate of 10 per cent substantially reduced i t , i n only one case (Corn Creek) was the fe a s i b i l i t y of reclamation refuted. Since the results of the benefit cost analysis are not sensitive to the discount rate over such a broad range the earlier estimates of fe a s i b i l i t y based on an 8 per cent rate are accepted. Changes in Crop Practices and Managerial Intensity After Libby Dam Using present farm returns on the Creston flats to estimate returns from further reclamation assumes that cropping practices and managerial intensity w i l l be the same after Libby Dam. At the present time grain crops account for two-thirds of the seeded acreage on the reclaimed land. While grain does not yield as high a return (gross or net) per acre as other crops, such as clover and potatoes, i t has been the dominant crop on a l l farms. The dominance of grain i s due to a large extent to the flood risk, from the Kootenay River. Given the possibility of annual floods, grain crops which have very low seeding costs in comparison with other crops, represent a much lower potential loss. With this flood risk removed by Libby Dam there may be a significant change in crop practices. Farmers could move into irrigated crops and follow more intensive management practices. There i s also a possibility that dairy farms could be established on the f l a t s , as the Creston area at present imports large quantities of milk, A trend away from grain crops could thus follow the completion of Libby Dam, As a consequence the gross return per acre of cultivated land may rise substantially and there would also be an increase i n net returns. It is not clear that net returns would rise in direct proportion to gross returns however. A review of Irrigation systems and intensive crop practices i n similar areas of Washington and Idaho, to the south of Creston, reveals that net incomes are not greatly increased by more intensive farming practices (U.S. Dept. of Agriculture 1964}'Washington State University 1967). It was found for instance, that on irrigated crops the irrigation system had to be designed carefully for both the climate, s o i l , and crop to be grown - introducing large capital costs. Irrigated crops also require a.significant increase in labor input, a factor which is often overlooked (Johnson 1969). One drawback to the introduction of more intensive crops on the Creston flats i s the relative.isolation of the Creston area with respect to markets. In the Washington and Idaho studies referred to above the crops produced enjoyed relatively good access to large markets. For Creston crops the main British Columbia market would be the Lower Mainland which involves a high transport cost. (At present i t i s cheaper to import hay into the Lower Mainland from eastern Washington than from Creston). Another problem associated with the introduction of more intensive cropping i s that farm units would become much smaller than they are at present. This has the effect of decreasing the efficiency which i s presently realized from the large scale use of machinery and equipment. Despite these problems, a major shift in the pattern of production on the Creston flats can be expected after Libby Dam is completed. At the same time higher gross returns and more intensive management are not a guarantee of proportionate increases in net returns. Due to the differences i n the price and income structures between, these areas and British Columbia the results are of course not directly com- parable. They do however indicate the general relationship which might be expected, and are based on farming i n areas which resemble Creston more than any areas in British Columbia. In light of the uncertainties surrounding future production on the Creston flats i t i s d i f f i c u l t to estimate the impact which changes may have on the f e a s i b i l i t y of further reclamation. The only reliable basis for any estimates is the data pertaining to present returns. As a l i b e r a l assumption these returns are increased by 20 per cent to allow for changes i n crops and management after Libby Dam. This has the effect of increasing the net return per acre from $26.31 to $31.57. The present value per acre, after allowing a one year time lag, i s increased to $366 from the former estimate of $305. Under this assumption both the benefit cost ratios and the net benefit estimates are significantly increased. Table E-2 summarizes these TABLE E-2 BENEFIT COST COMPARISONS. ASSUMING A 20 PER CENT '. INCREASE IN NET EARNINGS PER ACRE Area Net Benefit (B-C) Benefit Cost Ratio (B/C) 1. Indian Reserves 2. Corn Creek Including I.R. 1C Excluding I.R. 1C 3. Leach Lake 4. Six Mile Slough 5. Duck Lake $660,000 238,000 174,000 756,000 679,000 828,000 7.8:1 1.8:1 1.6:1 4.9:1 4.4:1 • 4,1:1. estimates. These calculations can reasonably be regarded as establishing an "upper limit" to the benefit cost comparisons for agriculture. They assume a 20 per cent improvement over present net earnings, and furthermore assume this improvement could be realized immediately after reclamation. This latter i s a generous assumption, as in fact we would expect such an improve- ment to be realized over a number of years, and the force of discounting would reduce the net benefits below the estimates i n Table E-2, Long Run Trends i n the Prices of Agricultural Output At present grain crops account for approximately 67 per cent of the cultivated acreage on the Creston flats (Table B-2). Most of this crop i s sold on the B.C. feed grain market, as Creston growers have limited quotas on delivery of grain to the Canadian Wheat Board. This concentration on grain production makes the farm economy particularly vulnerable to changes in the price of grain, Canada, like a l l wheat exporting nations, currently faces a serious surplus problem, and grain prices are depressed. While there have been surplus problems in the past, the underlying causes have been of a short-run nature and markets have eventually been cleared. The present outlook, how- ever, i s much more severe. Present wheat surpluses are expected to continue, as wheat exporting nations increase production while world wheat markets shrink. This expectation of persistent surpluses is based on several recent changes in the world wheat market (Huff 1969). "These include: (1) dramatic wheat production increases in Less Developed Countries; (2) substantially increased output in large wheat exporting countries outside of North America - namely Australia, Argentina, the USSR and France; (3) changes i n the • U.S'. pplicy regarding -its food aid and.its farm, support programs; (4) increased impact of restrictive trade policies; and (5) technological developments i n the baking industry which have allowed a higher percentage of soft wheat to be mixed with hard wheat for breadmaking." Factors 1, 2 and 5 above cannot be regarded as short-run phenomena, and they are of serious consequence.to Canada*s expectations for future wheat exports. The consequences of this are far-reaching. "... not only have rapid increases i n world wheat production fouled up the world wheat market, but there i s evidence that i t has also begun to s p i l l over into the world feed grains market." (Goodman 1969) A recent paper by the Federal Task Force on Agriculture (1969) suggested that wheat production i n Canada should be reduced by 9 to 11 million acres. This paper implied that the acreage removed from wheat could or should be re-allocated to the production of feed grains. It was recognized i n the paper that export markets would have to be developed either for feed grains and/or for livestock to accommodate this adjustment. Any adjustments of this nature which increase the production of feed grains within Canada w i l l have serious consequences for grain prices received by Creston growers. Feed grain prices are already depressed by the current wheat surpluses. A major increase i n production on the Canadian prairies can only depress prices further. With so many uncertainties i t Is pointless to try to estimate future grain prices at Creston, or the- effect on the f e a s i b i l i t y of further reclamation, Eowever, i f the shift i n cropping practices postulated after completion of Libby Dam does not occur i t seems safe to say that the long run expectations are for net earnings i n Creston flats agriculture to be lower. This i s a significant factor, and could play a very important role i n changing the f e a s i b i l i t y of further agricultural, reclamation projects. Time Elapsed Between Reclamation and Crop Production Present value calculations have assumed a continuous stream of annual benefits beginning one year after the i n i t i a l reclamation costs. This i s not an unreasonable assumption after the completion of Libby Dam. With the very low levels of the Kootenay River dyking would- take l i t t l e time arid internal drainage could be completed easily. Where reclaimed areas dried out quickly and no problems were encountered i n breaking ground crops could be seeded and harvested V e i l within this time,. Under ideal conditions i t is conceivable, although unlikely, that a - f i r s t crop could be taken off less than a year after reclamation began. Alternatively there could be as much as a two year lag between reclamation and the f i r s t harvest of any consequence.... This, could occur If d i f f i c u l t i e s were encountered i n breaking ground or i f the i n i t i a l crop was not well established. (It i s assumed for simplicity that the f i r s t year crop would yield a sufficient return to cover variable costs only). In such a case the annual benefit stream would not begin u n t i l two years after the i n i t i a l reclamation costs. With the force of discounting, this two year lag further reduces the present value of the benefit stream. The effect on the benefit cost ratios and net benefit calculations for each area i s summarized i n Table E-3. TABLE ET3 BENEFIT COST COMPARISONS WITH A TWO YEAR TIME LAG Benefits Minus Benefit-Cost Ratio Areas Costs (B-C) (B/C) 1. Indian Reserves $487,000 6.0:1 2. Corn Creek I.R. 1C Included 117,000 1.4:1 I.R. 1C Excluded 68,000 1.2:1 3. Leach Lake 537,000 3.7:1 4. Six Mile Slough 478,000 3.4:1 • 5. Duck Lake 576,000 3.1:1 Comparison of the results summarized in Table E-3 with those of Table 2 in Chapter Four reveals that both net benefits (B-C) and benefit cost ratios are reduced considerably by the effect of an additional year's time lag. Even with this additional lag, and excepting the Corn Creek. Unit, benefit cost ratios are favorable and the present value of net benefits remains substantial. Net benefits are reduced by approximately 9 per cent for individual reclamation units, and with the exception of the Corn Creek area a l l benefit cost ratios are above 2.0:1. These calculations provide an interesting check to those presented i n Table 2. It is f e l t that the assumption of a one-year lag on which. Table 2 i s based i s valid. However even i f this assumption should prove to be false the results i n Table 4 il l u s t r a t e that there i s l i t t l e impact on the overall economic f e a s i b i l i t y of reclamation, Feed Freight Subsidies and the Appropriate Measure of Benefit A f i n a l qualification i s introduced by considering the provincial feed freight subsidy paid on grain shipped from Creston. Feed grain grown at Creston does not qualify for freight subsidy under the federal govern- ment's Livestock Feed Assistance Act, This places Creston grain at a dis- advantage in British Columbia markets where feed grain from the prairie provinces receives federal freight subsidy. In an attempt to offset the negative effect on Creston grain of the federal policy the British Columbia government has instituted i t s own feed grain freight assistance for Creston grain. While the provincial assistance was i n i t i a l l y effective, changes in the federal policy in 1968 put Creston grain in a particularly d i f f i c u l t marketing position, even with provincial freight assistance. Negotiations have been undertaken by both the federal and provincial governments to try to resolve the problems created by the federal policy, but l i t t l e progress has been made. The future level of provincial subsidy payments i s there- fore a clouded issue, which makes analysis of i t s impact on f e a s i b i l i t y l i t t l e more than conjecture. Any freight assistance paid on the movement of Creston grain must be considered in analyzing the costs and benefits of further agricultural reclamation. At present the federal freight assistance directly reduces the price Creston growers receive for their grain, and the provincial assistance has been introduced to offset this discrimination. It i s important to determine who benefits from this assistance. Livestock feeders in British Columbia do not benefit, because without Creston grain they can easily obtain grain at the same price from other areas. The transport sector, which moves Creston grain under provincial assistance, would move grain from other areas in the absence of the provincial program. While there may be some relocation of transport activity, there i s no net benefit to the transport sector from the provincial assistance. Provincial assistance does, however, have a direct effect on the price Creston growers receive for their grain. The price received per ton w i l l be increased by the amount of the freight assistance. Thus, given the discriminatory impact of the federal program, provincial assistance on the shipment of grain from Creston represents a direct subsidy to Creston grain growers. Treatment of this subsidy in calculating benefits and costs w i l l d i f f e r depending on the framework, or the 'referent group' being adopted. From the purely local point of view, (the Creston area economy), this sub- sidy represents a net benefit. It is a transfer of funds from the general revenue of the province to Creston grain growers. Thus in calculating the benefit of agricultural output the total price received for grain w i l l be the appropriate measure of benefit. If the analysis i s being conducted from the point of view of the province of British Columbia however, this treatment of the subsidy i s inappropriate. In this case the subsidy simply represents a transfer of funds within the province, (from general revenue to Creston grain growers), and there i s no net gain to British Columbia. In calculating the benefits to British Columbia from agricultural output the amount of the subsidy should be subtracted from the market value of grain to yield the benefit attributable to production in the area. Similarly, i f the analysis i s conducted from the broader point of view of Canada as a whole, the amount of any subsidy paid must be deducted from the market value of grain to yield the benefit attributable to production in the area. Few definite conclusions can be reached concerning the magnitude of such subsidy payments in the future* The amount paid i n subsidy i n any one year w i l l depend on the prevailing rate of subsidization, a matter which i s presently very unsettled, and the amount of grain shipped which qualifies for subsidy. Attempting to predict either of these factors over any length of time would involve extremely tenuous assumptions. Some rather crude estimates of subsidy payments can be made however, based on payments made in the past. During the 1967-68 f i s c a l year a total of $24,000 was paid in sub- sidy on the movement of grain from Creston. This i s equivalent to approx- imately $1.14 per acre of cultivated flatland. If an additional 11,500 acres are brought into cultivation, and i f the same relationship holds, annual subsidy payments would be approximately $13,000. If subsidy payments continue at previous levels, then the approp- riate procedure to allow for these payments i s to deduct the present value of such payments from the estimated present value of primary benefits. While this i s admittedly a very imprecise means of estimating future subsidy pay- ments, the calculations have been performed and are summarized in Table E-4. Taking the freight subsidy into account i n this manner has l i t t l e effect on the overall f e a s i b i l i t y of reclaiming any area. Net benefits are TABLE E-A REDUCTION IN PRIMARY BENEFITS TO ACCOUNT FOR FREIGHT SUBSIDY Net Benefits Present Net Benefits Benefit-Cost before Worth of after Ratio after Accounting Estimated Accounting Accounting Area for. Subsidy Subsidy for Subsidy for Subsidy (B-C) Payments (See Table 2 Chapter IV) 1. Indian Reserves $534,000 $29,000 $505,000 6.2:1 2. Corn Creek 150,000 20,000 130,000 1.4:1 3. Leach Lake 597,000 36,000 561,000 3.9:1 4. Six Mile Slough 533,000 34,000 499,000 3.5:1 5. Duck Lake 645,000 42,000 603,000 3.2:1 For the Corn Creek unit i t i s assumed that I.R, > 1C i s included in reclamation. reduced, and benefit cost ratios lowered slightly, but as before reclamation appears to be economically feasible. While the method used to estimate the future value of subsidy payments i s admittedly very crude, the above com- parisons of benefits and costs-are appropriate i f the analysis i s being con- ducted from the point of view of the province as a whole. The comparisons in Chapter IV (Table 2) on the other hand would be appropriate only i f the analysis is being conducted from the point of view of the local economy. For both the provincial and national referent points allowing for this feed freight assistance reduces both the net benefits and the benefit cost ratios, so that the estimates of Chapter IV (Table 2) exaggerate the true level of net benefits. But the means of predicting future subsidy payments are so uncertain that these qualifications are just as well ignored - they do not affect the results of the benefit cost comparison of Table 2 beyond a range of error which would be expected i n any case. REFERENCES. APPENDIX E Federal Task Force on. Agriculture. 1969. Wheat, feed grains and o i l seeds. Paper prepared for the Canadian Agriculture Congress, Ottawa. Goodman, R.J. 1969. Wheat, Canada and the world. In Wheat. Canada and the World. Proceedings of the 1969 Workshop of the Canadian Agricultural Economics Society. Reglna, June 24-26. Huff, H.B, 1969. Canada's future role in the world wheat market. Canadian Journal of Agricultural Economics. 17(1):1-14. Johnson, J.B. 1969. Personal communication. Agricultural Extension Department, Washington State University. Marglin, S.A. 1963. The social rate of discount and optimal rate of investment. Quarterly Journal of Economics. 77(1):95-lll. McKean, R.N. 1958. Efficiency i n government through systems analysis. New York, John Wiley and Sons. United States Department of Agriculture. 1964. Agricultural production and food processing i n the Pacific Northwest 1960-1985. Economic Research Service, Corvallis, Oregon. Washington State University. 1967. Economics of farm size in the Washington-Idaho wheat-pea area. Technical Bulletin 52, May. A P P E N D I X F APPENDIX F RECREATIONAL USE OF THE CRESTON FLATS: THE CASE OF BIRD HUNTING DURING 1968 Bird hunting on the Creston flats i s an important recreational pur- suit for many hunters. Upland birds which are hunted include pheasants and doves, while waterfowl hunters pursue Canada geese and a wide variety of ducks. Hunting i s done on both the unreclaimed Crown land, and on private reclaimed farm lands. A mail survey of hunters was conducted to determine the amount of recreational use made of this area during the 1968 hunting season. The procedure adopted for the survey, and the results obtained, are presented i n this appendix. Sampling Procedure Identifying the 'Population* of Hunters The f i r s t problem encountered i n surveying Creston flats bird hunters is the enumeration or identification of the hunters. Two sources of identification were available, neither of which was wholly satisfactory in providing a complete enumeration. The f i r s t means of hunter identification was data collected in road checks of hunters during the season. These checks were carried out by the Regional biologist and his staff, and were intended primarily to provide information on the species composition, age, and sex distribution of the waterfowl harvest. The names and addresses of hunters checked were recorded, and made available for sampling purposes. These did not provide a satis- factory enumeration of hunters for two reasons. The road checks were not carried out on a systematized sampling basis with respect to days in the hunting season, but were concentrated on weekends, and especially weekends at the beginning of the hunting season. In addition personnel constraints were such that checkpoints were established where the greatest number of hunters could be interviewed. Thus hunting activity in many areas of the f l a t s , notably on private, land went unchecked, while in other areas, mainly Crown land, i t was checked more regularly. For these reasons names and addresses of hunters obtained at road checks did not form a satisfactory basis for enumeration of the hunter population, although they were useful in the sampling procedure, as is explained below, A more nearly complete enumeration of hunters was available from the Canadian Wildlife Service's records of purchasers of migratory game bird hunting permits. A l l persons hunting migratory birds in Canada are required to purchase these permits in addition to regular provincial hunting licenses. These permits are purchased at post offices, and the Canadian Wildlife Service keeps a complete record of a l l permits sold, both by residence of purchaser, and place of purchase. This information is available on a retrieval system, and provided the most satisfactory enumeration of hunters * available. * There i s one shortcoming in using this information as an enumeration of bird hunters however. Migratory bird permits are required only to hunt migratory species such as ducks, geese, doves, and pigeons. Persons hunting non-migratory birds such as pheasants are not required to purchase the permit. Thus to the extent that any persons hunted only pheasants on the Creston f l a t s , and did not buy a migratory bird tag, they would not be lis t e d in the enumeration. This is of l i t t l e consequence in practice, however. It can be reasonably assumed that few i f any persons would hunt exclusively for pheasants on the Creston f l a t s . Indeed experience indicates that many hunters automatically purchase the migratory bird permit in addition to required provincial licences, although they do not actually hunt migratory birds. To use this information effectively the hunters were str a t i f i e d according to area of residence. Three residence areas were established: A) local hunters - residents of Creston and other small communities in close proximity to the hunting area. B) non-local hunters - residents of British Columbia or Alberta from points outside the local area. This category included such population centres as Cranbrook, Calgary, T r a i l , Nelson, Castlegar, etc. C) foreign hunters - hunters from outside of Canada - in this case a l l foreign hunters came from the United States. Local hunters. It was assumed that local hunters would purchase their migratory bird permits at their place of residence. The population of local hunters was identified from a l l those persons purchasing migratory bird permits at post offices in the local area. A total of 322 local hunters were identified in this manner and were assumed to represent a l l the local hunters who would be licenced to hunt birds on the Creston f l a t s . Non-local hunters. Identifying the population of non-local hunters proved to be an intractable problem. Road check data provided the names and addresses of some non-local hunters, but, as discussed, could not identify a l l non-local hunters. Similarly a few non-local hunters purchased migratory bird tags in the Creston area and could be identified. But to accurately enumerate a l l non-local hunters who hunted on the Creston flats would have required a survey of a l l migratory permit holders in British Columbia and It i s acknowledged that some local hunters may have purchased these permits outside of the local area. This i s fe l t to be unlikely in the case of local residents, and i s fe l t to be insignificant for the purposes of this survey. In any case a thorough search of a l l local residents buying permits outside the local area would have been prohibitive in terms of both time and money. parts of Alberta. This would have been prohibitively expensive and time consuming. Thus the population of non-local hunters could not be identified. Names and addresses obtained in the road checks, and from records of non- local hunters purchasing migratory bird permits in the Creston area, (a total of 161) were used in the survey of hunters. Estimating the total number of non-local bird hunters on the Creston flats i s done In a rather crude fashion, as is explained later. Foreign hunters. Very few non-Canadians come to the Creston area to hunt birds. Those who do must purchase both a British Columbia hunting licence, and a migratory bird permit. It was assumed that any non-Canadian coming to the Creston area to hunt birds would purchase his licence in the Creston area. Under this assumption a population of 28 foreign hunters was identified from records of migratory bird permit sales in the Creston area. The Sample of Hunters Since i t was f e l t that the population of both local and foreign hunters had been identified accurately, and i n view of their relatively small number, (322 and 28 respectively), a 100 per cent sample was used for the mail survey. Although the non-local population was not identified, 161 names and addresses were available. Since this number was also small, a 100 per cent sample was employed. A l l hunters were mailed a questionnaire asking, for information on their bird hunting activities on the Creston flats during the 1968 hunting season. A letter of explanation and a stamped return envelope-were included. A total of 511 questionnaires were mailed. Response The response to the survey i s summarized below in Table F - l . Of the 511 questionnaires sent to hunters. 8 were returned undelivered by the post office. With 503 hunters thus receiving the questionnaire, a total of 245 replies were received. This represents a rate of response of 48.7 per cent from those who actually received the questionnaire, and 47.9 per cent of a l l hunters on the mailing l i s t . TABLE F - l SUMMARY OF RESPONSE TO MAIL QUESTIONNAIRE Local Non-Local Foreign A l l Hunters No. of Hunters Enumerated 322 161 28 511 Questionnaires Undelivered 3 4 1 8 No. of Hunters Receiving Questionnaire 319 157 27 503 No. of Respondents 149 80 16 245 Respondents as Per Cent of Recipients 46.7% 50.9% 59.3% 48.7% Findings of the Survey The Number of Hunters and Hunter Days of Recreation A l l hunters were asked i f they hunted migratory game birds (ducks, geese, or mourning doves), or pheasants i n the Creston flats area during the 1968 hunting season. Responses indicated that 19.6 per cent of a l l those enumerated did not hunt on the Creston f l a t s , while 80.4 per cent did hunt. Among the local hunters 24.8 per cent did not hunt birds on the Creston f l a t s , while 13.8 per cent of the non-local hunters did not hunt. A l l of the foreign hunters on the other hand indicated that they did hunt on the Creston flat s i n 1968. This data i s used to estimate the total number of bird hunters and hunter days of recreation on the Creston flats in 1968. Local hunters. Of the 322 local hunters licenced to hunt birds on * the Creston f l a t s , 24.8 per cent, or 80 hunters did not do so. The number of local hunters hunting birds on the fla t s i n 1968 i s thus estimated to be 242. Analysis of responses indicates that each of these hunters spent an average of 12,6 days hunting, or a total of 3,049 hunter days. The average duration of a days hunt was reported to be four hours. Non-local hunters. Estimating the total number of non-local hunters can only be done on a rather conjectural basis. As discussed earlier, i t was not possible to identify satisfactorily the population of non-local hunters for sampling purposes. For this reason the proportion of non-local hunters who reported that they did not hunt on the Creston flats (13.8 per cent) could not be applied to a total population figure to estimate the number of hunters. Instead an arbitrary procedure has been adopted, using as a par t i a l guideline the ratio of non-local to local hunters in road-check information. * Having 24.8 per cent of those eligible reporting that they did not hunt birds near Creston may appear rather high, but is probably quite reasonable. Many local area residents have stopped hunting the flats area i n recent years as pheasant hunting has become increasingly poor. The tendency for many of them i s to make one t r i p a year to Alberta for bird shooting, while much of the hunting done in British Columbia i s for big game. The nearby East Kootenay region provides some of the finest big game hunting in North America, and local bird hunting tends to be overshadowed by this. Road-check data were available for both the 1967 and 1968 hunting seasons. During the 1967 season the ratio of non-local to local hunters passing through road checks was 1,28:1, while the ratio in 1968 was 1.65:1. In the absence of a systematic sampling procedure for conducting these road-checks, l i t t l e can be concluded from these ratios except that for the time and place on which the road-checks were made they represent the ratio of non-local to local hunter activity. Using these ratios to estimate the total number of non-local hunter days during 1968 infers that the times and places at which road-checks were conducted present an unbiased sample of the season-long hunting activity. There are several reasons to believe that this i s not true, and they w i l l be discussed shortly. It i s f e l t that these ratios can be used however to indicate an 'upper limit' to the number of days of use by non-local hunters. Applying these ratios to the number of hunter days of use by local hunters in 1968 yields a range of estimates for non-local hunter days from 3,903 to 5,031. These estimates are summarized in Table F-2. TABLE F-2 NON-LOCAL HUNTER DAYS AS ESTIMATED FROM ROAD CHECK RATIOS Ratio Estimate (1967) 1.28:1 3,903 Hunter Days (1968) 1.65:1 5,031 " (1967+1968) 1.40:1 4,269 " " This method of estimating the number of non-local hunter days incorporates a significant upward bias for two reasons. Road-checks were held on weekends, and especially weekends early in the season. Most of the non-local hunting pressure In the area came on weekends, while local residents spread their hunting activity more evenly through the week,. For this reason the road-check data would tend to overstate the true ratio of non-local to local hunting activity. As a second factor, road-checks were almost exclusively oriented to hunters on Crown land. A much higher pro- portion of non-local hunters hunted on Crown land than did local hunters who had better access to hunting on private land. For these reasons i t is f e l t that the estimates presented above significantly overstate the number of hunter days of use by non-local hunters, and that i t would be unreasonable to assume that the number of days of use could have exceeded any one of these estimates. A more appropriate ratio, involving a large element of personal judgment, is thought to be in the order of 1:1. While non-local hunters might exceed local hunters on weekends, local hunting activity through the week, and late in the season, would bring the total activity to approximately equal levels. Non-local hunters are estimated therefore to have spent 3,050 days hunting birds on the Creston flats in 1968. Hunters returning questionnaires indicated that they spent an average of 7,8 days hunting on the f l a t s , averaging five hours per day. It i s thus estimated that a total of 391 non-local hunters hunted birds on the Creston flats in 1968. Foreign hunters. A total of 28 foreign hunters were licenced to hunt on the Creston flats in 1968. Responses to the survey indicated that a l l 28 * foreign, hunters did hunt birds on the f l a t s . Foreign hunters averaged 9.1 days of hunting each, for a total of 254 hunter days of use. For these hunters the average days hunt lasted for 4.4 hours. Summary. The estimates of hunting activity on the Creston fla t s in 1968 are presented i n Table F-3. In a l l a total of 661 hunters spent 6,353 TABLE F-3 SUMMARY OF HUNTING ACTIVITY - CRESTON FLATS. 1968 Local Hunters Non-Local Hunters Foreign Hunters A l l Hunters Number of Hunters 242 391 28 661 Number of Days Hunting 3,049 3,050 254 6,353 Av, No. of Days Per Hunter 12.6 7.8 9.06 9.61 Av. No. of Hours Per Day 4.06 5.40 4.40 4.70 days hunting birds on the Creston f l a t s . This was an average of 9.6 days per hunter, with each hunter-day averaging 4.7 hours. The average number of days spent hunting by foreign hunters exceeds the average of non-local hunters. This can be explained by the presence of a duck-hunting club whose members are a l l from the United States. This club owns a cabin i n the Creston area and the members make a f a i r l y substantial amount of use of their f a c i l i t i e s . They accounted for 14 of the 28 foreign hunters in 1968, and as a consequence the average number of hunter days is relatively high for this group. The Distribution of Hunting Activity Bird hunting activity on the Creston flats took place either on unreclaimed Crown land (Duck Lake, Leach Lake, Six Mile Slough, and the Corn Creek Slough), on private farm land (reclaimed), or on Indian Reserves 1, 1A and IB. Crown land supported by far the most hunting activity, with a total of 4,687 hunter days, 73.9 per cent of the total. Private farm land accounted for 1,551 days, 24 .4 per cent of the total, while the Indian reserves accounted for only 105 hunter days, 1.7 per cent of the total. This information i s broken down by the origin of hunters in Table F -4 . TABLE F-4 DISTRIBUTION OF BIRD HUNTING ACTIVITY PLACE OF HUNTING ACTIVITY (Hunter Days) Crown Land Private Farm Indian Reserve Origin of Hunters Land Local 2,055 906 88 Non-Local 2,394 641 15 Foreign 248 4 2 TOTAL HUNTER DAYS 4,697 1,551 105 Hunting oh Crown and Private Land. The number of hunter-days spent on Crown land i s more than three times as great as that on private land, although the amount of reclaimed farm land i s greater than the amount of Crown land. This concentration of hunters on Crown land i s a result of several factors. The grain harvest was very late in 1968 and prevented hunting on much private land. In addition, many farmers prohibit hunting on their land. Finally, even where land is not posted to prevent hunting, most landowners live in the town of Creston, and locating the owner of land to ask permission to hunt i s very d i f f i c u l t . For these reasons hunters tend to exert heavier pressure on the Crown land, especially non-local hunters who are severely handicapped in getting access to hunt on private land. Hunting on the Indian Reserves. While hunting i s permitted on the Indian Reserves, hunters are required to purchase either a $3 daily permit, or a $20 seasonal pass, in addition to their regular licence and migratory bird permit. Twenty-nine hunters purchased daily permits in 1968, while 6 purchased season passes. These hunters spent a total of 105 hunter days on the Indian Reserves in 1968 - far below the area's capacity for bird hunting. It i s f e l t that the price of hunting privileges on the reserve i s not responsible for the very light hunting pressure, A more lik e l y factor i s the fact that very few persons seem to be aware that they can get permission to hunt there. Even when persons became interested in acquiring a permit, the sales and administration was so awkward in 1968 that many simply gave up in frustration and hunted on the Crown land. Thus while the hunting pressure on the Indian Reserves i s negligible when compared with that on Crown and private land, this should not be interpreted as an indication of the area's capacity. Rather i t i s a result of the awkward administrative system under -which hunting privileges are made available. Spending by Creston Flats Bird Hunters. To provide a measure of the economic impact of bird hunting on the local economy, and within British Columbia in general, hunters were asked to estimate their expenditures i n connection with hunting on the Creston f l a t s . The estimated total and average expenditures are presented i n Table F-5. Local hunters spent an TABLE F-5 EXPENDITURE BY HUNTERS FOR BIRD HUNTING ON THE CRESTON FLATS. 1968 Type of Local Non-Local Expenditure Total Av. Total Av. Food & Meals $1,774 Alcoholic Beverages 426 Accommodation 356 Travel Expenses 2,928 Hunting Equipment & Miscel. Supplies 8,216 $7.33 $8,078 1.76 2,100 1.47 2,362 12.10 9,333 33.95 16,094 ORIGIN OF HUNTERS Foreign Total Av. $20.66 $2,119 5.37 1,325 6.04 164 23.87 1,073 41.16 1,004 A l l Hunters Total Av. $75.67 $11,971 $18.11 47.33 3,851 5.83 5.87 2,882 4.36 38.33 13,334 20.17 35.87 25,314 38.30 Total of A l l Expenses $13,700 $56.61 $37,967 $97.10 $5,685 $203.07 $57,352 $86.77 Amount Spent Per Day Hunting $4.49 $12.45 $22.38 $9.02 average of $56.61 for their bird hunting, non-local hunters averaged $97.10, and foreign hunters $203.07. Total spending by a l l hunters came to $57,352, representing an average of $9.02 per day spent hunting. Spending per hunter day ranged from a low of $4.49 for local hunters to $22.38 for foreign hunters. The expenditures summarized in Table F-5 do not include the costs of hunting licences and migratory bird permits. Since hunters may hunt other areas and other game with these basic licences the cost of licences cannot be attributed solely to hunting in the Creston area. Licence expenditures which are appropriately attributed to hunting at Creston include permit fees charged for hunting on the Indian Reserves. These fees totaled $207 during 1968. In addition i t was determined that 20 of the 28 foreign hunters did no hunting in British Columbia other than their bird hunting at Creston. Therefore the licence and migratory bird permit expenses of these hunters ($540) can also be included as directly attributable to bird hunting on the Creston f l a t s . The addition of these expenses brings the total expenditure for hunting to $58,099, Not a l l of this money was spent in the Creston area, or in British Columbia, Hunters reported spending a total of $41,543 in the Creston area (72.4 per cent of the total ) , and $56,467 in British Columbia (98.4 per cent of the total), A more detailed presentation of the distribution of this spending follows in Table F-6, TABLE F-6 GEOGRAPHICAL DISTRIBUTION OF SPENDING FOR BIRD HUNTING ON THE CRESTON FLATS Location of ORIGIN OF HUNTERS Spending Local 'Non-Local Foreign A l l Hunters Creston Area $13,499 $23,244 $4,800 $41,543 British Columbia 13,700 37,967 4,800 56,467 Total Spending $13,700 $37,967 $5,685 $57,352 The Value of Bird Hunting on the Creston Flats It i s a commonly held fallacy that the value of a recreational experience such as hunting can be measured by the amount hunters spend in their hunting pursuits. It would be equally valid to claim that the value of a loaf of bread i s what i t costs you to go to the store to get i t - not the price which you pay for the bread. If outdoor recreation i s considered as a consumption good in the same way that a loaf of bread i s considered as a consumption good, then the only significant distinction between them i n terms of their value to the consumer i s that he has to express that value by being willing to pay a price for the bread, while he consumes his outdoor * recreation free of charge. Thus while the data on hunters' spending presented above indicates the cost of this recreation and i t s economic * This i s not quite true, as hunters do pay a nominal fee for hunting licences. These licence fees generally do l i t t l e more than cover management and regulation costs, however, and are not levied in direct relation to the amount of game or recreation consumed. impact, i t does not measure the value of the hunting experience i t s e l f . Attempts to estimate the value of non-priced recreational oppor- tunities have received a good deal of attention recently, and have generally taken one of two main approaches (Knetsch and Davis 1966, Fearse and Bowden 1969), In the indirect approach efforts are made to estimate the value of the recreational experience by using the indirect evidence of hunters' expenditures. The direct approach on the other hand attempts to estimate this value by asking recreationists what they would be prepared to pay i f prices were in fact charged for recreational opportunities. Both approaches rely on a series of assumptions regarding the rational-choice process of the recreationist, and the many p i t f a l l s have been discussed extensively in the literature. In this study the direct approach was employed in asking hunters what i t was worth to them, per day spent hunting, to hunt on the Creston f l a t s . While not a particularly rigorous application of the direct approach, (Pearse and Laub 1969, pp. 23-4, 47-52), i t provides at least a general indication of the value of the hunting activity. It i s perhaps most interesting from the point of view of game management in indicating that many hunters would be willing to pay for their hunting opportunities. A total of 142 hunters replied to the question on how much they valued a day spent hunting on the Creston f l a t s . Their responses are summarized in Table F-7, There are many; problems in interpreting these responses. One of the f i r s t problems involves the treatment of those hunters who did not respond to the question. On almost a l l questionnaires returned and analyzed the questions relating to hunting activity and associated expenditures were completed i n f u l l . Only 142 of the 195 respondents replied to the question concerning the value of a day spent hunting however. Whether the 53 res- pondents who didn't answer f e l t that the hunting was worth nothing, whether the question was too hypothetical for them to bother with, or whether they refused to answer out of fear that a pricing system might actually be intro- duced, cannot be known. With no way of testing these various p o s s i b i l i t i e s , i t i s assumed that those who did not answer the question are represented f a i r l y by those who did. TABLE F-7 THE VALUE OF A DAY SPENT HUNTING ON THE CRESTON FLATS - HUNTERS' RESPONSES Number of Hunters Value of a Day Local Non-Local Foreign A l l Spent Hunting Hunters Hunters Hunters Hunters $0.0 22 15 3 40 $ 0.01 - 2.50 29 13 - 42 $ 2.51 - 5.00 21 8 2 31 $ 5.01 - 10.00 9 5 2 16 $10.01 - 20.00 5 7 - 1 2 $20.01 - 50.00 - - 1 1 Total Hunters 86 48 8 142 Av. Value of a Day Spent Hunting $3.57 $5.16 $7.99 $4.51 A similar problem arises with the interpretation of those 42 res- ponses which indicated a value of zero for a day spent hunting. This may include a number of hunters who f e l t that the hunting at Creston was particularly poor and not worth anything. (24 per cent of a l l hunters rated the hunting as poor). It may also include hunters for whom the hunting does have a value but who won't reveal i t for fear that a pricing system may be introduced, and i t w i l l include hunters who feel that the right to hunt i s something which they should not be required to pay for. It would also be a rational response for a hunter who had hunted so much that the marginal value (value of an extra unit) of a days hunting was in fact zero. However, most hunters would be expected to indicate the average value of a days hunting, not the marginal value. In any case, we have no basis for imputing any of the above motives to those who indicated that the hunting was of zero value. L i t t l e can be done except to accept the hunters' evaluations as correct. This must, however, be reconciled with the fact that a l l hunters did incur some positive costs to hunt on the Creston f l a t s . At f i r s t glance i t appears to be irrational for a hunter to incur positive costs i n order to partake of a recreational experience which has no value to him. The nature of hunting, however, i s such that a person must be willing to incur most costs before he actually begins to hunt. Thus spending is largely based on the subjective, or expected value of the hunting experience. For many hunters, however, the objective or after-the fact evaluation of their hunting experience may be far less than what they had expected. This provides one possible explanation for hunters who f e l t the Creston flats hunting to be of zero value, but s t i l l incurred positive costs to hunt. Not a l l hunters f e l t the hunting to be of zero value and their various evaluations of a days hunting were presented in Table F-7. For local hunters the average value of a day spent hunting was $3.57 (including hunters who reported zero value), for non-local hunters $5.16, for foreign hunters $7.99, and for a l l hunters combined $4.51. Using these figures as a measure ( i f not precise, certainly very ** plausible) of the value a hunter places on a days hunting on the Creston f l a t s , i t i s possible to estimate the total value of bird hunting during the 1968 hunting season. These estimates are presented in Table F-8. The total value of hunting is estimated at $28,652, of which $26,623 (93.0 per cent) was the value received by British Columbians, and $2,029 the value received by American hunters. Thus bird hunters on the Creston flats in 1968 placed a value of $28,652 on their hunting experiences, over and above the $57,352 they spent on their hunting trips. Averages weighted by the number of days spent hunting by each hunter at the value per day declared, (including hunters declaring a zero value), ** These are most lik e l y conservative estimates of value. Golfing and skiing are comparable forms of outdoor recreation in which participants generally acquire expensive and elaborate equipment and often travel long distances at ungodly hours to enjoy their sport, Skiiers pay daily fees of from $5 - $10, while golfers commonly pay $5 per day in green fees. The estimates of value for a hunter day certainly compare reasonably with these daily costs in sports where participants are required to pay for their recreation opportunities. TABLE F-8 THE VALUE OF BIRD HUNTING ON THE CRESTON FLATS IN 1968 HUNTERS' EVALUATIONS No. of Days Average Value Total Value Hunting Per Day Local Hunters 3,049 $3.57 $10,885 Non-Local Hunters 3,050 5.16 15,738 Foreign Hunters 254 7.99 2,029 A l l Hunters 6,353 4.51 28,652 Increased Hunting Under Improved Conditions, and Hunters' Willingness to Pay Bird hunting at Creston was not exceptionally good during the 1968 season (24 per cent of hunters rated i t as poor, and 40.5 per cent as only f a i r ) . In spite of this a total of 6,353 hunters days of recreation were taken by 661 hunters during the season. Efforts are presently being made under the Creston Valley Wildlife Management Area Act to improve the habitat on the Crown land for waterfowl nesting, and also to improve the quality of hunting. Improving the quality of hunting w i l l have two implications for the level of u t i l i z a t i o n . Hunters who already hunt in the area can be expected to increase their hunting activity. In addition, persons who do not hunt i n the area at present may be attracted to i t . This group might include for example hunters from T r a i l who ordinarily make a trip to Alberta for bird hunting. An unregulated increase in hunting pressure can easily have the effect of negating any efforts to improve hunting quality, A significant influx of hunters can lead to crowded hunting conditions, poor shooting practices, and actually fewer birds bagged per hunter than formerly (Anderson 1961, Bednarik 1961). To counter this effect i t may be necessary to regulate hunting pressure by the use of a daily permit or fee system. To throw some light on the problems which may arise in future management of the area, hunters were asked how many more days they would hunt in the area i f hunting quality were significantly improved. They were also asked how much they would be willing to pay, per day spent hunting, i f required to do so under a permit system of regulating hunting pressure. Increased ut i l i z a t i o n in the order of an additional 6,000 hunter days could be expected from hunters who already hunt in the area i f the hunting quality were significantly improved. Not a l l hunters would increase their use of the area however, but those who would not were a small minority in a l l three groups of hunters. Seventy-seven per cent of the local hunters, 83 per cent of non-local hunters, and 73 per cent of foreign hunters would increase their hunting, as presented in Table F-9, This represents a significant increase in hunting pressure, and is almost equal to the amount of use on the area at present. Furthermore this represents increased use by those who hunt the area already, and does not take account of additional pressures which could come from new hunters being attracted to the area. Faced with an influx of new hunters and increased use by existing hunters i t appears likely that a means of rationing access and controlling hunters w i l l be required to maintain a satisfactory level of hunting quality. Selling hunting permits on either a daily or a seasonal basis i s an efficient and simple means of rationing access and controlling hunters, A local precedent has already been set by the selling of seasonal and daily hunting permits on the Indian Reserves at Creston, although this has not attracted a large number of hunters in the past, due to poor management. ' TABLE F-9 INCREASED UTILIZATION IN RESPONSE TO INCREASED HUNTING QUALITY No. of Hunters Average Increase Total Increase Increasing Use Per Hunter (Days) (Days) Local Hunters 186 12.0 2,232 Non-Local Hunters 324 10.8 3,499 Foreign Hunters 20 12.7 254 A l l Hunters 530 11.3 5,985 Willingness to pay for significantly improved hunting was expressed by 80,6 per cent of the hunters vrtio answered the question on this matter, and ranged from a low of $0.50 per day to $40.00 per day. A total of 144 persons responded to this question, and their responses are tabulated in Table F-10. As with the earlier question in which hunters were asked what value they placed on a day's hunting, not a l l respondents answered the question dealing with their willingness to pay for hunting in the future. Of those who did answer, 19,4 per cent indicated that they would not pay any positive price. The same problems larise in interpreting the response to both questions. In the case of the question dealing with hunters' willingness to pay for future hunting opportunities, i t w i l l be assumed that the question was understood, and that response to i t f a i r l y represents hunters' willingness to pay. TABLE F-10 WILLINGNESS TO PAY. PER DAY. FOR IMPROVED HUNTING Local Non-Local Foreign A l l Hunters Daily Fee Hunters Hunters Hunters $0.0 16 9 3 28 $ 0.01 - 2.50 22 9 - 31 $ 2.51 - 5.00 28 8 2 38 $ 5.01 - 10.00 9 8 2 19 $10.01 - 20.00 10 13 1 24 $20.01 - 50.00 1 1 2 4 Total No. of Hunters 86 48 10 144 Among local hunters 81 per cent indicated that they would be prepared to pay a positive price for hunting opportunities, and the average price indicated was $6.43 per day. Similarly, an average price of $9.96 was indicated by 81 per cent of non-local hunters, while a price of $13.66 was average for the 70 per cent of foreign hunters willing to pay to hunt. Treatment of these average prices requires caution. The presence of a few hunters who would be willing to pay relatively high prices has the effect of raising the average price to a level above what most hunters would be willing to pay. It i s also easy to sli p into the error of assuming that i f the average price were charged a l l hunters would be willing to pay i t and hunt. This i s not true, as an examination of the data in Table F-10 w i l l reveal. A further problem in interpreting such prices is that hunters have not indicated how many days they would hunt at the prices they would pay. For these reasons data of this nature cannot be relied on for accurate predictions of future permit sales, or expectations of total revenue. There are two interesting aspects to such data. Probably the most important i s the evidence that most hunters (81 per cent) would be willing to pay for hunting opportunities, especially i f the quality of hunting could be improved or at least maintained through regulation and control of the number of hunters, A second important feature i s that such data does give an indication of what order of prices would be acceptable to most hunters, and how high i t would be necessary to raise prices to control the number of hunters. From the data in Table F-10 i t appears that a daily fee in the order of $2 - $3 would have the desired effect of eliminating some hunters, but would s t i l l be acceptable to most. Summary A mail survey was conducted to obtain information on bird hunters using the Creston fla t s area during the 1968 hunting season. While some sampling problems were encountered i t was possible to make reasonable estimates of the number of hunters using the area and their hunting activity. It is estimated that a total of 661 bird hunters used the Creston flats during 1968. Of these, 242 were hunters from the immediate area, 391 were non-local hunters from other areas in British Columbia, and 28 were foreign hunters from the United States. Bird hunters spent a total of 6,353 hunter days on the Creston f l a t s , with the average hunter day being 4.7 hours long. The harvest of birds included 8,929 ducks, 543 geese, 172 pheasants and 755 doves. To obtain this harvest hunters spent a total of $58,100, averaging $88 per hunter, and $9 per day spent hunting. Bird hunting on the flats did not rate very highly with hunters as a whole. Hunting was rated as poor by 24 per cent of the hunters and as only f a i r by 40 per cent. Despite this, most hunters f e l t the hunting had been of value to them, and for those willing to indicate i t s value, a day spent hunting had an average value of $4.50. On this basis, hunters enjoyed $28,652 worth of hunting in 1968, over and above the $57,352 they spent on hunting. Efforts are currently underway to improve the waterfowl habitat and hunting quality on Crown land at Creston. Most hunters (80 per cent) indicated that they would hunt more in the area i f hunting were significantly improved, and indicated that they would approximately double the total hunting pressure. Maintaining hunting quality in the face of significant increases in hunting pressure often requires means of regulating or con- t r o l l i n g the number of hunters and their distribution. On the evidence of responses to the questionnaire, about 80 per cent of the hunters would be willing to pay for daily permits to hunt on the Creston f l a t s . It would appear that a daily fee in the order of $2 - $3 would be effective in limiting hunting pressure, but would s t i l l be acceptable to most hunte REFERENCES. APPENDIX F Anderson, J.M. 1961. Quality recreation on public lands. F i f t y - f i r s t convention of the International Association of Game. Fish and Con- servation Commissioners, pp. 45-50. Bednarik, K.E. 1961. Waterfowl hunting on a controlled public area. Ohio Division of Wildlife, Publication W-127. Knetsch, Jack L. and Robert K. Davis. 1966. Comparison of methods for recreation evaluation. In Water research (Kneese and Smith eds.). Baltimore, Johns Hopkins. Pearse, Peter H, and Gary K. Bowden. 1969. Economic evaluation of recreational resources: problems and prospects. Transactions of Thirty-Fourth North American Wildlife Conference, pp. 283-293. Wildlife Management Institute, Washington, D.C. Pearse, Peter H, and M. Laub. 1969. The value of the Kootenay Lake sport fishery. Department of Recreation and Conservation, Victoria, B.C. A P P E N D I X G APPENDIX G ESTIMATED UTILIZATION OF RECREATION FACILITIES There have been many attempts to forecast the aggregate demand for outdoor recreation in recent years. Key variables which have been identified as primarily responsible for the rapid growth in recreation demand are population size, per capita disposable income, mobility, and per capita leisure time (U.S. Dept. of Interior 1962, 1967). 1 Even the most careful forecasts at the aggregate level have proven wrong in the past, as demand (measured by participation rates) has con- sistently outstripped predictions (Clawson and Knetsch 1966). The weakness in these forecasts has in part been due to an ina b i l i t y to separate the effect of increases in the supply of outdoor recreation areas from observed increases in participation, and in part due to the lack of a rigorous theory of demand as distinguished from observed participation rates. Whatever the predictions for future aggregate demand, the consensus i s that the present upward trend w i l l continue for some time, but that i t cannot continue ide f i n i t e l y as this would lead to absurd attendance rates in the future. While attempts to predict aggregate participation or demand have encountered many d i f f i c u l t i e s , far more serious problems occur in attempting to predict attendance or demand for individual recreation f a c i l i t i e s . This is particularly true when dealing with a new recreation f a c i l i t y where estimates cannot even be based on a past trend or level of use. In such a case (the case at Creston, except that we do have a base in the case of hunters and fishermen) a useful approach i s to obtain data from other similar recreation sites and lo c a l i t i e s in what has been termed the "geographical analog" method. This approach is most successful when dealing with a homogeneous type of recreation where reasonably similar sites and locations can be found. In an attempt to apply this method to reservoir based recreation in the United States, however, i t was found that the data requirements could not be satisfied, the authors concluding that the available data "... do not warrant elaborate s t a t i s t i c a l or mathematical treatment, which would tend to produce a spurious precision and needless refinement on many aspects,.,,,," (Ullman and Volk 1962), When these conclusions can be arrived at in the United States where there i s a wealth of aggregate attendance data for reservoir sites, they are even more applicable to any similar attempts in Canada, Aside from limited data on the activities of fishermen and hunters there i s a paucity of data on the participation in non-consumptive forms of outdoor recreation. This factor alone makes i t ridiculous to attempt a sophisticated means of predicting attendance at Creston, in addition to the almost intractable problem of finding a suitable 'analog' on which to base prediction. The only feasible approach which remains in estimating future attendance at Creston i s referred to by Clawson and Knetsch as the judgment approach (Clawson and Knetsch 1966), "To arrive at a judgment of future demands for outdoor recreation activities of particular kinds, or for kinds of areas, or in total, the following factors seem relevant: (1) hi s t o r i c a l and recent past trends in usage of a particular area of activity, and the reasons behind such trends, as far as one can conjecture or measure them; (2) probable future desires of average people for the recreation activity or area, as far as one may guess them; (3) probable future capacity of average people to enjoy the recreation activity or area; In particular, their a b i l i t y to afford the time and money that such recreation w i l l require for i t s enjoyment; and (4) the capacity or supply of areas on which the desired activity can be carried on," In using this approach we can benefit greatly by considering each type of recreational participation independently. Warmwater Sportfishing Warmwater sportfishing w i l l be restricted to the waters of Duck Lake, The capacity of Duck Lake to support fishermen is essentially complete at present - the greatest obstacle to uti l i z a t i o n being a lack of access for fishermen and boats. Access construction and the installation of launching ramps w i l l be among the i n i t i a l development steps for this area, and access to permit f u l l u t i l i z a t i o n of the lake's fishing capacity should be com- pleted by 1972. The f i n a l capacity of Duck Lake's warmwater sportfishery i s estimated to be 10,800 fisherman days per year. Present utilization totals approx- imately 700 days per year - almost exclusively by local area residents who tend to be either advanced in age or very young. Preference for this fishery among these age groups i s explained by several factors. Duck Lake is close to the town of Creston, the fishery does not require elaborate or expensive gear, fish are easily caught, and for those going out in boats i t is relatively safe. For these reasons this fishery tends to appeal to the very young and the very old. It i s estimated that utilization by local area residents w i l l increase substantially when obstacles to access are removed, growing at a relatively slow rate after the i n i t i a l expansion. This fishery w i l l have l i t t l e appeal for fishermen in the inter- mediate age categories between the very young and the very old. For these fishermen the Duck Lake fishery i s overshadowed by the vastly more attractive sportfishery of Kootenay Lake, immediately to the north of Duck Lake, This lake contains one of British Columbia's most productive fisheries, and offers a wide variety of catch. The fishery of Duck Lake w i l l have l i t t l e attraction for fishermen whose age and income are such that fishing in Kootenay Lake is a relevant alternative. Thus the 'market' of local area residents which this fishery w i l l reach w i l l be limited in scope - essentially those who are unable to f i s h the more attractive Kootenay Lake, Prospects for increased use by local area fishermen therefore appear slight, except for one significant factor. There i s considerable evidence that the problems associated with access to the area have been 'bottling up' a significant demand in the past. Pro- vision of access would remove this obstacle and could lead to a four to five fold increase in fishing activity over a very short time span. This uti l i z a t i o n would then be expected to level off and increase at a rate of * about 4 per cent per year. There is one other 'market' which this fishery may serve, and this would consist of non-local summer visi t o r s , mainly as family groups. In a recent study of fishing on Kootenay Lake i t was noted that fishing trips by local residents were highly repetitive short trips which typically involved only the enthusiastic fisherman in a family. Non-residents on the other hand were generally v i s i t i n g Kootenay Lake as part of an annual vacation involving a major commitment in travel and frequently participation by the whole family (Pearse and Laub 1969). * Sales of resident fishing licences in the local area grew at a rate of 4% per year from 1962 to 1967. There i s no breakdown on the distribution of these sales by age group, and in any case persons under 18 years of age do not require a fishing licence. It i s assumed that the normal rate of growth for fishermen interested in Duck Lake is the same as that for regional licence sales. The relatively inexpensive equipment, high degree of safety and high level of success to be expected from the Duck. Lake fishery w i l l have a strong appeal for "family fishing," especially for families with young children. These fishermen can be expected to take advantage of the fishing opportunities in conjunction with summer .visits to observe waterfowl and other birds in the area. Major utilization by these fishermen could be expected following development of the overall wildlife habitat. For the sake of simplicity i t w i l l be assumed that ut i l i z a t i o n by non-local fisher- men begins in 1974 with 1,000 fisherman days of use. Growth In use at an annual rate of approximately 20 per cent i s expected thereafter. While the arbitrariness of these estimates i s recognized, they are thought nevertheless to be reasonable. Utilization would increase each year unti l 1984 when the capacity of the lake would be reached. These estimates are summarized in Table G-l. The f i n a l column in Table G-l presents the amounts by which uti l i z a t i o n is increased over what i t would be without development. These are the increases or benefits attributable to development and they are derived under the assumption that without development present use of 700 days would grow at a rate of 4 per cent annually. TABLE G-l ESTIMATED UTILIZATION. WARMWATER SPORTFISHERY. DUCK LAKE Increased Local Area Utilization as a Year Residents Non-Local Total Result of Development (fisherman-days) 1970 700 - n i l - 700 - n i l ' 71 1,600 - n i l - 1,600 870 72 2,600 - n i l - 2,600 1,840 73 3,500 - n i l - 3,500 2,710 74 3,640 1,000 4,640 3,820 75 3,786 1,200 4,986 4,136 76 3,940 1,440 5,380 4,495 77 4,100 1,730 5,830 4,910 78 4,270 2,080 6,350 5,390 79 4,440 2,500 6,940 5,940 1980 4,620 3,000 7,620 6,580 81 4,800 3,600 8,400 7,320 82 5,000 4,320 9,320 8,200 83 5,200 5,200 10,400 9,235 84 5,400 5,400 10,800 9,590 CAPACITY REACHED IN 1984, CONSTANT UTILIZATION THEREAFTER Waterfowl and Upland Bird Hunting The footing i s soundest when forecasting u t i l i z a t i o n of the area for waterfowl and upland bird hunting. Appendix F summarizes the results of a survey of hunters using the area during the 1968 season, and provides much of the basic data for forecasts of future use. Development to capacity for hunters can be expected before a l l capital costs are incurred. By 1976 87 per cent of a l l capital expenditures w i l l have been completed, including a l l major basic structures. Expenditures from 1977 through 1982 w i l l be in the nature of small improvements and w i l l have l i t t l e significance in increasing the area's capacity for hunting. It is therefore assumed that hunting capacity reaches i t s maximum in 1977, lagging one year after the total expenditures incurred up to 1976. Present use of the unreclaimed land by hunters totals 5,000 days per year, with an additional 1,500 days of hunting on private land. With development of the habitat and increased numbers of birds available, the maximum capacity w i l l be available by 1977 at a level of 10,000 hunter days per year on Crown land and 5,000 per year on private land. In predicting increased uti l i z a t i o n i t is asserted that hunters w i l l constantly press on the capacity of the habitat. The capacity for hunting w i l l be f u l l y utilized as soon as i t becomes available. This assertion i s defended by the following arguments: there i s at present a significant latent demand for increased hunting opportunities among those hunters who already hunt on the Creston f l a t s . Present users have indicated that they would probably expand use of the area by 6,000 hunter days per year i f opportunities were available (Appendix F). This represents almost a doubling of present use without expanding to a new 'market' or population of hunters. Significant pressure can also be expected by hunters from nearby population centres (T r a i l , Nelson and Cranbrook) who do not hunt on the Creston flats at present. With few opportunities for high quality bird hunting nearby in British Columbia many persons from these areas have been making extended annual trips to Alberta. The availability of quality hunting opportunities as close as Creston would attract a large number of these hunters for hunting trips of short duration. Additional pressure can be expected from residents of other areas in British Columbia, notably the Lower Mainland. Bird hunters in the Lower Mainland have experienced a marked decline in the availability of hunting opportunities in the past decade as bird habitat has been eroded by other land uses. Many hunters in this area have more or less abandoned bird hunting in British Columbia and participate instead in an annual exodus to Alberta. Diversion of even a small fraction of these hunters to Creston would have the effect of pushing the demand for hunting opportunities beyond the capacity of the area. Predictions of ut i l i z a t i o n by hunters therefore coincide with the establishment of capacity and are summarized in Table G-2, While the total capacity of the area w i l l be 15,000 hunter days per year, the area presently supports 6,500 days. Only the increase in capacity and use, as summarized in the last column of Table G-2, should be attributed to the proposed development. Maximum capacity would be realized in 1977 and utilization would remain constant thereafter. TABLE G-2 ANNUAL INCREASE IN HUNTING CAPACITY AND UTILIZATION Capacity and Utilization in Hunter-Days Crown Private Total Annual Total Increase Year Land Land Increase Over Present 1970 5,000 1,500 6,500 - n i l - - n i l - 71 6,050 2,235 8,285 1,785 1,785 72 6,300 2,410 8,710 425 2,210 73 6,550 2,585 9,135 425 2,635 74 7,850 3,495 11,345 2,210 4,485 75 8,600 4,020 12,620 1,275 6,120 76 9,350 4,545 13,895 1,275 7,395 77 10,000 5,000 15,000 1,105 8,500 MAXIMUM CAPACITY REALIZED IN 1977, CONSTANT 1 THEREAFTER Hiking;. Nature Study. Bird Watching. and Photography The estimated establishment of capacity for these pursuits is summarized in Table G-3. The estimates in this table assume capacity to be established in direct proportion to capital expenditures, with a one-year lag. Estimating the timing of 'capacity avail a b i l i t y ' in this manner i s a straightforward matter. But estimating u t i l i z a t i o n of the area for these activities i s the most d i f f i c u l t aspect of the entire study. While the greatest capacity w i l l be in TABLE G-3 ANNUAL INCREASE IN CAPACITY - HIKING. NATURE INTERPRETATION. BIRD WATCHING. PHOTOGRAPHY Year Increase Recreation Capacity in -Day Total Recreation- Day Capacity 1971 45,000 rec'n -days 45,000 rec'n-days 72 12,500 " 57,500 " 73 10,000 " 67,500 " 74 57,500 " 125,000 " 75 32,500 157,500 76 32,500 " 190,000 " 77 27,500 " 217,500 " 78 12,500 " 230,000 '* 79 5,000 " 235,000 " 80 5,000 " 240,000 " 81 5,000 " 245,000 " 82 2,500 " 247,500 83 2,500 " 250,000 " MAXIMUM CAPACITY REALIZED IN 1983, CONSTANT THEREAFTER terms of such recreation, we have the least information in regard to i t . To formulate any estimates i t i s necessary to f i r s t consider broad aggregate factors which are operative in the utilization of outdoor recreation f a c i l i t i e s and then turn to particular forces which may be operative at Creston. The f i r s t observation i s of course the rather t r i t e fact that demand for a l l forms of outdoor recreation, as evidenced by participation, i s growing at consistently high rates. Unfortunately there are few statistics which document the participation in non-consumptive wildlife recreation i n Canada. Reliable stat i s t i c s are available in the United States, however, and they indicate that except for boating and fishing at reservoir sites the fastest growth in outdoor recreation since World War II has been in the use of national wildlife refuges, where attendance has grown at a rate of 12 per cent annually (Clawson 1963). There i s speculation that the rate of increase in such activities in Canada today exceeds the American experience. Comparing the rate of increase in national parks attendance for the two countries supports this speculation. Attendance at Canada's national parks has increased at an average rate of 12 per cent as compared with 8 per cent in the United States (Brooks 1962), At a more regional level, a study of the recreation and tourist industry potential in the pacific northwest area of the United States pre- dicts that recreation participation w i l l be four times greater in the year 2000 than i t was in 1960 (U.S. Dept. of Interior 1967). The same study notes that the rate of visitation growth in the Pacific Northwest exceeds the * national rate of growth for many, i f not a l l , comparable f a c i l i t i e s . While comparable regional s t a t i s t i c s are not available for British Columbia we can note that the same underlying factors are operative here - Review of the data in Appendix E of the above report reveals an annual growth of from 10% - 20% for selected types of outdoor recreation. an expanding economy, high per capita incomes, increased mobility through improved transportation routes, and increased leisure time per capita. A l l of these factors give rise to a rapid* rate of growth in participation in outdoor recreation. Reviewing these broad aggregates does l i t t l e more than dramatize the dynamic state of outdoor recreation participation. Such figures are of l i t t l e help in estimating attendance at the particular recreation site which would be created on the Creston f l a t s . For some insights into this matter, the experience with similar f a c i l i t i e s elsewhere i s helpful. An informative analogy can be drawn from the experience at Wisconsin's Horicon Marsh. This provides a good example of the way in which waterfowl w i l l respond to habitat conditions, and people in turn w i l l respond to the presence of wildlife. Extensive habitat develop- ment was undertaken at the 30,000 acre Horicon Marsh Wildlife Area and National Wildlife Refuge in the late 1950's (Keith 1964, Clement 1964). A dramatic buildup in the number of Canada geese using the habitat soon followed. In 1960 41,500 persons came to the area to watch the geese during the f a l l (a six week period from October to November), The ranks of bird watchers grew to 75,800 in 1961, and by 1963 had reached 202,500. This area is admittedly much closer to large population centers than Creston, but at the same time i t should be noted that the ut i l i z a t i o n recorded is for a six week period only. After reviewing the Horicon Marsh experience i t i s easy to become optimistic about high levels of u t i l i z a t i o n at Creston achieved over a very short time span. It i s sobering therefore to reflect on what few stati s t i c s are available on park oriented recreation in British Columbia. In 1968 the number of people attending nature interpretation programs, (visiting nature houses, going on conducted nature walks, and self-guiding nature t r a i l s ) totaled 182,000 by actual count (Department of Recreation and Conservation 1969). It i s impossible to know how many other people may have used the same f a c i l i t i e s in an informal fashion, but this figure points out the importance of location with respect to population centers in determining the use of any area. At the same time British Columbia has experienced some notable res- ponses to new (although not wildlife-oriented) recreation f a c i l i t i e s . Recon- struction of Barkerville in the Cariboo, and Fort Steele in the East Kootenays are cases in point. Both of these sites are s t i l l undergoing development, with Fort Steele being the most recently undertaken. Visitors to Fort Steele numbered 13,000 in 1965, 56,000 in 1966, 100,000 in 1967, and 107,000 in 1968. This is a case of recreational response following directly on the creation of a recreation site. This more specific review of experience with selected recreation sites yields a better perspective on the ut i l i z a t i o n which might be expected at Creston, but i t s t i l l does not answer the question of how much use to expect. In taking the f i n a l step and making some 'judgment' estimates i t i s helpful to refer to the guidelines quoted earlier. The f i r s t point calls for an examination of past utilization trends in the relevant activity. While these trends cannot be identified s p e c i f i - cally in British Columbia, uti l i z a t i o n i s obviously increasing rapidly. The second guideline calls for reference to the probable future desires of average people for the recreation activity. Again 'judgment' would point to a strong upward trend in peoples' desires for this kind of recreation activity. There i s at present an increasing appreciation and interest in preservation, of the natural environment, particularly among the young. The third point to be considered i s the capacity of average people to enjoy the recreation activity or area, particularly their a b i l i t y to afford the time and money required for participation. Once more the non- consumptive forms of recreation associated with wildlife development at Creston rate highly. The area i s easily accessible by car, costs of participating in the recreation are minimal, and the on-site time commit- ment can be as long or as short as participants desire. Final cognizance i s to be taken of the opacity or supply of areas which can support the recreation activity. In this regard the opportunities created at Creston w i l l be unequalled elsewhere in British Columbia. At the same time, however, the abundance of other types of outdoor recreation activity in British Columbia must be recognized. Considering these and other underlying forces estimates have been made of the extent of utilization which could be expected by persons interested in hiking, nature interpretation, bird watching, and photography. These estimates are summarized by year in Table G-A, In preparing these estimates i t was considered unreasonable to expect i n i t i a l attendance at Creston to exceed that recorded at such well publicized and popular attractions as Barkerville and Fort Steele. If the patterns observed at other recreation sites in British Columbia are repeated we would expect a strong upsurge of new interest after the i n i t i a l development, followed by a gradual stabilization of growth in attendance at a rate of 5 to 10 per cent a year. This is reflected in the estimates of a strong increase in attendance through 1977 with a slower and more stable rate of growth there- after. The area's capacity to support such recreation would not be reached un t i l 1985 and would have to be stabilized at that level by some means of TABLE G-4 ESTIMATED UTILIZATION. HIKING. NATURE INTERPRETATION BIRD WATCHING AND PHOTOGRAPHY Year Recreation-Days Year Recreation-Days 1971 5,000 1980 192,000 72 10,000 81 205,000 73 20,000 82 219,000 74 85,000 83 232,000 75 120,000 84 246,000 76 130,000 85 250,000 77 150,000 78 165,000 79 178,000 CAPACITY OF AREA REACHED BY 1985, CONSTANT USE THEREAFTER control beyond 1985. The slow rate of growth predicted from 1977 through 1985 i s a reflection of the fact that such v i s i t s are not highly repetitive for most individuals. It i s also important to estimate the extent of this use which w i l l be taken by persons from the various referent groups. Some insights into the extent of use by British Columbians can be gained by examining stati s t i c s on park attendance in British Columbia. Over the four camping seasons from 1965-68, only 60.6 per cent of campers have been from British Columbia. These proportions vary widely throughout the province. In the Kootenay region the per cent of British Columbia users tends to be much lower due to the proximity to Alberta, and the great attraction of the National Parks i n drawing visitors from the United States. For selected campgrounds in the Kootenays these proportions in 1968 were: B.C. Canada U.S.A. % % % Champion Lakes 49.2 37.1 13.7 Lockhart Beach 42.0 31.8 26.2 Jimsmith Lake 32.5 41.0 26.5 Mount Fernie 20.5 58.0 21.5 Moyie Lake 30.8 40.0 29.2 Wasa Lake 33.7 54.5 11.8 Yahk 31.7 43.7 24.6 Source: Parks Branch, servation. Department of Recreation and Con- As one goes further east in British Columbia, more campground users come from elsewhere in Canada and the United States than from British Columbia. These figures reflect campground users only, not total tourist t r a f f i c , and as such provide only a rough guide to the relative distribution of non- consumptive recreational vi s i t o r s . They do, however, give an interesting i n - sight into the extent to which free public f a c i l i t i e s may be util i z e d by non- British Columbians, After reviewing these data i t i s estimated that 3 per cent of the use for non-consumptive recreation w i l l be taken by local area residents, 35 per cent by British Columbians from outside the local area, and 40 per cent by Canadians from outside British Columbia. The total use by British Columbians i s thus 38 per cent and by Canadians 78 per cent. REFERENCES. APPENDIX G Brooks, L. 1962. The forces shaping demand for recreation space in Canada. Background paper, Resources for Tomorrow Conference, Proceedings. Vol. 3. Ottawa. Clawson, Marion. 1963. Land and water for recreation. Chicago, Rand McNally. Clawson, Marion and Jack L, Knetsch, 1966. Economics of outdoor recreation. Baltimore, Johns Hopkins. Clement, R.C, 1964. Viewpoint of a naturalist. In Waterfowl tomorrow (J,P. Linduska ed,). United States Department of the Interior, Washington. Department of Recreation and Conservation, 1969, Annual report. 1968. Victoria, Queen's Printer. Keith, Lloyd B. 1964. Some social and economic values of the recreational use of Horicon Marsh. Wisconsin. University of Wisconsin, Research Bulletin 246. Pearse, Peter H, and M. Laub. 1969. The value of the Kootenay Lake Sport fishery. Department of Recreation and Conservation, Victoria, B.C. Ullman, Edward L, and Donald J. Volk, 1962, An operational model for predicting reservoir attendance and benefits. Papers of the Michigan Academy of Science Arts and Letters. XLVII, 473-84. United States Department of the Interior, Outdoor Recreation Resources Review Commission. 1962, Prospective demand for outdoor recreation. Study Report No, 26, Washington, D.C, . Bonneville Power Administration. 1967. Pacific Northwest economic base study for power markets. Vol, 2, Part 9, Recreation. Portland, Oregon. A P P E N D I X H APPENDIX H PRESENT VALUE CALCULATIONS BENEFITS FROM HUNTING. FISHING, NON-CONSUMPTIVE RECREATION, AGRICULTURE AND TRAPPING In this appendix unit values are applied to the various types of recreational u t i l i z a t i o n estimated in Appendix G to determine the value of the recreation realized each year unt i l the area's capacity i s fully exploited. It i s assumed that u t i l i z a t i o n remains constant once the capacity limits of various forms of recreation are reached. Therefore, in Table H-l for example, i t is assumed that the annual value of benefits from TABLE H-l PRESENT VALUE OF BENEFITS FROM FISHING Year Value in Year Value in 1970 Year Value in Year Value in 1970 1971 $3,480 $3,220 1981 $29,280 $12,555 72 7,360 6,310 82 32,800 13,020 73 10,840 8,600 83 36,940 13,580 74 15,280 11,230 84 38,360 163.250 75 16,544 11,260 ti 76 17,980 11,330 it 77 19,640 11,460 ti 78 21,560 11,650 ti 79 23,760 11,890 ii 1980 26,320 12,190 ii PRESENT . $301,545 fishing w i l l remain constant at $38,000 after 1984, and the present value in 1970 of this constant stream of benefits i s $163,000. The value of these benefit streams i s discounted back, to present values in 1970, a discount rate of 8 per cent being adopted. The unit values employed are $4 per day for fishing, $8 per day for hunting, and $5 per day for non-consumptive recreation. Derivation of these unit values i s discussed in Appendix I, TABLE H-2 PRESENT VALUE OF BENEFITS FROM HUNTING Year Value in Year Value in 1970 1971 $14,280 $13,220 72 17,680 15,160 73 21,080 16,730 74 38,760 28,500 75 48,960 33,320 76 59,160 37,280 77 68,000 496.000 It II II PRESENT VALUE, 1970 $640,210 It i s planned that about 30 per cent of the area, or about 3,500 acres, could be developed for agricultural production complementary to wildlife management. Under ordinary agricultural management this would be expected to yield a net benefit of $26 per acre (Appendix C), However, i t i s expected that there w i l l be a sharecropping agreement in this instance, TABLE H-3 PRESENT VALUE OF BENEFITS FROM NON-CONSUMPTIVE RECREATION (HIKING. NATURE INTERPRETATION. BIRD WATCHING AND PHOTOGRAPHY) Year Value in Year Value in 1970 Year Value in Year Value in 1970 1971 $25,000 $23,150 1981 $1,025,000 $439,620 72 50,000 42,860 82 1,095,000 434,710 73 100,000 79,380 83 1,160,000 426,420 74 425,000 312,375 84 1,230,000 418,690 75 600,000 408,300 85 1,250,000 5.320.000 76 650,000 409,560 • 77 750,000 437,550 • 78 825,000 445,660 • 79 890,000 445,180 • 1980 960,000 444,580 • $10,088,000 with the •landlord's' share of roughly one-third l e f t as feed and cover for wil d l i f e . Under such an arrangement net benefit i s actually realized on only two-thirds of the acreage - on the rest the cost of seed, f e r t i l i z e r , and cultivation becomes a cost of game management. For this reason calculations of the net benefit from agricultural production w i l l be taken on only two-thirds of the total farmed area, or 2,300 acres. Calculations of net value on this basis are summarized in Table H-4. For these calculations i t i s assumed that agricultural development takes place i n proportion to total capital expenditure, with a one year time lag. TABLE H-4 PRESENT VALUE OF NET BENEFITS FROM AGRICULTURAL PRODUCTION Year Value in Year Value in 1970 Year Value in Year Value in 1970 1971 $10,800 $10,000 1979 $56,000 $28,000 72 13,800 11,800 1980 57,500 26,600 73 16,200 12,900 81 58,600 25,000 74 30,000 22,000 82 59,200 23,500 75 37,700 25,700 83 59,800 275.000 76 45,500 28,700 « it 77 52,000 30,400 • ti 78 55,000 29,700 • II $549,300 Values from trapping w i l l not be large, and w i l l reach a maximum in 1983 when the net benefit w i l l be $4,000. Table H-5 summarixes the present value calculations. TABLE H-5 PRESENT VALUE OF NET BENEFITS FROM TRAPPING Year Value in Year Value in 1970 Year Value in Year Value i n 1970 1971 $ 720 $ 670 1979 $3,760 $1,880 72 920 790 1980 3,840 1,780 73 1,080 860 81 3,920 1,680 74 2,000 1,470 82 3,960 1,570 75 2,500 1,710 83 4,000 18,400 76 3,040 1,920 • II 77 3,480 2,030 • it 78 3,680 1,990 • tt PRESENT $36,750 The summary of a l l present values expected from the wildlife develop- ment project i s presented in Table H-6. Net annual benefits are discounted TABLE H-6 SUMMARY OF ALL PRESENT VALUES. 1970 Fishing $301,000 Hunting 640,000 Non-Consumptive Recreation 10,088,000 Agricultural Production 549,000 Trapping 37,000 PRESENT VALUE OF ALL BENEFITS $11,615,000 to present values in 1970 using a discount rate of 8 per cent. Overall, present values totalling $11,615,000 are estimated. A P P E N D I X I APPENDIX I UNIT VALUES FOR OUTDOOR RECREATION IN RESOURCE DEVELOPMENT PROJECTS Planners dealing with natural resource development face the problem of placing a value on the recreational use of resources. Recent progress in this f i e l d has included a c l a r i f i c a t i o n of the nature of the 'product' produced in recreation, and recognition of the need for an acceptable evaluation of this product. Only when recreation is valued on the same basis as other uses of natural resources can the optimum pattern of resource use be specified. The Recreation Product The primary benefits from recreation areas are those accruing directly to users of the area. Such enjoyment has economic value in the same sense as the enjoyment arising from conventionally marketed goods or services such as food or clothing. However in the case of most public out- door recreation, opportunities are supplied free of charge to consumers and we lack conventional market indicators of the value of the resource in this use. Thus the basic problem in dealing with recreation as an output of resource employment is a measurement problem. We lack clear expressions of economically meaningful values which can be attributed to resources used for recreation. But the absence of market prices does not mean that there are no values created by this use of resources. Economic values which are relevant to resource allocation decisions and directly comparable to values imputed to other resource uses are produced. The problem l i e s not in an absence of values but in the absence of a direct measure of value. Placing a Value on Recreation Economic values are measured basically by what people are willing to give up or sacrifice in order to enjoy a particular product or service. A relevant economic measure of recreation values is therefore the willing- ness oh the part of consumers to pay for outdoor recreation services. These values are inherently the same as those established for other com- modities which consumers must pay for - but in the case of recreation no prices have been established to measure these values. To overcome this problem the value of recreation can be estimated from a demand curve constructed to indicate what consumers would pay for various units of recreation output rather than go without them. The measure of total user benefit i s equivalent to the total area under the demand curve (the sum of the maximum prices which various users would pay for the various units of recreational output from the resource). This i s also referred to as "consumer's surplus" and measures the total economic worth to society of the recreational services provided by a particular area. This use of the total area under the demand curve as a measure of value differs from the common use of the demand curve for privately produced goods and services. For privately produced goods and services the total value i s typically a single value or price per unit multiplied by the total number of units. This measure i s appropriate for most privately produced goods (shoes for example) where contemplated increases or decreases in production are small relative to total output and have no influence on the market price charged for a l l units of output. The production from outdoor recreation areas usually occurs in large "lumps" however (non-consumptive recreation at Creston for example), and i s usually immobile. These features of "lumpiness" and immobility mean that the production, while possibly not large in relation to total national output, i s large relative to the market served. Were the product a normally marketed good i t s addition to or subtraction from the market would have a significant effect on the price charged. For this reason the appropriate measure of value of recreation produced i s the total area under the demand curve, rather than a unit price applied to the total output. While this may be theoretically satisfying i t i s hardly practical. In practice i t would require the construction of a demand curve for each area or resource so that i t s value could be imputed. Construction of such demand curves may be d i f f i c u l t and i s time consuming. Furthermore, where demand curves are derived from travel cost information they introduce a conservative bias into the evaluation by overlooking the cost of time spent in travel. By ignoring this factor the demand curve underestimates the actual demand for a given resource and hence the value imputed to the resource when used for recreation. Some Practical Approaches to Recreation Evaluation The evaluation procedure outlined above i s d i f f i c u l t to put into practice, and there i s a danger that the demand curve employed w i l l incor- porate a conservative bias. These d i f f i c u l t i e s have resulted in other methods being used to measure the value of recreation produced on resource sites. Some of these methods are patently incorrect and w i l l not be discussed. A method which has practical applicability however i s that of applying a unit value to the amount of recreation produced. This procedure of adopting a unit value has serious shortcomings as discussed above. It i s commonly adopted as the only practical and workable alternative for recreation evaluation. As such i t i s useful provided that i t s shortcomings are kept in mind and i f efforts are made to modify the unit value selected to meet specific situations. The f i r s t problem in using this approach i s the selection of an appropriate unit value. The most common procedure is to relate the unit value chosen to prices charged at privately owned recreation areas. This method i s used in the United States by various federal agencies concerned with the use and development of water and related land resources (United States Government 1962), The American practice i s to adopt a schedule of values which can be applied to the recreation product. The schedule incorporates a range of values to allow f l e x i b i l i t y in selecting a unit value for recreation on particular sites. General recreation act i v i t i e s which attract "the majority of outdoor recreationists and which, in general, require the development and maintenance of convenient access and adequate f a c i l i t i e s " are given unit day values from $0,50 to $1.50 per day. Specialized recreation days "for which opportunities, in general, are limited, intensity of use i s low, and which j often may involve a large personal expense by the user" are given unit values from $2.00 to $6.00. These unit values are intended to measure the amount that users would be willing to pay i f payment were required. They are set forth as interim statements of recreation benefit analysis "pending the development of improved pricing and benefit evaluation techniques." This method i s sound in so far as i t relates the willingness of users to pay for the privilege of using a resource to the value of that resource use. The actual units selected are open to question however - they simply reflect "the consensus judgment of qualified technicians." Insofar as they are based on charges at similar private areas they should be examined c r i t i c a l l y . The prices paid at private outdoor recreation areas are affected by the existence of virtually free public areas. Charges levied at private recreation areas may not reflect the total value of recreational experience so much as the value of benefits in excess of those available free at public areas. Prices paid at private recreation areas probably are simply a bonus or premium paid for a better natural resource, better f a c i l i t i e s , or lack of crowding. It i s precisely because private areas are not f u l l y com- parable to public areas that users are willing to pay fees or charges. Applying these fees or charges to public recreation risks a serious under- statement of the true value of the recreation. In any case selection of a unit value for a day of recreation remains a matter of educated guessing and personal judgment. Once a unit value i s selected the next problem i s estimating the appropriate number of recreation days. The number of recreation days taken at a zero charge w i l l be larger than the number at some fixed price. Multiplying the value per day by the number of recreation-days at a zero charge w i l l result in an overestimate of the amount which would actually be paid i f prices were charged. This i s not a serious shortcoming, however, as the purpose in evaluating recreation i s to measure i t s total contribution to welfare or value. As long as a zero pricing policy remains in effect the actual value of the resource in use w i l l exceed what would be paid i f prices were charged. This i s because a payment required for goods or services which have traditionally been enjoyed free tends to cause a deterioration in the individual's standard of living and reduce his total consumption of goods and services. So long as a resource is supplied free of charge i t represents a greater addition to total welfare than when other goods or services must be sacrificed for i t . As a result of these countervailing factors i t seems reasonable to adopt a unit value per recreation day and apply i t to total recreation con- sumed at zero price. While this would only by coincidence yield an estimate of value equal to the area under the demand curve for that resource i t must be accepted as the only practical and satisfactory approximation. Adoption of Unit Values for Recreation. Creston Estimating the value of non-priced recreation at Creston is very d i f f i c u l t . Aside from the study of waterfowl hunters reported in Appendix F there are no detailed studies of the demand for the recreation opportunities which w i l l be created, and such studies would be a major undertaking in them- selves. Furthermore there are no^comparable private outdoor recreation areas which could be used to provide rough guidelines i n the selection of unit values. As an alternative i t i s necessary to impute unit values for the various types of recreation days using personal judgment and taking account of the pertinent factors and determinants of demand for the Creston area. These values can be applied to the annual number of user-days to yield an estimate of the annual value of the resource for recreation. There have been several studies of the demand for fishing and hunting in British Columbia which have attempted to measure the value of a recreation day. A review of these studies i s useful in establishing the relevant range of values which could reasonably be adopted at Creston. A study of big game hunters in the East Kootenay area revealed that the non-priced or primary value of a hunting trip for the average hunter was $197, equal to $20.50 per hunter day (Pearse and Bowden 1966, Pearse 1968). In a recent study of sportfisherraen on Kootenay Lake a value of roughly $6.50 per resident angler day was established (Pearse and Laub 1969). The study of Creston bird hunters reviewed in Appendix F revealed an average value of $4.50 per hunter day, given present hunting quality. Hunters indicated a willingness to pay more for improved hunting, averaging roughly $8 per day ($6.43 for local hunters, $9.96 for non-local hunters, and $13.66 for foreign hunters). The per day values estimated for big game hunters appear unreasonably high to transpose to Creston recreationists. Marsh and reservoir visitors are probably much more casual in their pursuits than the intense and some- what esoteric hunters of East Kootenay big game. On the average they probably do not value their recreation experience as highly as a big game hunter. The other studies provide more comparable estimates, indicating a value in the order of $4 to $8 per day of recreation. In adopting values for the individual types of recreation i t w i l l be assumed that a hunter-day under improved conditions has a value of $8 as indicated by hunters. We expect unit values for the warmwater sportfishery and non-consumptive forms of recreation to be lower. Considering the repetitive nature of the sportfishing done in Duck Lake and the fact that the species caught are not highly prized a value of $4 per fisherman day seems appropriate. Persons partaking of non-consumptive forms of recreation w i l l form a more representative cross section of the public than either hunters or fishermen. In this regard we note both the very high quality recreational experience which w i l l be available at Creston, and the general affluence of British Columbians. Considering that v i s i t s to the area w i l l be relatively non-repetitive for most individuals a value of $5 per recreation day i s adopted for acti v i t i e s such as hiking, nature interpretation, bird watching and photography. REFERENCES. APPENDIX I Pearse, Peter H. and Gary Bowden. 1966. Big game hunting in the East Kootenay. Vancouver, Price Printing. Pearse, Peter H. 1968. A new approach to the evaluation of non-priced recreational resources. Land Economics. Vol. XLIV, No, 1, 87-99. ' and M, Laub. 1969, The value of the Kootenay Lake sport fishery. Department of Recreation and Conservation, Victoria, B.C. United States Government. 1962, Policies standards and procedures in the formulation, evaluation, and review of plans for use and development of water and related land resources. Report by the President's Water Resources Council, 87th Cong., 2nd Sess., S. Doc. 97. A P P E N D I X J APPENDIX J THE PRESENT VALUE OF COSTS FOR WILDLIFE AND OUTDOOR RECREATION Habitat Improvement Costs by Area Habitat improvement plans have been worked out for each of the unreclaimed areas (Moore 1969). The costs and timing of the proposed developments are summarized here for each area in turn, and the present value of capital and maintenance costs calculated for 1970 with a discount rate of 8 per cent. With the exception of the development at Duck Lake, some aspects of the Leach Lake development, and Indian Reserve 1A, the major capital expenditures w i l l not be incurred u n t i l 1973 when f u l l control over the Kootenay River i s realized through Libby Dam. Indian Reserves 1. 1A. and IB Two developments are planned for the Indian Reserve lands. Reserve 1A w i l l be developed in a pilot project designed to improve both the water- fowl harvest and grazing and w i l l be operated as a separate unit. Reserves 1 and IB w i l l be developed jointly as an integrated management unit. The capital cost of developing Reserve 1A w i l l be $20,000, and annual maintenance costs are estimated at $1,500. Development of this area i s expected to be finalized in 1970 as the elevations in this section of the Indian Reserves are such that dyking requirements w i l l not be materially affected by Libby Dam. The present value of capital costs for Reserve 1A i s thus $20,000 while the present value of maintenance c o s t s i s $18,750. The development of Reserves 1 and IB involve a much larger under- taking. Total capital costs are estimated at $340,000 and maintenance costs are expected to stabilize at $8,000 annually after 1977. Present value calculations are summarized in Table J - l . TABLE J - l INDIAN RESERVES 1. IB - PRESENT VALUE OF COSTS Capital Value in Operating and Value in Year Cost 1970 Maintenance Costs 1970 1973 $67,000 $53,200 74 50,000 36,750 $1,600 $1,200 75 50,000 34,000 2,700 1,800 76 50,000 31,500 4,000 2,500 77 50,000 29,200 5,000 2,900 78 50,000 27,000 6,300 3,400 79 23.000 11.500 8,000 50.000 TOTAL $340,000 $223,150 $61,800 Corn Creek Total capital costs for the Corn Creek area are estimated at $126,000 with annual maintenance costs reaching a maximum of approximately $6,500 in 1980. Table J-2 summarizes the present value calculations. CORN CREEK - PRESENT VALUE OF COSTS Capital Value in Operating and Value in Year Cost 1970 Maintenance Costs J970 1973 $15,000 $12,000 $ - $ - 74 20,000 14,700 2,100 1,500 75 20,000 13,600 3,300 2,200 76 12,500 7,900 4,000 2,500 77 12,500 7,300 4,700 2,700 78 12,500 6,700 5,500 3,000 79 12,500 6,300 6,200 3,100 1980 12,500 5,800 6,500 3,000 81 8.500 3.600 6,500 35.000 TOTAL $126,000 $77,900 $53,000 Leach Lake I n i t i a l capital developments are being undertaken on the Leach Lake unit in 1970 consisting of work on Summit Creek, This work i s being under- taken at this time so that f i n a l completion can be achieved swiftly in late 1972 when Libby Dam becomes effective. Total capital costs are expected to be $375,000, with annual maintenance costs probably as high as $12,000, The present value calculations are presented in Table J-3. TABLE J-3 LEACH LAKE - PRESENT VALUE OF COSTS Capital Value in Operating and Value in Year Cost 1970 Maintenance Costs 1970 1970 $110,000 $110,000 $ - $ - 71 20,000 18,500 5,000 4,600 72 150,000 128,600 5,000 4,300 73 55,000 43,700 5,000 4,000 74 40.000 29.400 7,500 5,500 75 10,000 6,800 76 10,000 6,300 77 12,000 87.500 78 II 79 • II •• II • • TOTAL $375,000 $330,200 t i $119,000 Six Mile Slough Total capital costs for on-site development of the Six Mile Slough area are estimated at $151,000. Additional costs w i l l be necessary to provide access to the area. In dealing with agricultural development i t was assumed that such access would cost approximately $75,000 (Appendix D) and the same cost w i l l be assumed here. Annual maintenance costs would be in the order of $7,000, The present value calculations summarized in Table J-4 assume that access i s provided in the i n i t i a l year of development and on-site capital costs commence the following year, 1974, TABLE J-4 SIX MILE SLOUGH - PRESENT VALUE OF COSTS Year Capital Cost Value in 1970 Operating and Maintenance Cost Value in 1970 1973 74 75 76 77 78 79 1980 81 82 $78,000 20,000 10,000 10,000 20,000 25,000 25,000 18,000 17,000 14,000 $62,000 14,700 6,800 6,300 11,600 13,500 12,500 8,300 7,300 5.600 $ - 1,800 2,600 3,500 5,000 7,000 $ - 1,300 1,800 2,200 2,900 47.300 TOTAL $237,000 $148,600 $55,500 Duck Lake Duck Lake development w i l l commence in 1970 as the area i s already protected by dyke from the waters of the Kootenay River. Present plans c a l l for a total capital outlay of $663,000 over six years, with annual mainten- ance costs expected to reach a maximum of $17,500, Present value c a l - culations are presented in Table J-5. TABLE J-5 DUCK LAKE - PRESENT VALUE OF COSTS Capital Value in Operating and Value in Year Cost 1970 Maintenance Cost 1970 1970 $300,000 $300,000 $9,500 $9,500 71 83,000 76,800 12,200 11,300 72 80,000 6*8,600 14,700 12,600 73 80,000 63,500 17,000 13,500 74 60,000 44,100 17,500 161.000 75 60.000 40.800 " 78 80 TOTAL $663,000 $593,800 $207,900 Capital Costs Associated with Wildlife Development The costs discussed above have been for direct habitat improvement and control. Present plans also c a l l for major capital outlays to construct an administrative centre and develop a campground where Summit Creek enters the floodplain. Administrative Centre It i s expected that the administrative centre w i l l be built in 1972, at a cost of approximately $200,000, Maintenance and operating costs are expected to be $6,000 annually. The present values of these costs in 1970 are $171,000 and $64,000 respectively. Summit Creek Park At present development plans c a l l for the Parks Branch of the Depart- ment of Recreation and Conservation to develop a campground on Summit Creek at the western edge of the floodplain. The maximum capacity would be 200 camp units at f u l l development. Capital cost of constructing the campground is estimated at $382,000 with annual maintenance costs in the order of $12,000. The appropriate treatment of these costs is not clear at present. It i s expected that the campground w i l l provide accommodation for visitors to the wildlife development. At the same time i t would be unreasonable to expect that a l l campground users w i l l be visitors interested in w i l d l i f e . Similar campgrounds throughout British Columbia are consistently f i l l e d to capacity during the tourist season. It can easily be argued that a camp- ground at Summit Creek would also be used to capacity even i f there was no wildlife development. As a preliminary position i t i s argued here that the costs of constructing and maintaining this campground do not represent costs attributable to the wildlife development per se. The campground does not contribute to wildlife habitat or production, rather i t serves a completely separate function in providing accommodation for campers, and there is no guarantee that a l l campers would v i s i t the wildlife development. The costs of developing campgrounds of this nature are more appropriately set off against the 'value' of providing camping space, not the value of producing wi l d l i f e . Of these two additional capital costs, the Administrative Centre and Summit Creek Park, only the costs of the Administrative Centre w i l l be included in the analysis of the costs of wildlife development. Management Costs; Salaries and Personnel The costs enumerated above have included capital and maintenance costs for the planned development of each area or unit. The f i n a l costs to be considered are those of salaries for f u l l and part time staff. When fu l l y operative i t i s expected that staff w i l l consist of a supervising biologist, a foreman-manager, 3 full-time employees and a secretary. In addition at least 3 part-time employees would be required in the summer months. Annual salary costs would thus be in the order of $75,000, although this level of annual costs would not be reached u n t i l approximately 1976. Estimates of the annual salary costs, and their present values in 1970 are given i n Table J-6. TABLE J-6 SALARY COSTS - PRESENT VALUE Year Annual Salaries Value in 1970 1970 $30,000 $30,000 71 37,000 34,000 72 44,000 38,000 73 56,000 44,000 74 65,000 48,000 75 70,000 48,000 76 75,000 591.000 t l II It TOTAL $833,000 Summary. The Present Value of Costs for Wildlife and Outdoor Recreation Development Table J-7 presents a summary of the costs of the proposed development for wildlife and outdoor recreation. Total capital outlays are estimated at $1,961,000, but because these outlays w i l l be spread from 1970 through 1982 the present value of capital costs i n 1970 i s only $1,565,000, The present value (1970) of annual maintenance costs which w i l l be incurred through per- petuity i s estimated at $581,000, while the present value of salary expenses w i l l approximate $833,000. SUMMARY OF PRESENT VALUES - COST OF WILDLIFE AND OUTDOOR RECREATION DEVELOPMENT Total Capital Present Value of Present Value of Outlays Capital Costs Operating and Maintenance Indian Reserve 1A $20,000 $20,000 $19,000 Indian Reserves 1, IB 340,000 223,000 62,000 Corn Creek 126,000 78,000 53,000 Leach Lake 375,000 330,000 119,000 Six Mile Slough 237,000 149,000 56,000 Duck Lake 663,000 594,000 208,000 Administrative Centre 200.000 171.000 64,000 $1,961,000 $1,565,000 $581,000 Present Value of Annual It i s worth noting that the present value of annual costs - salaries and maintenance - together total $1,4 million, almost as much as the present value of capital costs. It i s important to include these costs in this form as they are often overshadowed by the more obvious and immediate capital costs. REFERENCE. APPENDIX J Moore, DwightD.1969.A development plan for the Indian Reserve Lands 1, 1A arid IB and the Creston Valley Wildlife Management Area, mimeo report, Creston. A P P E N D I X K APPENDIX K THE EFFECT OF ALTERNATE DISCOUNT RATES ON THE BENEFIT COST ANALYSIS, WILDLIFE DEVELOPMENT As pointed out in the main text, the discount rate can have a significant effect on the outcome of a benefit-cost analysis. Future costs and benefits are discounted at 8 per cent throughout this study as this i s fe l t to be a satisfactory approximation of the real social discount rate. To test the sensitivity of the analysis of the wildlife development to the discount rate this appendix carries out the benefit cost comparisons with alternative rates of six and ten per cent. Six Per Cent Discount Rate With a discount rate of six per cent the present value in 1970 of a l l benefits is $16,524,000, while the present value of costs i s $3,595,000. On the basis of an overall comparison net benefits are then $12,929,000, the benefit cost ratio 4.6:1, The figures which provide the basis for this comparison are sum- marized in Table K-l, Distributing these costs and benefits among the appropriate referent groups the results of the benefit-cost comparisons are as summarized in Table K-2, COSTS AND BENEFITS FROM PROPOSED WILDLIFE DEVELOPMENT. 6 PER CENT DISCOUNT.RATE (PRESENT VALUES. 1970) DEVELOPMENT COSTS Present Value of Capital Costs: I.R. 1A $20,000 I.R. 1, IB 247,000 Corn Creek 87,000 Leach Lake 340,000 Six Mile Slough 166,000 Duck Lake 609,000 Administrative Centre 178.000 Total Capital Costs $1,647,000 Present Value of Maintenance Costs: I.R. 1A $25,000 I.R. 1, IB 92,000 Corn Creek 78,000 Leach Lake 167,000 Six Mile Slough 82,000 Duck Lake 279,000 Administrative Centre 89.000 Total Maintenance Costs 812,000 Present Value of Salary Expenses 1.136.000 Present Value of A l l Costs $3,595,000 BENEFITS FROM DEVELOPMENT Fishing $443,000 Hunting 910,000 Non-Consumptive Recreation 14,337,000 Agriculture 782,000 Trapping 52.000 Present Value of A l l Benefits $16,524,000 COMPARISON OF BENEFIT COST ANALYSIS FOR VARIOUS REFERENT GROUPS (PRESENT VALUES 1970. 6 PER CENT DISCOUNT RATE) British A l l Participants Columbia Canada (includes non- Canadians) Present Value of Benefits (B) $7,480,000 Present Value of Costs (C) $1,761,000 Net Benefits (B-C) $5,719,000 Benefit Cost Ratio (B/C) 4.2:1 $13,281,000 $ 3,089,000 $10,192,000 4.3:1 $16,524,000 $ 3,595,000 $12,929,000 4.6:1 Ten Per Cent Discount Rate With a ten per cent discount rate the present value in 1970 of a l l benefits i s $8,193,000, while the present value of costs i s $2,580,000. On an overall comparison net benefits are $5,613,000 and the benefit cost ratio i s 3.2:1. Table K-3 summarizes the figures which provide the basis for cal- culations with a ten per cent discount rate. The results of the benefit- cost comparisons for the appropriate referent groups are summarized in Table K-4. COSTS AND BENEFITS FROM PROPOSED WILDLIFE DEVELOPMENT. 10 PER CENT DISCOUNT RATE (PRESENT VALUE. 1970) DEVELOPMENT COSTS Present Value of Capital Costs: I.R. 1A $20,000 I.R. 1, IB 202,000 Corn Creek 70,000 Leach Lake 321,000 Six Mile Slough 134,000 Duck Lake 580,000 Administrative Centre 165.000 Total Capital Costs $1,492,000 Present Value of Maintanance Costs: I.R. 1A $15,000 I.R. 1, IB 45,000 Corn Creek 39,000 Leach Lake 91,000 Six Mile Slough 40,000 Duck Lake 155,000 Administrative Centre 50.000 Total Maintenance Costs 435,000 Present Value of Salary Expenses 653.000 Present Value of A l l Costs $2,580,000 BENEFITS FROM DEVELOPMENT Fishing $221,000 Hunting 483,000 Non-Consumptive Recreation 7,047,,000 Agriculture 414,000 Trapping 28.000 Present Value of A l l Benefits $8,193,000 COMPARISON OF BENEFIT COST ANALYSIS FOR VARIOUS REFERENT GROUPS (PRESENT VALUES 1970. 10 PER CENT DISCOUNT RATE British A l l Participants Columbia Canada (includes non- Canadians) Present Value of Benefits (B) Present Value of Costs (C) Net Benefits (B-C) Benefit Cost Ratio (B/C) $3,747,000 $6,599,000 $8,193,000 $1,289,000 $2,125,000 $2,580,000 $2,458,000 $4,474,000 $5,613,000 2.9:1 3.1:1 3.2:1 A P P E N D I X L APPENDIX L ESTIMATED GROSS BUSINESS REVENUES RESULTING FROM SPENDING ASSOCIATED WITH PROPOSED WILDLIFE DEVELOPMENT Spending by Hunters In 1968 local hunters spent $4.50 per day for hunting on the Creston fl a t s . Non-local hunters from elsewhere in British Columbia spent $12.50, of which $7.60 was spent in the Creston area (see Appendix F). It i s assumed that in the future hunting w i l l be divided equally between these groups of hunters and that local hunters w i l l spend $5 per day spent hunting ( a l l spent in Creston economy) while non-local hunters w i l l spend $13 per day of hunting ($8 locally, $5 elsewhere in British Columbia). Spending by hunters attributable to development of the habitat i s estimated as follows. TABLE L - l SPENDING BY HUNTERS Year Spending in Area Creston Spending in British Columbia 1971 $11,650 $16,000 72 14,350 20,000 73 17,150 24,000 74 31,500 44,000 75 39,800 55,000 76 48,100 67,000 77 55,300 76,000 CAPACITY REACHED IN 1977, CONSTANT SPENDING THEREAFTER Spending by Fishermen Spending by fishermen w i l l be much lower than that by hunters - participation in the sport i s much less costly, and the age and income levels of most participants precludes a high level of spending. We estimate that local fishermen w i l l spend $2 per day spent fishing, non-local fisher- men $4 per day, TABLE L-2 SPENDING BY FISHERMEN Year Spending Year Spending 1971 $1,740 1979 $16,200 72 3,680 80 18,400 73 5,400 81 21,000 74 9,300 82 24,000 75 10,300 83 28,000 76 11,400 84 29,000 77 12,700 f II 78 14,300 • II UTILIZATION AND SPENDING CONSTANT AFTER 1984 Under the assumption that non-local hunters coming to the area were on single-purpose trips we included under expenditures in British Columbia their spending outside of the Creston area. This w i l l not be done for fishing however. We assume that no non-local fishermen make single-purpose trips to f i s h Duck Lake. Thus only their spending while fishing at Creston is relevant. Spending en route to Creston i s not included, as this travel i s assumed to be a purpose in i t s e l f . Spending estimates are summarized in Table L-2, based on a weighted average of spending by local and non-local fishermen. Spending by Non-Consumptive Recreationists Spending by this type of recreationist w i l l vary greatly depending on their point of origin. The cost of participation for local residents w i l l be very low - a cost of $1 per day i s assumed to cover travel costs and some incremental equipment expenses. For recreation-days by British Columbians from outside the local area spending of $6 per day is assumed, * and for spending by non-British Columbians $7.50 per day. * These estimates are derived from a review of findings concerning expenditures by visitors to British Columbia and other areas. A 1963 study of summer visitors to British Columbia (B.C. Government Travel Bureau 1963) found the average expenditure per v i s i t o r day to be $6.40 for a l l types of v i s i t o r activity. Figures available on expenditures by park and campground users in Oregon are much lower, indicating an average of $2.75 per v i s i t o r day (Oregon State Parks Branch, 1965). These figures cover only campground and park users and thereby exclude tourists who would spend heavily on motels, hotels, and restaurants. They are also restricted to expenditures within 25 miles of the campground. Recent studies of non-resident fishermen in British Columbia indicate a much higher level of spending. Non-resident fishermen on Kootenay Lake spent $14,50 per day (Pearse and Laub 1969), On a province-wide basis non- resident fishermen spend $16,00 per day spent in British Columbia (study forthcoming on non-resident fishermen in British Columbia for the B.C. Fish and Wildlife Branch). Per day expenditures by fishermen tend to be high as travel costs are prorated on the basis of the number of fishermen in a party. For non- consumptive recreation i t w i l l be more common for a l l party members to participate, thus lowering costs per recreation day considerably. British Columbia residents are assumed to spend less per day than others as they may make proportionately more one-day trips to the area, not incurring lodging expenses. Other visitors are assumed to spend $7.50 per day, an upward revision of the 1963 v i s i t o r day figure. Total spending in the Creston area by these recreationists i s sum- marized i n Table L-3. (These estimates are weighted by the number of days of recreation taken by each group of recreationists.) As with the fisher- men i t i s assumed that visitors to the Creston area are on multi-purpose trips and therefore include only their spending while at Creston. Travel elsewhere in British Columbia i s assumed to have purpose in i t s e l f and these expenditures are excluded. TABLE L-3 SPENDING BY NON-CONSUMPTIVE RECREATIONISTS Year Spending Year Spending 1971 $34,000 1981 $1,391,000 72 68,000 82 1,487,000 73 135,000 83 1,574,000 74 580,000 84 1,667,000 75 814,000 85 1,694,000 76 881,000 • tt 77 1,017,000 • II 78 1,120,000 • it 79 1,204,000 II 1980 1,301,000 it CAPACITY UTILIZATION BY 1985, CONSTANT SPENDING THEREAFTER Spending Generated by Farming and Trapping In addition to recreational spending ut i l i z a t i o n of the area for agriculture and trapping w i l l generate business revenues. (Trapping i s inconsequential, gross revenues being only $5,000/year). These revenues w i l l be at two levels, f i r s t the receipts of farmers and trappers them- selves as businessmen, secondly the receipts of other Creston businesses as a result of spending by farmers and trappers. The amounts of these receipts are estimated in Table L-4. The relationship between gross receipts of TABLE L-4 SPENDING GENERATED BY FARMING AND TRAPPING Gross Receipts of I n i t i a l Gross Receipts Year Farmers and Trappers of Creston Businesses 1971 $44,000 $40,000 72 56,000 51,000 73 66,000 60,000 74 123,000 111,000 75 154,000 139,000 76 186,000 168,000 77 213,000 193,000 78 225,000 204,000 79 230,000 208,000 80 235,000 213,000 81 240,000 217,000 82 243,000 220,000 83 245,000 - 222,000 FULL UTILIZATION BY 1983. REVENUES CONSTANT THEREAFTER farmers and trappers, and receipts of Creston businesses which i s presented here i s discussed in Appendix A. Combined Spending by A l l Users The combined effect of this spending by a l l forms of recreationists i s summarized in Table L-5. This table summarizes expenditures in the TABLE L-5 COMBINED BUSINESS REVENUES RESULTING FROM SPENDING ASSOCIATED WITH PROPOSED WILDLIFE DEVELOPMENT Year Gross Receipts of Farmers and Trappers Gross Receipts of Creston Businesses 1971 $44,000 $87,000 72 56,000 137,000 73 66,000 218,000 74 123,000 732,000 75 154,000 1,003,000 76 186,000 1,109,000 77 213,000 1,278,000 78 225,000 1,394,000 79 230,000 1,484,000 1980 235,000 1,588,000 81 240,000 1,684,000 82 243,000 1,786,000 83 245,000 1,879,000 84 it 1,973,000 85 ii 2,000,000 RECEIPTS MAXIMIZED IN 1985, CONSTANT THEREAFTER Creston area only, omitting those expenditures elsewhere in British Columbia which were given in the f i n a l column of Table L - l . REFERENCES. APPENDIX L British Columbia Government Travel Bureau. 1963. Visitors '63 a study of visitors to the province of British Columbia. Canada, in the summer of 1963. Victoria, Queen's Printer. Oregon State Parks Branch. 1965. The state park v i s i t o r in Oregon. Portland, Oregon. Pearse, Peter H. and M, Laub. 1969. The value of the Kootenay Lake sport fishery. Department of Recreation and Conservation, Victoria, B.C.

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