Spokane Journal of Business

Rethinking how to value the Columbia River Basin

Natural capital should be viewed in broader sense

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When non-native settlers first arrived in North America, the natural resource wealth astounded them. They saw the opportunity for endless growth—a nirvana of clear, clean rivers, an open door to economic riches unparalleled anywhere in the entire world.

The Columbia River Basin in the Pacific Northwest is an abundant watershed, supporting immense forests, the largest salmon runs in the world, and diverse and abundant wildlife. 

Settlers began the modern-day work to extract the riches through logging, mining, and agriculture. Cities were built on flood plains, and hydroelectricity systems were established. Those natural resources benefit our region with sustainable food, jobs, recreation, clean water, and a healthier environment, among many others.

However, economic riches can come at a cost to the resources that those riches depend on. The natural resources in the Columbia River Basin have been degraded by dams and other developments in the basin. When assets, whether built or natural, aren’t managed sustainably, economic loss occurs.

That fact has been expressed by all the original inhabitants whose ancestors taught ways of using and protecting the natural resources. Natives have watched as their eternally-perpetual world of sustenance and splendor continues to be trampled.

Natural capital is a modern way of saying “making money off the natural resource.” Inherent in this phrase is the fact that one person’s economic benefit is another person’s cost.

The cost factor never has been lost among the Upper Columbia United Tribes, which represents the Coeur d’Alene Tribe, Kalispel Tribe, Colville Confederated Tribes, Kootenai Tribe of Idaho, and the Spokane Tribe of Indians. And it’s never been thoroughly evaluated and reported.

Nor has the true cost of “economic benefit” been lost on the rest of the indigenous peoples of the Pacific Northwest, who all joined together with other non-governmental organizations to produce a report titled, The Value of Natural Capital in the Columbia River Basin: A Comprehensive Analysis.

The report uses a combination of benefit transfer analysis valuation to a range of values and their distribution—in other words, transferring ecosystem service values from existing, completed evaluations of comparable land and water areas, combined with local range and distribution data—to estimate the value of the Columbia River region’s natural capital.

Although not precise, the methods used provide a much better estimate than the alternative of assuming that the ecosystem value is zero — or worse, a cost to the benefits derived from that very same ecosystem. Or, alternatively, that the ecosystem has infinite value. Pragmatically, in estimating the value of ecosystem function and services, it is better to be approximately right than precisely wrong.

That report suggests the Columbia River Basin holds immense natural capital and economic value for all citizens:

Ecosystem Services are estimated to provide a value of $198 billion annually. The highest total benefits accrue from forests at $149 billion, followed by rivers at $11 billion.

This value far exceeds and dwarfs all other economic values, including hydropower and irrigation.

For comparison, hydropower provides a value of $3.3 billion per year.

The value of irrigation in the report is $647 million per year, both before and after modernizing the Columbia River Treaty. This valuation is only the present “fair market value” of the cost of water for irrigation. The total agriculture value is significantly higher, but it still pales in comparison to the immense value of ecosystem services, which includes production of food and drinkable water, regulating toxic contamination, adopting climate resilience, providing recreation and subsistence, navigation and commodities transportation.

This report highlights increases in a combined economic value of about $500 million to non-tribal commercial fisheries, recreation, and other ecosystem values through renewed restoration activities and enhanced conservation policies while showing a minimal hydropower loss of $69 million. The hydropower loss could be compensated by integrating wind and solar production with energy conservation.

Monetary values haven’t been developed for the tribes’ cultural and socio-economic losses suffered over time, especially with the development of dams on the river for hydro and flood control. Those losses are dealt with qualitatively in the report and include salmon and other tribal — first foods that are so comparatively low that tribal people now experience extremely high rates of premature death, severe health issues, and irreplaceable losses of spiritual and cultural values.

River system’s future

The report describes present and future natural resource values in economic terms. That’s useful to inform the integration of ecosystem values into a modernized way to operate the electricity and flood risk management of the Columbia River system. With the United States and Canada set to re-negotiate the Columbia River Treaty, our hope is that the two countries include ecosystem function—fish, wildlife, habitat, water quality—as a major criterion for management of the river system.

Modernizing river operations in a way that recognizes the value of natural capital will provide far more long-term economic sustainability than the current Columbia River Treaty that is narrowly focused on hydropower and flood risk management only.

Hydropower revenues would decrease by $69 million per year, out of the total $3 billion per year, a 2.3 percent decrease which could be easily compensated with energy conservation and alternative energy sources, such as wind and solar.

Although degraded over time by the development of other important economic river values, such as flood control and hydropower, a 10 percent increase of the natural ecosystem value of the Columbia River, as provided by more salmon, sturgeon, wildlife, and clean, cold water, would aid in protection against climate change and fortify long-term economic sustainability.

Revitalizing Columbia River Basin sustainable natural economic assets needs serious consideration as a viable and sustainable source of measurable economic value for tribes and citizens of the northwest.

As Columbia River Treaty assessments continue, it is essential that sustainable natural capital value be given serious consideration in actions that affect river management. An informed course of action should carefully examine ways to promote sustainable ecosystem and economic function and increased ecosystem health. 

We cannot afford not to include the economic value of ecosystem function in the renegotiation of the Columbia River Treaty. The tribes are doing this for the benefit of all.

 

Donald Michel is the executive director of the Upper Columbia United Tribes.

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