Passive Values and Policy

The concept of valuation and willingness-to-pay is receiving greater attention in the classroom. I recently ran across a paper discussing the importance of passive or existence values, where people value things even though they will not directly use them. We may receive pleasure knowing salmon can breed naturally as they have been doing for thousands of years, even if we will never visit those areas.

This paper, Importance of Including Use and Passive Use Values of River and Lake Restoration, by John Loomis, also illustated political meddling in economic valuation.

Great for teaching!

The COE originally planned to include a nonuse

value question in its economic analysis, but

intervention by then Washington Senator Slade

Gorton (who supported dam retention) resulted

in the question being removed from the survey.

Calculation of the non-use value for salmon and

free flowing rivers was done using benefit transfer

from existing non-use valuation studies. Using a

variety of benefit transfer protocols, the passive use

value of salmon was estimated for the dam removal

alternative at between $22.8 and $310.5 million

(U.S. Army Corps of Engineers 2002: 42). The

passive use value of restoring the free flowing river

was estimated at $420 million (U.S. Army Corps of

Engineers 2002: 42).

As shown by including the passive use values

of the free-flowing river and salmon restoration,

this would make dam removal economically

efficient, which yields the highest net benefits.

The omission of the passive use values may have

contributed to the Corps of Engineers decision to

keep the dams in place.