ECONOMIC BENEFITS OF SANTA ANA WATERSHED FOREST RESTORATION

BARBARA WYSE, PRINCIPAL & SENIOR ECONOMISTHIGHLAND ECONOMICS Highland Economics

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PROJECT PURPOSE

Would funding of forest restoration measures in the Santa Ana River Watershedeconomically benefit water districts?

• What is the connection between forest restoration and Santa Ana watershed water supply quantity / water quality?

• What are the types/magnitude of economic benefits from restoration measures?

• What is the level of certainty regarding economic benefit findings?

• What are the data gaps/next steps that can increase certainty?

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MOTIVATION FOR STUDY – FINDINGS ELSEWHERE

Santa Fe Municipal Watershed, NM

• Forest restoration projects to reduce fire risk, increase water quality

• Customers pay an average monthly fee of $0.54

Denver Water, CO

• >$10 million costs to Denver Water due to 138,000 FS acres burned (>1 million cubic yards sediment in water supply reservoir)

• $33 million over 5 years for forest treatment/watershed protection

Charles River, MA

• Millions of dollars in damages and hundreds of deaths in floods

• $8.3 million in land acquisition, same benefits as $100 million dam/levees

Catskill / Delaware Watershed, NY

• City of New York was out of compliance with EPA water quality standards

• $1.5 billion over 10 years to protect the watershed and upgrade infrastructure

• Avoided $6 billion in capital and $300 million in operating costs

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PARALLELS FOR SANTA ANA WATERSHED

1. Forest Service lands with high risk of fire

a. Costs of sedimentation in recharge ponds / river channel

b. Reduced water supply

c. Increased O&M Costs

2. Supply limited water basin

a. Potential high costs of reduced recharge/streamflow

b. Purchase of additional imported water

c. Potential water supply shortages

3. ‘Flash’ flow water supply

a. Potential high costs of flooding

- Costs to water suppliers/flood control agencies/others

- Reduced groundwater recharge

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Restoration Measures

Thinning, Road Retrofitting, Meadow Restoration, Chaparral Restoration

Effects on Santa Ana River Watershed

Water Quantity/Quality

Economic Benefits to Santa Ana River Watershed

Recharge Basin Maintenance Costs, Water Purchase Costs

OVERVIEW OF ANALYSIS

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CHALLENGES AT EACH STEP

• Connecting management action & ecological response

• Translating ecological response to economic values

• Applicability of data from other locations to project site

• How to deal with uncertainty in results

SOUND FAMILIAR?

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APPROACH TO MEETING CHALLENGES• Connecting management action & ecological response

- Extensive literature review and interviews with local experts to define expectedranges of ecological effects to expect from management actions

• Translating ecological response to economic values

- Identify types of economic benefits (cost savings in labor/infrastructure and water purchases) . Interview local managers and literature review on expected range of economic benefits for water providers.

• Applicability of data from other locations to project site

- Collect local data on San Bernardino/Cleveland NF, streamflow, and economic data

• How to deal with uncertainty in results

- Use ranges to model and estimate ‘likely’ outcomes and associated probabilities

Highland EconomicsMANAGEMENT ACTION AND ECOLOGICAL RESPONSE:

WHAT IS EFFECT OF THINNING ON WATER QUANTITY?

• Forest fuel reduction increased streamflow, BUT

• Magnitude difficult to quantify

• Large ranges from studies

- % increase in flow: 0 to 81%

- Variables % watershed treated, flow volume, aspect, slope, vegetation type, etc)

• Most studies find large volume removal is necessary

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MANAGEMENT ACTION AND ECOLOGICAL RESPONSE:FINDING “MOST LIKELY” RESPONSE FOR SANTA ANA RIVER WATERSHED FROM LITERATURE

• Literature: Define Range and Distribution of Water Supply Effects

• 25% reduction in density is needed before any increase in stream flow can be measured.

• For every 1% reduction in tree stand density (> 25%), a most likely streamflow increase of 0.6% in water flow effects, with low at 0.5% and high at 0.8%

• Connect to Local Data: What is the reduction in forest volume that would result from thinning?

• What is the current stand density in San Bernardino/Cleveland NF watersheds?

• What is the target stand density in the watersheds?

• What is the current acreage of forest that requires thinning to reach target density?

• Connect to Local Data: What is the current streamflow volume in Santa Ana River Watershed areas?

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LOCAL DATA ON ACREAGE TO THIN: CURRENT STAND DENSITY( DARKER GREEN IS DENSER FOREST)

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LOCAL DATA ON STREAMFLOW

• Case Study: San Bernardino Valley Water District Sub Basin Data

• Precipitation is assumed to be held constant at average historic rates

• Timing of flows was not considered, only average annual flow volumes

Creek Sub-Basin Acreage Base Flow (AFY)

Lytle 29,654 33,612

Cajon Creek 36,201 8,825

Devil Canyon 3,530 1,959

East Twin Creek 5,579 3,887

City Creek NR Highland 12,487 8,512

Mill Creek Yucaipa 27,172 27,733

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ECONOMIC VALUE OF ECOLOGICAL EFFECTWHAT’S THE VALUE OF WATER SUPPLY?

• Big range of value from difference sources

• Avoided cost of purchasing alternative water

- Multiple sources of water $75 – 450/AF

• Cost of Shortages (not modeled)

- Cost to residential consumers of water supply restrictions, up to $2,000/AF in reduced value

Highland EconomicsIDENTIFYING UNCERTAINTY IN RESULTS

• Define Range and Distribution of Water Supply Effects and Per Unit Value of Water

• Combine Distribution of Water Supply Effects and Per Unit Water Values (in @ Risk Model)

- Provides best information on most likely effects, within context of the possible range of effects

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RESULTS: RANGE & MOST LIKELY BENEFIT VALUES

Sub-Basin example results

•90% chance that thinning sub-basin gives$19,000 - $50,000 annual benefits in water supply

•$40- $100 per acre per year in water supply benefits

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STUDY IMPLICATIONS AND NEXT STEPS

RESULTS

• Most likely present value benefit of thinning ($1800/acre) exceeds average federal payments for thinning ($1600/acre)

-Includes water quality and water quantity benefits from increased streamflow and reduced fire risk

-Assumes 20 year thinning cycle

• Economic case exists for investment.

NEXT STEPS: Addressing Sources of Uncertainty

• Key Uncertainties- Percent of watershed thinned

- Type of road retrofit

- Locations of restoration projects

- Magnitude of hydrological response

• Focuses data collection and next steps in project.

THANK YOU!

BARBARA WYSE

HIGHLAND ECONOMICS503-954-1741

BARBARA.WYSE@HIGHLANDECONOMICS.COM