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Prepared for Defenders of Wildlife by
Dr. John Loomis
Department of Agricultural and Resource Economics
Colorado State University
December 2005
Exective Summary
 If
in fact, the final Supplemental Environmental Impact Statement
on the Southern Sea Otter Translocation Program allows for unlimited
population growth, eventual expansion of southern sea otter populations
and range would provide more than $100 million in annual economic
benefits to California households. These benefits derive from
recreation, tourism, ecosystem services, option value and existence
value. The majority of these benefits are associated with existence
value -- the value people place on just knowing that sea otters
are being saved from extinction and their populations increasing
to levels where the species could be removed from the federal
list of threatened species.
To estimate existence value benefits, we used
a willingness to pay study sponsored by and published by the National
Marine Fisheries Service (Hageman 1985), and a meta-analysis of
rare and endangered species valuations reported in the literature.
The Hageman study is the only published research that has been
done to assess California households' willingness to pay for three
different levels of sea otter population recovery, and was adjusted
to reflect changes in survey response rate and inflation. We consider
that the adjusted results are likely to be an underestimate of
the current willingness to pay, in part due to increased sea otter
education efforts in the state, increased opportunities to view
sea otters, and rising real incomes in California.
 Sea
Otter Tourism. Expansion of southern sea otter populations
and habitat will likely result in increases in tourism in Santa
Barbara in the next decade, and eventually in Ventura County.
Using a statistical model of tourism in California along with
survey data on sea otter visits, we estimate an increase in Santa
Barbara county of at least 62 direct jobs to as much as 326 direct
jobs. This increase in jobs is associated with estimates from
the U.S. Fish and Wildlife Service (USFWS) Draft Supplemental
Environmental Impact Statement on the Translocation of Southern
Sea Otters (DSEIS) of 117 additional otters along the coast in
Santa Barbara county in the next decade. These job estimates do
not include multiplier effects, which could easily double the
eventual number of jobs provided once sea otter populations expand
and additional tourism infrastructure is put in place in Santa
Barbara and Ventura counties. This expansion of southern sea otter
populations along the Santa Barbara coast would result in at least
$1.5 million in direct tourism income related to sea otters to
a best estimate of $8.2 million annually in Santa Barbara and
Ventura counties from the initial expansion of sea otter populations
reported by USFWS. These direct income effects do not reflect
any multiplier effects, consideration of which may double these
direct income estimates.
Non-Market Economic Benefits. The USFWS
predicts an expansion of 117 sea otters that will reside year-round
between Point Conception and Santa Barbara Harbor (USFWS 2005:
75) and another 79 sea otters at San Nicolas Island near Santa
Barbara. There would also be at least $3.4 million dollars, with
a median estimate of $21.4 million in annual non-market economic
benefits to California households from the sea otter expansion.
These non-market benefits include recreation, existence values,
and option values. The majority of these benefits arise from existence
values from just knowing that sea otter populations would increase
by a total of 196 otters over the next decade (117 along the Santa
Barbara coast and 79 at San Nicolas Island). These results are
based on an existing willingness to pay survey by San Diego State
University for National Marine Fisheries Service and by applying
a meta-analysis of previous valuation literature on rare and endangered
species.
Ecosystem Services. Sea otters are also
a keystone species in sustaining healthy kelp forests off the
California coast. These kelp forests provide many valuable services,
directly and indirectly, to humans. These services include reduced
shoreline erosion, improved habitat for numerous invertebrates
such as mussels and clams, several fish species, as well as carbon
storage that can moderate climate change. The expansion of sea
otter populations will aid in the restoration and maintenance
of kelp forests off the coast of Santa Barbara. The ecosystem
services provided by kelp forests have been valued by other scientists
at $7,600 an acre per year.
 Costs
to Commercial Fishing. Over the ten-year expansion of sea
otters off the coast of Santa Barbara, the USFWS predicts that
commercial harvest of sea urchins, crabs and spiny lobster would
be reduced to zero in this area due to consumption of these species
by sea otters. Based on the USFWS data in the DSEIS the gross
revenue or ex-vessel revenue foregone is estimated to be $610,242
annually. This reduction overstates the losses to these commercial
anglers and society since reduction in these commercial fishing
activities would result in savings of boat fuel and labor that
can be re-employed elsewhere. Converting the gross revenue to
total jobs (including multiplier effects), the commercial fishing
losses would involve about 24-26 jobs.
Comparison of Economic Effects. Table
E-1 presents a comparison of the gains in direct sea otter tourism
income, total employment, and non-market value as compared to
costs to commercial fishing. As can be seen, even the lower bound
of the direct gain in sea otter related tourism in Santa Barbara
county is more than double that of the reduction in commercial
fishing. The total jobs realized from sea otter tourism is at
least five times that estimated to be lost in commercial fishing.
Of course the gain in recreation use and passive use (primarily
existence values) to California households from the additional
196 sea otters is substantial at a median value of $21 million.
Sensitivity Analysis. While there may
be some uncertainty around these estimates of non-market value,
an alternative perspective can be gained on the overall economic
benefits of the sea otter expansion by dividing the annual revenues
lost by the number of sea otters gained. While the annual revenues
lost of $610,242 overstates the net loss in commercial fishing
income because it does not deduct costs, it may provide an upper
bound on what a sea otter would need to be worth to make the expansion
program economically efficient. Dividing the $610,242 by the 117
additional sea otters along the Santa Barbara coast that USFWS
indicates would be directly affecting commercial fishing yields
an annual cost of $5,216 per sea otter. This annual benefit is
far below the rehabilitation costs per sea otter cited below of
$20,000 to $50,000. In fact, each household in California would
only need to pay about a nickel per household to cover the entire
$610,242 in foregone fishing revenue involved in maintaining the
additional 117 sea otters.
While decisions regarding endangered species
are and should be based on more than economic factors, this range
of estimates on the economic values of sea otters helps bring
some balance to the debate over southern sea otter range expansion:
it is clearly not sea otters versus jobs. Sea otter tourism has
the potential to support a substantial number of jobs and income
in the Santa Barbara area, as well as providing non-market economic
values to millions of California households.
Sea otters have several types of economic values
to people that have not been quantified by USFWS in the DSEIS.
These economic benefits should be included by USFWS when evaluating
sea otter management alternatives in the Final SEIS. If the USFWS
is quantifying the costs in dollar terms, a balanced and complete
economic analysis should quantify the benefits in dollar terms
as well. The remainder of this analysis provides the details on
the data sources, methods and calculations used to arrive at these
estimates.
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Updated 3-3-06
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