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Option and Existence Values for the Waitaki Catchment

1. Purpose

2. Background

3. Total economic value

4. Benefits transfer

5. New Zealand studies that indicate potential value magnitudes

6. Waitaki Catchment non-market values

7. Discussion and conclusions

References

6. Waitaki Catchment non-market values

Evaluation of changes in non-market values associated with alternative management proposals for the Waitaki Catchment requires identification of the ways in which the catchment differs under each scenario. The remainder of the discussion will address only option and existence value changes. We should emphasise again that option value deals with future use opportunities; they do not include existing use values. Thus the benefits to those not currently fishing in the Waitaki Catchment would not be counted under the category of "use value"; but these anglers might be willing to pay something to keep a future use opportunity open - this is counted as an "option value".

Key potential changes in the Waitaki Catchment include reallocations of water between in-stream flows, abstractive irrigation and hydro-electricity generation, which can involve impoundment, abstraction or other impacts on river flows and the surrounding environment. The scale and direction of TEV changes will depend upon the types of changes proposed and the values held by people affected by those changes.

Table 3. Potential causes of value change

Recreation use values

Existing recreational use benefits of the lower Waitaki River are in the order of $2 million per annum (Kerr, 2004). The relative magnitude of upper catchment recreational benefits has not been calculated. The complete loss of all recreational opportunities on the lower Waitaki would result in costs of about $2 million per annum from reduced use values. This approach does not provide a measure of changes in recreational use values contingent upon specific developments or other activities or processes in the catchment. Instead, it provides a measure of recreational values potentially at risk. It provides an estimate of the cost of a total loss of all existing recreation activities - commonly termed an "all or nothing scenario". In practice, most catchment changes affect only some recreation activities; they are unlikely to completely eliminate most (if any) activities; they can enhance some recreational activities; and they frequently create new recreation opportunities [The upper Waitaki hydroelectric energy scheme provides an example. Changes to flow regimes in some parts of the catchment (eg, the Pukaki River, which was dewatered) destroyed fishing and white water recreation resources. However, the scheme created new water sport facilities at Lake Ruataniwha, the Tekapo artificial white water course, and a new fishing resource in the hydro canals.] .

Option values

Option values are related to the range of use (eg, recreational and abstractive) opportunities and the uncertainty associated with people's expectations about future use of those facilities. For example, when dealing with recreational values, if people are risk averse and think they may, in the future, take up a recreational pursuit then they may be willing to pay now to ensure that suitable facilities are available in the future - a type of insurance.

To gain an understanding of the potential magnitude of Waitaki Catchment option values, it is necessary to consider the types of activities that are available there now or could be made available in the future under alternative management scenarios.

Table 4. Option value impacts

Provision of kayaking facilities has the highest potential to impact on option values for individual recreators. There are few white water kayak opportunities in the Waitaki Catchment, although the neighbouring Clutha and Rangitata catchments provide quality opportunities for highly-skilled paddlers. Catchment management has the potential to influence availability of white water facilities, principally through artificial course development and recreational flow releases. Consequently, changes in catchment management could have significant effects on current and potential kayakers' option values. However, only a very small proportion of the population is involved in, or potentially involved in, white water kayaking, so while individual effects might be large, the aggregate impact is likely to be small.

Lake-based boating is common in the Waitaki Catchment. However, the close proximity of lakes in the Clutha Catchment, the large number of lakes in the Waitaki Catchment, and the limited impacts of catchment management on lake boating opportunities indicate that potential option value impacts of a change in any one lake are insignificant.

Existence values

Changes in existence values typically arise because of impacts on the structure and functioning of the natural environment. In general, people place higher value on natural environments (eg, braided river systems) that are functioning well, are not polluted, and/or support rare or endangered species.

Reductions in water quality in the Waitaki Catchment, for example from agricultural runoff or community sewage discharges, would be likely to reduce existence values (and may also affect recreational use values).

Changes in biodiversity can have significant existence value impacts. Potential causes in the Waitaki Catchment include conversion of native grasslands to pasture or introduced forest, introduction of pest species such as wilding pines, mustelids and lagorasyphon, or changes in wild species habitats caused by different drainage patterns, vegetation changes and provision of artificial food, shelter and nesting sources.

Impacts on endangered species, such as the black stilt or the wry-billed plover, have the potential to produce significant impacts on existence values. Such impacts may arise from direct management interventions (such as Project River Recovery) or from indirect impacts such as loss of habitat or increased predation.