Box 1. facts and figures

* Location: USA; Pacific Northwest; Oregon State * Ecosystems: River basins covering nine Level III ecoregions: Coast Range, Willamette Valley, Cascade Mountains, Eastern Cascades Slopes and Foothills, Columbia Plateau, Blue Mountains, Snake River Plain, Klamath Mountains, Northern Basin and Range Desert. Source: For more information, see Environmental Protection Agency, Western Ecology Division, Ecoregion Maps and GIS Resources: http://www.epa.gov/​wed/​pages/​ecoregions/​level_iii_iv.htm (Accessed April 11, 2014). * Population: 3.9 million people in the state of Oregon, U.S. * Size of Restored Area: 2,314 miles of riparian habitat improved; 642 miles of in-stream habitat treated; 686,570 acres of uplands improved; 37,122 acres of wetlands improved; 2,043 stream miles reopened to access by anadromous species. * Budget: $411.4 million dollars invested in 6,740 watershed restoration projects. * Study Period/Duration: 2001-2010 * Partners: University of Oregon Ecosystem Workforce Program, Oregon Watershed Enhancement Board, U.S. Forest Service, National Oceanic and Atmospheric Administration Restoration Center * Study Objectives: Quantify the market benefits of watershed restoration expenditures in order to build public support for habitat restoration.

Introduction

1Watershed restoration is the practice of restoring degraded aquatic and terrestrial habitats to functional, self-sustaining conditions. More than one billion dollars is spent on river restoration each year (Bernhardt et al., 2005) as restored watersheds provide an array of generation-spanning ecosystem services and benefits (MEA, 2005). However, measuring all ecological, health, cultural and economic impacts of restoration is difficult, costly, and uncertain. As such, reported watershed restoration outcomes tend to be easily quantified, project implementation metrics such as the numbers of stream miles improved or acres treated. However, in today’s fiscal climate it is more important than ever to demonstrate the multiple ways that conservation work benefits not just the environment but also our economy. Recently, Nielsen-Pincus & Moseley (2010) produced economic multipliers specific to watershed restoration in the state of Oregon, making it possible to estimate the economic activity stimulated by restoration investments.

Background on restoration and economics

3In order to restore ecosystems at a meaningful scale, conservationists and researchers must make the social and economic benefits of doing so more explicit (Knight et al., 2006; Holl & Howarth, 2000). This is felt most keenly during adverse economic conditions when debates over shrinking public budgets devolve into zero-sum game arguments; namely, spending money on environmental protection or enhancement is a sacrifice to economic growth. Even though the need for ecosystem restoration is usually a consequence of economic activity, the resources provided to carry it out are influenced by current economic circumstances (Edwards & Abivardi, 1997). Nonetheless, a recent survey of over a thousand peer-reviewed restoration papers found that restoration practitioners are failing to draw links between ecological and socioeconomic benefits, underselling the evidence that restoration is a worthwhile investment for society (Aronson et al., 2010).

Estimating the benefits of protected or restored habitat

4As the majority of the goods and services provided by nature are not valued in the formal market economy, economists have created novel approaches to incorporate environmental benefits into economic analyses, such as the Total Economic Valuation (TEV) framework, see Pearce et al. (1989). TEV is comprised of both use values (direct, indirect and option) and non-use values (bequest and existence) that together constitute the total economic value of the natural resource or ecosystem in question. However, the majority of TEV studies address only one use value, such as air purification services, rather than providing a complete estimate for all use and non-use values. TEV studies utilize a variety of non-market valuation methods such as hedonic pricing, travel cost, contingent valuation, and experimental choice analyses. Robbins & Daniels (2012) provide an excellent overview of these methods in the context of restoration, and De Groot et al. (2013) conducted a synthesis cost-benefit analysis on a range of ecosystem restoration projects, finding that the majority of projects were not only profitable but were also high-yielding investments.

5The contribution of such economic studies to the field of restoration is critical to furthering knowledge and uniting disciplines. However, it is important to recognize their limitations. TEV studies are long-term, expensive efforts that need to be carefully and correctly designed to produce relevant results. Even with adequate time and resources, such studies can be highly sensitive to key assumptions, biases, and inherent uncertainties; if improperly executed, results may be unreliable (Schultz et al., 2012).

Estimating the economic impacts generated by habitat restoration project expenditures

6Recently, economic thinking about restoration has expanded to examine the short-term, market benefits that restoration expenditures stimulate in local communities (e.g. see Edwards et al. 2013). These types of analyses are identical to those undertaken to assess the economic impact of federal investments in construction projects, for example. As in traditional construction, restoration project expenditures are made as payments to contractors, payments for equipment and materials, and as wages to personnel managing and performing the restoration work. These businesses and employees in turn circulate that money throughout the economy as they supply their own business and labor needs, stimulating further economic activity. In economics this process is called the ‘ripple’ or ‘multiplier effect’, as the initial outlay of spending ripples and multiplies throughout various sectors of the economy related directly and indirectly to the project. Economists use input-output (I-O) modeling or the economic multipliers derived from I-O models to conduct these analyses and it is the basis for the following case study. For more information on I-O models, see Annex A.

Case study: Restoration and the local economy in Oregon

8This paper examines the employment and economic impacts of watershed restoration expenditures made in Oregon over the ten year period of 2001–2010, using economic multipliers to determine the total direct, indirect, and induced impacts resulting from these investments.

Methods

10We queried the OWRI for watershed restoration projects that:

1. were completed in Oregon during the ten year period of 2001–2010;

2. included cash expenditures (excluding projects supported solely with in-kind contributions); and

3. listed specific restoration activities, such as “riparian vegetation enhancement” or “fish passage barrier removal”, with associated total expenditure data.

12To determine the economic impacts of restoration investments, we used multipliers supplied by Nielsen-Pincus & Moseley (2010) who examined the employment and economic impacts of public investment in forest and watershed restoration in Oregon. Type I multipliers measure only the direct and indirect effects while Type II multipliers measure the direct, indirect and induced effects of the investment. For more information about economic and employment multipliers, see Annex A.

13First, all project expenditures were totaled by the restoration activity categories used by OWRI and Nielsen-Pincus & Moseley (2010), described as follows:

• Fish Passage — removal of barriers to fish passage such as culverts and dams;

• In-stream — enhancement of stream habitat and function;

• Riparian — enhancement and restoration of native riparian vegetation;

• Road — inventory, construction, reparation, or decommission of roads;

• Upland — agricultural water management, juniper management, and noxious weed treatments;

• Urban — urban centered actions removing sources of watershed pollution;

• Wetland — restoration of wetland and estuarine habitat;

• Combined — a diverse combination of some of the above project types.

14Then, the associated multipliers (see Table 1) were applied to the totaled expenditures in each respective activity category. Where projects included multiple activities, the relevant multiplier was applied to the portion of total expenditures associated with that activity. Because multipliers for road and urban projects were not developed by Nielsen-Pincus & Moseley (2010), we used the “Combined” multiplier.

15Table 1 details the economic multipliers and employment effects estimated by Nielsen-Pincus & Moseley’s (2010) stimulated per $1 million invested. Jobs supported may be full-time, part-time, temporary, seasonal, or permanent.

Table 1. Economic multipliers and employment effects

	Economic multipliers		Employment effects per $1 million invested
Restoration Activity	Type I	Type II	Direct + Indirect	Direct + Indirect + Induced
Fish passage	1.8	2.3	10.6	15.2
In-stream	1.7	2.2	10.5	14.7
Riparian	1.7	2.4	17.5	23.1
Upland	2	2.6	10.8	15
Wetland	1.8	2.4	12.5	17.6
Other/Combined	1.8	2.3	10.4	14.7

Source: Nielsen-Pincus & Moseley (2010)

16To determine the total direct, indirect and induced economic output and employment resulting from restoration investments, we multiplied project investments in each category of restoration work by the relevant multiplier. We then summed the total economic activity by project to arrive at a state total. We also present the total economic activity results by county in Annex B.

Results

17The average number of activities undertaken per project was one, although some projects reported as many as five separate activities. The most popular types of restoration activities were road (24% of projects), riparian (24%) and upland work (21%). While fish passage restoration comprised only 16% of study projects, it constituted the greatest proportion of expenditures by project type (29% of total expenditures), followed by upland (24%) and road (15%) restoration. Urban restoration work was least common, occurring in only 0.2% of the study projects and constituting only 0.1% of total expenditures.

18A total $411.4 million dollars was invested in 6,740 watershed restoration projects completed throughout the state of Oregon over the period 2001–2010. We estimate that these expenditures contributed between $752.4 million and $977.5 million in economic output and supported 4,628 to 6,483 jobs, see Table 2. Results are also presented by county, see Figure 1 and Annex B.

Table 2. Oregon restoration projects: Estimated economic impacts by project type, 2001-2010 (2010$)

Project Type	Total expenditures (million $)	Estimated economic output (million $)			Estimated employment (jobs)
Combined	$14.4	$25.9	–	$33.0	149	–	211
Fish Passage	$117.4	$211.4	–	$270.1	1,245	–	1,785
Instream	$53.3	$90.6	–	$117.2	559	–	783
Riparian	$29.0	$49.3	–	$69.6	508	–	670
Road	$60.5	$108.8	–	$139.1	629	–	889
Upland	$100.8	$201.5	–	$262.0	1,088	–	1,512
Urban	$0.2	$0.4	–	$0.6	3	–	4
Wetland	$35.8	$64.4	–	$85.9	447	–	630
TOTAL	$411.4	$752.4	–	$977.5	4,628	–	6,483

Source: Authors' estimates using data from OWEB (2012) and Nielsen-Pincus & Moseley (2010)

Figure 1. Oregon restoration projects by county

Estimated employment (in orange) and economic output (in green), 2001–2010.

Source: Authors' estimates using data from OWEB (2012) and Nielsen-Pincus & Moseley (2010)

19The job creation potential of restoration activities compared with investments in other sectors of the economy is favorable. Figure 2 displays findings from the literature and compares two types of restoration project investments, labor-intensive projects and average projects (Nielsen-Pincus & Moseley, 2010), with estimates from investments made in transportation infrastructure, renewable energy, building retrofits, coal, and oil and natural gas (Heintz et al., 2009a, 2009b). Restoration activities create more jobs per $1 million of investments than comparable green investments in renewable energy, building retrofits, and transportation infrastructure; more than twice the number of jobs as comparable investments in coal; and more than three times the number of jobs as comparable investments in oil or natural gas.

20The majority of watershed habitat restoration in Oregon occurs outside its major urban areas, hence, the majority of associated jobs are likely located in rural counties and communities: places hard hit, generally speaking, by the 2008 economic downturn with recent unemployment rates in excess of both state and national averages (Beleiciks & Krumenauer, 2012; Young, 2013). Restoration activities bring a range of employment opportunities for those working in construction, project management, engineering, natural resource sciences, and other fields. Restoration also stimulates demand for the products and services of local businesses such as plant nurseries, heavy equipment companies, and rock and gravel companies. In addition, these dollars tend to stay in the local economy: Hibbard and Lurie (2006) found that approximately 80% of OWEB’s restoration investments stay in the county where the project is located.

Discussion: The utility of estimating the economic impact of restoration

21There is a systemic lack of acknowledgement of the value of functional ecosystems within our market economy, which arguably contributes to flawed decision making (EFTEC, 2005; Hurd, 2009). Intuitively, in the face of shrinking public budgets and difficult decisions about the distribution of scarce resources, it is useful, if not essential, to make the economic case for restoration. This is especially salient to those of us in the conservation nonprofit sector. As practitioners, with our own limited resources, we wish to know what kinds of information and outreach strategies are effective in the pursuit of improved environmental and social welfare.

23Since release of the brochure, Ecotrust staff and researchers at the University of Oregon regularly receive inquiries as to the possibility of extending this type of analysis to other regions. We enthusiastically support continued research into and development of such economic tools, as organizations like ours are subsequent consumers and purveyors. Yet, we argue that there is an equally pressing, concomitant need to study the impact of this information on individuals and institutions.

24While we have found that quantifying and communicating the economic gains of watershed restoration reframes the conversation with key stakeholders, it is not clear whether this translates into lasting, favorable outcomes, be those demonstrable changes in public opinion or other, more practical support in the form of greater private landowner participation in restoration projects; changed policies that recognize watershed restoration as an investment strategy in rural economies and green infrastructure; or increased federal or state budgets for restoration.

25We recognize that establishing causality with respect to policy outcomes or behavioral change is a complicated endeavor. However, there is much to be explored in terms of changed perception or attitude. For example, are common economic impact metrics, such as number of jobs, more persuasive than intergenerational benefit claims because they avoid the associated pitfalls of temporal discounting? Or by providing data on the market benefits of environmental restoration, are perceived trade-offs diminished, thereby minimizing the psychological burden for decision-makers? Regardless, it is probably safe to assume that funding will continue to fall short of the amount needed for large-scale ecosystem restoration. Hence, we stand to increase our collective impact with an improved understanding of the influence of different economic arguments.

Conclusions

26The act of restoring watershed health provides local jobs and bolsters regional economies. In our case study analysis, we estimated that $411.4 million in watershed restoration expenditures made over ten years in the state of Oregon generated up to $977.5 million in economic output and supported up to 6,483 jobs.

27Beyond short-term market impacts, it is important to remember that a critical assessment of restoration’s value would not be complete without considering its primary intended benefits to ecosystem health. Restoration investments continue to accrue and pay out over time with long-term improvements in wildlife populations and aquatic and terrestrial habitat. And intact watersheds create enduring benefits, from enhanced fishing opportunities to the provision of critical ecosystem services, which are vital to the welfare of communities and cultures.

28We believe that meaningfully characterizing and effectively communicating the interdependencies of ecosystems and economies is critical to addressing the immense environmental challenges of the 21^st century. Whether our aim is the recovery of wild salmon in the western United States or the abatement of greenhouse gas emissions, alternative models of economic development that properly value for functioning ecosystems need to be expanded and strengthened. By applying common economic impact assessment techniques to environmental conservation activities, we are hopefully aiding in the transition to a more reliable prosperity. In addition to replicating these kinds of economic impact studies, there is much to gain from more rigorous exploration of how making the economic case for environmental wellbeing is an imperative for achieving modern environmental goals.

Acknowledgements

29The authors would like to thank the Ecosystem Workforce Program at the University of Oregon, especially Cassandra Moseley and Max Nielson-Pincus, for their good work developing the multipliers used in this study and advising us in our application of their research; Bobbi Riggers of the Oregon Watershed Restoration Inventory database system for her assistance in querying and interpreting restoration project information; all the Whole Watershed Restoration Initiative partners, especially Ken Bierly of the Oregon Watershed Enhancement Board, Megan Callahan Grant and Lauren Senkyr of NOAA’s Restoration Center, and Scott Peets and Jim Capurso of the U.S. Forest Service for their support of this work; Kristen Sheeran and Carolyn Holland of Ecotrust for co-funding the study and brochure; Kate Carone of Ecotrust for her editorial and intellectual support; and the many dedicated, talented individuals who plan, design, implement, and monitor salmon habitat restoration projects.