Application of Cost and Value Comparisons to Iowa Wildlife

There is an increasing demand for methods to determine wildlife values and costs in order to allow comparisons with marketed goods which compete with wildlife for funds and resources. For relatively small changes in the total wildlife supply, estimation of the value of this increment in supply should be compared with the associated costs for the increment in supply. Statewide average values and costs are usually meaningless in this type of comparison. It is advocated that better estimates of changes in wildlife abundance caused by government and private activities will provide much useful information even with the limited economic information available. Estimation of wildlife values is most easily handled in terms of the number and value of recreation days provided by wildlife. Market values for some types of wildlife recreation are becoming available for use in evaluating small changes in the wildlife supply. However, evaluation of large changes in the wildlife supply and estimation of values for entire state wildlife resources is a much more complex problem. The difference between estimating incremental wildlife values is explained and a promising method to estimate the total value of major segments of Iowa's wildlife is proposed. COMPARISONS AT THE MARGIN There is much controversy about the propriety .of various methods to place values on wildlife and recreation. However, there are established economic techniques available to make cost and value comparisons on small-scale wildlife projects. Value refers to the intangible benefit received by recreationists from wildlife put in terms of dollars. Value and cost comparisons are necessary to determine when costs to produce or save units of wildlife become prohibitive relative to their value. Americans seem willing to pay large sums to prevent extinction of a species, but the value to Americans of additional animals above the survival minimum becomes less and less. Average values do not adequately express this relationship between value and abundance. Iowa wildlife is produced at a very low average cost to the state, but the costs of game management practices to produce additional wildlife would climb far above the over-all average. Averages do not adequately describe the relationship between costs and abundance. One of the fundamental tools of economists is the use of marginal costs and marginal values. Marginal costs and marginal values are the cost and value of small additions to the existing supply. Only for incremental changes in wildlife numbers can meaningful wildlife cost and value comparisons be made. Comparisons at the margin requires comparing the added cost of supporting one additional animal against lResearch statistician for Swift and Co., Chicago, Illinois. Former graduate student in economics at Iowa State University, Ames. 152 1 Cook: Application of Cost and Value Comparisons to Iowa Wildlife Published by UNI ScholarWorks, 1968 1968] ECONOMICS OF IOWA WILDLIFE 153 the value of the additional animal. In practiceit is usually necessary to compare larger units of wildlife or to make comparisons in terms of recreation days. Comparing total costs and values is often inappropriate. For example, comparing the value of Iowa's wildlife population against state costs to promote these populations would be meaningless. Most wildlife would be produced with no state support at all. The use of marginal values would permit an evaluation of state wildlife costs relative to their contribution to wildlife numbers. A $100 expense on pheasant habitat is not justified by a total value of say $2 million for Iowa's pheasants, but may be justified if it contributes $100 to the value of Iowa's pheasants. In economic terms, the optimum species density and range for government agencies and individuals to aim for is the condition called economic efficiency. The basic requirements for economic efficiency are met when marginal costs equal marginal value, and the marginal costs of the methods used to reach this quantity are less. than or equal to marginal costs of alternative methods. The wildlife quantity where marginal values = marginal costs is considered optimum because up to this quantity the value of each additional animal exceeds the cost to produce the animal. A quantity any lower would forfeit part of the opportunity to increase total net value. A quantity any higher would have a value for each additional animal less than the added cost and total net value would decline. Cl Z1<( (/) 0 UJU 3-1 ~~ 0 _J I~ ~ $