7793

• UCREFRP Catalog Number: 7793
• Author: Douglas, A. J. and R. L. Johnson
• Title: Instream Flow Assessment and Economic Valuation
• USFW Year: 1993
• USFW - Doc Type: A Survey of Nonmarket Benefits Research
• Copyright Material: YES

INSTREAM FLOW

w

Price

o

P

Producer
surplue

o

A

Quantity

Flgore 1 Diagrammatic representation of the consumer surplus and producer surplus components of the
social benefits provided by a natural resource using supply and demand curves.

of the return to fixed factors of production and capital resources. 5 Like the consumer
surplus, it is affected by the availability of substitutes for the good in question.
However, it is not as pertinent as is the consumer surplus to problems of market
versus nonmarket allocations of renewable resources. As more substitutes become
available for the commodity in question, both the consumer's and producer's surplus
will decrease.
The multi-dimensional nature of the benefits estimation problem will become
clearer after a discussion of the manifold nonmarket outputs produced by
streamflows in the next section. Arguments among economists often involve dis-
agreement about the policy implications of certain empirical estimates. The units in
which the values of the instream flows are reported vary widely in the literature, and
the variation in the units of measurement is often related to the policy goals of the
overall study in which they are reported.

STREAMFLOWS AND NONMARKET OUTPUTS

Everyone is familiar with water as a market commodity~onsider bottled water for
example. Young and Haveman6 note that streamflows provide various market and
nonmarket uses. Instream flows are needed for commercial navigation along water-
ways, and commercially marketed hydropower. They provide valuable aquatic habi-
tat for economically significant fish species. Hence, they are an unpaid factor of
production for commercial fisheries. However, many of the most valuable uses
of instream flows occur in water related. noncommercial activities, including