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market prices truly reflect the opportunity cost of the resources used to produce a good (Assumption 1). Second, all other markets in the economy must be operating completely free of distortions (Assumption 2). That is, the price paid by consumers must be identical to the cost of producing the good in all markets. Third, the entire national-level impact must be identical with the regional-level impact (Assumption 3). That is, resources do not flow across regional boundaries. With these assumptions in mind, an estimate of the national efficiency benefits of the incremental impacts due to the proposed critical habitat is made by determining the value of the direct impacts. This estimate is presented in Table I-7-1 for various years through the study period. For the regional economy, this measure would yield a value of $1.27 million for the impacts in 1995 as a value for the benefits associated with the listing and proposed critical habitat actions in that year. Similarly, the value for the year 2010 would be $4.22 million. The present value (at a 3 percent discount rate) of the impacts measured by the traditional national efficiency measure, based on the data reported in Table I-7-1, would be a positive $52.69 million (1982$). The annualized value of these impacts over the study period would be $2.63 million. For the purposes of the current analysis of the endangered- fishes, assumptions 2 and 3 are arguably not fulfilled. For instance, Assumption 2 is violated since in an integrated economy all markets are more or less interdependent. An exogenous impact in one market will cause responses in other markets through changes in relative prices of the outputs of the markets. If all of the indirectly affected markets in the economy are free of distortions, then reallocating resources among these markets would generate a series of offsetting effects.12 'ZAn illustration of why markets are not free of distortions can be found in the case of indirect business taxes which drive a wedge between the price paid by consumers and the cost of producing the good. I-40