1. Rex H. Caffey Director and Associate Professor Center for Natural Resource Economics & Policy Louisiana State University AgCenter Louisiana Sea Grant College Program Restore America’s Estuaries December 12, 2006, New Orleans, LA What Benefits Are We Really After? Examining Cost Efficacy and Project Selection in CWPPRA

2. Objectives Economics at the Ecosystem Scale LA Case Study: Grappling with benefits

3. A mandate for “economic efficiency” in rationale of most large scale programs. No blank checks Economics – allocation of scarce resources amongst competing interests. Economics and Large Scale Restoration Economics is more than just project justification. Not just “At Risk” accounting

4. 2050 ? 1956 How should we allocate our limited restoration dollars?

5. Case Study Economics in CWPPRA (1991-2005)

6. cost-effectiveness “...coastal wetland restoration projects in Louisiana (will) provide for the long- term conservation of such wetlands... based on the cost-effectiveness of such projects in creating, restoring, protecting, or enhancing coastal wetlands...” (Public Law 646: CWPPRA, Sec. 3952 1(b)). Efficiency Mandate

7. 155 Authorized projects, 109 Active projects. Stage 1: What determines costs? Quantify the effect of specific factors that determine cost-efficiency of “Active” Projects. Cost Function: Average Annual Habitat Units $/AAHU = f {size, location, tech, sponsor, policy, time } Descriptive Statistics Multiple Linear Regression Model

8. Cost-Efficacy for Active Projects (n=109)

9. Average Costs: Sponsors

10. Region 2 Average Costs: Regions

11. Vegetative Planting (2%) $900 per AAHU

12. $1,736 per AAHU Hydrologic Restoration (27%)

13. Freshwater Diversion (9%) $2,341 per AAHU

14. Sediment & Nutrient Trapping (5%) $2,839 per AAHU

15. Outfall Management (3%) $3,602 per AAHU

16. Sediment Diversion (6%) $4,077 per AAHU

17. Marsh Creation (10%) $4,698 per AAHU

18. Shoreline Protection (27%) $9,461 per AAHU

19. Barrier Island Restoration (10%) $10,416 per AAHU

20. Shoreline Protection A Closer Look at Expensive Project Types: Barrier Island 2001 2004 2002 2000 2001 2004 CNREP 2006

21. How are total cost changing? CNREP 2006

22. What’s happening to benefits? CNREP 2006

23. And consequently...Costs per unit? CNREP 2006

24. Stage 2: Role of Cost-Efficiency and other factors in project selection of Candidate Projects. Stage 2: Project selection factors? Candidate Selection Model: Selection = f {FFC, CE, Criticality, Size, Type, population) Binary Logit Model ~ 350 “Nominated” projects, 299 Candidate Projects. Results: Years 1-5, Costs negatively correlated with selection Years 6-10, Costs negatively correlated with selection Years 11-15 Costs positively correlated with selection

25. Transparency and validity of benefit calculation - How is “Bang” being calculated? - Communicate the science behind decisions Meaningful participation in prioritization process - Project origin: Bottom up vs. Top Down? - Seat at the table from the beginning Project trajectory becoming a major issue - How long will it take to get the benefits? - Strong public support for rapid-land building Public Concerns

26. Observations and Lessons Learned Economics & Coastal Restoration We can do better than “at risk” accounting Cost-efficacy an effective metric for project selection and re-assessment, adaptive management If you don’t like the answers you get, don’t blame economics – costs are not the problem, benefits are!

27. Thank You