1. Economics of Investment In Prevention, Rapid Response, and Management

2. Donna J. Lee Donna J. Lee University of Florida Gainesville Florida USA “Economics Of Investment In Prevention, Rapid Response, And Management,” Non-market Valuation, Decision Support Systems And The Management Of Invasive Species: Economic Tools For Public Agencies,, AARES Preconference Workshop, Queenstown NZ, Feb. 13 2007.

3. Key concepts Risk Time Optimal investment Monitoring and Prevention Rapid response (Early eradication) Long term management

4. ProblemSetting Problem Setting

5. How Pests Interfere With Native Ecosystems Predator-prey (Brown tree snake) Parasitic (Soybean aphid) Compete for food, space, sunlight (Miconia) Alter environment (Zebra mussel) Disrupt economic activities (Armored catfish)

6. Sources of Exotic Introductions Trade – legal, illegal Incidental - hitch hikers in boats, on vehicles, with people, with traded goods) Natural – air and water

7. Types of Ecosystem Values Direct use Direct use o collection, harvest, extraction o recreation Indirect use Indirect use o native species habitat o ecosystem services e.g. erosion control, water supply Non-use Non-use o aesthetic o cultural o existence

8. BNZ Priority Ecosystems High country Aquatic Marine Indigenous forest

9. BNZ Priority Pests and Diseases Salvinia Water Hyacinth Cape Tulip Johnson grass Pyp grass White Bryony Hornwort (South Island) Hydrilla Rainbow Lorikeets Dutch Elm Disease Manchurian wild rice Phragmites Rainbow skinks Giant hogweed Argentine ant Darwin’s Ant Chilean needle grass Wilding conifers

10. Management Goals Stimulate or maintain economic health Safeguard ecosystem biodiversity and functions Provide quality nature based opportunities Protect culturally significant resources

11. Risk Gambling games

12. What is your risk preference?  Check one  Risk Loving (dangerous activities, gamble with money, motorcycle)  Risk Averse (low impact activities, conservative investments)  Risk Neutral (indifferent to upside gains and downside loss)

13. Game A There is a 50% chance that you will win $200 and a 50% chance that you will win $100 What’s the most you would pay to modify the game so that… There is a 60% chance that you will win $200 and a 40% chance that you will win $100 Amount you would pay $_______

14. Analysis of Game A Old game Expected benefit =.5(200) +.5(100) = $150 New game Expected benefit =.6(200) +.4(100) = $160 WTP = approximately $10

15. Analogy to IS 50% = probability of an invasion 40% = probability of an invasion with Prevention measures $200 = Ecosystem Benefit with no invasive specie $100 = Ecosystem Benefit with invasive specie $10 = Value of Prevention

16. Game B There is a 50% chance that you will win $200 and a 50% chance that you will win $100 What’s the most you would pay to modify the game so that… There is a 50% chance that you will win $200 and a 50% chance that you will win $150 Amount you would pay $_______

17. Analysis of Game B Old game Expected benefit =.50(200) +.50(100) = $150 New game Expected benefit =.50(200) +.50(150) = $175 WTP = approximately $25

18. Analogy to IS $200 = Ecosystem Benefit no invasive specie $100 = Ecosystem Benefit with invasive specie $150 = Ecosystem Benefit with invasive specie plus net gain from Rapid Response or IS management (e.g. eradication, damage mitigation, containment, habitat restoration) $25 = Value of Rapid Response or Value of IS management

19. Game C There is a 50% chance that you will win $200 and a 50% chance that you will win $100 What’s the smallest amount you would accept for this change in the game… There is a 30% chance that you will win $200 and a 70% chance that you will win $100 Smallest amount you would accept $______

20. Analysis of Game C Old game Expected benefit =.50(200) +.50(100) = $150 New game Expected benefit =.30(200) +.70(100) = $130 WTA = approximately $20

21. Analogy to IS 50% = probability of an invasion 70% = probability of an invasion (e.g. with permitted imports) $20 = Value of Loss from IS threat

22. In your opinion, how should we manage our ecosystems?  Check one  Risk Loving (combat problems as they appear)  Risk Averse (protect against worst case scenarios)  Risk NeutralWhy?

23. Time

24. IS growth over time Year IS Stock 10 50 % 100 50 0 Moderate speed Carrying capacity Fast Slow speed

25. Value of Ecosystem Services IS Stock 0 % 100 High Low Value of Ecosystem Services $

26. Economic Loss over time due IS Economic Loss over time due IS (for a pristine ecosystem) Year Ecosystem Value 10 50 $ 0 Economic Loss Baseline With infestation No infestation

27. Alternate Ecosystem Baseline Projections Year Ecosystem Value 10 50 $ Baseline 0 With infestation Economic Loss Declining Stable Recovering

28. Benefit from Prevention Year Ecosystem Value 10 50 $ Baseline 0 Without prevention With prevention Benefit from prevention

29. Benefit from Rapid Response Year Ecosystem Value 10 50 $ Baseline 0 Without rapid response With rapid response Benefit from rapid response Economic Loss

30. Benefit from Management Year Ecosystem Value 10 50 $ Baseline 0 Without management With management Benefit from management Economic Loss

31. Optimal investment Prevention Rapid Response (Long Term Management)

32. Net benefit from prevention $ Prevention ($) Benefit Cost Net Benefit

33. $ Prevention (P) Net Benefit $ Benefit Cost P* Prevention (P) Maximum Net Benefit from Prevention

34. $ Net Benefit $ Benefit Cost R* Response (R) Net benefit from rapid response Maximum Net Benefit from Rapid Response Maximum Net Benefit

35. Maximum Net Benefit from Prevention and Rapid Response

36. Game D Prevention is costly Three levels of Prevention  None  Low  High Three levels of Rapid Response  None  Low  High Choose level of each to maximize Net Benefit

37. Game D Prevention and Rapid Response Choices PREVENTION cost None$0Low$50High$70 RAPID RESPONSE None$0 Low$5 High$10

38. Net Benefit from Prevention and Rapid Response PREVENTION None$0Low$50High$70 RAPID RESPONSE None$0$0$200$150 Low$5$400$500$350 High$10$800$1000$750

39. Game E Rapid response is costly Three levels of Prevention  None  Low  High Three levels of Rapid Response  None  Low  High Choose level of each to maximize Net Benefit

40. Game E Prevention and Rapid Response Choices PREVENTION None$0Low$10High$50 RAPID RESPONSE None$0 Low$100 High$400

41. Net Benefit from Prevention and Rapid Response PREVENTION None$0Low$10High$50 RAPID RESPONSE None$0$0$40$90 Low$100$20$50$100 High$400$15$45$75

42. Summary Optimal investment depends on Probability an invasion will occur Speed of establishment and spread Risk preferences Available choices (technology) Ecosystem benefits Cost and relative effectiveness of management choices

43. More on Managing Invasive Species Choices, Costs, and Benefits

44. Choices Do nothing Prevention (and monitoring) – Border containment – Quarantine – Ban – Ecosystem restoration and protection Rapid response – Eradication – Adaptation – Education to prevent spread and reduce damages Long term management – Removal – Containment – Education to slow spread and limit damages

45. Costs Monitoring Prevention Response Program and administrative expenditures Lost income from banned imports and sales Lost use values from areas closed to harvest, extraction, cultivation, recreation Cost of eradication and removal Cost due to unintended or secondary impacts from eradication and removal (e.g. Chemical use, etc.) Cost of research and information gathering

46. Benefits Monitoring Prevention Response Avoided ecosystem damages and loss in biodiversity Avoided economic, cultural, social losses from ecosystem impairment Avoided secondary consequences from eradication Restoration Gain in ecosystem function and biodiversity Gain economic, cultural, social losses from improved ecosystem function Reduction in future management outlays for treatment and removal

47. How much should you invest in… Monitoring and Prevention Rapid Response Long Term Management Research

48. How much should you invest in Monitoring and Prevention? Factors that influence the Benefit and Cost of Monitoring and Prevention Risk of entry with no prevention Effectiveness of prevention measures Ability to detect an introduction before establishment Cost of early eradication Likelihood of establishment and spread Speed of establishment and spread. How much time do you have to respond? Cost of eradication after establishment Magnitude of potential damages avoided

49. How much should you invest in Rapid Response? Factors that influence the Benefit and Cost of Rapid Response Speed of establishment and spread -- How much time do you have to respond? Cost of preparedness Cost of eradication Magnitude of potential damages avoided

50. How much should you invest in Long Term Management? Factors that influence the Benefit and Cost of Long Term Management Cost of control and containment Magnitude of damages avoided Future replacement cost or restoration cost

51. How much should you invest in Research? Factors that influence the Benefit and cost of Research Quality of existing information Value of additional information Risk of making a mistake due to insufficient information