The Economics of Invasive Species

Contents

• Summary
• Introduction
• Invasive Species Management and Economics
• Economic Impacts of Invasive Species
• Conclusion
• Notes

Summary

The prevention, eradication, and control of invasive species is an economic and policy issue and has less to do with biology and ecology than many people involved in managing natural resources realize.*

*Until prevention speaks the language of economics as well as ecology, it will consistently take a back seat to transportation and trade. -- Jason Van Driesche and Roy Van Driesch. 2001. Guilty Until Proven Innocent: Conservation Biology in Practice. Winter 2001/Vol. 2 No. 1

Invasive species were introduced into the United States as a result of trade, commerce, and the fulfillment of cultural needs. Decisions about agricultural production, conversion of land from forest to fields to towns, the growth of trade and tourism, and the choice of introduced species for food production, garden ornamentals, and for hunting and fishing are among the fundamental economic drivers of the invasive species problem.

Economics provides us with many of the tools we need to understand the drivers of the invasive species problem and inform managers and policymakers about the costs of invasive species and the costs and benefits of different prevention, eradication, and control measures.

Studies have been carried out to estimate the economic effects of invasive species and their management on natural resources. These have been particularly focused on forest or agricultural production losses and control costs, but the economic impacts on ecosystem functioning and human health have been less well studied at both state and national levels. Examples of estimates of the annual cost of invasive species in the U.S. and Oregon (in 2008 dollars) are shown ... below. [chart omitted]

U.S. general estimate
Total direct- and indirect-use impacts
$143 billion/year

Noxious weeds (21 species in Oregon)
Production losses, fire damage, control costs
$125 million/year

Sudden oak death (Oregon)
Nursery production and forest losses if established
$81-310 million/year
Control costs of current outbreak
$7 million/year

Invasive plants (Portland, Oregon)
Complete removal and native species revegetation
on 40% of public lands (over a five-year period)
$31 million/year

Zebra mussels
Projected control costs to 13 hydropower facilities
$25.5 million/year

Although these studies provide policymakers with important information with which to make decisions, inconsistency in study methodologies limits the usability and comparability of these studies in making policy decisions.

• A much wider role for economics is needed that goes beyond financial analyses of agricultural or timber production losses and control costs and embraces measures of the impact of invasive species on total economic value and the consequences of the loss or impairment of ecosystem services for the economic well-being of Oregon.
• Early detection and rapid response (EDRR) and prevention are among the most cost-efficient and -effective ways of reducing the costs of invasive species. Education is a primary process driving EDRR and prevention. Enhanced education of the public, government agencies, industry, and nongovernmental organizations is needed to strengthen all links in the invasive species management chain.

Introduction

Approximately 50,0001 non-indigenous species (NIS) have been introduced into the country as a result of human commerce, trade, and movement. Some have been introduced intentionally, such as those used as livestock, pets, food crops, and ornamental plants. Other species have been introduced unintentionally, such as the zebra mussel, which hitchhikes in the ballast water of oceangoing ships.

Once introduced, many NIS fail to thrive in their new environment. Other species thrive and have positive or at least no adverse effects on the ecosystem into which they are introduced. Indeed, NIS comprise more than 98% of the U.S. food system generating a value of over $893 billion per year.¹ However, some NIS become invasive species (IS), which, according to the Convention on Biological Diversity² (CBD), are alien species whose introduction and spread threaten ecosystems, habitats, or species with socio-cultural, economic and/or environmental harm and/or harm to human health. According to the CBD, invasive species are one of the leading causes of the loss of natural biodiversity.

The means or routes by which species are introduced into new ecosystems are pathways or vectors. Examples of these vectors are the intentional release of species (such as brook trout introduced into Cascade lakes to augment fishing opportunities); organisms that arrive lodged in the bodies of their hosts, such as livestock or fresh fruit and vegetable produce; species that arrive in packing material; and unintentionally introduced species such as the zebra mussel, which are transported in the ballast water of oceangoing ships. What all these pathways have in common is that they are the direct result of the global and regional trade, transport of goods and people, and the cultural needs associated with people. With increasingly open national economies and a large increase in the volume of global trade in the past 50 years, the numbers of IS in the U.S. are rising.

While the global transport of goods and people is the primary vector for the introduction of IS, and ecological factors such as a lack of controlling natural enemies and a lack of effective predators explain their propagation in new ecosystems, the factors that allow them to become established and thrive in new environments is also readily explained by economics. Property rights, trade rules, and prices affect peoples decisions on land use, the use of certain species in consumption and production, and the global and regional movement of goods and people.³ While global trade is the main vector for biological invasions, regional trade (such as between the U.S., Mexico, and Canada, or between states in the U.S.) exacerbates these effects.

Biological invasions are a classic Econ 101 example of a negative externality arising from people's economic decisions. Negative externalities are simply the uncompensated third-party costs arising from a particular decision or action. The risks of biological invasions are endogenous (internally caused) in that they are affected by how countries value goods and services that can become vectors for invasive species, how they protect themselves from IS, and how they react to them after they occur.⁴ In these respects, IS management is more of an economic and management problem than a biological or ecological one. Indeed, economic studies are increasingly being used to justify measures against IS.

Economics is much more than just a method for calculating costs. It is a framework for understanding the complex causal interactions between human behavior and natural processes, and for finding institutional and behavioral solutions to seemingly intractable environmental problems.⁵

Missing is a broad body of knowledge about the social and economic consequences of nonnative species invasions. Since the loss of amenities caused by invasive species in natural systems is often incremental, few people realize the impacts invasive species already present impose on our economic and recreational use of the natural world.⁶

Invasive species management is also a "weakest link" public good. It is nonexclusive, meaning incentives exist to take a free ride on the efforts of others and shoulder less than a fair share of the costs of control. Also, the collective benefits of IS management are orders of magnitude above what they are to the individuals or regions receiving them, further reducing the incentive for individual action. IS management is only as effective as the weakest link in the chain. For example, five ports on the west coast may have best-practice biosecurity measures in place, but a sixth port may put in place the minimum biosecurity practices required by law. This weakest link can result in IS introductions into the region despite the very best efforts of the other five ports.

Invasive Species Management and Economics

A common management goal for IS, such as that outlined by Bio-Security New Zealand,⁷ is the exclusion, eradication, or effective management of risks posed by weeds, pests, and diseases to the economy, environment, and human health. Economics can be used to help meet this goal by providing

• before-the-fact evaluation, prioritization, and selection of prevention, eradication, and control measures;
• after-the-fact evaluation of measures to assess their efficiency and effectiveness;
• impact assessments such as an evaluation of the costs of damage from IS, and the costs of measures employed to prevent, control, or manage the damage; and
• an understanding of the relationship between human behavior and the prevention, eradication, and control of invasive species.

Exclusion and early detection are the most cost-effective methods of controlling and preventing IS (see figure 2, page 11). In one study, early detection, control, and eradication yielded a cost-to-benefit ratio of 17:1 (OTA 1993). Another study yielded a ratio of 34:1 (ODA 2000), meaning a potential savings of $34 for every $1 invested in early-detection programs.⁸

The goal of Oregon's invasive species action plan⁹ is to "facilitate early-detection efforts to keep invasive species out of the state, find invasions before they establish permanent footholds and do whatever it takes to eradicate incipient populations of undesirable species." This focus on early detection and rapid response has paid dividends and is likely to continue to do so. The costs of controlling any IS rise rapidly as the species gains a stronger foothold in the ecosystem. After the establishment phase, eradication may no longer be a possibility, and damage mitigation and control may be the only feasible policy responses.

Case I: eBay and Gypsy Moths in Oregon

Gypsy moths (Lymantria dispar) are one of North America's most devastating pests. When they reach high population densities, they can cause extensive defoliation of trees and shrubs. They were originally introduced into the eastern U.S. in 1869 as part of research for the silk-producing industry; they subsequently escaped, and widespread eradication efforts were made beginning as early as 1890. Millions of acres in the eastern U.S. have been defoliated by these creatures.

Gypsy moths were largely confined to the eastern U.S., but in 1983, three gypsy moths were discovered near the town of Lowell, Oregon. An extensive trapping program was implemented, and more than 1,900 were caught in the area in 1984. The Oregon Department of Agriculture (ODA) implemented aerial spraying of a biological insecticide in 1985, in an effort to eradicate the moth. Nearly a quarter-million acres were treated, and spraying continued in 1986. In 1987, extensive trapping revealed no gypsy moths in the area, and the pest was deemed eradicated. Since that time, ODA has continued monitoring for the moths, deploying over 18,000 traps statewide. Although a few have been caught every year, and limited spraying continues to be carried out, the species has been effectively controlled.

Interestingly, in 2006, 66 moths were caught in Oregon, most of them in Bend, in the central part of the state. Further investigation found that this new infestation arrived from Connecticut in a 1967 Chevy purchased through the Internet auction site eBay. This illustrates the difficult task that faces policymakers trying to control invasive species. Control of an IS does not end with its eradication. Constant monitoring is required, which has become a routine, albeit challenging, task for state agencies dealing with the problem. Oregon Department of Agriculture www.oregon.gov/ODA/PLANT/plant_ann_rep06_ippm_part2.shtml

Economic Impacts of Invasive Species

Ecosystems provide humans with goods and services, each of which can be assigned (often arbitrarily) a value. Many studies have been carried out that highlight the detrimental effect of IS on natural ecosystems - and therefore, on their value. Use values (such as the value of food production or the value of recreation activities in natural areas) can be measured, and they form the basis for the vast majority of studies. Non-use values (such as existence value, i.e., the value of knowing that a natural ecosystems exists; or bequest value, i.e., the value of leaving a natural and functional ecosystem to future generations) go beyond financial analyses and are therefore more difficult to quantify. A loss of these values does, however, impose a loss of wellbeing to individuals and society and should be taken into account when making policy decisions. The concept of total economic value and examples of ecosystem services are shown in figure 1 and table 1. [omitted]

Subsidies to producers and the inclusion of IS control costs in the calculation of economic growth (and hence, total economic wellbeing) may distort the accounting of true costs in dealing with invasive species. However, attempts have been made to quantify these impacts at both state and national levels. To date, there have been two major nationwide studies of the costs of impacts from invasive species.

• The first, from the office of technology assessment,¹⁰ found that costs associated with 79 harmful species over an 85-year time period amounted to over $139 billion.
• A more recent study1 estimated the costs associated with a much wider group of IS to be in the region of $143 billion per year. Both of these estimates were based on direct- and indirect-use values (such as damage and costs of control) but did not take into account non-use values.

There were significant differences in the way the two studies were conducted, but what they both illustrate is the difficulty in quantifying the impacts of IS at a national level. These studies also suggest that the overall magnitude of annual economic effects exceeds the federally defined threshold of $100 million per year for "major" economic impacts.

There have been many studies on the impacts of individual invasive species in localized settings (table 2 - omitted). Most of these studies attempt to value existing invasions and disregard the value of preventing future invasions, which might be the most effective policy tool available. They also focus on the loss of provisioning services, and the corresponding direct-use economic impacts, which are reflected in business or financial data. Only a few take into account non-use impacts of invasive species. This might be due to the difficulty of preparing estimates of these non-use values and the controversy over the available methods (such as contingent valuation) used to quantify these effects. Economic analyses are hindered by the lack of uniformity in methodologies used, by uncertainty about what constitutes an adverse ecological impact, and by the difficulties in predicting the nature and magnitude of impacts. Using a standard methodology for what impacts to include in the assessment, what measurement methods to employ, and what discount rates and multipliers to use will greatly improve the usability and comparability of these results in making policy decisions.

Conclusion

Integration of economics with invasive species management can provide policymakers at all levels with useful information for making important decisions about prevention, eradication, and control. Effective IS management will be realized when

• we have much greater awareness of the local, national, and international roles that economic forces play in driving the IS crisis.
• we embrace a much wider role for economics that goes far beyond financial analyses in the search for solutions to the IS challenge. The use of a standard or common approach to performing economic analyses will improve the usability and comparability of the results within states and nationally.
• a greater level of coordination between local, state, national, and international agencies is achieved. In this respect, a comprehensive biosecurity framework is the only way to avoid, remedy, and mitigate the economic and ecological risks posed by IS.
• a higher level of education of the public, government agencies, industry, and nongovernmental organizations is achieved, thereby strengthening all links in the IS management chain.

Oregon’s focus on early detection and rapid response is an integral part of a comprehensive biosecurity framework. However, if resource managers are inattentive to the underlying economic drivers of trade, commerce, movement of people, and cultural demand for many NIS, the IS problem will continue. Evergreater resources will be required to control newly established IS and significant losses to the economic wellbeing of the state of Oregon and the nation. Improved knowledge and greater appreciation of the economics of exclusion, early detection, and control will expand the tools we need to address the IS problem at all levels of management.

Figure 2. [omitted] —Successful eradication (%) decreases and effort (work hours) increases with degree of infestation. Early detection and response are critical for cost-effective eradication of invasive species. (Based on data for eradication of 18 noxious weed species and 53 independent infestations in California.)¹¹

---

Notes

(Web sites referenced below were accessed for this paper in 2008).

1 Pimentel, D., R. Zuniga, and D. Morrison. 2005. “Update on the environmental and economic costs associated with alien-invasive species in the United States.” Ecological Economics 52, pp. 273–288.

2 Online at www.cbd.int/

3 Lovell, S., S. Stone, and L. Fernandez. 2006. “The economic impacts of aquatic invasive species: A review of the literature.” Agricultural and Resource Economics Review 35(1), pp. 195–208.

4 Jensen, R. “Economic policy for invasive species.” Online at www.nd.edu/~rjensen1/workingpapers/ InvasiveSpecies.pdf

5 Perrings, C., M. Williamson, E. Barbier, D. Deflino, S. Dalmazzone, J. Shogren, P. Simmons, and A. Watkinson. 2002. “Biological invasion risks and the public good: an economic perspective.” Conservation Ecology 6(1):1.

6 Van Driesche, Jason and R. V. Driesche. 2000. Nature Out of Place: Biological Invasions in the Global Age. Washington, D.C.: Island Press.

7 Online at www.biosecurity.govt.nz/

8 Oregon Department of Agriculture. 2000. “Economic analysis of containment programs, damages, and production losses from noxious weeds in Oregon.” www.oregon.gov/ODA/ PLANT/docs/pdf/weed_body_a.pdf

9 Online at www.oregon.gov/OISC/docs/pdf/ oisc_plan6_05.pdf

10 OTA. 1993. “Harmful non-indigenous species in the United States.” OTA F-565, Washington, D.C.: U.S. Congress Office of Technology Assessment, U.S. Government Printing Office.

11 Rejmánek, M. and M. J. Pitcairn. 2002. “When is eradication of exotic pest plants a realistic goal?” In C. R. Veitch and M. N. Clout (eds.), Turning the Tide: The Eradication of Invasive Species, pp. 249–253. Gland, Switzerland: International Union for the Conservation of Nature and Natural Resources.

Credits:

Text by Chris Cusack, Michael Harte, and Samuel Chan. Editing and layout by Rick Cooper. Thanks to Jennifer Goodridge for information and comments pertaining to the City of Portland case study; to Dan Hilburn and Tim Butler, of the Oregon Department of Agriculture (ODA), for information on ODA studies; to Lisa DeBruyckere, of the Oregon Invasive Species Council, for comments on earlier drafts of this report; and to Mandy Tu, of The Nature Conservancy, and Tania Siemens, of Oregon Sea Grant, for information on early detection and rapid response.

This publication may be photocopied or reprinted in its entirety for noncommercial purposes. To order additional copies of this publication, call 541-737-4849.

For a complete list of Oregon Sea Grant publications, visit http://seagrant.oregonstate.edu/sgpubs

This report was prepared by Oregon Sea Grant under award number NA06OAR4170010 (project number A/ESG-7) from the National Oceanic and Atmospheric Administration's National Sea Grant College Program, U.S. Department of Commerce, and by appropriations made by the Oregon State legislature. The statements, findings, conclusions, and recommendation are those of the authors and do not necessarily reflect the views of these funders.

Oregon Sea Grant
Corvallis, Oregon
ORESU-G-09-001