IP08 Habitat Equivalency Analysis for Natural Resource Damage Assessment
B115 & B116
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(IP065) An Economic Perspective on Habitat Equivalency Analysis Including Safeguards for its Application.

Wilde, L1, Brody, N1, Williamson, J1, 1 LECG, Inc., Los Angeles, CA, US

ABSTRACT- Habitat equivalency analysis (HEA), sometimes called the environmental annuities model, is a method for quantifying certain elements of natural resource damages. The key methodology in habitat equivalency analysis is the calculation of present discounted quantities of lost services expressed in physical units rather than dollars. The method has been proposed for estimating natural resource damages occurring during the interim following an injurious event before restoration is complete. Such HEA-quantified damages would be expressed in terms of present quantities of services lost. Under a compensatory restoration regime, responsible parties would be required to restore this quantity of services. This paper presents an economic analysis of HEA and discusses issues surrounding its economic rationale and logical consistency. Issues identified include assumptions of proportionality between service units and value, assumptions that resource flows are constant and additive over time, difficulties quantifying service reductions, application of the method when restorable equivalent resources do not exist, and possible disproportional costs of restoration and value to the public of services lost. In addition, the paper evaluates and discusses a number of the safeguards that may be used to address economic concerns and shortcomings of the HEA method.

Key words: equivalency, habitat, hea, damages

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