makes use of probability distributions of net benefits and compares the expected value of the intro- duction and no-introduction scenarios, choosing the action with the greater expected value. Clearly for each strategy, measures of the consequences of introductions and damages must be made. This procedure must determine how the stream of net benefits should be discounted over time and the characteristics of the uncertainty of these measurements.
Exercise
The debate over the introduction of C. gigas or some other non-native oyster into Chesa- peake Bay waters is highly political and full of uncertainties. Watermen are unwilling to abandon an industry that has been a fundamental element of the region’s economy and culture for over a century. Virginia watermen, in particular, see molluscan introductions as a means to revitalize the failing industry. However, the uncertainty of the effects of an introduction clouds the issue. An- other complication is the fact that the decision will have effects that cross jurisdictional bound- aries.
The decision whether or not to allow an introduction is not isolated to the specific, individ- ual oyster beds within the two states of Maryland and Virginia. The Chesapeake Bay ecosystem is not confined, of course, by political boundaries. Any decision that is made must take a multi-juris- dictional approach that transcends artificial divisions.
Suppose that you are a member of a Chesapeake Bay economic development council. You are tasked with developing recommendations on a Bay wide oyster development plan. Consider the role of environmental valuation in your analysis. Using the following questions as a guide, outline the study you would request of a local economist.
1. What values associated with oyster resources and services should be analyzed?
2. What techniques would you recommend in order to determine the values of these resources and services?
3. What are the limitations to the existing methodologies in this case?
4. What additional information do you need in order to determine the expected net econom-
ic benefits of a C. gigas introduction plan?
5. What discount rate would you recommend in a benefit-cost analysis of a C. gigas introduc-
tion plan?
6. Suppose that new technological developments offer alternative methods of oyster enhance- ment (e.g., bio-technological or bio-engineering of a native species immune to MSX or Dermo). What role can environmental valuation play in assessing these alternatives?