Discounting
Recreational
and
Commercial
Fishing
Benefits
At
proposal,
EPA
did
not
apply
any
discounting
to
the
beneficial
fishery
impacts
from
the
reduced
I&
E
attributed
to
regulatory
options,
and
instead
assumed
a
steady
state
scenario
(
in
effect,
applying
a
discount
rate
of
zero).
This
was
due
to
a
lack
of
time
available
to
conduct
the
appropriate
species­
specific
analysis
of
the
time
lags
that
may
exist
between
implementation
of
an
I&
E­
reducing
BTA
and
the
subsequent
timing
of
increased
commercial
or
recreational
catches.
The
Agency
has
now
completed
an
analysis
of
the
timing
of
such
beneficial
impacts
for
all
species
in
the
case
studies,
and
this
section
of
the
NODA
describes
the
methods
and
findings
of
the
discounting
analysis.

The
issue
of
time
lags
between
implementation
of
BTA
and
resulting
increased
fishery
yields
stems
from
the
fact
that
one
or
more
years
may
pass
between
the
time
an
organism
is
spared
impingement
or
entrainment,
and
the
time
of
its
ultimate
harvest.
For
example,
a
larval
fish
spared
from
entrainment
(
in
effect,
at
age
0)
may
be
caught
by
a
recreational
angler
at
age
3,
meaning
that
a
3­
year
time
lag
arises
between
the
incurred
cost
of
BTA
and
the
realization
of
the
estimated
recreational
benefit.
Likewise,
if
a
1
year
old
fish
is
spared
from
impingement
and
is
then
harvested
by
a
commercial
waterman
at
age
2,
there
is
a
1­
year
lag
between
the
incurred
BTA
cost
and
the
subsequent
commercial
fishery
benefit.

Two
key
factors
determine
how
much
the
discounting
will
affect
the
benefit­
cost
results.
The
first
factor
is
the
discount
rate
applied
in
the
analysis.
The
greater
the
discount
rate
applied
to
future
benefits,
the
lower
the
present
value.
For
the
316(
b)
rulemaking,
EPA
is
using
two
discount
rates:
a
real
rate
of
3%
is
applied
as
a
reasonable
estimate
of
the
social
rate
of
time
preference;
and
a
real
rate
of
7%
is
also
used.

The
second
key
factor
in
the
analysis
is
the
range
of
ages
at
which
different
types
of
fish
are
typically
landed
by
commercial
or
recreational
anglers.
These
results
are
species
specific,
as
they
account
for
the
life
history
of
each
species
(
i.
e.,
the
percent
harvested
in
each
year
class,
and
weight
attained
in
each
year).
For
each
species,
EPA's
model
uses
fishery
data
that
indicate
what
percent
of
the
impacted
fish
will
survive
to
a
given
age.
Then,
for
each
cohort
of
fish
that
survives
to
a
given
age
(
for
each
species),
EPA
applies
a
suitable
fishery
mortality
estimate
that
indicates
how
many
of
that
cohort
will
get
harvested.
The
methods
and
associated
life
history
data
are
presented
in
the
Case
Study
Document
prepared
for
proposal
and
available
at
http://
www.
epa.
gov/
waterscience/
316b/
casestudy/
.

For
example,
for
a
given
fish
species,
X,
killed
in
a
larval
stage
(
i.
e.
at
age
0),
assume
that
3%
of
the
surviving
fish
typically
are
landed
at
age
1,
and
15%
at
age
2.
Thus,
3%
of
the
surviving
fish
of
species
X
would
have
their
landed
values
discounted
over
a
1
year
period
for
entrainment
(
since
once
spared
of
mortality
from
entrainment,
it
takes
1
year
until
they
are
landed
and
the
benefit
is
"
realized").
Also,
15%
of
the
fish
in
this
entrainment
example
for
species
X
would
have
their
associated
landed
values
discounted
for
2
yrs.
Then,
the
present
values
are
summed
across
the
cohort
of
base
year
entrainment
survivors
for
species
X,
to
indicate
the
present
value
of
the
stream
of
commercial
(
or
recreational)
landings
associated
with
implementing
BTA
in
the
base
year.
In
this
example,
with
a
3%
discount
rate,
if
1,000
fish
are
saved
today
at
age
0
an
estimated
3%,
or
30,
would
be
caught
next
year.
If
the
value
for
each
fish
is
$
1
today,
the
total
value
would
be
$
30
now,
while
the
discounted
value
one
year
in
the
future
would
be
$
29.10.
Similarly,
an
estimated
15%,
or
150
fish,
would
be
caught
in
year
two,
which
at
$
1
per
fish
would
be
valued
at
$
150,
but
when
discounted
would
be
valued
at
$
141.10.
The
total
value
of
saved
fish
that
are
caught
is
$
180
with
no
discounting,
which
equals
$
170.20
when
discounted
at
3%.
Thus,
the
discounted
losses
in
this
example
are
equal
to
0.95
the
undiscounted
losses.

The
discounted
values
vary
depending
on
the
life
history
of
each
fish
species
affected.
Fish
that
tend
to
be
harvested
at
young
ages
will
have
relatively
short
time
lags
between
implementation
of
BTA
and
the
subsequent
timing
of
changes
in
landings.
In
contrast,
long­
lived
fish
that
tend
to
be
caught
at
relatively
older
ages
will
tend
to
have
longer
time
lags
(
and,
hence,
they
will
have
larger
impacts
from
discounting
and
lower
present
values).

The
discounted
results
also
vary
between
commercial
and
recreational
landings,
because
the
former
is
based
on
weight
of
landings,
whereas
the
latter
is
based
on
number
of
fish
landed.
Results
also
vary
between
impingement
and
entrainment,
because
impacts
from
the
former
are
reflected
as
adult
fish
with
age
distributions
that
vary
by
species,
whereas
entrainment
impacts
are
predominantly
on
eggs
and
larvae
(
age
0).

To
calculate
the
discounted
impacts,
EPA
has
compiled
data
on
the
time
stream
of
landed
fish
(
and
associated
fish
mass),
and
applied
for
three
generalized
classes
of
fish
ranging
from
relatively
long­
lived
fish
(
e.
g.,
striped
bass,
pollack)
to
short­
lived
species
that
tend
to
be
harvested
by
or
at
age
1
(
e.
g.,
pink
shrimp).

In
brief,
at
a
3%
discount
rate,
the
present
value
benefits
will
be
at
about
90%
to
95%
of
the
undiscounted
estimate
(
i.
e.,
between
5%
to
10%
less
than
stated
at
proposal)
for
most
of
the
fish
with
mid­
range
life/
harvest
histories
(
e.
g.,
walleye).
For
longer­
lived
species,
the
present
values
will
tend
to
be
lower
(
e.
g.,
80%
to
91%),
and
the
opposite
for
shorter­
lived
species
(
where
discounted
values
are
between
96%
and
100%
of
undiscounted
results).

For
each
benefits
analysis
region,
EPA
has
calculated
species­
specific
discount
factors
for
commercial
and
recreational
catch,
for
impingement
and
entrainment
separately.
The
impacts
of
discounting
at
each
site
vary,
depending
on
the
types
of
species
relevant,
the
relative
number
of
each
impacted
species
affected,
and
the
site­
specific
mix
of
commercial
versus
recreational
landings
of
the
relevant
species.

The
results
of
these
discounting
methods
have
been
applied
to
the
new
regional
analyses
for
Northern
California
and
the
North
Atlantic.
The
results
can
be
found
in
the
NODA.
Discounted
Losses
as
a
Percentage
of
Undiscounted
Losses
3%
rate
of
discount
Entrainment
Impingement
Species
Group
Commercial
Recreation
Commercial
Recreation
Low
(
pollack,
striped
bass)
0.83
0.88
0.86
0.91
Mid­
Range
(
walleye,
crappie)
0.90
0.93
0.92
0.95
High
(
silverside,
pink
shrimp)
0.96
0.97
1.0
1.0
Discounted
Losses
as
a
Percentage
of
Undiscounted
Losses
7%
rate
of
discount
Entrainment
Impingement
Species
Group
Commercial
Recreation
Commercial
Recreation
Low
(
pollack,
striped
bass)
0.66
0.75
0.71
0.80
Mid­
Range
(
walleye,
crappie)
0.78
0.84
0.83
0.90
High
(
silverside,
pink
shrimp)
0.93
0.93
1.0
1.0
