Review of “Draft Economic Analysis for Proposed Designation of Critical Habitat for Jaguar”

Review of “Draft Economic Analysis for Proposed Designation of Critical Habitat for Jaguar”

Published: August 9, 2013

By: Thomas Michael Power, Ph.D and Donovan S. Power, M.S.

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The U.S. Fish and Wildlife Service (FWS) contracted with Industrial Economics, Incorporated (IEI) to evaluate the potential economic impacts associated with the designation of critical habitat for the federally listed jaguar.1 That report was prepared in support for the FWS’s proposed rule designating such critical habitat in Arizona and New Mexico.

IEI found that the incremental costs associated with that critical habitat designation would be quite modest, primarily involving additional administrative costs associated with consultation with other agencies and organizations.2 The estimated costs associated with the designation of the jaguar critical habitat were estimated to be low for two reasons. First, government agencies would seek to protect the jaguar and jaguar habitat regardless of whether there was a formal designation of that habitat because the jaguar is a listed species under the Endangered Species Act (ESA). The baseline expenditures to which government agencies were already committed would be similar to the conservation activities required by designated critical habitat. Second, most existing and expected activities on jaguar critical habitat were not expected to be incompatible with jaguars continuing to use that existing habitat.

IEI identified one exception to this conclusion that the incremental costs associated with designating critical jaguar habitat would be quite low: The potential impact on the viability of large proposed metal mines in critical habitat Unit 3, the Patagonia Unit. IEI devoted Chapter 5 of its report to discuss the “Potential Economic Impacts to Mining Activities.” Both the proposed Rosemont Mine and the Hermosa Project have a large enough footprint that they could cause potential adverse modification of the proposed designated jaguar habitat and require mine modifications and other mitigation measures.

IEI notes that the U.S. Forest Service’s (USFS’s) Draft Environmental Impact Statement on the Rosemont Mine concluded that the loss of jaguar habitat resulting from the proposed mine would be relatively small (0.1 percent).3 However, IEI cites Rosemont Mine’s concerns that “feasible alternatives that may avoid adverse modification of critical habitat do not exist. The company is therefore concerned that the designation of critical habitat will result in substantial impacts to the mine.”4 From this, IEI concludes:

  • Therefore, the incremental impact of the [critical habitat] designation could include the total loss of economic benefits expected to result from production at the Rosemont mine. At this time, we are unable to predict the probability that the conservation measures requested to avoid adverse modification of jaguar habitat would be so costly that Rosemont would choose not to continue production. However, as described above, the USFS has proposed conservation efforts in its Biological Assessment of the Rosemont Mine that are unlikely to be so costly as to prevent production. (Paragraph 155)

Because of the uncertainty as to whether critical habitat designation would impose quite modest additional costs on the Rosemont Mine or costs so high that the mine would be abandoned, IEI analyzed two scenarios: one that assumed no significant costs on Rosemont and the other that assumed that the Rosemont Mine would not be able to proceed. The same scenarios were assumed for the Hermosa Project.

For the scenario under which these two proposed mines would not be able to proceed if the mine impact areas were designated jaguar critical habitat, IEI used studies sponsored by the mining companies, and subjected to no independent review and validation, to estimate the incremental economic losses (costs) associated with that critical habitat designation. Those critical habitat costs were estimated to be huge:

  • Rosemont Mine: $1.2 to $2.5 billion per year in lost economic activity, the loss of as many as 9,000 jobs, and the loss of as much as $307 million in annual revenues to governments. (Highlighted text following paragraph 156)
  • Hermosa Project: $3.96 billion in lost revenues and 152 mining jobs lost. (Paragraph 158)

Tagged with: rosemont, mining, jaguars, arizona

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