Application for Funding Cover Page

Prof. Barbier, University of Wyoming, Practical Decision Analysis for Invasive Species Management

Application for Funding Cover Page

Title of Proposal: The Economics and Ecology of the Risk of Invasive Plant Establishment from the Horticultural Trade in North America

Program to Which Application being Made: “PREISM”

Priority Research Area: II. Practical Decision Analysis for Invasive Species Management

Principal Investigator/Project Director: Edward B. Barbier, John S. Bugas Professor of Economics, Department of Economics and Finance, University of Wyoming.

Co-Investigators:

Professor Duncan Knowler, School of Resource and Environmental Management, Simon Fraser University.

Professor Sarah Reichard, Center for Urban Horticulture, College of Forest Resources, University of Washington.

Type of Institution: University of Wyoming (Land Grant University)

Contact Numbers:

Prof. E. Barbier: Phone (307) 766 2358; Fax (307) 766 5090; E-mail .

Prof. D. Knowler: Phone (604) 291 3421; Fax (604) 291 4968; E-mail

Prof. S. Reichard: Phone (206) 616 5020; Fax (206) 685 2692; E-mail

Signature of Principal Investigator:…………………………………………………...…

Date:…………..

Signature of Authorized University of Wyoming Representative:…….…………….… Date:…………..

Table of Contents

Project Summary

PROJECT DESCRIPTION 1

Rationale and Significance 3

Research Methods 6

Research Tasks 7

Conclusion 12

Citations to Project Descriptions

Collaborative Arrangements

Vitae and Publication Lists for Project Staff

Budget (Forms ARS-455 –9 pages)

Indirect Cost Rate Schedule

Current and Pending Support

Additions to Project Description: reprints

Knowler, D. and Barbier, E.B., 2005, “Importing Exotic Plants and the Risk of Invasion: Are Market-Based Instruments Adequate?” Ecological Economics 52:341-354.

Knowler, D., 2005, “Reassessing the Costs of Biological Invasion: Mnemiopsis leidyi in the Black Sea,” Ecological Economics, 52:187-199.

Barbier, E.B. and Shogren, J.R. 2004. "Growth With Endogenous Risk of Biological

Invasion." Economic Inquiry 42(4):587-601.

Barbier, E.B., 2001, "A Note on the Economics of Biological Invasions," Ecological Economics, 39(197-202.

Reichard, S.H. and White, P., 2001, “Horticulture as a Pathway of Invasive Plant Introductions in the United States,” 51(2):103-113.

Reichard, S.H. and Hamilton, C.W., 1997, “Predicting Invasions of Woody Plants Introduced into North America,” Conservation Biology, 11(1):193-203.

Project Summary

The proposed research aims to develop an integrated economic and ecological analysis of the costs and benefits associated with the risk of invasive plant establishment from the horticultural trade in North America. The research will encompass:

(1) Modeling the economic behavior of a profit-maximizing horticultural industry that imports an exotic plant species through establishing nurseries at specific geographical locations in North America.

(2) Ecological and economic analysis of the risk and potential damages from accidental introduction and establishment of invasive plant species associated with a commercial plant industry that imports and breeds exotic plant species at its various locations.

(3) Integrating these economic and ecological analyses to model the potential policy tradeoff between the profits of the commercial plant breeding industry with the expected losses associated with the risk of accidental introduction.

(4) Evaluation of various policy interventions for reducing the risk of accidental introduction by the North American horticultural industry; for example, these might include: “doing nothing”, self-regulation by the industry, taxing or banning the sale of exotic species and policy coordination between the US and Canadian governments.

The overall objective of the project is to produce a new ecological-economic method of assessing the commercial decision of private nurseries in the US and Canada to sell exotic species and the accompanying risk of accidental introduction. Such research is of increasing importance to improve policies to control this problem in both countries and to decision makers seeking new tools and modelling methods to assist in the design of better policies.

Principal Investigator/Project Director: Edward B. Barbier, John S. Bugas Professor of Economics, Department of Economics and Finance, University of Wyoming.

Co-Investigators:

Professor Sarah Reichard, (College of Forest Resources), University of Washington.

Professor Duncan Knowler, School of Resource and Environmental Management, Simon Fraser University.

Prof. Barbier, University of Wyoming, Practical Decision Analysis for Invasive Species Management

Project Description

1. Introduction

The proposed research aims to look at the ecology and economics of the risk of invasive plant establishment from the horticultural trade in North America.

Non-indigenous, or "exotic" plant species are often intentionally imported into regions outside of their normal range as plant or breeding stock for agricultural, horticultural or domestic gardening activities. However, one of the unintended side effects of such introductions is that the exotic plant species may be accidentally introduced into the wider environment of the new host region, with dramatic impacts.

For example, the cumulative losses to the U.S. economy from invasive plants have been estimated at $600 million over the period 1906 to 1991 (OTA, 1993). Recent estimates suggest that the annual losses from invasive plants in the U.S. may be even larger (Pimental et al. 2000). In Canada, recognition that invasive exotic plants could have a significant economic and ecologic impact began with the instigation of a national awareness program for purple loosestrife in 1990 (Haber 1998). Recent surveys of plant invasions suggest the cumulative damages inflicted non-native invaders are comparable to damages in the US (Haber 2002; Claudi 2002).

Economic analysis of the problem of invasive species is emerging as a new area of interest among environmental economists, as demonstrated by a spate of recent works on the subject (Perrings et al., 2002; Barbier, 2001; Barbier and Shogren, 2004; Eisworth and Johnson 2002; Naylor, 2000; Knowler and Barbier, 2000; Settle and Shogren 2002). In most treatments of the economics of invasion, the invasive species is seen as imposing costs without contributing any benefits in return. This approach accords with the standard treatment of a pollution problem, and results in policy prescriptions that tradeoff residual pollution damages against the costs of control, settling at equilibrium on a mix that maximizes social welfare, usually by minimizing damages plus control costs.

However, the economic analysis of plant invasions needs to be modified in the case for exotic species that have been deliberately introduced, as typically there was some perceived benefit for their introduction in the first place. This potential benefit adds an additional element not taken into account in the growing literature on the economics of biological invasions. For instance, horticultural operations such as nurseries may find it profitable to import, breed and sell exotic species since they can earn profits from doing so, even though the plant may become invasive and incur damages and control costs as a result. Thus, prohibiting sale of the exotic has social costs in the form of foregone consumer benefits and nursery profits, and these must be considered in a proper analysis of the economics of invasion if it is to serve as a practical guide to policies and decisions concerning management of the plant invasive problem. For example, Claudi (2002) notes that, prior to the 1996 ban on sales of Lythrum cultivars in Manitoba, annual garden nursery revenues from sale of loosestrife cultivars in the province were CAN$10,000 per year.

A principal contribution of the proposed research is therefore to demonstrate the development of such a practical decision analysis of the costs and benefits associated with the possible accidental introduction and establishment of plant invasives through commercial horticultural operations.

Preliminary economic analyses by two of the researchers involved in this proposal develop and use such a cost-benefit framework to examine policy options to regulate the commercial horticultural decisions to import exotic plant species (Barbier and Knowler 2005; Knowler and Barbier 2005). This initial work has identified two additional features of the invasive plant problem associated with the commercial horticultural trade that must be considered in any economic analysis in support of practical decision-making for managing this problem.

First, the decision by the commercial nursery to import, breed and sell an exotic plant species is taken ex ante of any knowledge of a possible threat of invasion and its consequent economic losses. That is, the likelihood and timing of any future invasion are unknown and thus revealed only ex post. Given this uncertainty, the economic assessment of the threat of plant invasion must be concerned with analyzing the potential unintended risk of introduction associated with private nursery operations benefiting from sales of exotics.

Second, better assessment of the commercial decision of private nurseries to sell exotic species and the accompanying risk of accidental introduction requires improvements in integrating ecological-economic modeling. This approach is necessary because the problem of invasive species introduced through commercial sale is fundamentally economic and ecological. For example, as noted above, although many exotic species are imported, bred and sold by horticultural operations throughout North America relatively few have become established successfully as invaders in their host environment, and not all of the successful invaders have caused widespread economic damage. To determine the potential risk of future unintended introductions via the horticultural trade it is necessary to know: a) the key characteristics of various exotic species that make them more likely to become successfully established in North American environments and b) the key environmental factors that contribute to the spread and adaptation of plant invasives as well as their ability to displace native species and cause harmful economic damages (Reichard and Hamilton 1997).

2. Rationale and Significance

2.i. General

Policymakers in North America face a critical tradeoff concerning the risk of accidental introduction of plant invasions as a result of commercial horticultural operations.

Horticulture is a profitable and expanding industry. US floriculture and nursery crop sales, based on growers’ wholesale receipts, topped $14 billion in 2002, a more than 50% increase from a decade previously (Jerardo 2002). On average, a typical US household spends $129 annually on these crops. In Canada, the value of direct ornamental and plant sales to the public in 2003 was over CAN$290 million, also a significant rise over previous years (Statistics Canada 2004).

As the North American horticultural industry continues to grow, new nursery locations are being established. For example, a 2001 survey of floriculture growers in 36 US states indicated that since 1992 the number of small growers (between $10,000 and $100,000 in annual sales) has increased from 5,829 to 6,243, and the number of large growers (over $100,000 in annual sales) rose from 4,566 to 4,722 (Jerardo 2002). About two-thirds of the growing area utilized for floriculture crops comprises open fields, currently estimated at 41.1 million acres. Most retail nurseries operate locally, and thus any potential risk of invasion may also be confined to the immediate environment. However, some retail and many wholesale nurseries may sell across the US, through the use of commercial shipping and postal mail order as well as internet sales (Reichard and White 2001). The seed trade industry is also expanding rapidly in the US, much of which is for horticultural uses. Seed producers tend to trade and ship across the US.

Thus the expansion of the horticultural industry and trade in North America carries a large risk of invasive plant species establishment. For example, it is estimated that the operations of the horticultural industry accounts for as much as 80-85% of woody plant invasions and 60-65% of herbaceous invasions (Reichard and White 2001). The initial selection and source of the plant, that is the choice of cultivars and breeding program, affects the level of plant invasion. Moreover, the private purchase of plants from the horticulture industry fails to take into account the external public cost that is incurred if and when these plants become invasive.

In assessing the increased risk and growing scale of the problem posed by the introduction of plant invasives in the US, an Issue Paper by the Council for Agricultural Science and Technology (Mullin et al. 2000, p. 4) concluded: “Although there are some federal regulatory constraints on movement, sale, and possession of exotic organisms, the overall resources directed at prevention, intervention, quarantine, removal, public awareness, and the enforcement of existing federal statutes are seriously inadequate. Many states also have regulations governing invasive plant species but these regulations are inconsistent from state to state, may be confusing or contradictory, and do not adequately address the scope of the problem.”

Similar conclusions have been reached in Canada about the inadequacy of existing federal and provincial policies for managing the threat of plant invasions (Haber 2002; Claudi 2002).

Further research in the integrated ecology and economic modelling of the commercial decision of private nurseries in the US and Canada to sell exotic species and the accompanying risk of accidental introduction is therefore of increasing importance to improve policies to control this problem in both countries. Moreover, such research is crucial at this time as the current debate over what policy approaches to adopt to this problem considers a number of possible alternatives: from “doing nothing” to self-regulation by the horticultural industry to increased government and state regulation of the sale and distribution of exotic species.

The North American horticultural industry should also benefit from better policies to manage the potential risk from the importing, breeding and sale of exotic plant species. By reducing uncertainty in the industry over current and proposed regulations, improved polices will enable the industry to make informed choices about how best to substitute non-invasive species with potentially invasive ones in wholesale and retail operations. An effective policy would ensure that this would meet the objective of reducing the risk of potential plant invasions without affecting significantly the profits of the horticultural industry. In fact, as a recent study has found, an effective policy that controls the sale of invasive plants by nurseries “could actually stimulate sales, if handled correctly, because replacement plants would be promoted and sold” (Reichard and White 2001, p. 111).