Levitt and Dubner on the northern spotted owl

By Felix Salmon
October 18, 2009
all the controversy over the war against environmental science being waged by Superfreakonomics, I'll add only that this comes as no surprise to me, since something similar (albeit on a much smaller scaled) can be found in the first book. I actually did some reporting on this when Freakonomics first came out, but since it was buried in a 4,400-word review on a little-read personal website, it's hardly surprising that nobody saw it. So I'll resuscitate it here:

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In light of all the controversy over the war against environmental science being waged by Superfreakonomics, I’ll add only that this comes as no surprise to me, since something similar (albeit on a much smaller scale) can be found in the first book. I actually did some reporting on this when Freakonomics first came out, but since it was buried in a 4,400-word review on a little-read personal website, it’s hardly surprising that nobody saw it. So I’ll resuscitate it here. The upshot is that the Freakonomists have a history of misrepresenting environmental science:

Levitt and Dubner like to get holier-than-thou when others make mistakes. At one point, they eviscerate a homeless advocate named Mitch Snyder, for saying that there were 3 million homeless Americans:

When Snyder was pressed on his figure of 3 million homeless, he admitted that it was a fabrication… It may be sad but not surprising to learn that experts like Snyder can be self-interested to the point of deceit. But they cannot deceive on their own. Journalists need experts as much badly as experts need journalists… Working together, journalists and experts are the architects of much conventional wisdom.

So what happens when Dubner and Levitt – a classic pairing of a journalist and an expert – get together? It may be sad but not surprising to learn that even they can come up with decidedly dodgy numbers. Here’s one:

Economists have a curious habit of affixing numbers to complicated transactions. Consider the effort to save the northern spotted owl from extinction. One economic study found that in order to protect roughly five thousand owls, the opportunity costs – that is, the income surrendered by the logging industry and others – would be $46 billion, or just over $9 million per owl.

When alarmist figures in the billions start getting quoted, I immediately start getting suspicious. So I went to the footnotes, which cited a paper by Jason Shogren from which, I believe, this is extracted. Here’s what Shogren actually writes:

Opportunity costs have been estimated for a few high-profile, regional ESA conflicts such as the northern spotted owl. One study estimated that an owl recovery plan that increased the survival odds to 91 percent for a population of about 1,600 to 2,400 owl pairs would decrease economic welfare by $33 billion (1990 dollars), with a disproportionate share of the losses borne by the regional producers of intermediate wood products, a relatively small segment of the population (Montgomery et al. 1994). If the recovery plan tried to push a goal of 95 percent survival odds, costs increased to $46 billion. Another study estimated the short-run and long-run opportunity costs to Washington and Oregon of owl protection at $1.2 billion and $450 million (Rubin et al. 1991).

In other words, Levitt and Dubner have taken the very highest estimate from Shogren’s paper, one which Shogren didn’t even come up with himself, and used it uncritically. They could have used the $1.2 billion and $450 million estimates instead, of course, but chose not to for reasons we can only guess at.

I also sent Shogren an email, asking him what he thought of this use of his number. He said that the $46 billion was “an outside estimate,” and added:

We used the number to illustrate what little we do know about costs of the Endangered Species Act. Other numbers we cite in the paper say that the ESA is more about transfers of wealth (from agricultural to recreation) than about the loss of wealth.

The really weird thing is that the factoid aboout the spotted owl seems to have been dropped into the book utterly randomly: it’s there only to illustrate the broader point that economists try to measure all manner of different things. But why would Levitt and Dubner concentrate only on the costs of saving the spotted owl, while ignoring the benefits? And why would they pick a number which seems designed to shock, rather than a much more reliable number which is less shocking, like the cost per life saved of installing various safety features on roads or subways? The broader context, after all, is that of abortion, and whether it’s possible to quantify the costs and benefits of abortion, after taking into account its role in lowering the crime rate. Saved lives, in this context, seem far more germane than saved owls.

Update: John Berry writes in with more:

Back in the ’90s I spent a week reporting on the economics of the spotted owl court injunction that had halted timber sales in the northwest. My best source was a guy named Stub Stewart, who had just retired as CEO of a privately owned lumber company based in Eugene, Ore. He introduced me to a former plywood mill manager who had become a consultant after his plant shut down. The consultant had a data base that covered the whole forest products industry in the region. Their joint conclusion was that the owl hadn’t cost a single job.

The key was that the industry had pretty well exhausted its resource base. First, the privately owned timber was cut and as that source of stumpage dwindled, the Forest Service and the BLM gradually increased the allowable cut on public lands. But that too was finite and timber sales began to fall. Meanwhile, productivity grew rapidly in the industry. Stewart flew us in his helicopter out to a sale site in the Oregon Cascades his company was cutting. The entire operation was being performed by a contractor with a crew of only three using about $1.5 million worth of equipment, including a small crane. Productivity was also going up in newer plywood mills. All of the job loss up to that point which was being blamed on the owl was due to the diminished resource base and the productivity gains. I haven’t revisited the issue since I wrote the story for the Washington Post. But that $46 billion figure has got to be far, far too high. I led my story with the fact that the Georgia Pacific Company, among the largest forest products companies, had just moved its corporate headquarters from Portland to Atlanta because that’s where the new softwood resource base was located–on privately owned land in the Southeast.

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Comments
12 comments so far

Nice catch. If you’re going to add up costs and benefits it’s only fair to actually add up the benefits. You don’t just preserve owls when you preserve old-growth forests — you get to keep everything else in them too.

Levitt and Dubner have a pattern of kicking the dirty f—ing hippie environmentalists. Why I don’t know. I hear picking on the retarded kids will make you popular with the jocks. They should give that a try while they’re at it.

Lets consider a number of things here.

It has been 18 years since the Northern Spotted Owl listing became an issue (1991).

The $450 million figure is so far from reality as to be absurd. That equates to $25m per year.

How about the $1.2b figure. That equates to $66m per year. It is absolutely absurd to assume that either number has any validity whatsoever. Those values don’t even come close to the stumpage value of the timber harvested (perhaps 10% of the stumpage alone), let alone the value of every job created in the process.

Lets further consider the consequences of the listing. The volume of wood products imported from the southern hemisphere has increased dramatically, something approaching 50 fold. The result has been a massive increase in carbon emissions from the fuel to transport these wood products from the southern hemisphere to the northern hemisphere.

The best method for sequestering carbon is through growing trees, and then harvesting those trees and locking that carbon up as a wood product for another 50 to 100 years. The trees that sequester the least amount of carbon are old-growth trees. So in a sense we are doing a poorer job of sequestering carbon, and at the same time, we are pumping out more carbon transferring wood from the south to the north. I guess one could say we are sacrificing the Polar Bear to protect the Northern Spotted Owl and the Marbled Murrlet. Should we cut every old growth tree? Of course not, nobody supports that. Consider that one of the biggest proposals in the Kyoto Protocol is to focus on using trees to sequester carbon. The biggest generator of carbon credits is the planting of trees. The carbon is not released upon harvest, it is sequestered in the wood product, but harvesting the tree does allow other trees to grow and sequester carbon.

At the same time when calculating the opportunity cost of a decision we must of course consider the impact on other outcomes as well. Consider that we have substantially increased our imports of wood products, which has increased our trade deficit. The increase in the trade deficit has reduced the value of the US$, and has increased the cost of many commodities. So each and every person in America has had to pay for the decision to list the NSO through far higher prices in many other goods, because the $ has weakened, because our trade deficit has increased.

Posted by Kevin | Report as abusive

The whole point of the protecting endangered species is to protect the environment as a whole, not the individual species. It is effective because it is easier to determine the impact of development upon an individual species, as opposed to trying to come up with some kind of value for the entire ecosystem.

Joseph j7uy5,

This is your point as I understand it.
“We want to make the environment better, so lets focus on doing one extremely small sliver differently, and if we do that often enough the whole will be better.”

This is so rife with opportunity for failure. The entire point of opportunity cost is to understand the full impact of a decision.

There are a myriad of choices, and the best course of action is the one that yields the greatest benefit with the lowest overall cost, recognizing the ancillary and indirect costs of decisions, as well as the ancillary and indirect benefits of the decision.

To make decisions that have a significant impact on an environment, while focusing on the narrowest possible scope is to assure failure. Clearly one cannot fully anticipate all the costs. Once one recognizes the costs, then it is incumbent on them to reevaluate the decisions and make changes, fixes and enhancements to make the overall cost/benefit tilt more towards the benefit side than the cost side.

The Northern Spotted Owl debate was not about science, it was about politics, and the decisions made had many negative implications as a result, that were never backed by science. No one wants the NSO to become extinct, but there is no question that the cost to save them could have been far cheaper, with similar if not far better results. That is the point the authors of Super Freakeconomics were trying to make.

Posted by Kevin | Report as abusive

So Felix, what is your learned opinion on how much saving the NSO actually cost? When I see the author in question not willing to discredit either the 450 million, or the 46 billion (a hundred fold magnitude), maybe the best answer is “nobody knows.”

It also strikes me that this is somewhat in the same vein as all those economists who predicted that subprime was “contained” and that certain events that happened in the GFC weekly would only happen once every ten thousand years.

Posted by fresno dan | Report as abusive

The spotted owl became the whipping boy for changes in the timber and lumber industries tat would have occurred in any case. The timber and mill companies had logged out the bulk of the government old-growth forests. The mills were not set up to handle the smaller new-growth timber harvest. And the only thing that’s prevented the Canadians from swamping us, all along, with cheaper softwoods, were protective tariffs and trade barriers that subsidized the timber and mill industries at the homebuyers expense.

When we also consider the destruction of salmon habitat and the downstream flooding caused by clear-cutting, we can see there are cost-benefits of protecting spotted owl habitat that are ignored by the spotted owl haters.

All of the weeping and wailing was just a way for the timber industry to blame the results of their own actions on “the government”.

Ah, Felix, you missed a tie in opportunity. For those who railed against the environmentalists who saved the Spotted Owl don’t seem to be saying much about one of the ongoing disasters that can be linked directly to the rise in temperatures in the Northwest and the Rocky Mountains region: which is the takedown of the forests by the Pine Beetle. What, you may ask, does this have to do with climate change? It is simple, and elegant. The warmer winters have allowed the beetle to breed more, and to extend it range further north. This Denver Post article is a good place to start:
http://www.denverpost.com/ci_7972146

From the article:
A pine beetle infestation is spreading from the mountains into southern Wyoming and the Front Range, and all of Colorado’s mature lodgepole pine forests will be killed within three to five years, state and federal officials said Monday. The bark beetle infestation ravaged 500,000 new acres of forests in Colorado in 2007, bringing the total infestation to 1.5 million acres — almost all of state’s lodgepole forests — according to the latest aerial survey. The infestation has now worked its way north and east, including an increase of more than 1,500 percent in the acreage affected in Boulder and Larimer counties.

“That’s a pretty staggering thought,” Susan Gray, group leader of Forest Health Management for the U.S. Forest…

“Will Crapser, state forester for Wyoming, said that 85 percent to 90 percent of the mature lodgepole pine — about 750,000 acres — will be dead in the Medicine Bow Mountains of southern Wyoming in the next three to five years.

The result of the devastation will be a landscape much like that of Yellowstone National Park after the fires that ravaged the forests there in 1988, said Rick Cables, Rocky Mountain regional forester for the U.S. Forest Service.”

And of course the Denver newspaper rather gets around the inevitable denialist letters by simply reporting on “warming”:

Gray and Bob Cain, a U.S. Forest Service entomologist, said that a lack of cold winters has allowed pine beetles to thrive.

Cain said that normally in the middle of winter, temperatures need to fall to minus 40 degrees to

One thing about protecting the spotted owl – it involved saving, not destroying, the forest. Hence, the forest was potentially preserved as an economic resource. But – due to ignoring the pleas of environmentalists – the U.S. has done nothing to stop the warming of the climate due to CO2, and will suffer every kind of economic disaster, including destroying recreation and lumbering.

This is how evil the denialists are. They are in bed with the pine beetle.

OOPS, I cut off my quote from the forest service. It goes:
“normally in the middle of winter, temperatures need to fall to minus 40 degrees to kill the bark residing beetle.

“Those are the temperatures that used to shut these outbreaks down,” he said. “We used to routinely get into the minus 40s in the mountains. And we just haven’t been.”

So Snyder’s fabrication of a homeless number is the same as taking a value published in a journal? Yes, they used the highest published number they could find, but “an outside estimate” is hardly making something up out of whole cloth.

Posted by Eagle | Report as abusive

[“an outside estimate” is hardly making something up out of whole cloth.]

Actually, in this case it is. Because, as Mr. Salmon made quite clear, that number was taken completely out of context and presented as if it were some solid, proven conclusion. It wasn’t. Levitt/Dubner just made that up.

Posted by bugmenot | Report as abusive

Felix, the Bush Administration, implemented a “Northern Spotted Owl Final Recovery Plan” in 2008 that they estimated to cost $489 million over 30 years. It sounds like the high estimate was a bit off and the low one was pretty good!

Posted by rana | Report as abusive

In fact, the spotted owl controversy probably created net new jobs for large numbers of lawyers, which are the kind of high paying, knowledge-oriented jobs we want to create in our modern economy (sarcasm intended – a pox on all the parties).

Posted by Curmudgeon | Report as abusive
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