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CHAPTER 4
EVALUATION CRITERIA: A SURVEY OF WYOMING RESIDENTS
4.1 PURPOSE OF THE SURVEY
In Chapter 2 we argued that economic efficiency criteria such as benefit-cost analysis alone do not provide an adequate framework for evaluating Wyoming water projects. This conclusion does not mean that economic efficiency has no place in the evaluation process. To the contrary, in Chapter 3 we argue that the benefit-cost measure is an important evaluation tool that must be supplemented by other criteria. This idea is not new. Multiple evaluation criteria have been utilized and discussed in the economic literature for years under the banner of Multiple Objective Planning (MOP). Federal procedures for water project evaluations have also stressed the need for MOP evaluations to include environmental, social, and regional economic concerns in water project decisions (Howe [1987]).
A practical problem with MOP is that determining the relative importance of various economic objectives is very difficult; so difficult, in fact, that some economists relegate such activities to the political process:
. . . with weights being assigned to these various objectives in keeping with the decision-makers' preferences and their interpretation of public desires (Young and Howe [1988]).
The problem with this approach for Wyoming's water development program is that it has implicitly been in place since the program was funded in 1982, and has enjoyed mixed results at best. Some state decision makers have argued for placing heavy weights upon economic efficiency criteria, while others have argued that efficiency considerations are far less important than putting Wyoming's water to beneficial use. As a result, there has been heated debate in the Wyoming legislature about the direction of the Water Development Program and the fate of individual projects, with no objective basis for decision making. Since one of the primary purposes of this research project is to lend some objectivity to that debate, we believe that an attempt must be made to establish the relative importance to Wyoming citizens of various competing economic objectives.
In addressing this issue, we first reviewed the comments of respondents to a recent statewide survey associated with the Sandstone project (Watts, Brookshire and Cummings [1989]). The primary purpose of the survey was to elicit bids as part of a contingent valuation study. Approximately one-third of the 410 respondents, however, volunteered comments about what they liked or disliked about the Sandstone project in particular and Wyoming water development in general. These comments were analyzed, tabulated, and re-analyzed to determine whether there were any recurring issues that might be important to water project evaluation at the state level. The analysis indicated that the majority of comments could be grouped into one of the following categories:
There are obvious conflicts among the issues/objectives described above. For example, Wyoming could increase its control over its unappropriated water resources in certain river basins by bringing as much new land under irrigation as possible, thus strengthening its legal entitlement through beneficial use. Such developments may not be economically efficient, however, and may not meet with approval from those who want an equitable distribution of benefits or to preserve river basins in their natural state.
During the Sandstone study. Watts, Brookshire and Cummings [1989] demonstrated that the contingent valuation method (CVM) could be used to place an efficiency value on what would normally be considered a non-efficiency objective, the control of Wyoming's water resources. The results of that study indicated that Wyoming households are willing to pay a significant sum to enhance Wyoming's control of its water in the Little Snake Basin by early construction of the Sandstone project. Conceptually, the CVM could be used on a recurring basis to resolve conflicting objectives that arise in water project evaluations in the state. As a practical matter, however, this approach has many pitfalls. First, it would require very time-consuming and expensive economic studies for each project that is to be evaluated. Second, repeated use of CVM techniques on the same population can lead to biased estimates for reasons too complex to address here.
As an alternative to suggesting the repeated use of CVM techniques to evaluate state water projects, we decided to conduct a statewide survey of Wyoming households to assess attitudes and opinions about the relative importance of various conflicting objectives. The results of the survey were then incorporated into a framework for evaluating Wyoming water projects (see Chapter 5).
4.2 THE SURVEY INSTRUMENT
A mail format was chosen because of the complex issues involved in the survey. A mail questionnaire allowed us to provide the respondents with the background information necessary to form an opinion, and allowed the respondents adequate time to formulate their responses (a copy of the survey questionnaire is included in Appendix C to this report).
The questionnaire first presents the reader with background information on the Wyoming Water Development Program, and then asks him/her to rate the relative importance of various uses for Wyoming's undeveloped water resources (Question 1). The purpose of these questions was to assess the adequacy of traditional efficiency measures associated with various water uses.
The second set of questions (Question 2) asks the respondent to agree or disagree with four policy statements about the Wyoming Water Development Program. The primary purpose of these questions was to familiarize the reader with the issues involved, and provide backup data concerning their relative importance.
The heart of the survey was a series of three questions (Questions 3 through 5) concerning possible evaluation criteria for Wyoming water projects. Respondents were first presented with the four issues identified from the Sandstone survey, and then asked if there were other issues they believed to be important. If so, they were asked to list those other issues. Respondents were then asked to rank all issues (including their own) as to their relative importance in evaluating Wyoming water projects. The questionnaire concluded with a series of demographic questions.
We approached the survey with some skepticism due to the complexity of Wyoming's Water Development Program. On the other hand, our experience with the Sandstone study led us to believe that many Wyoming residents are interested in and informed about Wyoming's water issues, and could respond in a meaningful way. It should also be noted that the purpose of this survey is not like that of a political poll, which attempts to elicit the voting preferences of all registered voters about an issue to predict the outcome of an election. Instead, we were primarily interested in the attitudes and opinions of those Wyoming residents who are informed about Wyoming's water issues and the choices the state faces with respect to them.
4.3 SURVEY METHODS
A thorough discussion of survey methods is presented in Appendix C to this report and will not be reproduced here. Briefly, a sample of 800 Wyoming households was selected randomly from telephone listings covering the entire state. The first of three survey mailings was initiated on November 18, 1989. This mailing was followed by a second mailing of the questionnaire on December 9, 1989, followed by a postcard reminder to nonrespondents on December 21, 1989. Survey responses were cut off as of January 15, 1990, with 345 questionnaires returned out of a total of 636 households who received questionnaires, for a response rate of 54.3 percent. 25 We consider this response rate quite good considering the complexity of the issues involved and the amount of time it took to fill out the questionnaire (about one-half hour).
4.4 SURVEY RESULTS
This section presents an overview of some of the more important survey results that are relevant to water project evaluation. A detailed description of the survey results is presented in Appendix C of this report. The statistics in Table 4.1 characterize the most important uses of Wyoming's undeveloped water resources according to survey respondents. The data depict the percentage, of respondents rating each water use as either important or very important on a five- point scale (5 = very important). The results show that providing water supplies for future economic growth is the highest rated use for Wyoming's currently undeveloped water resources. This use is followed in importance by municipal use, preserving wild and scenic rivers, and providing instream flows for fisheries.
Interestingly, additional water for irrigation and industrial use was rated lower among respondents than the two environmental uses, instream flows and preserving wild and scenic rivers. In fact, three of the top four most important uses for Wyoming's undeveloped water resources are uses for which benefits are typically not quantified in traditional benefit-cost studies. Traditional water uses such as hydropower production, recreation, and flood control received relatively low ratings by the survey respondents, being rated important or very important by less than half of the sample. This result indicates a need for evaluation criteria that take into account non-traditional water uses.
TABLE 4.1
Survey Respondents' Rating of Potential
Uses for Wyoming's Undeveloped Water1
_______________________________________________________________
Potential Uses of Percent Rating
Wyoming's Undeveloped Important or Importance
Water Very Important Rank
_______________________________________________________________
Water supplies for 78.6 1
future economic growth2
Municipal use 72.7 2
Preserving wild and
scenic rivers2 70.6 3
Instream flows and fisheries2 68.1 4
Irrigation 65.3 5
Industrial Use 62.3 6
Hydropower production 46.5 7
Recreational reservoirs 34.2 8
Flood Control 30.8 9
____________________________________________________________
1 Based upon a sample of 341 Wyoming households that responded to these particular questions. 2 Benefits attributable to these water uses are typically not quantified in benefit-cost studies.
The next set of questions dealt with a series of statements concerning Wyoming water development policy. Respondents were asked whether they agreed or disagreed with each statement on a scale of one to five (5 = strongly agree). The results are summarized in Table 4.2. Interestingly, the statement that Wyoming must protect some of its rivers from dams and reservoirs received the highest level of agreement, 80.3 percent. The second highest level of agreement was with the statement that Wyoming should develop its water resources before other states take our water, regardless of benefits and costs. Approximately 75 percent of the survey respondents agreed with that statement. Approximately 60 percent of the respondents agreed that projects should be built only if benefits were equitably distributed, but only 43.4 percent believed that benefits should exceed costs before a project is built.
As mentioned previously, the purpose of this series of questions was primarily to familiarize the respondent with the issues, rather than obtain objective data. As noted in Table 4.2 some respondents may have been confused by some of the statements in this section because the percentage of respondents agreeing with both statements 2 and 4 should not logically exceed 100 percent. There is additional evidence
TABLE 4.2
Percentage of Respondents Agreeing
or Strongly Agreeing with
Policy Statements
________________________________________________________________
Percent of Respondents
Issue Agreeing or Strongly
Statement Agreeing
________________________________________________________________
1. Wyoming must protect some of its
rivers from dams and reservoirs
to preserve their wild and scenic
beauty. 80.3
2. Wyoming should develop its water
resources before other states take
our water, regardless of whether
project benefits exceed project
costs. 75.2
3. Wyoming water projects should be
built only if project benefits will
be distributed equitably, i.e., not
confined to one small area or group
of people. 59.4
4. Wyoming water projects should be
built only if project benefits
exceed project costs. 43.4
________________________________________________________________
that some survey respondents were confused at this point because approximately 65 individuals who completed this section of the questionnaire did not proceed with the next section (Questions 3-5). For that reason, the results for survey Question 2 have been used only to amplify and interpret other survey results.
The most important questions in the survey involved a rank ordering of criteria for evaluating Wyoming water projects. Approximately 275 of the 345 survey respondents completed this portion of the survey. The results are summarized in Table 4.3, which shows that increased control over Wyoming's water resources is the respondent's overwhelming choice as the most important evaluation issue. Approximately 50 percent of the sample thought this issue was the most important for evaluating Wyoming water projects. Approximately 20 percent thought preserving a balance between preservation and development of Wyoming's resources was the most important issue, while 13 percent thought a comparison of a project's benefits and costs was. Distributional issues accounted for approximately nine percent of the votes for the most important issue, as did other issues defined by the survey respondents. There was no particular pattern to the other issues identified by respondents.
When respondents were asked to rate the second most important issue, preserving an adequate balance between preservation and development became the respondents' choice.
TABLE 4.3
Survey Respondents' Ranking of Most
Important Issue Associated with
Building Wyoming Water Projects1
_________________________________________________________________________________________
Percent Ranking Issue as the
_________________________________________________________
Issue Most Second Most Third Most Fourth Most
Important Important Important Important
_________________________________________________________________________________________
Will the project increase
Wyoming's "control" over
it's water resources? 49.3 22.1 15.1 8.1
Will the project disturb the
balance between preservation
and development of Wyoming's
water resources? 19.6 30.1 28.6 15.1
Will the project's benefits
be greater than its costs? 13.0 20.6 27.8 30.6
Will the project's benefits
be confined to a small group,
or be distributed widely
across the state? 8.7 18.4 21.1 40.4
Other issues. 9.4 8.8 7.5 5.8
Totals 100.0% 100.0% 100.0% 100.0%
________________________________________________________________________________________
1 Based upon approximately 275 respondents to this series of questions (see Appendix C for
details).
It was also the respondents' choice as the third most important issue, followed by benefit-cost and distributional issues.
It is interesting to note that while the policy statement concerning preservation in Table 4.2 received the highest level of agreement, the preservation issue was rated second as a project evaluation criterion. A careful reading of the questions, however, indicates that while four out of five respondents want to preserve some of the state's rivers from development, a much smaller percentage believes that objective should be the most important issue with respect to project evaluation.
Overall, the data in Table 4.3 indicate that the survey respondents believe that increasing Wyoming's control over its water resources is the most important issue in evaluating state water projects, while the second most important issue is maintaining a balance between development and environmental preservation. Benefit-cost efficiency criteria seem to be more important than distributional issues, but both were rated significantly less important than the first two issues by most survey respondents.
4.5 DEFINITION OF INTEREST GROUPS
A multivariate discriminate analysis was performed on the survey data to relate the demographic characteristics of the survey respondents to their opinions about water development. Table 4.4 presents a list of the eight most important
TABLE 4.4
Most Important Variables in Explaining
Differences in Survey Responses
________________________________________________________________
Variable Variable
Number Description
________________________________________________________________
1 Self-evaluation as developer or preservationist
2 Membership in Wyoming Outdoor Council
3 Years of schooling
4 Contributions to organizations active in water
issues
5 Membership in irrigation district
6 Days of annual hiking activity
7 Days of annual bird hunting
8 Size of household
________________________________________________________________
demographic variables that explain differences in the respondents' choices as the most important issue for project evaluation. All of the variables were statistically significant in explaining differences among groups of respondents.
Based upon an analysis of the results, it appears that the survey respondents can be broken into three rough groups for purposes of discussion. The first group consisting of approximately 25 percent of the respondents, is somewhat younger, more highly educated, more oriented to outdoor activities, more likely to belong to an environmental organization, and more likely to have a family at home than the average respondent. They classify themselves as preservationists, not developers, and tended to define the most important issue with respect to water projects as either protecting the balance between preservation and development, or some issue of their own. Interestingly, this group tended to cite the importance of maintaining control over Wyoming's resources as their second most important issue.
The second group consisting of approximately' 50 percent of the survey respondents, were somewhat older than the preservationists, considered themselves developers, not preservationists, and as a group thought that increasing Wyoming's control over its water resources was the most important issue. Interestingly, this group tended to rate balancing preservation and development as the second most important issue in evaluating water projects.
The third group of Wyoming residents are identified by a lack of desire to balance economic development with preservation. These individuals are much more likely to belong to an irrigation district, and tended to rate either, control, benefit distribution or benefit-cost ratios most important.
4.6 SUMMARY
Succinctly, it appears that the majority of survey respondents wants the state to aggressively develop its water resources and maintain control of its water destiny, but not at the expense of wild and scenic areas of the state. They do not necessarily believe that economic efficiency and distribution issues are unimportant with respect to project evaluation, but that these issues are not as important as the first two objectives.
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