A Property Rights Solution to Endangered Salmon

Writing for PERC, R. David Simpson gives an intriguing example of salmon preservation: Native American tribes in Oregon considered bidding on a dam license (to change its operations in ways that would  protect salmon). The result: a productive relationship with the dam owners—a cooperative effort to protect salmon.

Here is an excerpt from Simpson’s paper:

Salmon had been in decline on the Deschutes River in northern Oregon, a tributary of the Columbia, since Portland General Electric began construction of the Pelton Round Butte Dam Complex in the mid-1960s. The Confederated Tribes of Warm Springs, a consortium of local Native American groups, were guaranteed the right to fish for salmon on the Deschutes River under an 1855 treaty.

As salmon declined, the tribes faced both economic and cultural impoverishment. Controversy and finger-pointing attended discussions of the causes of the salmon decline, with the tribes blaming the Portland General Electric dams and the utility pointing to both up- and downstream threats to salmon.

An innovative solution was available in this case, however, because the tribes had a few advantages that other groups interested in conserving salmon might not. First, they had a unified and concentrated interest in salmon conservation. Second, they had leverage. They owned much of the land on which the dams were built. Moreover, hydroelectric dam operators are required to relicense their facilities at regular intervals by application to the Federal Energy Regulatory Commission. Other parties can bid for the license. So when the Pelton Round Butte Dams came up for relicensing in the early 2000s, the tribes were prepared to play hardball: They threatened to compete for the license.

A compromise was struck. The tribes purchased an ownership share in the Portland General Electric dam complex. This diversification of shareholder interests has led to a better balance between electricity generation and salmon conservation. While salmon runs are naturally variable, measures adopted since the change in ownership have been credited with contributing to record fish returns in recent years.

The joint owners now have direct and powerful incentives both to preserve salmon and economize on the costs of doing so. The utility and tribes now combine on a variety of efforts to protect salmon. They have invested more than $10 million to improve upstream salmon habitat by removing barriers and fencing out livestock, restored a daily average of almost 33 million gallons of in-stream water flow, and spent more than $100 million to construct a 273-foot-deep selective water withdrawal system to control temperatures in the water streams in which salmon migrate.

While there are still some controversies involving salmon management on the Deschutes, and more study would be required to tell whether the combination of measures now in place is truly cost-effective, it is reasonable to suppose that sharing ownership has aligned incentives better and improved management.

The key is to give the same party incentives both to earn money and save fish—or, really, to give them incentives to earn money by saving fish. More than a half-century of work on fisheries economics has underscored a key point: Property rights are essential to efficient fishery management. This has led to a variety of proposals to assign property rights to mature fish.

David Simpson is the former director of Ecosystem Economic Studies in the National Center for Environmental Economics at the U.S. Environmental Protection Administration and was a 2018 PERC Lone Mountain Fellow. PERC is the Property and Environment Research Center in Bozeman, Montana.

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