Groundwater and Sediment-Related Benefits

1. Groundwater and Sediment-Related Benefits Will Wheeler National Center for Environmental Economics October 2011 National Center for Environmental Economics

2. Introduction • In past rules, EPA has frequently augmented recreational and stated choice benefit estimates • Examples: • Health benefits from contaminated groundwater in private drinking water wells • Cost savings from reduced dredging • Water storage and navigation • Cost savings from treating public water supplies • Not original studies, but comport with our dual mandate • We will talk more with OW National Center for Environmental Economics

3. Groundwater—Nitrates in Drinking Water • Nitrates in drinking water are a health concern (especially methemoglobinemia or blue baby syndrome) • Changes in BMPs, nutrient application, and septic controls will result in lower concentrations of nitrates in groundwater • Drinking water quality in public systems is covered by SDWA (MCL of 10 mg/l), so we do not assume any benefits • Private wells are not covered, so these benefits were include in 2003 CAFO rule National Center for Environmental Economics

4. CAFO Rule • Used USGS and other data to predict nitrate concentrations in private wells, based on • loadings from AFOs, fertilizer, air deposition, and septic • well depth • soil type • land use • regional dummies • Estimated number of people using private wells from Census • Valuation: Poe and Bishop (ERE 1999) for getting below the MCL plus DeZoysa 1995, Crutchfield et al. 1997 for lower increments

5. GW-Challenges and Opportunities • Different data sources: • Using Bay Model inputs rather than CAFO regulatory inputs • Updated data (e.g., American Housing Survey instead of Census) • Regional instead of national analysis may limit some data availability • To the extent that some states are relying on point source controls, benefits will be lower, so we may focus resources on other states • Updated benefits: • Bergstrom, Boyle, Poe (2002) book • Loomis et al (JAAE 2009) • update existing meta-analysis with new studies • preference calibration approach

6. Sediment

7. Sediment • Existing practice in OW RIAs in three areas of sediment-related benefits • Dredging of navigable waterways • Dredging of reservoirs • Drinking water treatment • Reduced sediment loads lead to savings from avoided costs

8. Dredging • For navigable waterways, OW uses Army Corps Dredging Information System • Has dredging project dates, costs, and amount of sediment dredged for all projects from 1995 to 2008 • Can calculate costs savings from lower sediment loads in future years • For reservoirs, OW uses Army Corps Reservoir Sedimentation Survey Information System • Has reservoir locations, uses, and sedimentation rates • Apply several dredging cycles and (regional) average costs for navigable waterways • Can calculate costs savings from lower sediment loads in future years

9. Drinking water treatment • Match drinking water intakes to stream reaches • Estimate influent sediment loads • Use engineering costs to calculate • The cost of alum needed to treat sediment loads • The cost of sludge disposal (more alum = more sludge)

10. Sediment—Challenges and Opportunities • Econometric versus engineering costs • Econometric estimates can account for flexibility • Technological change, hidden costs • Pizer and Kopp (2005), Burtraw (1999) • For CAFO rule, EPA used an econometric model (Holmes 1989, Land Econ) to calculate avoided costs • If data is available, we could check dredging frequency • We plan on investigating these issues and discussing with OW National Center for Environmental Economics