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Economic Analysis

Economic Analysis. Steven Blum Alan T. Monji Environmental Scientist Region 9. Overview. Legal requirements to consider economics Basin Planning and economic considerations Estimating cost of alternative methods of compliance Estimating cost of Agricultural Water Quality Control Programs

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Economic Analysis

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  1. Economic Analysis Steven Blum Alan T. MonjiEnvironmental ScientistRegion 9

  2. Overview • Legal requirements to consider economics • Basin Planning and economic considerations • Estimating cost of alternative methods of compliance • Estimating cost of Agricultural Water Quality Control Programs • What we learned from the LA Trash TMDL (City of Arcadia v. SWRCB) • How to estimate costs • Cost estimation examples

  3. CEQA Requirement • From CEQA §21159: (3)(c) “The environmental analysis shall take into account a reasonable range of environmental, economic, and technical factors, population and geographic areas, and specific sites.”

  4. Porter-Cologne Requirements • From Water Code§13141 For an “agricultural water quality control program” total cost estimates and potential funding sources “shall be indicated”

  5. Basin Planning and Economic Considerations • When establishing WQOs, the Board must take economic considerations into account (among other things; Water Code §13241) • Cost analysis required by CEQA §21159 can substitute for §13241 analysis (according to the LA Trash TMDL decision)

  6. Limitations of Economic Analysis • PRC §21159 (c) “The environmental analysis shall take into account a reasonable range of…economic …factors.” (d) “Nothing in this section shall require the agency to conduct a project level analysis.” (f) “Nothing in this section is intended, or may be used, to delay the adoption of any rule or regulation for which an analysis is required to be performed pursuant to this section.” • In other words, we do the best we can…

  7. The Economic Analysis and the SED • Do NOT provide an economic cost/benefit analysis • But DO include brief discussion of • “Economic gain” • The cost of NOT doing the TMDL • Avoided cost

  8. Estimating Costs of Alternative Methods of Compliance • Cost estimate required by PRC §21159 • Consider “reasonable range” of economic factors (c) • …but not of a “project level analysis” (d) • Level of analysis may depend on stakeholders and controversy around the TMDL/BPA

  9. Estimating Costs for Agricultural Programs • Cost estimate required by Water Code §13141 • Same cost analysis methodology as for other analyses • However, must also identify potential sources of financing

  10. What We Learned about Economics from the LA River Trash TMDL • Court did not rule on whether economic analysis was required by Water Code §13241 • The court ruled that CEQA §21159 analysis also satisfied Water Code §13241 City of Arcadia v. SWRCB

  11. Types of Costs • Structural controls • Non-structural controls • Monitoring and reporting • Amortization

  12. How to Estimate Costs • Elicit input from stakeholders • Build on experience of other Regional Boards • Reference BMP documents (EPA, Caltrans, NRCS) • Select a range of appropriate BMPs • Consider affected acreage • Assign a cost to each BMP in the range • Keep scenarios simple • Clearly state your assumptions

  13. Estimating Costs - Example:Indicator Bacteria, Beaches & Creeks • Urban areas: Residential (low and high), commercial, industrial, military, park/rec, transitional

  14. Estimating Costs, cont’d

  15. Some War Stories from R9 • Rainbow Creek TMDL • Indicator Bacteria Beaches and Creeks – Project I • TMDL project implementation costs

  16. References • City of Arcadia v State Water Resources Control Board. • US EPA, 2000. Guidance for Developing TMDLs in California. January 7, 2000. • SWRCB, 1999. Economic Considerations in TMDL Development and Basin Planning. Memo from Sheila Vassey, Office of Chief Counsel. October 27, 1999. • SWRCB, 1994. Guidance on Consideration of Economics in the Adoption of Water Quality Objectives. Memo from William Attwater, Office of Chief Counsel. January 4, 1994.

  17. Questions?

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