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Benefits of Compliance with Nutrient Criteria: Montana

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Benefits of Compliance with Nutrient Criteria: Montana s Approach Jeff Blend Montana Department of Environmental Quality May 20, 2010 – PowerPoint PPT presentation

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Title: Benefits of Compliance with Nutrient Criteria: Montana


1
Benefits of Compliance with Nutrient Criteria
Montanas Approach
  • Jeff Blend
  • Montana Department of Environmental Quality
  • May 20, 2010

2
The Results
Benefits (annual) Costs (annual)
Quantified Quantified
est. lt 15.8 million (Dodds et. al.)Rec., drinking water, property values, endang. species est. gt 40 million 40 M for public sector WWTP upgrades based on DEQ assum.
Not Quantified Not Quantified
Other economic benefits (agriculture, health, WWTPs, aesth.) Private sector costs (30-40 businesses)
Ecosystem benefits and Non-Use values Other costs (admin, transaction)
Long-term At least 20 years
3
Benefits
  • Use Values (quantified) Use Values
    (non-quantified) Non-Use Values Indirect Use
    Values
  • Use Values refer to changes in economic and
    social well being of people who physically use
    the water resource WWTPs, businesses, recreation
    and agriculture
  • Non-Use Values Existence Value
  • Indirect Use (non-market) Natural processes that
    still benefit humans

4
Benefits-Quantified
  • Dodds Study- Eutrophication of U.S. Freshwaters
    Analysis of Potential Economic Damages (2008)
  • Estimated the economic value of higher water
    quality as result of nutrient standards over
    current water quality, for the entire U.S.
  • Methods
  • Compared current TN and TP concentrations for the
    U.S. EPA nutrient ecoregions with estimated
    reference conditions.
  • Calculated potential annual value losses in
    recreational water usage, waterfront real estate
    values, threatened and endangered species, and
    drinking water from published data
  • Values may be underestimated/research gaps

5
Values Estimated in Dodds
  • Recreational Water UsageAlgal bloom effects on
    boating, fishing, other rec. loss of trip-related
    expenses from lake closure due to eutrophication
  • Lakeside property value decrease with declines in
    water clarity--Calculated percent gain or loss in
    property values per 1 m change in Secchi depth.
  • Biodiversity Assume 25 of all imperiled aquatic
    species are threatened in part by human-induced
    eutrophication and therefore 25 of all recovery
    costs of U.S. Federal Endangered Species Act
    plans was used as a proxy for this item

6
  • Drinking water costs attributable to
    eutrophication estimated using amount of money
    spent on bottled water that could potentially be
    attributed to avoidance of taste and odor
    problems in surface-water-derived tap water
  • Costs not measurable
  • number of days water bodies were closed for
    contact and noncontact use
  • number of fish kills
  • human and livestock deaths and sicknesses
  • money spent on watershed restoration and
    developing nutrient criteria
  • money spent on macrophyte removal
  • water treatments added by municipalities as a
    result of eutrophication
  • Costs (benefits) are probably conservative

7
Benefits-Quantifiable (Cont.)
  • Dodds et al. estimated a value of 2.2 B annually
    for total U.S. costs from not meeting standards
    (or benefit of meeting standard)
  • DEQ prorated that number proportionately by MT
    population (0.31) to come up with a Montana
    number-about 7 M in benefits
  • lt 7 M because not meeting standards
  • 7 M Rec water usage (3.2 M) water-front
    prop values (1 M) endangered species (0.15 M)
    drinking water (2.6 M)
  • Could be more or less based on assumptions

8
Population versus land area numbers
  • If we prorate the 2.2 B number using Montanas
    land area as a percent of the total U.S. land
    area, the Dodds number for Montana becomes an
    estimated 90 million annual benefit as an upper
    bound (MT over 4 of the land area in the U.S.
    versus 0.3 of the population). Low 7 M, High
    90 M
  • Using Montanas population percentage is a better
    measure for some components of quantifiable
    nutrient benefit and Montanas land area
    percentage is a better measure for other
    components. We combine the two numbers.

9
  • Drinking water and existing waterfront property
    values are probably best linked to population.
  • Waterfront property values include some
    properties owned by out of staters so the 1 M
    for Montana may be an underestimate.
  • The endangered species number is best used in
    conjunction with land area
  • The recreational water usage number is harder
    Some water recreation is done by residents and
    some is done by out of staters. Using USFWP data
    from in 2006, Montana residents made up 81 of
    all fishing days in the state and non-residents
    made up 19. This is the best proxy available
    for dividing out the recreational value number
    between resident and non-residents.

10
Final Benefit Number
  • So, our compromise between prorating Dodds number
    by population and by land area is 10.4 1M
    1.8M 2.6M up to 15.8 M as a good compromise
    between the 7 M and 90 M.
  • 15.8 is an upper bound for annual benefits in
    Montana from complying with nutrient standards
  • Other studies besides Dodds
  • Four other studies of Increase in property value
    per foot of lake frontage for 1-foot improvement
    in water clarity (from 2.34 to 28 in 1996
    dollars).
  • Other quantitative studies on recreational
    benefits.
  • Value of improvement per trip from better
    dissolved oxygen levelsSmith and Desvouges, 1986
  • Salinity---Carson and Mitchell, 1993

11
Non Quantified Benefits-Anthropocentric
  • Use Values
  • Improved water quality for economic uses Less
    treatment (cost) for a business, industry or WWTP
  • Removal of overabundant macrophytes
  • Improved Agricultural water supply (less clogging
    of irrigation canals, cattle)
  • Commercial fishing/Fishing guides
  • Non-Use Values
  • Option Value (possible future use) and Existence
    value
  • Aesthetics from meeting nutrient standards
    (wilderness)
  • Some of these benefits could be minor, and may be
    partially captured in 15.8 M figure.

12
Indirect Use or Non-Human
  • Improved health of plants, wildlife, riparian
    areas, water and nutrient cycles
  • Maintenance of dissolved oxygen levels suitable
    for aquatic life and fisheries
  • Minimization of daily pH changes which can harm
    fisheries
  • Maintenance of healthy aquatic life communities
    including more sensitive species (fish kills
    down, biodiversity up, macrophyhte growth).

13
Distributional Impacts
  • Benefits to all Montanans. Especially to those
    who recreate or live near water.
  • Some benefits to out-of-state tourists or those
    who live downriver from Montana
  • Costs mostly to 135 towns (just over 50 of
    Montanans) and 30-40 businesses
  • Some Government agencies (minor)

14
Conclusions
  • Overall Benefits of Nutrient criteria are
    cloudy-Lack of data problem
  • A variety of ecosystem and non-monetary benefits
    are hard to quantify as are business costs
  • Monetary decision versus policy decisionPolicy
    values are human values that are codified

15
  • Increase in property value per foot of lake
    frontage for 1-foot improvement in water clarity
  • Citation method Location Value (1998)
  • Michael and others 1996 Hedonic China Lake, ME
    28.00
  • Michael and others 1996 Hedonic Cobbossee L.
    ME 16.37
  • Michael and others 1996 Hedonic Long Lake,
    ME 17.53
  • Steinnes 1992 Hedonic Northern Minn. 2.34

16
Benefits of Nutrient Criteria
  • Direct Use Values Quantified
  • Market values Recreation (swimming, boating,
    fishing), property values, drinking water,
    industrial use, commercial fishing
  • Use Values Non Quantified
  • Irrigation ditches, wildlife quality, aesthetics
  • Indirect Use Values maintenance of biodiversity
    and a more natural hydrological cycle, habitat,
    and nutrient cycling
  • Non Use Values Non-quantified
  • Existence, Option Values

17
Importance of the Economics of Nutrient Criteria
Compliance
  • Economic analysis can define problems and direct
    focus to areas with greatest potential benefits
    and costs. This can help policymakers.
  • Changes in water quality can influence the
    benefits and costs water users receive and can
    cause harm to a sensitive beneficial use of
    water.
  • Economics can inform about distributional
    impacts.
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