Independent Study Concurs with Key Cardno ENTRIX Findings on Costs of Florida Water Quality Regulations
A study released March 6 by the National Academy of Sciences (NAS) has independently come to the same conclusion as a Cardno ENTRIX study; that costs associated with implementing new numeric nutrient criteria (NNC) in Florida's waterways are expected to exceed initial U.S. EPA estimates. While the NAS study did not produce alternative cost estimates, the outcomes support Cardno ENTRIX's opinion that U.S. EPA's cost estimate did not take into account all cost factors.
In November 2010 Cardno ENTRIX completed an economic analysis of the compliance costs of the new NNC proposed by the U.S. EPA for Florida's lakes and flowing waters. That study, carried out on behalf of the Florida Water Quality Coalition, found that actual compliance costs for Florida residents and industry would be much higher than those costs estimated by the U.S. EPA. Based on updated data, Cardno ENTRIX issued an addendum in July 2011 with revised cost findings. Among the key findings in the Cardno ENTRIX study:
- Compliance costs could be much higher than EPA estimates, depending on implementation assumptions and the level of treatment technology that is required for compliance. EPA approach underestimates total compliance costs by underestimating the number of waterways affected by the NNC.
- EPA did not adequately incorporate uncertainty regarding compliance costs into their analysis.
- There will be an environmental justice cost associated with the NNC, because many counties with high poverty and unemployment levels will face higher water costs.
- Many industries that have suffered economic declines over the preceding five years could be hurt by the NNC and the diversion of consumer and business spending to costs of complying with the criteria.
- The benefits associated with U.S. EPA's new water quality standards are uncertain. There is little quantifiable benefit demonstrated with respect to improving water quality in healthy water bodies that will now be considered impaired under U.S. EPA regulations.
Key findings in the NAS study that support Cardno ENTRIX's conclusions:
- NAS finds that incremental costs to the stormwater, septic, and agricultural sector are likely to be higher than EPA cost estimates, while the significant uncertainty in costs to the municipal and industrial wastewater sectors make it difficult to know whether the EPA under- or over-estimated the incremental cost in these sectors.
- Over time, NAS finds that there is significant uncertainty in costs to all sectors, and that the EPA did not adequately represent uncertainty of the incremental cost of implementing the NNC rule. Compliance costs vary depending on implementation assumptions and treatment technology requirements. The report states that Future cost analyses of rule changes would be improved if they explicitly described how a rule would be implemented over time and its impact on costs.
- EPA's assumption was invalid that the use of current best management practices would meet compliance requirements under the NNC. NAS report concluded that the use of current best management practices is unlikely to be sufficient to meet beneficial designated uses in Florida waters.
- EPA underestimated the number of newly impaired waters. The EPA made an invalid assumption that there would be no cost to the 77 to 86 percent of Florida waterways without adequate water quality monitoring data to determine whether they would be newly impaired under the NNC. The NAS report concluded that a more defensible approach would consider the characteristics of unassessed waterbodies and their drainage areas to predict if they would fail to meet the numeric nutrient criteria.
The Cardno ENTRIX study was provided to Congress in November, 2010. In addition, Cardno ENTRIX presented the results of their revised report at an NAS Meeting in February, 2011. After publication of this document, Cardno ENTRIX worked closely with the Florida Department of Environmental Protection to obtain additional data, leading to changes in the Cardno ENTRIX analysis and an addendum to the report, which can be accessed here.
NAS press release: Click Here
For more information, contact:
Dr. Doug MacNair
Vice President and Practice Leader - Natural Resource Economics
(919) 239-8900 (Office)
(919) 357-2203 (Mobile)