United States Office of Marine and Office of Policy,
Environmental Protection Estuarine Protection (WH-556F) Planning, and Evaluation (PM-219)
Agency Washington, D.C. 20460 Washington, D.C. 20460
Off ice of Water
September 1990
EPA 503/5-90-001
The Economics of Improved
Estuarine Water Quality:
An NEP Manual for
Measuring Benefits
Printed on Recycled Paper
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ACKNOWLEDGMENTS
The Economics of Improved Estuarine Water Quality: An NEP
Manual for Measuring Benefits is the result of a collaborative
effort between the U.S. Environmental Protection Agency's
(EPA) Office of Marine and Estuarine Protection (OMEP) and
Office of Policy, Planning, and Evaluation (OPPE).
These offices would like to thank Peter Caulkins of OPPE who
wrote the original document. Special thanks are also extended
to Tom Armitage and Margherita Pryor of OMEP and numerous
reviewers in EPA's Regional Offices for their critical review of
the document. In addition, Tom Bigelow and other Battelle
Memorial Institute staff contributed significantly in the editing
and production of this manual.
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EXECUTIVE SUMMARY
Section 320 of the Clean Water Act provides for the development of
Comprehensive Conservation and Management Plans (CCMPs) for
estuaries of National significance. To ensure the greatest return on
resources spent, it is often necessary to document the economic
benefits associated with alternative management strategies. This
publication, The Economics of Improved Estuarine Water Quality:
An NEP Manual for Measuring Benefits, is designed to assist estuary
program managers and staff in determining the cost effectiveness of
various pollution abatement options. The document explains the
concept of economic benefits, then describes how pollution
abatement projects can generate benefits.
Economic benefits are defined in this manual as the dollar value
associated with changes in the use or potential use of a body of
water. Willingness to pay, consumer surplus, and producer surplus
are elements of the conceptual basis for measuring economic
benefits. Pollution abatement projects generate economic benefits
in stages-reducing effluents improves water quality, which changes
the aquatic habitat. Recreationists, commercial fishermen, and
homeowners, for example, then alter the way in which they use the
body of water. The value associated with these changes represents
the economic benefits of a pollution abatement project.
Benefits include user benefits and intrinsic benefits. User benefits
are direct or indirect and affect industry, agriculture, the municipal
water supply, commercial fishing, navigation, recreation, health,
habitat, and aesthetics. These typically can be measured by using
commonly available market prices, or can be inferred from market
prices. Intrinsic benefits are those that are not directly related to the
current use of water-related resources. They typically express to
individuals the "psychic," subjective value of improved well-being.
Intrinsic benefits can be personal or intergenerational, short term or
long term.
To evaluate pollution abatement projects, a distinction must be made
between primary and secondary benefits. Primary benefits are the
direct impacts of the project. Secondary benefits are the indirect
impacts. In some cases secondary benefits should be included in
the evaluation; in other cases they should not. This manual
suggests an approach to describing nonmonetizable benefits and
provides recommendations to help to avoid double counting. Report
and display features also are provided. Detailed procedures are
given for defining and estimating recreational as well as commercial
fishing benefits.
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Recreational benefits covered include swimming, health, fishing,
boating, and intrinsic benefits. The methods described to evaluate
swimming benefits include the travel cost, contingent valuation
survey, and participation/unit-day valuation methods. A cost-of-
illness method is proposed to evaluate swimming-related health
benefits. The demand estimation method for evaluating fishing
benefits is described step by step, and a two-step procedure is given
for evaluating benefits to boating. The commercial fishing benefits
discussion focuses on commercial shellfishing, and four case studies
are provided to assist in defining the benefits associated with
reopening shellfish beds. Intrinsic benefits from reopening shellfish
beds also can be estimated using methods such as the contingent
valuation method (described in Chapter VI, Recreational Benefits).
Because there are numerous and subtle factors to consider when
estimating the benefits of pollution abatement, this manual describes
the types of analyses that can be made rather than dictating specific
methodologies. To assist further in planning the best approach for
measuring benefits, a list of technical publications that,address
industrial point-source effluent guidelines, limitations, and standards
is provided at the end of this manual.
IV
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GLOSSARY
Bequest Value: An option value that reflects intergenerational
concerns. (See Option Value.)
Common Property Resource: A resource such as air or water that
is essentially free of charge or available to many users.
Consumer Surplus: The conventional dollar measure of the
satisfaction that individuals derive from consuming a good or
service, exclusive of what they pay for it.
Economic Base Analysis: A technique for estimating the
secondary benefits from implementing a pollution abatement project
by tracing the interindustry relationships and utilizing a single
multiplier.
Economic Benefit: The dollar value associated with the
incremental, beneficial changes in the use or potential use of the
water body.
Existence Value: A measure of an individual's willingness to pay for
knowing that the services of a resource exist, independent of any
anticipated use by that person.
Individual's Demand Curve: A graphical representation of a
person's desire for goods and services; the curve is used to
determine an individual's maximum willingness to pay to consume
specified goods or services.
Input/Output Analysis: A technique for estimating the secondary
benefits from implementing a pollution abatement project by tracing
the linkages between industries in a regional economy and utilizing
several multipliers that result.
Intrinsic Benefits: All benefits associated with a resource that are
not directly related to the use of that resource. (See Option Value
and Existence Value.)
Net Benefits: A term used to denote benefits that either remain
after, or are free from, costs and other charges that are assessed.
Nonmonetizable Benefits: Those benefits that cannot be valued
monetarily or for which a dollar value cannot be easily assigned.
Option Value: A type of intrinsic benefit that quantifies the amount
of money, beyond user values, that individuals are willing to pay to
ensure access to a resource (or level of environmental quality).
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Primary Benefits: Direct benefits of, or the increases in well-being
resulting from, a pollution abatement project.
Producer Surplus: The measure of change in the well-being of a
firm; that is, a measure of the excess of revenues over costs.
Secondary Benefits: Those benefits that are indirectly created by
a pollution abatement project, either through the stimulative effects
stemming from additional activities generated by the direct impacts
of the project, or through the demand-induced effects of the
expenditures required by the project.
User Benefits: Those benefits associated with the direct or indirect
use of the resource.
Willingness to Pay: A measure of the maximum amount that an
individual is willing to spend for each quantity of specified goods or
services.
VI
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CONTENTS
Page
EXECUTIVE SUMMARY jjj
Glossary v
I. Introduction 1
II. Concept of Economic Benefits 3
A. The Context: Nonoptimal Use of a Common
Property Resource 3
B. Willingness to Pay: Demand Curves and
Consumer Surplus 4
C. Supply Curves and Producer Surplus 6
D. How Common Property Resources May Not Be
Optimally Used 7
III. How Pollution Abatement Projects Can Generate
Economic Benefits 11
IV. Benefit Categories 17
A. User Benefits 17
1. Net Benefits to Industrial Users of Water 17
2. Net Benefits to Agricultural Users of Water ... 19
3. Net Benefits to Municipal Users of Water .... 20
4. Net Benefits to Commercial Fishing 20
5. Net Benefits to Navigation 20
6. Net Benefits to Recreation 20
7. Net Health Benefits 21
8. Habitat-Based Benefits 21
9. Benefits to Aesthetics 21
B. Intrinsic Benefits 22
1. Option Value 22
2. Existence Value 23
V. General Procedures for Evaluating Benefits 25
A. Benefit Framework 25
B. Primary and Secondary Benefits 25
C. Nonmonetizable Benefits 27
D. Double-Counting of Benefits 27
E. How to Deal with Uncertainty 28
F. Report and Display Procedures 29
VI. Recreational Benefits 31
A. Defining Recreational Benefits 31
B. Estimating Recreational Benefits 34
1. Swimming Benefits 34
VII
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I
a. Travel Cost Method 34
b. Contingent Valuation Survey Method 35
c. Participation/Unit-Day Valuation Method ... 36
2. Swimming-Related Health Benefits 37
3. Recreational Fishing Benefits 38
a. Criteria for an Acceptable Evaluation
Procedure 39
b. Demand Estimation Method 39
c. Evaluation Procedures 41
Step 1. Define the Affected Fishery 41
Step 2. Determine How Physical Conditions
Affect Recreational Quality and Quantity 41
Step 3. Estimate Baseline Recreational
Activity and Value of Recreational
Fishing 46
Step 4. Estimate Changes in Recreational
Activity and Economic Value ......... 47
d. Data Availability '....'. 48
Current Sources 48
Future Sources 49
4. Recreational Boating Benefits 50
:5. Intrinsic Benefits 51
VII. Commercial Fishing Benefits 53
A. Defining Benefits of Reopened Shellfish Beds ..... 53
Case 1 54
Case 2 54
Case 3 54
Case 4 55
B. Estimating Commercial Fishing Benefits 56
VIII. References 57
viii
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LIST OF TABLES
Table 1. Synthesis of Economic Estimates from Selected
Recreational Fishing Studies
Table 2. Average Expected Net Willingness to Pay per
Trips by Model in 1981 (1981$)
Page
. 42
. 45
LIST OF FIGURES
Figure 1. Demand Curve and the Consumer Surplus Welfare
Measure 4
Figure 2. Supply Curve and Producer Surplus 7
Figure 3. Nonoptimal Use of Common Property
Resources , 8
Figure 4. Causal Relationships and Economic Benefits .... 12
Figure 5. Sources of Benefits of Water Pollution Control ... 18
Figure 6. Value of Benefits Summary Statement 30
Figure 7. Individual Consumer Surplus for Beach
Recreation 32
Figure 8. Demand and Supply Curves and Producer and
Consumer Surplus for Case 3 55
Figure 9. Demand and Supply Curves and Consumer Surplus
for Case 4 56
LIST OF EXHIBITS
Publications Available Through EPA's Industrial Technology
Division A1
IX
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Chapter I
Introduction
Section 320 of the Clean Water Act provides for the development of
Comprehensive Conservation and Management Plans (CCMPs) for
estuaries of National significance. To ensure the greatest return on
resources spent, it is often necessary to document the economic
benefits associated with alternative management strategies. The
purpose of this manual is to assist estuary program managers and
staff in identifying, estimating, and evaluating the economic benefits
of water quality improvements created by various pollution
abatement options. Estimating economic benefits helps to
determine that a project's benefits are reasonably commensurate
with the project's costs.
Benefit estimation cannot be approached mechanically. Each
situation is unique, introducing new complexities that require
judgment and versatility in determining how best to measure the
various benefits. Furthermore, the availability of data is important
in selecting and developing methods for estimating benefits. The
availability of data both constrains and shapes the analysis.
Therefore, estuary managers and project analysts are urged to
gather and review all relevant information before proceeding with a
site-specific approach. To aid in the preparation process, the U.S.
Environmental Protection Agency (EPA) Industrial Technology
Division (also known as the Effluent Guidelines Division) has
compiled a list of technical publications that address industrial point-
source effluent guidelines, limitations, and standards. The list,
referred to as Exhibit A, is included at the end of this manual.
Because there are numerous and often subtle factors to consider in
benefits estimation, this manual does not dictate specific
methodologies that must be used when estimating the benefits
created by pollution abatement options; rather, the manual describes
the types of analyses that EPA believes can serve as benchmarks.
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This manual first explains the concept of economic benefits, briefly
touching on willingness to pay, and consumer and producer
surpluses. The document then describes how pollution abatement
projects can generate benefits. Chapters follow on each of the kinds
of benefits that could result. The section below outlines the general
procedures for estimating the benefits from water pollution controls.
This manual is intended to be a primer on benefits analysis. For a
more comprehensive explanation of benefits estimation, see the
Benefit-Cost Assessment Handbook for Water Programs (U.S. EPA,
1983).
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Chapter II
Concept of
Economic Benefits
The following discussion of economic benefits is conceptual in
places. This section is intended to clarify the technical definition of
the term benefits to facilitate understanding of the practical
application of the benefits analysis, and to provide an overview of
the typical context in which water quality problems exist (i.e.,
common property resources). Some familiarity with microeconomic
principles is assumed. A more comprehensive explanation is given
in the Benefit-Cost Assessment Handbook for Water Programs (U.S.
EPA, 1983).
In other documents the term benefits has been used loosely to refer
to outcomes such as the expected number of beach closings
averted per season or the reduction in total phosphorous loadings
in the water body. The term economic benefit, as it is used in this
manual, is more specific. Here, the term refers to the dollar value
associated with the incremental, beneficial changes in the use, or
potential use, of the water body. The economic concepts used to
measure these benefits are derived from economic theory, according
to which individuals acquire satisfaction (or utility) by consuming
goods and services.
One of the fundamental problems in water quality economics is the
"common property resource" issue. In some cases, typically when
an air, water, or other resource use is essentially free of charge
and/or available to many users, that resource will tend to be
overused relative to some optimal level. To understand this
phenomenon, it is necessary first to describe the basic concepts of
demand curves (willingness to pay) and supply curves.
A. The Context:
Nonoptimal Use
of a Common
Property
Resource
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B. Willingness to
Pay: Demand
Curves and
Consumer
Surplus
II
An individual's demand curve, which is a reflection of a person's
desire for goods and services, is an important conceptual guidepost
for defining and measuring economic benefits. The typical demand
curve, presented in Figure 1, shows the maximum amount that an
individual would be willing to pay for each quantity of good X. The
downward slope of the curve indicates that an individual is willing to
buy more of X at lower prices than at higher prices. In Figure 1, it
is assumed that all the other factors that might influence demand,
such as income, the prices of related goods, etc., do not change.
Thus, according to the demand curve, if the market price is P0, the
individual will purchase Q0 of X and make a total expenditure equal
to PoAQ00. Because the demand curve measures the-individual's
maximum willingness to pay for each level of consumption, the total
willingness to pay for Q0 can be derived as the total expenditures
plus the triangle P0PjA.
£
I
I
Quantity of X
Figure 1. Demand Curve and the Consumer Surplus
Welfare Measure
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The difference between what individuals actually pay with a constant
price per unit and the amount that they are willing to pay is defined
as the consumer surplus-the conventional dollar measure of the
satisfaction that individuals derive from consuming a good or
service, exclusive of what they pay for it. For most activities that
depend upon services related to the environment, the price is zero.
For example, often no price is charged for admittance to public
beaches. In such cases, economists develop demand curves based
on surrogate prices (e.g., using travel costs). (See Section VI.A
below.)
Although the area under the typical demand curve is not a theo-
retically ideal measure of a recreationist's consumer surplus, in most
water-based recreational applications it provides a sufficiently close
approximation to the ideal measure and is simpler to estimate (Willig,
1976). Comprehensive data, such as a recreationist's income level,
distance from the person's house to the recreational site, and the
frequency of trips taken to the recreational site, generally will not be
available for rigorous empirical estimation of water pollution
abatement benefits. A comprehensive individual-user telephone
survey would be needed to gain this information; however, such a
survey is expensive and time-consuming. Therefore, developing a
more theoretically rigorous measure of individual consumer surplus
without comprehensive data would probably add only a false sense
of precision. Even measuring the area under a typical demand curve
is difficult. It requires the ability to specify and estimate demand and
supply curves. The difficulty arises because the data observed (i.e.,
prices and quantities) reflect only the intersection, or equilibrium
point, of the two curves. Specifying these curves requires data on
variables other than price and quantity to account for "shifts" in the
curves. Even if the demand and supply curves can be successfully
specified, the data available to estimate the equations are often
highly correlated, resulting in poor parameter estimates. These are
the problems faced when "hard" data are available, as in the private
marketplace. The problems become much more severe when
estimating the consumer surplus for public goods.
Despite having serious methodological problems, these methods are
used to estimate water quality benefits and are relied upon by
decision makers. For example, under Executive Order 12281, benefit
estimates relying upon these techniques are commonly used in the
Regulation Impact Analyses (RIA) that support guideline standards
promulgated by EPA and approved by the Office of Management
and Budget (OMB). The methods discussed below reflect these esti-
mation problems, and offer suggestions on how best to deal with
difficult situations. For those interested in pursuing more rigorous
estimates, the Benefit-Cost Assessment Handbook for Water
Programs (U.S. EPA, 1983) can be consulted.
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C. Supply Curves
and Producer
Surplus
How would estimates of individual consumer surplus be used in
estimating the benefits of water quality improvement? As an
example, one beneficial impact of water pollution controls might be
a reduction in the number of days of beach closings due to
excessive fecal coliform counts. Thus, estimates of a random
sampling of recreationists' consumer surplus for each visit to the
beach, properly expanded to represent the total number of recrea-
tionists likely to use the beach on any given day, would provide a
dollar value of the economic benefits of improving water quality to
increase the recreational use of that beach by one day.
Analogous to the concept of consumer surplus, producer surplus is
the measure of a change in the well-being of a firm (firm is used
generically to mean any economically productive entity). In Figure 2,
the producer surplus is the area above the original supply curve S0
and below the price line P0 faced by the firm or industry. The supply
curve shows the relationship between the quantity of output that the
firm is willing to supply and the price at which the firm can sell the
output. .The upward slope of the curve indicates that the firm is
willing to sell more at higher prices than at lower prices, all else
being equal. The area ONUQ0 measures the costs to the firm of
supplying Q0 of the good, and the area OP0UQ0 measures the reve-
nues generated by selling Q0 of the good at the price PQ. Producer
surplus is the area of the triangle NP0U that measures the excess of
revenues over costs.
Whether a firm is economically better off after water pollution
controls have been implemented is sometimes difficult to determine,
but examining the change in producer surplus will help. For
example, controls may lead to the reopening of shellfish beds. If so,
a polluting firm could see its marginal costs (or fixed costs) rise,
resulting in lower quantities sold and economic losses. Moreover,
if the shellfish industry is competitive, new firms will be established
to supply the additional demand, or the price will drop to reflect
lower costs, eliminating excess profits. Consumers will be better off
in total, but producers will be neither better nor worse off
economically. On the other hand, an increase in harvestable supply
and possible decrease in processing costs could lead to a reduction
in the firm's marginal costs of supplying shellfish. This scenario is
depicted as the rightward shift in the supply curve from S0 to'S1 in
Figure 2. If there is no change in the price for a firm's or industry's
output, then the change in producer surplus would be equal to the
area UTMN. Unlike individual consumer surplus, which is measured
in terms of utility or satisfaction, a change in producer surplus
provides an exact measure of a change in a firm's welfare because
it is measured directly in dollars.
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So
Producer
Surplus
D Qo
Quantity
Figure 2. Supply Curve and Producer Surplus
The change in consumer and producer surplus provides the
conceptual basis for measuring economic benefits. Before these
concepts can be applied, however, it is necessary to understand the
nonoptimal use of common property resources, the process by
which water pollution controls produce economic benefits, and the
different kinds of benefits that may be considered.
D. How Common
, Property
Resources May
Not Be Optimally
Used
As mentioned in Section II.A, the availability of common property
resources can result in their nonoptimal use. This section describes
how nonoptimal use may arise, and presents an overall framework
for the need for water quality protection and hence for estimating the
overall costs and benefits for water quality protection programs and
projects.
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Figure 3 presents a basic model used to equate social costs with
social benefits and represents a summation of net benefits for both
consumers and producers, given the common property resource.
Costs/Benefits
($)
S, » Marginal Social
Cost Supply Ciirve
;p • Marginal Private
Cost Supply Curve
« Marginal Social Benefits
» Marginal Private Benefits
Q.
Quantity
Figure 3. Nonoptimal Use of Common Property
Resources
The optimum level of output is that at which the marginal social cost
equals the marginal social benefit, yielding output Qe. However, the
unregulated competitive market provides output Qc instead. The
increased welfare associated with producing Qe is given by the area
ABC. The reduction in total social cost from the change is the area
under the marginal social cost curve, ABQcQe. The loss of social
benefit equals the area under the marginal social benefit (demand)
curve, ACQcQe. The difference between the two, area ABC,
represents the net welfare improvement from the reduced output of
market goods and the increased level of environmental goods (water
quality enhancement).
The preceding example illustrates the common problem'of overuse
of a common property resource. For example, estuarine waterways
may become polluted because of agricultural runoff (i.e., nonpoint
sources) or industrial discharges (i.e., point sources). Policy
prescriptions, such as requirements for agricultural Best
Management Practices (BMPs) or industrial pretreatment regulations,
are intended, in effect, to equate the marginal private cost supply
curve (S_) in Figure 3 with the marginal social cost curve (Ss).
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In reality, it is extremely rare that S or Ss in Figure 3 either are ever
known or can truly be estimated at reasonable cost. However, it is
usually possible to discover if a proposed water quality protection
program or project will result in an overall improvement in social
welfare. In other words, it is possible to determine if a reduction in
the size of the "social welfare loss triangle," area ABC in Figure 3,
will occur.
At its essence, benefit-cost analysis of improvements to estuarine
water quality is intended to achieve precisely a determination of the
size of the change in the social welfare loss triangle. If the benefits
of such improvements outweigh their costs, then the program is
desirable.
The remainder of this manual focuses on methods to predict and
estimate the economic benefits of estuarine water quality
improvements. In many cases, the analyst must be aware that some
costs are often required to achieve those benefits. For example,
industrial users may benefit from cleaner process water for cooling,
etc., but pretreatment regulations, or required changes in agricultural
practices to achieve those benefits in a watershed, may be costly.
While these costs are recognized, the focus of this manual is on
benefits estimation. Occasionally, the term net benefits is used to
denote benefits net of costs; but, in general, cost estimating as
discussed in this manual is more straightforward. The following
section provides examples of sources for cost estimation for
wastewater treatment facilities, but other costs, such as of
government regulation programs and agricultural practice changes,
are not explicitly covered.
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Chapter III
How Pollution Abatement
Projects Can Generate
Economic Benefits
Economic benefits of water pollution controls are produced in
distinct stages. As Figure 4 illustrates, reducing the quantities of
effluent being discharged into a water body improves the various
parameters or measures of water quality, which in turn can lead to
changes in the aquatic habitat in the impacted area. Once the
economic agents directly affected by the water body (e.g.,
recreationists, commercial fishermen, and homeowners) perceive
these changes, they may alter how they use the water body. The
measured value associated with these changes in use or potential
use represents the economic benefits that the project generates.
The first link in this chain-the relationships among the various water
pollution controls and the qualitative and quantitative reductions in
effluents-is technical and in many ways noneconomic. One aspect
of this link that is economic in nature, however, is the cost of
constructing, upgrading, operating, and maintaining various water
pollution controls such as municipal wastewater facilities. Although
cost data may not be directly applicable to optimal reductions in
effluents (i.e., there are ancillary equipment and related costs that do
not impact effluent levels), the data nonetheless should be
considered and the relationship between money spent and expected
outcome closely examined.
Several publications are available that address these issues.
Construction Costs for Municipal Wastewater Treatment Plants:
1973-1978 (U.S. EPA, 1980) examines cost information collection,
analysis, and estimation techniques, and includes examples to
illustrate various costing procedures. For instance, examples include
estimating the total project cost for a new 2.0 million gallons per day
(mgd) activated sludge secondary treatment plant in Columbia,
Missouri; estimating the cost of enlarging an existing advanced
secondary treatment plant in Billings, Montana, from 4.0 to 5.5 mgd;
and estimating the cost of enlarging or upgrading an existing 2.0-
mgd primary treatment plant in Gainesville, Florida, to a 5.0-mgd
advanced wastewater treatment plant. The examples are accompa-
nied by appropriate graphs and calculations to guide the reader
through the estimation process.
11
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Water Pollution Controls
i
rtRedi
I
itylmj
1
Aqual
I
isesof
I
Effluent Reductions
Water Quality Improvements
Chang* in Aquatic Habitat
Behavioral Responses of Economic Agents
Value of Changes in Uses and Services of the Water Body
Recreational Uses
Commercial Fishing Uses
Industrial Uses
Irrigation Uses
Municipal Water Supply Uses
Navigational Uses
Human Health Uses
Aesthetic Uses
Option Value Uses
Existence Value Uses
Figure 4. Causal Relationships and Economic Benefits
Similarly, Construction Costs for Municipal Wastewater Conveyance
Systems: 1973-1979 (U.S. EPA, 1981) examines the costs of
constructing gravity collection sewers, interceptors, pumping
stations, and the associated force mains necessary to collect and
transport wastewater to a treatment facility. This report, which is
based on analysis of 777 collection systems, provides detailed
analysis of various cost estimating procedures and includes
examples. Two examples address estimating the total project cost
to construct 5,000 ft of 30-in. sewer in Louisville, Kentucky, and
estimating the total project cost for a wastewater collection system
to serve a population of 2,500 people in Mankato, Minnesota.
Yet another document that examines the economic aspects of this
first link in the chain is Operation and Maintenance Costs for
Municipal Wastewater Facilities (U.S. EPA, 1981). This document
summarizes operation and maintenance data for more than 900
treatment plants and almost 500 conveyance systems throughout 41
of the 48 contiguous states. Included is information on administra-
tive costs, sludge-handling costs, and staffing. In addition, examples
are provided that illustrate estimation procedures in these key areas,
such as estimating administrative costs for a secondary wastewater
treatment facility with a design flow of 5.0 mgd, and estimating total
operation and maintenance costs for a new treatment plant with a
12
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design flow of 2.75 mgd. The estuary manager or analyst may also
wish to consult "Cost-Effective Operation and Maintenance: Six
Cities Save Over One Million Dollars" (U.S. EPA, 1986), another
reference for analyzing effective wastewater treatment options.
The second link in the chain-the relationship between effluent reduc-
tions and changes in water quality-is noneconomic in nature, as it
involves a variety of physical and biochemical processes and
relationships.1 Because these physical and biochemical processes,
which take place once pollution has occurred, are predominantly
noneconomic in nature, they are not covered in this manual.
However, it is critical that the economist or analyst gain a reasonably
clear understanding of the relevant physical and biochemical
processes.
The third link in the chain involves translating the predicted changes
in water quality parameters, such as dissolved oxygen, suspended
solids, or fecal conforms, into quantified physical effects on habitats,
such as changes in fish habitats or reductions in the number of
beach closings. This link represents the interrelationships between
the noneconomic (i.e., physical and biochemical) and the economic
stages of the production of benefits. In some circumstances, the
analysis cannot proceed beyond this link because the effects that
induced changes in water quality have on marine aquatic habitats
are not well understood. For example, some pollution is intermit-
tent (caused by rainstorms) so that the resulting water quality
problems are transient and may result in only a short-term adverse
effect. However, in other cases intermittent problems can have
cumulative, long-term effects, possibly resulting in direct consumer
loss of benefits (e.g., shellfish beds may be closed for an extended
period or swimmers may have a lingering fear of the water long after
the beach has been reopened). Predicting water use benefits that
would result from controlling intermittent sources of pollution is
difficult. In this situation, the impacts of controls should be
described qualitatively. A qualitative analysis may identify other
factors that should be considered and will aid in the decision-
making process. (See Section V.C for further discussion.)
The link between water quality improvement and change in aquat-
ic habitat has been examined in Habitat Requirements for Chesa-
peake Bay Living Resources (Chesapeake Bay Program, 1988). To
document the present water quality of Chesapeake Bay and refine
strategies for reducing or preventing further increases in nutrient
enrichment and contamination by toxic metals and organic
compounds, Bay Program personnel developed a resource-based
These processes and relationships come into play once decreased or increased
effluents enter the environment However, it is clear that polluters' decisions to
change pollution practices are often closely related to economic (typically profit
and loss) considerations.
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approach for defining habitat objectives. After studying major
trophic relationships and energy paths in the bay, then establishing
zones based on water depth and salinity, representative and target
species could be identified and profiled. These species serve as
indicators of Chesapeake Bay's ecological condition. Related habitat
matrices were developed for the target species and provide
information such as the sensitivity of a particular species to toxic
substances. The Habitat Requirements document can be used to
develop, resource-based water quality standards. The document
details the steps involved and presents species-specific data.
It should be emphasized that habitat benefits themselves often foster
other improvements and have value beyond that determined by the
analyst when establishing links in the causal relationships to arrive
at economic benefits from improved water quality. This document
focuses on benefits to water users and nonusers of improved water
quality, which may include not only better fisheries (a point
addressed later) but improved wetland quality, which in turn can
readily result in healthier flora and fauna, greater estuarine species
diversity, etc. In turn, this can lead to higher-valued consumptive
and nonconsumptive recreation, and even commercial values. In
many cases, the value of protection and restoration of habitat can
also be estimated, using the techniques described in this report.
A related document, but one that examines the other side of the rela-
tionship--in this case, the need to improve water quality by altering
the pollutant (i.e., phosphorous) level-is the Handbook: Retrofitting
POTWs for Phosphorous Removal in the Chesapeake Bay Drainage
Basin (U.S. EPA, 1987). The handbook presents general
engineering considerations for retrofitting wastewater treatment
facilities,: performance and cost data from selected plants, process
design synopses, and chemical and safety concerns. Also included
are a comparison of biological phosphorus removal processes, a
discussion of the effects of combined phosphorus and nitrogen
control on the engineering requirements, estimated cost graphs for
retrofitting plants, and an examination of numerous other factors in
phosphorus removal. Several case studies in the Chesapeake Bay
and Great Lakes Drainage Basins are described as well.
Similarly, the Design Manual: Phosphorus Removal (U.S. EPA, 1987)
explores several phosphorus removal strategies and processes, and
provides detailed case histories or various applications of the
technology. For example, using the Phostrip (biological) process at
a wastewater treatment plant (15-mgd design capacity) in Little
Patuxent, Maryland, resulted in an average total phosphorus removal
efficiency of 94%; using chemical addition systems at treatment
plants in Elizabethtown, Pennsylvania, and Little Hunting Creek,
Virginia, Resulted in estimated chemical sludge production levels from
phosphorus removal of 30% to 44%; and adding iron as waste pickle
liquor (approximately 5 mg/L) at the Back River Wastewater
14
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Treatment Plant in Baltimore, Maryland, significantly improved sludge
handling operations, boosting average daily sludge production of dry
solids from 69 to 88 tons and wet solids from 390 to 456 tons for an
increase of 29% and 17%, respectively. It is advisable to consult
these and other documents when examining the link between
improvements in water quality and changes in aquatic ecological
habitats.
Once changes in aquatic habitats have been recognized by users or
potential users of the water body, these individuals or firms will alter
how they use the resource. Changes in the pattern of uses and
services associated with the resource represent the economic
benefits that result from implementing successful estuarine pollu-
tion controls. The last stage of the analysis is to determine the dollar
value associated with changes in uses and services of the affected
water body. Before reviewing the methodologies for valuing these
benefits, it is appropriate to identify all of the uses or services of the
water body that may be affected by the improvement in water
quality. These uses and services are identified in the next section.
15
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Chapter IV
Benefit Categories
The sources of benefits from the changes in the uses and services
of the water body are categorized in Figure 5. The economic
benefits created by water quality improvements can be grouped into
two broad categories-user benefits and intrinsic benefits. User
benefits are those benefits associated with the use of the resource;
these benefits are divided into direct uses and indirect uses of water.
Intrinsic benefits are all benefits associated with a resource that are
not directly related to the use of that resource; these benefits are
also divided into two subcategories, option value and existence
value. All of the subcategories are then divided further to delineate
specific economic beneficiaries. Each of these categories is
discussed below.
Industrial water uses are usually classified as boiler feed, cooling
water, and process water. Boiler feed is water that is boiled in
thermal electric plants to make steam for space heating and for use
in industrial processes. Since intolerable quantities of salts are
normally present in water sources used as boiler feed, the water
generally is treated before use regardless of the concentration of
pollutants. The implication is that the benefits from water pollution
controls would be slight insofar as water is used for boiler feed since
treatment is required regardless of the pollutant levels.
Cooling water is used to cool heated surfaces. Quantitatively, by far
the most important use of cooling water is in electric generating
plants. Quality requirements for cooling water are not nearly as
stringent as for boiler feed. Still, cooling water is sometimes treated
before use to prevent scale and slime formations, and cooling towers
must undergo a "blowdown" process periodically to remove these
formations. Thus, water pollution controls might reduce the costs of
treatment and the frequency of blowdown. Also, pollution controls
might reduce the use of toxic cleaning agents that are discharged
in effluents; this would benefit users downstream as well.
A. User Benefits
1. Net Benefits to
Industrial Users of
Water
17
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Industry
Withdrawal
Direct
Consumptive Recreation
(e.g.. Duck Hunting)
Nonconsumptive Recreation
(e.g.. Wildlife Photography)
Figure 5. Sources of Benefits of Water Pollution
Control
Process water is water used in a wide variety of industrial pro-
cesses. Many of these are once-through uses in which withdrawn
water is used to transfer wastes to the water body. Water quality is
relatively unimportant in most of these uses. The implication again
is that water pollution controls would result in little or no economic
benefits for process-water uses.
Some studies have estimated the cost savings of treating withdrawn
water if'the water quality were to be improved. Estimating a firm's
producer surplus from a water quality improvement has been much
less sophisticated than estimating consumer surplus. The primary
focus has been on estimating the cost savings associated with the
change; in water quality. The estimates are derived largely from
engineering cost estimates (Eliassen and Rowland, 1962; Greeley
and Hansen, 1969). Past estimates of industrial withdrawal benefits
have been very small, since industrial water treatment costs are not
more than 0.1% to 1.0% of production costs. Furthermore, many
firms respond to deterioration in water quality by changing to new
processes that can accommodate low-quality water, instead of
treating water before using it. If this change occurs, estimates of
reduced treatment costs are inappropriate and would overestimate
the benefits of improved water quality.
18
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The benefits analysis must also take into account recent trends in
increasing water reuse and recycling in industrial processes. In
some cases, water quality improvements may reduce industrial
costs; in particular, more reuse and recycling may be possible or
treatment expenses before reuse may be reduced. However, there
may be no benefit to industries that reuse and recycle water if their
water quality requirements are low. Thus, the analyst must gain a
clear understanding of the industrial processes affected.
Before benefits can be estimated, the case must be made that firms'
costs would, in fact, be affected by water pollution controls. As
implied above, such instances are likely to be rare.
Industrial users may, however, be subject to additional costs from
water quality regulations. For example, pretreatment at the industrial
site may be required before discharge into sewer systems or
waterways; this may mean adapting a new technology and incurring
the costs. These costs must be included as offsets to the benefits
estimates. Tax savings to the user from any tax credits, however,
should not be included because the public pays these costs through
reduced tax income.
Although it is unlikely that brackish estuarine water will be diverted
for irrigation purposes, agricultural uses of water are a concern to
estuary program managers. The impacts that these uses have on
the estuary should not be overlooked. In many estuaries, diversion
of freshwater for agricultural uses has resulted in longer residence
times of toxicants in the estuary. As the water level in the estuary is
reduced, the salinity concentration increases. More incoming water
is then needed to reduce the toxicant and salinity levels. Wetlands
also can be adversely impacted by freshwater diversion. The
benefits of freshwater use must therefore be weighed against
associated habitat degradation costs.
One significant issue pertinent to such locales as Washington,
California, and Hawaii is saltwater intrusion from an imbalance of
groundwater pumping at sea level with saltwater permeating through
the soil or Ghyben-Herzburg floatation lenses. The more brackish
the water is in estuaries contiguous with irrigated agricultural wells,
the more likely the longevity of water supply will be affected, since
the salt concentrations will distort the separation of freshwater and
saltwater. Hence, there is a direct benefit to agricultural water
supply from estuarine water quality enhancement.
2. Net Benefits to
Agricultural Users of
Water
19
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3. Net Benefits to
Municipal Users
of Water
II
4. Net Benefits to
Commercial Fishing
5. Net Benefits to
Navigation
6. Net Benefits to
Recreation
It is unlikely that marine or estuarine water will be diverted for drink-
ing water purposes. However, municipal water supply uses should
be considered in the cost-benefit analysis of water quality
improvements. Freshwater diversions for municipal uses can result
in longer residence times of toxicants in the estuary and may
adversely impact wetlands as well. Pollutants in surface water runoff
may also find their way into a municipal water supply. Therefore,
municipal water uses in and around the estuary, and the impact that
associated freshwater diversions have on the resource base, should
be considered fully.
Water pollution can affect the productivity of commercial fisheries in
several ways. Conventional pollutants and toxic substances can
affect the biological productivity of estuarine areas, seriously
damaging the food chain that supports commercially valuable
species. Pollutants can also directly reduce, eliminate, or make unfit
for consumption populations of finfish and shellfish species. Within
some estuaries, local stocks of sport fish have declined and other
commerpially important species have been taken off the market
because^ of toxic substance contamination. Shellfish beds also have
been closed to commercial harvesting as a result of water pollution.
Pollution abatement may result in the partial or complete restoration
of these resources. Estimation of the economic benefits associated
with protection and restoration of fishery resources is discussed in
a later section of this manual.
The presence of corrosive substances in the water can shorten the
lives of, and otherwise damage, vessels and structures such as
wharves and pilings (Tihanski, 1973). Water pollution controls may
therefore create navigational benefits.
Many past studies indicate that the recreational benefits resulting
from water quality improvements are the most quantitatively
significant. Water-based recreational activities that can be affected
by water pollution include swimming, sportfishing, hunting of
waterfowl, bird-watching, wildlife photography, boating, sailing, and
water skiing. For water pollution control projects, recreational
benefits, are likely to be created by the value of an increase in daily
(seasonal or annual) usage (if it is not already utilized to its capacity)
20
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because of perceived improvements in the recreational attractiveness
and/or safety of the water body. Estimation of recreational benefits
is discussed in a later section of this manual.
Health benefits may be associated with many of the previously
mentioned uses of a water body, in particular water-based recre-
ation and the consumption of contaminated finfish and shellfish.
Theoretically, the health benefits that might result from water
pollution controls would equal the sum of the affected individual's
willingness to pay for the reduction in the risk of contracting ill-
nesses (such as infectious hepatitis, diarrhea, fever, and gastroen-
teritis in the case of water recreation). This willingness to pay is
thought to depend on three principal characteristics of the illness:
(1) the degree of pain and discomfort, (2) the extent of cosmetic
losses in personal appearance, and (3) the extent of time that the
person is sick. A quantitative economic assessment of swimming-
related health benefits associated with fecal coliform reductions is
discussed in a later section of this manual.
Habitat-based benefits are those benefits that are the result of an
impact on the ecosystem. The benefits are divided into two
subcategories, consumptive and nonconsumptive recreation. For
example, improvements to water quality could support the aquatic
ecosystem by providing food, cover, and other needed elements for
the survival and propagation of various species. This, in turn; could
lead to increased duck hunting (consumptive recreation) and
increased wildlife photography (nonconsumptive recreation).
Habitat-based benefits can be quite complex because of the close,
and two-way, ecological connection between habitat and water
quality. Water quality degradation may decrease habitat quality, for
example, by weakening the ecological integrity of riparian zones. A
reverse causal link may then be initiated, in which reduced natural
filtering and cleansing functions of riparian zones may not only
reduce, for instance, the value of wetlands for flood production, but
may also further degrade water quality. Clearly, the economic
analyst must understand these two-way processes, perhaps by
working closely with biologists and chemists, and must also consider
these seemingly indirect but often very important benefits.
The term aesthetics refers to other ways in which the quality of the
water body affects the well-being or utility of those who live and
work around it. Odor, unsightly shore deposits, and large
accumulations of scum, foam, surface slicks, or other visible
pollutants can adversely affect, among other factors, residential
7. Net Health Benefits
8. Habitat-Based
Benefits
9. Benefits to Aesthetics
21
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B. Intrinsic Benefits
1. Option Value
property values on or near the shoreline. In extreme cases, such as
the washing ashore of medical wastes, direct recreational use of the
water is also impacted and can result in beach closings or other
mitigating measures. However, because aesthetic effects often are
not associated with direct use of the water, they pose severe
measurement and valuation problems. Nonetheless, to the extent
that they involve utility gains and, hence, willingness to pay, they are
every bit as real in an economic sense as direct recreational use.
[For more discussion of the property value impact benefit model, see
the Benefit-Cost Assessment Handbook for Water Programs (U.S.
EPA, 1983).]
Intrinsic benefits include all benefits associated with a resource that
are not directly related to the current use of that resource. Briefly,
intrinsic benefits can be categorized as the sum of option (bequest)
value and existence value.
Intrinsic benefits are difficult to measure correctly, but to the extent
that they involve willingness to pay, they are every bit as real in an
economic sense as direct recreational use. The best method to
estimate intrinsic benefits is by using contingent valuation surveys,
as discussed later in this manual. Intrinsic benefits can be
significant. In recent studies of the benefits of water quality
improvements, intrinsic benefits have typically amounted to
approximately 50% of recreational user benefits (Fisher and Raucher,
1982; Mitchell and Carson, 1981; Walsh et al., 1978).
Option value is defined as the amount of money, beyond user
values,'that individuals are willing to pay to ensure access to the
resource (or a level of environmental quality) in the future, when
there is uncertainty in resource availability and/or individual use
(demand), regardless of whether the individual is a current user.
Option benefits reflect the value of reducing uncertainties and
avoiding irreversibilities. .When option values reflect intergenera-
tional concerns, they are referred to as bequest values. Bequest
values ;are defined as the willingness to pay for the satisfaction
associated with endowing future generations with the resource.
Although these calculated benefits are useful analytical tools, their
utility and accuracy are enhanced when they are subjected to a
societal discount rate. Such a rate and procedure adjusts future
dollar measures of benefits for society's true value of money plus the
impliciitradeoff between consumption and investment. For example,
to invest in water quality today means not investing in some other
alternative or foregoing consumption today. If no discount rate is
applied when using the estimation methods, the resulting benefits
estimates will be significantly overstated.
22
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II
Existence value is defined as an individual's willingness to pay for
knowing that the services of the resource exist, independent of any
anticipated use by the recreationist. For example, people may have
a stewardship motive for wanting to ensure the continued existence
of whales regardless of whether they ever plan on going whale-
watching. People may also value for philosophical, ethical, or
religious reasons knowing that healthy ecosystems will continue to
exist. A. M. Freeman (1981) presents an approach to defining and
measuring existence values.
2. Existence Value
23
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Chapter V
General Procedures for
Evaluating Benefits
This discussion of the general procedures for evaluating benefits
includes the appropriate framework to be used, the distinction
between primary and secondary benefits, an explanation of un-
measurable benefits, how to deal with uncertainty, and the appro-
priate report and display procedures to be used.
The incremental economic benefits generated by a proposed
pollution abatement project are evaluated by comparing the situation
with the project to that without it. The annual value of the uses,
potential uses, and services of the water body with the proposed
project, minus the annual value of the uses and services of the water
body without the proposed project, represents the incremental
annual economic benefits created by the pollution controls.
The distinction between primary and secondary benefits is impor-
tant since the analysis should include only certain benefits.
Typically, primary benefits are taken to be the direct impacts of, or
the increases in well-being resulting from, the proposed project.
Secondary benefits are defined as those benefits indirectly created
by the project, either through the stimulative effects stemming from
additional activities generated by the direct impacts of the project,
or through the demand-inducing effects of the expenditures (inputs)
required by the project.
For example, an investment in a pollution abatement project could
reduce the number of beach closings per season and lead to
increased recreational use of that beach. The willingness to pay for
the additional recreational enjoyment at that beach is a measure of
a primary benefit of the project. Further, because of the increased
recreational use of the beach, the demand for the services of nearby
A. Benefit
Framework
B. Primary and
Secondary
Benefits
25
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restaurants and hotels may increase, leading to the hiring of more
cooks, groundskeepers, and other service personnel. This increase
in employment represents a secondary effect stemming from addi-
tional activities generated by the direct impacts of the project.
Wages paid to the laborers who were hired to construct the pollution
control facilities would also represent a secondary benefit, in this
case induced by the expenditures required by the project.
Should the economic value associated with these secondary benefits
be added to the economic value of the primary benefits in
determining the total benefits of the project? The answer to this
question depends on the employment conditions in the economy.
With relatively "full" employment, there is generally no basis for
claiming the existence of any secondary benefits. This is not to deny
that hotel or restaurant hirings may increase. The point is that in a
full-employment economy, where there are essentially no idle
resources, such hiring represents a transfer and not a net gain-it
requires that some other activity be theoretically foregone or
reduced. Thus, under full-employment conditions there is no
presumption that the secondary benefit adds to aggregate national
welfare, land therefore there is no basis for including secondary
effects in the benefit calculation. Even in a less-than-full-employ-
ment economy, some resources that would be utilized to meet the
increase! in economic activity created by the pollution abatement
project would be transferred from other productive uses and would
therefore represent a transfer.
If, however, there is significant unemployment in those sectors of the
labor market from which resources would be drawn, then the real
social costs of their use may be close to zero. Hence, addition of
secondary benefits to primary benefits is warranted. It should be
noted that full employment does not imply a 0% unemployment rate.
Economic full employment recognizes that a certain proportion of
the labor force will be either switching jobs or just entering the labor
market. For the rules and procedures governing benefit evaluation
under conditions of unemployed or underemployed labor resources,
see Section 713.1201 of "NED Benefit Evaluation Procedure:
Unemployed or Underemployed Labor Resources" in the Procedures
for Evaluation of National Economic Development Benefits and
Costs in Water Resources Planning (1979) by the U.S. Water
Resources Council. If economic conditions warrant including
secondary benefits, then consult A Methodological Approach to an
Economic Analysis of the Beneficial Outcomes of Water Quality
Improvelrients from Sewage Treatment Plant Upgrading and
Combined Sewer Overflow Controls (U.S. EPA, 1985) for an example
of how to estimate these benefits.
There are two primary techniques for estimating secondary benefits:
input/output and economic base analyses. Input/output analysis is
the more detailed technique because it traces the.linkages between
26
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industries in a regional economy. For example, increased fisheries
or agricultural production may mean additional purchases of
agricultural equipment and supplies from retailers and wholesalers,
thereby increasing income in those sectors. In turn, retailers and
wholesalers may then purchase additional business services. As the
additional purchases circulate through the economy, "multiplier"
effects are realized so that the secondary benefits can be widely
spread to other industries. One input/output model structure,
IMPLAN, created by the U.S. Forest Service, is commonly used and
can be developed inexpensively for any area of the United States.
For a description of input/output analysis, see Isard (1960). Another
source is the U.S. Water Research Council (1977).
Economic base analysis is a simpler version of the input/output
analysis. While it also recognizes interindustry relationships, those
relationships are summarized in a single multiplier. More detail on
the economic base analysis is provided in Isard (1960).
Given the available data and empirical methods, certain benefits
cannot be valued monetarily. Nonmonetizable impacts should be
described in the most explicit terms possible, preferably in quanti-
tative (though nonmonetary) units. Consider, for instance, a
recurring odor or surface scum problem. A dollar value cannot be
easily assigned to these impacts. However, the distance (i.e.,
pervasiveness) and frequency of the problem can be stated
quantitatively. Perhaps the odor is evident within a 300-ft radius of
a sewer outlet and is most noticeable on weekends, or perhaps the
scum extends 1/4 mile along the shoreline and is evident the first
week of every month. Such indicators at least provide comparative
information on the magnitude of the impact, even though the
monetary value of the impact may not be expressed in monetary
units. For example, the ecological benefits of pollution abatement
projects on wetlands is not well understood, so it is difficult to
monetize these benefits. Nonetheless, a description of the current
condition and possible beneficial outcomes that may result from the
project can be very helpful to managers and decision makers in
considering strengths and weaknesses of alternative management
options.
A major difficulty in estimating benefits is that benefit categories and
estimation methods are sometimes related in awkward and
overlapping ways. One technique may measure the joint benefits of
more than one category, or it may not capture all the benefits
accruing to that category. This introduces the possibility of double-
counting some of the benefits of water pollution control and not fully
C. Nonmonetizable
Benefits
D. Double-Counting
of Benefits
27
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E. How to Deal with
Uncertainty
counting others. For example, improved water quality may result
in both increased recreational fishing and boating activity. Separate
methods are used to estimate the increased fishing participation and
the increased boating participation. However, some of the increased
boating activity is primarily for the purpose of fishing. Double-
counting of fishing benefits would result if no adjustment were made.
i
One way to avoid or reduce the possibility of double-counting is by
gathering anecdotal data about boating usage. Marina operators
have a good sense of who their customers are and what recreational
habits they have. Talking with marina staff will yield anecdotal
information on the split between boating and fishing. These data can
then be used to estimate various benefits more accurately.
As stated earlier, each situation that requires benefit estimation is
unique: different types of data and different assumptions will be
required. Moreover, each situation and selected methodology will
have its own level of uncertainty. If extreme uncertainty exists, no
single method will yield reliable results. Instead, consider using more
than one model and correlating the information.
The estuary manager or analyst should establish an upper and lower
bound of uncertainty (rather than a single number that yields a false
sense of precision) to define a range of accuracy. To establish
upper and lower bounds, examine all available historical data,
develop reasonable assumptions, and identify linkages between
water quality improvements and possible outcomes. [Refer to
Figure 4 as an example of linkages and to A Methodological
Approabh to an Economic Analysis of the Beneficial Outcomes of
Water 'Quality Improvements from Sewage Treatment Plant
Upgrading and Combined Sewer Overflow Controls (U.S. EPA, 1985)
for a case study of how to deal with uncertainty.] The intent is to
determine trends that will help to establish upper and lower bounds.
As a change in water quality affects one of the linkages, the degree
of uncertainty in each subsequent stage is also affected. Quantifying
the degree of uncertainty to within an acceptable range will make the
results more reliable and usable.
It is important to recognize explicitly the source of uncertainty. To
convey the significance of uncertainty, it is necessary to relate the
concept of uncertainty with actual benefits identified, and specify the
source of the uncertainty. For example, regarding public health,
uncertainty refers to the margin of error in measuring the magnitude
of health effects. The two sources of the margin of error are (1) the
complexity of environmental impacts to an ecosystem encountered
by beneficial users, and (2) the lack of evidence and research
28
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properly relating dose/response data with willingness to pay scales
for avoiding illness and mortality through enhanced water quality.
In writing a report, the following information should be reported for
each benefit category and for each type of effluent treatment being
considered:
(1) Justification that benefits will result for the treatment
option under consideration (i.e., water quality and other
analyses indicate that under current conditions there is
significant use impairment)
(2) Description of the site, its estimated capacity for
recreationists, fish harvests, or other monetizable uses,
and a list of available substitute sites and their proximity
(3) Description of the benefit estimation method used,
assumptions made, data sources used, and general
procedures followed in the analysis
(4) Discussion of potential biases (e.g., double-counting or
underreporting of data in the literature)
(5) An annual estimate of primary benefits
(6) The rationale for reporting upper and lower bounds for
a category's benefits
(7) Justification for and value of any secondary benefits
(8) Any nonmonetizable benefits for the category with upper
and lower estimates of the magnitude of the non-
monetizable effects, if possible.
A benefit summary statement for all categories should also be
prepared. The suggested format for the summary statement is
presented in Figure 6.
F. Report and
Display
Procedures
29
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1
1. Primary Benefits
A. Recreation
1. Swimming
2. Boating
3. Fishing
B. Commercial Fishing
1. Shellfish
2. Finfiih
; Subtotal
II. Other Monetlzable Benefits
A. Other Recreation
B. OtherCommarclal Fishing
C. Industrial
D. Agricultural
E. Municipal
F. Navigational
G. Aesthetic
H. Intrinsic
1. Other
Subtotal
III. Total Monetlzable Primary Project Benefits
IV. Nonmonetizablo Primary Project Benefits
(List)
V. Secondary Benefits
A. Recreation
B. Commercial Fishing
Subtotal
Lower
Bound
Upper
Bound
Source of
Uncertainty
^^"•^CL
X
Figure 6. Value of Benefits Summary Statement
30
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Chapter VI
Recreational
Benefits
One outcome of severe water pollution can be fecal coliform counts
exceeding the 200 most probable number (MPN) per 100 mL
national health limit, thereby closing affected beaches for sometime
afterwards. For a pollution abatement project, quantifiable
recreational swimming benefits include, but are not limited to, (1) the
value of the increase in the number of days per season available for
recreation owing to a reduction in the number of seasonal beach
closings, (2) the value of the increase in daily beach usage (if it is
not already utilized to capacity), and (3) the value of the increased,
daily recreational enjoyment owing to perceived improvements in the
recreational attractiveness and/or safety of the beach.
Figure 7 represents an individual recreationist's consumer surplus for
the increased and improved recreational opportunities at the beach.
The individual's demand curve without the pollution abatement
project is represented by the demand curve D0, which indicates that
the individual takes T0 number of day-trips to the beach during the
year. The area ABO under the curve represents the individual's
consumer surplus for T0 day-trips. Pollution controls will most likely
reduce the presence of oil, grease, floatable debris, fecal coliform
bacteria, and suspended solids. These water quality variables do not
represent an exhaustive list of parameters that may be affected;
however, the first three variables can easily be detected by a
swimmer (Feenberg and Mills, 1980), and excessive fecal coliform
counts, while not easily detectable by a swimmer, lead to beach
closings.
By reducing the number of beach closings and the presence of
these highly visible pollutants, water pollution controls will most likely
result in perceived improvements in the recreational attractiveness
and/or safety of the beach. (Temporary closings of beaches or
posted warnings about beach use after storms may be perceived as
an indication that an area is unsafe for swimming at all times.
A. Defining
Recreational
Benefits
31
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Operation and
Maintenance
Costs
0 i
OM-i OM2 TO
Number of Trips to the Site
Figure 7. Individual Consumer Surplus for Beach
i Recreation
Depending upon the number of closings per season, the public may
avoid certain beaches, regardless of their appearance or proximity.)
As shown in Figure 7, these perceived improvements1 would lead to
a shift outward of the individual's demand curve to Dr As a result
of the project, the increased recreational enjoyment at the beach for
the original T0 number of day-trips taken by the recreationist is
represented by the area ABFE. The perceived improvements also
will lead to an increased number of visits to the site by the individual
(assuming that the site is not currently being utilized to capacity),
which is represented by the area BCF. The value of the benefits to
the recreationist for the increased enjoyment from current beach use
as well as the increase in beach use is the total area between the
Realize that, for a single individual, the shape of the curve as hypothesized
may be very different from the added value received from better water quality.
The (user may value an added day at the beach higher if it occurs on a holiday
rather than on a nonholiday. Added days at the beach may have less value
than existing days (diminishing marginal returns). Also, improved water
quality-since it improves the water year around-may not really produce added
days at the beach for a single individual because days available are dictated
by npnwater-quality factors (e.g., vacation days).
32
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two demand curves ABCE. As described below, this area should
be estimated for each recreationist in a randomly drawn sample and
weighted in such a manner that the total number of original day-
trips in the sample is expanded to equal the total number of visits
currently made to the site during the season. The sum of these
weighted areas represents the aggregate, annual consumer surplus
for the improved recreational attractiveness and safety of the beach.
A pollution control project that reduces or eliminates the number of
beach closings also increases the number (supply) of days when the
beach is open for recreation. The value of an additional recreational
day can also be determined by the demand curve D, in Figure 7.
The average consumer surplus for each day-trip to the beach is the
area under the individual's demand curve divided by the number of
day-trips taken, area EOC/Tj. The average consumer surplus per
day-trip for a randomly selected sample of recreationists at the
beach can be calculated by first computing the average consumer
surplus per day-trip for each recreationist in the sample, and then
computing the average consumer surplus per trip for the entire
sample.
An estimate of the dollar value of the number of daily beach closings
avoided by pollution controls is equal to
average sample con-
sumer surplus per day-
trip to the beach with the
project (dollars spent per
individual visit)
estimated average
daily attendance at
the beach with the
project (number of
individuals per day)
X number of daily beach
closings expected to be
avoided owing to
combined sewer
overflow (CSO) controls
(number of days).
One caveat to the above description is that increased beach
visitation may incur some costs in the form of maintenance, such as
refuse collection and servicing of restroom facilities. Thus, a slight
refinement to the estimation approach in Figure 7 should be
considered, when appropriate. If operation and maintenance costs
are as shown in Figure 7, increased beach use benefits would be
offset by increased operating and maintenance costs, area
This dollar figure represents the value for the increased supply of
recreational days available at the beach and the increased con-
sumer surplus per trip. In addition, it assumes that the demand
curves can be measured either because the beach access is allowed
for a fee (so that market data can be used to measure the curves),
or because, if beach access is free, the demand curves can be
measured by other techniques. The figure omits the potential
increase in daily use that may also result from water quality
improvements. As shown in the next section, certain methods can
capture all of these benefits, whereas others capture only a portion.
33
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B. Estimating
Recreational
Benefits
II
1. Swimming Benefits
a. Travel Cost Method
In the previous sections, water quality benefits have been addressed
primarily from a theoretical perspective. In this section, actual
estimation techniques that could be used will be examined. Since
in the real world, time, resources, and available data constitute very
real constraints that shape and limit the analysis, where possible,
several ;estimation techniques that vary in sophistication will be
discussed. In this manual, only the most salient features of these
methods will be highlighted. For more detail, consult the Benefit-
Cost Assessment Handbook for Water Programs (U.S. EPA, 1983).
As Figure 7 indicates, the key to calculating individual consumer
surplus is estimating the individual's demand curve for beach
recreation. Ordinary demand curves are normally estimated by
using price and quantity-demanded data. However, because most
beaches are public goods, no prices are charged for recreational
services offered. Fortunately, the transportation and time costs
involved often constitute a major portion of the costs of engaging
in recreation at a beach. These travel costs provide surrogate prices
so that the demand can be estimated.
The essence of the travel cost method is that the combination of the
number of day-trips to a site and the round-trip travel cost for each
recreationist traces out a demand relationship since the geographical
location of the recreationist's residence exerts a kind of experimental
control, forcing the more distant consumers to bear heavier travel
and related costs; and those who face higher travel costs usually will
visit the site less frequently than those who live closer, all else being
equal. ' This permits empirical estimation of the demand for a
recreation site's availability.
However, the travel cost method does have limitations. Travel
expenses may or may not represent a large portion of recreational
expenses, depending on whether the site visit requires a lengthy trip
(e.g., sites near large urban areas may be inexpensive to reach).
Furthermore, many recreational visits have multiple purposes, such
as boating and swimming. If the water quality improvement is
expected to affect one of several potential recreational activities,
appropriate allowances must be made to net out the portions of
travel expenses from the benefits estimation. For a more detailed
discussion of the travel cost method, consult the Benefit-Cost
Assessment Handbook for Water Programs (U.S. EPA, 1983). Also,
see Loomis (1988) for variations of this method.
34
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Since the travel cost equation is based on actual recreational visits,
it is one of the most reliable techniques for estimating consumer
surplus. It also captures all of the potential user benefits; however,
it does not capture existence or option values. While travel cost
studies are quite data-intensive, such studies are common
dissertation topics. Local universities should be consulted as a
possible source of such studies.
The final issue concerns properly specifying the travel cost equa-
tion to be estimated. The EPA publication A Methodological
Approach to an Economic Analysis of the Beneficial Outcomes of
Water Quality Improvements from Sewage Treatment Plant Up-
grading and Combined Sewer Overflow Controls (U.S. EPA, 1985)
provides substantial discussion on the most appropriate specification
and estimation technique.
An alternative method for determining the appropriate willingness to
pay for water pollution controls is the contingent valuation survey
method. This method differs from the travel cost method in that it
attempts to gather information on an individual's valuation of
nonmarket goods directly by "creating" a hypothetical market
through a survey questionnaire. One advantage this approach has
over the travel cost approach is that the survey questionnaire can be
designed to elicit not only the respondent's willingness to pay for
discrete changes in water quality, but also his/her option and
existence values as well. This survey approach involves asking
individuals what they are willing to pay for specifically defined
changes in environmental conditions such as a change in water
quality. An example of this approach is Mitchell and Carson's
Willingness to Pay for National Freshwater Quality Improvements
(1984), which is available from EPA. The strength of this document
is that it presents national data with a breakdown by region. To
apply the findings of a strictly regional study to other parts of the
country would yield inaccurate results because of varying
geographic and demographic factors. This study, however, is
national in scope and therefore a recommended resource.
Conducting a contingent valuation study that will result in defensible
results is difficult. The key features of the market framework to
assign dollar values are (1) the proposed means of payment, (2) the
value elicitation procedure, and (3) the description of the resource
being preserved. A useful example of how the surveyed group of
individuals could perceive the water quality enhancement as a
means of payment would be through their water bill or, in the case
of renters, as a rent increase that incorporates utilities'
enhancements. Regarding the value elicitation procedure, a voter
referendum format of conducting the survey (Loomis et al., 1989) is
a credible means that does not appear like a solicitation for
b. Contingent Valuation
Survey Method
35
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c. Participation/Unit-Day
Valuation Method
charitable contributions. This method was used successfully with
Proposition 70 of the State of California in 1987, for a bond issue
allowing the purchase of habitat and open space. However,
procedures to elicit valuation must be chosen carefully and will vary
widely depending on whether telephone, mail, or face-to-face
interview techniques are used.
The technical expertise required to design the survey, elicit re-
sponses, and derive the willingness to pay estimates is consider-
able. In addition to using Mitchell and Carson's national study
(noted above), regional programs may have recent, local studies
available that have a more appropriate estuarine focus. In the
absence of such local studies, support for surveys of this kind might
be a high priority for estuary protection programs in which
recreational and related benefits are major concerns.
The participation/unit-day valuation method relies on previously esti-
mated values of individual consumer surplus for an average day's
recreation. By applying these values to estimated daily use of a
beach, the dollar value for an increase in the supply of recreational
beach days available can be approximated. The advantages of this
method are its simplicity and minimal data requirements. The
disadvantage is that it cannot be used to estimate the aggregate,
annual consumer surplus for the increased attractiveness and safety
of the beach. Consequently, this method could lead to an under-
estimation of total, recreational swimming benefits.
This method has two distinct stages. The first stage involves the use
of regional participation studies to estimate current beach
attendance and to project the increase in beach use that would likely
result from water quality improvements. The analyst must be
concerned with several important issues. First, he/she must examine
historical data and provide strong evidence of swimming use impair-
ment under current water quality conditions. Assuming that any
water quality improvement will lead to increased participation is
inadequate. Second, the analyst should demonstrate that the beach
is currently not being used at capacity. To project increases in
swimming participation at beaches that are already congested is not
credible. For further discussion of this subject, see A Methodological
Approach to an Economic Analysis of the Beneficial Outcomes of
Water Quality Improvements from Sewage Treatment Plant
Upgrading and Combined Sewer Overflow Controls (U.S. EPA, 1985).
The second stage involves the valuation of the increased partici-
pation. ; Generally, the literature suggests that a $5.00 to $11.00
range per visit is reasonable. [Again, see Appendix B in A Meth-
odological Approach to an Economic Analysis of the Beneficial
36
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Outcomes of Water Quality Improvements from Sewage Treatment
Plant Upgrading and Combined Sewer Overflow Controls (U.S. EPA,
1985).] This method is by no means exhaustive. The analyst should
consult the Benefit-Cost Assessment Handbook for Water Programs
(U.S. EPA, 1983) for discussion of other methods that may be used.
There are numerous potential health benefits associated with water
pollution abatement projects-health effects associated with
withdrawal uses such as drinking water or irrigation, health effects
associated with pathogenic and/or toxic contamination of shellfish,
and health effects associated with water contact. In this section,
only swimming-related health effects associated with pathogens are
discussed because this is an area where adequate data and
dose/response information most often exist. People who swim in
water that is polluted with certain bacteria have a high incidence of
gastroenteritis.
The method proposed here to estimate swimming-related health
effects (1) defines the population at risk, (2) applies a dose/response
relationship to determine the likely incidence of gastroenteritis under
current water quality conditions (without the pollution abatement
project) and under the water quality's improved condition (with the
pollution abatement project), and (3) values the reduction in
swimming-related illnesses.
In determining population at risk, the analyst needs to consider not
only the average daily number of visitors to the beach, but also air
and water temperature data to determine the proportion of people
at the beach who actually swim. For an example of how population
at risk can be estimated, see Chapter 7 and Appendix C of A
Methodological Approach to an Economic Analysis of the Beneficial
Outcomes of Water Quality Improvements from Sewage Treatment
Plant Upgrading and Combined Sewer Overflow Controls (U.S. EPA,
1985).
It has been demonstrated that Enterococci bacteria are a good
indicator of the aquatic behavior of the viruses responsible for
swimming-related illnesses. While Cabelli et al. (1980, 1982) have
developed a dose/response relationship between Enterococci
density and the number of cases of gastrointestinal symptoms per
1000 swimmers, typically only fecal coliform (and/or total coliform)
density counts at beaches are available because State, local, and
Federal public health standards are based on these bacteria. A
statistical relationship between the more available indicator, fecal
conforms, and the more appropriate indicator, Enterococci, is
provided in the aforementioned study.
2. Swimming-Related
Health Benefits
37
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3. Recreational Fishing
Benefits
The final, stage is determining the value of the number of
gastroenteritis cases that would probably be avoided as a result of
the water1 quality improvement. Then to quantify the economic
benefit, a post-of-illness approach is used that depends on average
wage rates and the number of work days lost due to the illness.
Again, the aforementioned study provides more discussion on this
subject. ;
The method described here is taken in part from the National Marine
Fisheries | Service Guidelines on Economic Valuation of Marine
Recreational Fishing (Huppert, 1983). This method is intended to
demonstrate how a model would predict increases in recreational
fishing, giyen a water quality improvement that would enhance a
fishery habitat and lead to an increase in the sustainable stock of
recreational finfish. This section describes procedures to assign a
dollar value that is equivalent to the amount that recreationists would
be willing 'to pay for increased estuarine angling.
It is important to note the limitations inherent in the scope of this
discussion. First, the procedures recommended here seek to
develop dpllar values that represent the value to participants of the
increased; and/or enhanced recreational fishing, not the income
generated in associated support industries. The increase in
recreational fishing is considered a primary benefit, whereas the
economic impact of the recreational expenditures on a regional
economy;would most likely be a secondary benefit (see Section
V.B). Second, this procedure does not capture nonuser benefits
associated with enhanced recreational fishing.
Occasionally, gross angler expenditures are incorrectly taken as a
measure bf the economic value of recreational fishing. While
expenditures are prima facie evidence that recreationists place value
on fishingjand the underlying natural resources, the total quantity of
such expenditures made on recreational trips is not a useful estimate
of that value. There are two reasons for this. First, many of the
expenditures made for equipment, food, transportation, and lodging
during a fijshing-related trip are not specifically attributable to fishing.
Recreational trips often are multipurpose in nature, and total
expenditures are not a fair indicator of costs incurred specifically for
fishing, {second, and most important, to treat expenditures as a
measure bf value involves a simple logical fallacy. Expenditures
represent ;costs of fishing. With falling fuel prices, for example, we
might find striped bass fishermen spending less per fishing trip in
1986 than in 1981. Should we take this as evidence that striped
bass fishing has fallen in value? No. Expenditures represent a cost
that detracts from the net economic value of the recreational
experience. It is this net economic value that we seek to measure.
38
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II
An acceptable evaluation procedure has the following
characteristics:
(1) The procedure should provide a reasonable explana-
tion of the physical relationships among the controls
implemented, the water quality improvements that result,
the impact on estuarine fish stocks, and the change in
recreational fishing demand associated with the change
in fish supply.
(2) Evaluation should be based upon a recreational demand
model for the particular fishery being affected or a
similar fishery in a different "study area."
(3) Estimates of demand should account for the socio-
economic characteristics of the market area popula-
tions, qualitative characteristics of the recreational
resources under study, and the availability of alterna-
tive recreational sites.
(4) Willingness to pay projections over time should be
based upon projected changes in the underlying
determinants of demand (e.g., personal tastes and
preferences, income, availability of substitutes, etc.).
To analyze the demand for various fishing activities, it is useful to
treat the recreationist's decision as a sequence of three choices.
First (Stage I), the person chooses whether to fish in an estuary.
Second (Stage II), the person selects the types of fishing (surf,
beach, small boat, partyboat, pier, scuba, etc.) to participate in.
Third (Stage III), the person must choose his/her preferred level of
participation (i.e., how many trips of each type to make). Each stage
of this decision process may be influenced by a variety of economic
and environmental factors. Prominent among these factors are the
individual's socioeconomic circumstances, the costs of participation,
the physical characteristics of the type of fishing as well as the
fishing site, and the chances of angling success.
Prevalence of estuary fishing in the population at large represents
the Stage I decision made by individuals. Thus, lower estuary fishing
participation rates (i.e., estuarine anglers per 1,000 population) in
inland areas relative to coastal areas reflect individual choices
based upon the cost of estuary fishing to them, the costs and
attractiveness of other alternative recreational opportunities (e.g.,
freshwater fishing), as well as family income levels and other factors.
Similarly, the proportion of different types of estuary fishing trips
a.
Criteria for an Acceptable
Evaluation Procedure
b.
Demand Estimation
Method
39
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presumably reflects choices based upon relative costs and relative
attractiveness of the alternatives. Number of trips taken per year per
angler is an empirical measure of the final choice stage.
Statistical analysis of recreational data can proceed by examining
the probability P of being fisherman Pj, the conditional probability of
engaging in fishing type i given that one is a fisherman, and the
number of fishing trips per year by fishermen engaging in type i, Tj.
The relationship is presented as
Trips-per-year( = Population x P
P, x
T,.
The change in activity days generated by an improvement in water
quality is estimated as follows: increases in the amount of each type
of fishing available causes changes in (1) the probability P of
participating in fishing, (2) the conditional probabilities of choosing
each of th;e types of fishing in the designated area P-t-, and (3) the
number of days per year spent fishing for each type i, Tj.
While use 0f a participation model (e.g., Vaughan and Russell, 1981,
1982) may seem appropriate and could be utilized in some cases,
determining what fishery types one would use in estuaries and
therefore in a participation model can be difficult, Many estuarine
fish are widely distributed species. Being unable to characterize
segments jof estuaries or entire estuaries in terms of the types of
recreational fisheries supported could prevent a participation model
from beirig easily and directly applied to such an analysis.
Moreover, ; while a participation model may provide the increased
demand for recreational fishing in terms of an increase in the
number of fishing days by type, such a model will not provide an
economic : value of the recreationist's willingness to pay for the
additional trips and/or enhanced "quality."
Perhaps a more suitable approach in this case would be to use
travel cost models or contingent valuation surveys to determine the
appropriate economic values for a fishing day. Variations of the
Clawson-Knetsch travel cost technique, for example, have been used
to estimate recreational benefits indirectly in a number of cases.
(For related information, see Knetsch, 1974.) Studies of the Boston
Harbor area and a segment of Pennsylvania's Monongahela River
have utilized travel cost models successfully to examine various use
classificatipns including fishing and boating. Conclusions of the
Boston Harbor study indicate that water quality improvements
resulting from combined sewage treatment plant and combined
sewer ovej-flow controls could yield $12 to $15 million in fishing and
boating benefits. The Monongahela River study also yielded
favorable travel cost data-the model predicted a value of $83 per
year per u|ser household if a decrease in water quality is avoided-
and also offers a discriminating comparison of the travel cost and
contingent evaluation approaches. For more information on these
40
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case studies consult A Methodological Approach to an Economic
Analysis of the Beneficial Outcomes of Water Quality Improvements
from Sewage Treatment Plant Upgrading and Combined Sewer
Overflow Controls (U.S. EPA, 1985) and A Comparison of Alternative
Approaches for Estimating Recreation and Related Benefits of Water
Quality Improvement (U.S. EPA, 1983), respectively. Table 1
provides a summary of selected studies (freshwater and marine) and
Table 2 provides the results from a recent study on the Pacific Coast
that calculates average expected willingness to pay per trip by
mode.
To determine the economic benefit from a proposed action affect-
ing marine recreational fishing, it is necessary to follow a four-step
process. The following paragraphs explain each step in detail. The
amount of effort devoted to each step may vary from one application
to another, depending upon the nature of the proposed action, the
difficulty of establishing the physical linkage between the action and
the recreational experience, and the sensitivity of the evaluation to
the formulation of the demand model. In every case, however, the
procedure seeks to determine the condition of the fishery without the
action, the probable effect of the action on the fishery, and the effect
that the action has on the demand for recreational fishing. The eco-
nomic benefit is then viewed as the net change in economic activity
occurring in the defined fishery as a result of the proposed action.
Step 1. Define the Affected Fishery. Changes in recreational
activity owing to proposed actions will typically be concentrated in
some geographical or "market" area. The impacts should be related
to (1) actual and potential recreationists drawn from identified
locations, and (2) a particular set of fishing locations, species,
stocks, and/or modes of fishing. A description of the subject
fisheries and an inventory of biological resources involved should be
included in this first step. Also needed is a definition of particularly
important fishing sites, a description of alternative (competing)
recreational fishing sites available and their characteristics, and an
explanation of any significant constraints to estuarine access, if any.
Reference to historical evidence regarding changes in the volume of
recreational activities (e.g., fishing days by mode of fishing) overtime
is encouraged.
Step 2. Determine How Physical Conditions Affect Recreational
Quality and Quantity. Fishery management and development
actions often cause physical changes that are not directly
experienced by marine recreational fishermen. Many of these
physical changes will directly or indirectly impact important char-
acteristics or quality factors. For example, the average size, species
composition, or number of fish available within a region may be
altered. The effect of these on fishing characteristics important to
c. Evaluation Procedures
41
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Table 1.
,
Study
Brown etal.
(1983)
Ziemeretal.
(1980)
Vaughan &
Russell (1982)
King & Walka
(1980)
Weithman & Haas
(1982)
Rshing
Season
1977
1971
1979
1980
1979
Synthesis of Economic Estimates from Selected Recreational Fishing Studies8
Location and Activity
Oregon
Steelhead
Georgia
Warm Water
Nationwide
Fee Rshing
Trout Sites
Arizona
Missouri
Coldwater
Value of Travel
Method Time
TC-zonal None6
TC-micro-data
TC-micro-data None0
TC-zonal BEA
Average
TC-micro-data None
TC-zonal .35 of average
wage
Consumer's
Surplus per Day
(1981$)"
$44d
$59*
$30 (trout)
$ 7 (catfish)
$10
$20
Consumer's -
Surplus per
fish (1981$)b
$49 (trout)
$34 (catfish)
-------
Table 1. (Continued)
Study
Huppert &
Thomson (1984)
Miller (1984)
Samples &
Bishop (1983)
Menz & Mullen
(1982)
Brown et al.
(1980)
Fishing
Season Location and Activity
1979-80 California
Marine Fishing from
Partyboats
180 Selected States
1978 Lake Michigan
Trout and Salmon
1976 Adirondack
1977 Oregon
Ocean Salmon
Freshwater Salmon
Steelhead
Method
TC-zonal
TC-micro-data
TC-zonal equation
TC-zonal multi-
equation
TC-zonal
TC-multiequation
TC-zonal
Value of Travel
Time
1/3 of wage
2/3 of wage
1/3 of wage
50% of wage
Average wage
rate
Consumer's
Surplus per Day
(1981$)b
$13
$20
$20-$42
-
$23-38 (without
substitution)
$17-$30 (with
substitution)
-$78
-$25
-$36
Consumer's
Surplus per
fish (1981$)"
$ .46 .
$9.40
Washington
Ocean Salmon
TC-zonal
-$75
-------
Table 1. (Continued)
Study
Crutchfield &
Schelle (1978)
SMS Research
(1983)
Donnelly et al.
(1983)
Rshing
Season
1978
1983
1982
Location and Activity
Washington
Ocean Salmon
Hawaii
Ocean Rshing
Idaho
Steelhead
Method
CVM-WTP
CVM-WTA
CVM-WTP
CVM-WTA
TC-single
equation
zonal CVM-WTP
Consumer's
Value of Travel — Surplus per Day
Time (1981$)"
$25
$56-1 04h
$ 9-$859
$178-$628°
$2.67/hour $13.5*
$28<
$19'
$48]
Consumer's
Surplus-per —
fish (1981$)b
$ 6.351
Notes: TC: trave! cost method; CVM: contingent valuation method; WTP: willingness to pay; WTA: willingness to accept; ?: not reported.
a. Table from Rowe (1985).
b. Per angler unless otherwise noted. Values typically are based upon trips targeting this species.
c. Distance included as separate explanatory variable.
d. Value for trips rather than days.
e. Day value per household.
f. Value reported in personal correspondence.
g. Lower values for $1 starting bid. Higher values for $800 starting bid.
h. Willingness-to-accept range due to different cutoffs of maximum values accepted in analysis.
i. Based upon average 5.5-hour recreation day of sample respondents.
j. Based upon 12-hour recreation day, as used in Forest Service management plans.
-------
Table 2 Average Expected Net Willingness to Pay
per Trips by Mode in 1981 (1981$)
Site
Beach and
Bank8
Man
Made8
Party
Boat3
Private
Boat8
All
Modes'3
California $31.00 $25.40 $11.80 $23.10 $23.10
Oregon $39.00 $35.50 $ 3.70 $10.10 $53.00
Washington $53.00 $26.90 $6.00 $20.50 $45.90
a. Calculated for the elimination of the mode at all sites in the
states.
b. Calculated for the elimination of all site/model alternatives with
a 1% or greater probability of being visited and calculated
separately for each county of origin.
Source: Valuing Marine Recreational Fishing on the Pacific Coast.
Robert Rowe, National Marine Fisheries Service,
Southwest Fisheries Center, LJ-85-18C, June 1985.
anglers (i.e., catch rates) should be assessed. That is, linkages
between objective conditions in the biological realm and perceived
recreational "quality" need to be established.
A change in catch per angler day is one useful measure of recre-
ational quality. Other measures developed should be justified by
reference to source data, existing published studies, etc. Quanti-
tative relationships among the important physical conditions (such
as fish stock size) and recreational quality components (such as
angler catch rate) may be derived from statistical models for the
subject fishery or from studies of other very similar fisheries. Or a
hypothesized relationship may be developed from accepted theory
with specific adaptation to the subject fishery.
As an example of the latter approach, suppose that population
biologists determine that the angler catch rates are proportional to
fish stock abundance. A particular fishery project is expected to
increase the stock by 10%. The observable consequence for the
angler would be a 10% increase in catch per day of fishing. If fishing
participation rates and frequency of fishing trips is a function of
catch rates, then increases in catch rates could lead to more
fishermen fishing more often.
45
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Step 3. Estimate Baseline Recreational Activity and Value of
Recreational Fishing. This step attempts to establish a base
condition from which the proposed action will cause changes. The
base condition may or may not be equivalent to the current
conditions. If there has been some recent shift in the physical or
economic setting, or a trend can be reliably extrapolated, the base
condition could be established by predicting the near future. For
example, if fish stocks have been declining over time, then the base
case, which represents the condition of the fishery if no action is
taken, could reflect the continued decline of that fishery. If the
fishery has historically declined but is currently stable, then the
current condition of the fishery would represent the base case.
Whatever procedure is used, this base condition must include (1) an
estimate of the number and types or recreational fishing trips that
will take plpce in the subject fishery without the project, and (2) the
net economic value (willingness to pay) aggregated for the whole
fishery. Both components may be derived from a comprehensive
model of demand for recreational fishing. Or, the two components
might be developed from separate, but consistent empirical models.
(1) Estimating Volume of Recreational Activity. If no changes from
current socioeconomic, institutional, and environmental conditions
are expected to take place in the absence of the proposed action,
the estimated level of recreational fishing may be equal to current (or
recent historical) levels. This is the simplest approach. Current
levels of recreational fishing may be derived from a model that
accounts for differing recreational participation rates across travel
distance zones and socioeconomic strata. Given per capita
participation (e.g., fishing trips per year per angler) by residence
zone and socioeconomic strata of anglers, future participation can
be extrapplated based on population growth and other trends. To
implement an extrapolation such as this requires extensive survey
information revealing the geographic distribution and socioeco-
nomic characteristics of marine recreational fishermen. Data
collected for a travel cost study may provide the necessary infor-
mation. A; more sophisticated analysis may account for the effects
of anticipated trends in recreational fishing conditions or fishing
quality. For example, an established trend in fish availability, ocean
access, or, cost of participation (e.g., increasing cost of travel) may
be expected to have an important influence on future participation
in fishing, independent of general demographic trends. To account
for these kinds of effects in the base condition requires a quantitative
model linking recreational participation to the qualities or the
characteristics that are expected to become trends.
46
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Such a linkage may be developed as part of a recreational fishing
demand model, wherein the changing characteristics are repre-
sented as "shift" variables in the demand curve. Travel cost demand
studies may introduce these shift variables when multiple sites are
surveyed and fishing characteristics vary among sites.
(2) Estimating the Value of the Recreational Fishery. To estimate
the value of the fishery, a dollar value must be assigned to the
number of fishing trips associated with the base condition. The
basic notion of economic value is the willingness to pay. The
recommended procedure is to estimate value per recreational fishing
day or trip based upon a per capita recreational demand equation.
Step 4. Estimate Changes in Recreational Activity and Eco-
nomic Value. This step should be a simple matter of combining
results from Step 2 (concerning mechanisms by which proposed
actions affect recreational fishing) with those of Step 3 (developing
the economic model of recreational demand that incorporates the
relevant shift variables). Per capita participation (demand) in the
subject fishery will rise or fall, and the value per day or trip may
change due to the proposed action. The relative size and
importance of these two components will vary markedly from case
to case.
An example is the case of improved fish availability in a specific fish-
ery. The analysis in Step 4 would first indicate the level of participa-
tion (demand) and willingness to pay per angler as of the baseline
condition. The results of Step 2 would be used to determine the
magnitude of the impact of the project on recreational fishing via the
shifter variable (i.e., the change in catch rates). The shifter variable
would be used to "shift" the base case level of demand outwards to
the new level of demand, and then the per trip willingness to pay
value would be applied to the new aggregate number of fishing trips
to determine the new economic value of the fishery. The difference
between the aggregate baseline value of the fishery and the new (as
a result of the project) aggregate value of the fishery represents the
economic benefits of the project for recreational fishing. In Figure 7,
the baseline condition would be represented by the demand curve
DQ. The "with the water-quality project" condition would be
represented by the demand curve D|. The change in recreational
value per angler is estimated by the area between the two demand
curves.
The proposed project or regulatory action may cause a complex
change in fishing qualities, such as when availability of some species
is affected by the stock of another species. For example, a project
might increase the amount of reef-related fishing while decreasing
the opportunities for or aesthetic quality of troll fishing. In these
47
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d. Data Availability
cases, the analyst must estimate the negative effects as well as the
positive effects. This may require that demand models be developed
for more than one fishery.
Current Sources. Three major surveys have been conducted in
recent years that obtained economic recreational fishing data on a
national scale: (1) the ongoing NMFS Marine Recreational Fishery
Statistics! Survey (MRFSS), (2) the 1981 NMFS Socioeconomic
Survey ($/E Survey), and (3) the 1985 U.S. Fish and Wildlife
Service's ^National Survey of Fishing and Hunting (NSFH).
Both the MRFSS and S/E Survey are based on a combination of
intercept |(i.e., face-to-face interviews in the field) and telephone
surveys. The MRFSS is structured so that detailed information on
the catch;, species, fishing mode, and location is collected at the
fishing site through intercept interviews. A separate telephone
survey, w|hich canvasses the general population in coastal areas,
collects data pertaining to level of fishing activity by mode of fishing
and residence location. During 1979,1980, and 1986, the economic
data on distance traveled were collected during the intercept
surveys. ! During 1981, the S/E Survey utilized both intercept and
telephone follow-ups. That is, an angler contacted at the fishing site
was also telephoned later with additional questions concerning
expenditures, satisfaction level, disposition of catch, employment
status, arid income.
Major differences between the NSFH survey and the NMFS surveys
are as follows:
(1) the NSFH surveys occur at 5-year intervals rather than
annually.
(2) The NSFH canvasses the U.S. population by telephone and
conducts personal interviews with a subsample to obtain
statistically reliable results at the State level. The MRFSS
canvasses the population only in a coastal strip and collects
detailed species information by on-site intercept. MRFSS
uses ratio estimators to generate data on noncoastal and
6ut-of-state trips and catch.
(3) The NSFH asks anglers to recall the previous year's
experience, whereas the MRFSS is conducted at 2-month
intervals.
48
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None of the data from these surveys is ideal for economic evalua-
tion, but they should provide a first line of attack for specific recre-
ational evaluation studies. At the very least, the general nationwide
data can provide the analyst with an appreciation for the total
numbers likely to be involved in marine fishing, broken down by
region and mode of fishing. For some widespread fisheries, the
MRFSS plus S/E Survey may provide sufficient coverage and sample
size to conduct an economic evaluation. In other cases, examining
available data will help to develop a more in-depth local survey.
Another approach that might provide valuable information on the
abundance of the fishery resource is to conduct a time-series
analysis of young juvenile (also known as prerecruit) species using
one or more abundance indices and environmental parameters
(Austin et al., 1986). Abundance indices examine the size and
distribution of various species.
This approach has been undertaken for a number of finfish species.
Results can be singularly informative or can be used to supplement
other economic data sources, yielding data of perhaps even greater
importance.
Future Sources. The Strategic Assessment Branch (SAB) in the
Ocean Assessments Division, Office of Oceanography and Marine
Assessment, National Oceanic and Atmospheric Administration
(NOAA), has initiated a long-term effort to build a comprehensive
national database and assessment capability for the nation's coastal
and ocean resources. Components of this national marine resource
assessment program include (1) a National Estuarine Inventory Data
Atlas: Physical and Hydrologic Characteristics of 92 Estuaries, (2) a
National Coastal Wetlands Data Base, (3) a National Shellfish
Register of Classified Estuarine Waters, (4) Shoreline
Characterization, (5) National and Regional Marine Resources Data
Atlas, (6) a National Coastal Pollution Discharge Inventory, and (7)
an Economic Survey of Outdoor Marine Recreation in the USA. At
this time SAB's efforts are focused primarily on the data acquisition
and processing stages. While several of these are ongoing projects,
certain components of the databases have been completed and are
available to the public.
Further information on NMFS surveys is available from Dr. Mark
Holliday, NMFS F/S21, Room 8313,1335 East-West Highway, Silver
Spring, Maryland 20910. For more information on the NSFH,
contact Dr. M. J. Hay, U.S. Fish and Wildlife Service, Room 2556,
Department of Interior, 18th and C Street, N.W., Washington, DC
20240. For more information on the SAB effort contact Dan Basta,
Strategic Assessment Branch, Ocean Assessments Division, Office
of Oceanography and Marine Assessment, National Oceanic and
Atmospheric Administration, U.S. Department of Commerce,
Rockville, Maryland 20852.
49
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4. Recreational Boating
Benefits
The Economic Studies Branch of EPA, in conjunction with NMFS,
will have available by fall 1990 a study on the demand for marine
recreational fishing for the East Coast from New York to Florida.
For mor^ information about this study, write to Mark Holliday at the
above address or to Mary Jo Kealy, U.S. Environmental Protection
Agency, PM-220, 401 M Street, S.W., Washington DC 20460.
The method described here for predicting recreational boating
benefits is a two-stage procedure: (1) estimating the change in
recreational boating participation and (2) determining the value of
that chanjge.
Changes in participation due to water quality improvements can in
theory result from (1) increased ownership of boats, (2) increased
intensity of use by boat owners, (3) increased rentals of boats, and
(4) increased intensity of use by renters. A study by Vaughan and
Russell (U.S. EPA, 1985) indicates that increases in boat ownership
and increases in rental use owing to water quality improvements are
negligible. Therefore, the most likely source of increased boating
participation is increased use by boat owners.
Even the .increase in boat owners' intensity of use is arguably small.
Boat owners face not only a constraint on leisure time, which other
recreationists face, but also (1) weather constraints (windy days can
impede water skiing, calm days impede sailing; rain impedes both),
and (2) availability of marinas, moorings, and access ramps.
Furthermore, 44% of the boaters in the U.S. Coast Guard survey
(1979) reported using their boats more than 50% of the time for
fishing, ajnd this increase in boating participation would be covered
under the recreational fishing benefits. Finally, unlike swimming,
boating is not limited to specific locations. The boater can often
avoid poor local water quality conditions by cruising a short
distance. Nevertheless, if a case can be made that current water
quality degradation is the binding constraint, then local and regional
recreational surveys could be used to estimate an increase in
participation. Given the usual amount of uncertainty, a range of
increased boating days should be provided with the lower bound of
that range often being zero.
The range of increased boating days can be valued using a lower-
bound user day value of $18.00 and an upper-bound value of $41.00,
based on 1982 dollar values [see Appendix B in A Methodological
Approach to an Economic Analysis of the Beneficial Outcomes of
Water Quality Improvements from Sewage Treatment Plant
Upgrading and Combined Sewer Overflow Controls (U.S. EPA,
1985)]. :
50
-------
Intrinsic benefits, as defined earlier in this manual, are all benefits
associated with a resource that are not directly related to the current
use of that resource. Intrinsic benefits can be categorized as the
sum of option (bequest) value and existence value (see Section
IV.B). Although these nonuser benefits are not directly observable,
they are as real and economically important as the more easily
measured user benefits.
Intrinsic benefits are difficult to measure and value. A contingent
valuation approach is the most common technique used. Fisher
and Raucher (1984) have demonstrated that intrinsic benefits can
be inferred from user benefits. Evidence from their survey of existing
studies indicates that intrinsic benefits are 40% to 60% of
recreational-user benefits. Based on this study, as a rule of thumb,
50% of recreational benefits can be used as an estimate for intrinsic
benefits, if finding a direct study is not possible. However, if rules of
thumb such as this are used, a fairly wide band of uncertainty should
be applied (see Figure 4).
5. Intrinsic Benefits
51
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-------
Chapter VII
Commercial Fishing Benefits
Estuaries provide spawning and nursery habitats for commercially
valuable fish. Water quality improvements can increase these
commercial fish stocks, resulting in expansion of the fishing indus-
try. The economic benefits associated with this expansion can be
determined by comparing the commercial fishing market under
current water quality conditions with the market that could develop
if pollutant stresses were reduced or eliminated. One critical
problem in estimating the commercial fishing benefits associated
with finfish is that many species are migratory and spend only a
portion of their lives in the estuary.
Regional fishery scientists involved in estuary programs should
advise economic analysts of the degree to which finfish impact
estimates can be developed for water quality improvements in each
estuary. These scientists need to demonstrate how the pollution
adversely impacts the reproductive cycle of the finfish species (i.e.,
recruitment failure). There are several potential impacts: mortality
due to pollutant stress may lead to insufficient spawners; pollutant
stress, which kills off macrophytes, and/or sedimentation may lead
to the destruction of the spawning habitat; pollution may lead to a
disruption of spawning behavior or avoidance of the spawning
habitat altogether; or pollution may directly and indirectly disrupt the
various tropic levels so that insufficient food is available, resulting in
a reduction of adult spawning.
At this time, the relationship between the recruitment failure mech-
anism(s) and water pollution is not well understood. Consequently,
associating a change in water quality with a change in maximum
sustainable yield of fish stock is difficult. Therefore, this section
focuses only on commercial shellfishing benefits.
Shellfishing may be totally restricted by States in areas with pollu-
tant levels exceeding health standards. This can result in major
A. Defining Benefits
of Reopened
Shellfish Beds
53
-------
Case 1
Case 2
Case 3
revenue losses for that State's shellfishing industry. In areas that
border the; closed beds, firms may be required to keep the harvested
shellfish in depuration (decontamination) tanks for several days after
harvesting, which increases production costs. Water pollution
controls have resulted in the reopening of shellfish beds in a number
of States. This section defines the economic benefits associated
with reopening of shellfish beds in four different scenarios.
If the shellfish industry serving the local market is such that no single
firm can influence price, if the reopening of the shellfish beds affects
only a small proportion of the firms serving the market, and if the
increased jharvest is small relative to the market for the product, then
it can be safely assumed that product (i.e., shellfish) prices would
remain fixed after the beds are reopened (see Figure 2). If the
fishery is! also being appropriately managed to maximize net
economic yield (i.e., the fishery is regulated, and there is not free
entry into it by other firms), then the economic benefits of water
pollution controls for commercial shellfishing would be equal to the
change in producer surplus (area MNUT in Figure 2).
If some or all of these assumptions do not hold, defining and
estimating economic benefits become more complicated. Case 2 is
the example of an unregulated fishery. If the fishery is unregulated,
the produber surplus accrues in the short run for the existing firms.
However, their increased profits may attract additional firms to the
resource, which ultimately reduces these excess profits to zero. In
the absence of regulation of the resource (e.g., limits on fish catch
or restricted access), water pollution controls would result in only
transient : primary benefits in the form of short-run producer
surpluses. Such a short-run producer surplus, lasting only a year or
two, is of little economic interest in evaluating a water quality project
where the long-run impacts are considered economically relevant.
In this situation, there would be no long-run producer surplus.
Consider another situation where the yields from the reopened
shellfish beds are large relative to the market, so that the increased
yield depresses the market price. Assume also that the fishery is
regulated! so that access to the reopened beds is limited. This
situation is portrayed in Figure 8. D0 represents the long-run
aggregate demand curve for shellfish. S0 and S., represent the
industry's long-run supply curves without the controls (i.e., the shell-
fish beds;remain closed) and with the water pollution controls (i.e.,
the shellfish beds are reopened), respectively. Reopening the beds
leads to an increased yield (Q0 to Q^. The increased quantity of
shellfish harvested is sufficiently large to cause the price for shellfish
to drop from P0 to Pr The pollution controls result in an increase
54
-------
¥
P°
I
Do
Figure 8.
Qo Qi
Quality of Shellfish
Demand and Supply Curves and Producer
and Consumer Surplus for Case 3
in consumer surplus owing to the price reduction, which is equal in
magnitude to the sum of the areas A + B + C. Before the beds are
reopened, producer surplus is equal to the sum of the areas A + D.
After the beds are reopened, the change in producer surplus is equal
to F + G - A = APS. APS may be positive or negative, depend-
ing on the slope of the demand curve DQ. Indeed, both consumer
and producer surpluses depend on the shape of the demand and
supply curves.
The last situation differs from Case 3 only in that the assumption of
a regulated fishery is dropped. This situation is portrayed in
Figure 9. Without regulation of the fishery, there is no long-run
producer surplus as in Case 2. The reduction in the price of shellfish
(as explained in Case 3), however, does result in consumer surplus
benefits equal to the sum of the areas A + B (in Figure 9).
To summarize, Case 1 results in only producer surplus benefits;
Case 2 results in no long-run benefits; Case 3 results in both
producer and consumer surplus benefits; and Case 4 results in only
consumer surplus benefits.
Case 4
55
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B. Estimating
Commercial
Fishing
Benefits
PO
So
I
Figure 9.
Qo Qi
Quality of Shellfish
Demand and Supply Curves and Consumer
Surplus for Case 4
In some cases, pollution controls may not sufficiently reverse shell-
fish contamination and lead to the reopening of the beds.
Consequently, any empirical estimate of these benefits must include
adequate justification that the proposed controls would, in fact, lead
to the reopening of the shellfish beds.
For CaseH, estimating the benefits is straightforward. The area
MNUT in Figure 2 is equal to the market value of the increased yield,
net of any changes in expenditures on other variable costs of
production.
Cases 3 and 4 are more complicated. For either case, the industry
supply and demand curves would have to be estimated empirically
in order to value accurately those areas that represent the producer
and/or consumer surplus benefits. (For additional information,
consult Rprholm et al., 1965; Gulland, 1969; Altobello et al., 1977;
McHugh and Mirchel, 1978; Wang etal., 1978; and Marchesseault
and Russell, 1979.)
56
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Chapter VIII
References
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Austin, H. M., D. A. Evans, and B. L Norcross, 1986. "Time Series
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Brown, W. G., C. N. Sorhus, and K. C. Gibbs, 1980. Estimated
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"Using Individual Observations to Estimate Recreation Demand
Functions: A Caution," American Journal of Agricultural Econom-
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Cabelli, V. J., 1980. Health Effects Quality Criteria for Marine
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Cabelli, V. J., A. P. Dufour, L. J. McCabe, and M. A. Levin, 1982.
"Screening Associated Gastroenterites and Water Quality," Ameri-
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Crutchfield, J. A., and K. Schelle, 1978. "An Economic Analysis of
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(mimeo), Department of Economics, University of Washington,
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Donnelly, ID., J. B. Loomis, and C. F. Sorg, 1983. "The Net Eco-
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Eliassen, R., and W. Rowland, 1962. "Industrial Benefits Derived
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i
Feenberg, D., and E. Mills, 1980. Measuring the Benefits of Water
Pollution Abatement, Academic Press, New York, NY.
Fisher, A., and R. Raucher, 1982. "Comparison of Alternative
Methods of Evaluating the Intrinsic Benefits of Improved Water
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Fisher, A.^ and R. Raucher, 1984. "Intrinsic Benefits of Improved
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V. Kerry (Ed.), Advances in Applied Micro-Economics. Vol. 3, JAI
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i
Freeman,;A. M., Ill, 1981. "Notes on Defining and Measuring Exis-
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Greeley and Hansen, 1969. "Study for Determination of Benefits
from Improved Great Lakes Water Quality," Dredging and Water
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Buffalo, NY, June.
Gulland, J. A., 1969. Manual of Methods for Fish Stock Assessment:
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i
Huppert, p. D., 1983. National Marine Fisheries Service Guidelines
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NMFS, Southwest Fisheries Center-32, La Jolla, CA.
Huppert, ;D. D., and C. L Thomson, 1984. "Demand Analysis of
Partyboat Angling in California Using the Travel Cost Method," NMFS
Report LJ-84-06, La Jolla, CA.
Isard, W.,; 1960. Methods of Regional Analysis: An Introduction to
Regional Science, M.I.T. Press, Cambridge, MA.
58
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King, D. and A. Walka, 1980. "A Market Analysis of Trout Fishing on
Fort Apache Indian Reservation," School of Renewable Natural
Resources, University of Arizona, Tucson, AZ.
Knetsch, J., 1974. "Outdoor Recreation and Water Resources
Planning," Water Resources Monograph 3, American Geophysical
Union, Washington, DC.
Loomis, J. B., 1988. "The Bioeconomic Effects of Pinlser Harvesting
on Recreational and Commercial Salmon and Steelhead Fishing: A
Case Study of the Siuslaw National Forest," Marine Resource
Economics, Vol. 5, pp. 43-60.
Loomis, J. B., T. Wegge, M. Hanemann, B. Manninen, 1989. "The
Economic Value of Water to Wildlife and Fisheries in the San
Joaquin Valley: Results of a Simulated Voter Referendum,"
unpublished manuscript.
Marchesseault, G. O., and H. J. Russell, Jr., 1979. "A Simulation
Approach to Identifying Multiple Year Harvest Strategies in the Sea
Scallop Fishery," Northeast Fish and Wildlife Conference, New
England Fishery Management Council, Research Document No. 79,
SC 4.1, April.
McHugh, J. L, and A. C. Mirchel, 1978. "Study of the Economic
Structure of the Mid-Atlantic Sea Scallop Industry," Marine Sciences
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Menz, F. C., and J. K. Mullen, 1982. "Acidification Impact on Fish-
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(mimeo), Clarkson College of Technology, Pottsdam, NY.
Miller, J..R., 1984. "On Estimating the Value of Freshwater Fishing
in Substate Regions" (mimeo), University of Utah, Provo, UT.
Mitchell, R. C., and R. T. Carson, 1981. An Experiment in
Determining Willingness to Pay for National Water Quality
Improvements (draft), U.S. Environmental Protection Agency,
Resources for the Future, Inc., Washington, DC, June.
Mitchell, R. C., and R. T. Carson, 1984. Willingness to Pay for
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59
-------
Rowe, R., 1985. Valuing Marine Recreational Fishing on the Pacific
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Center, LJ-85-18C, June.
Samples, K. C., and R. C. Bishop, 1983. "Estimating the Value of
Variations in Angler Success Rates: An Application of the Multiple
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Wl. :
SMS Research, 1983. Experimental Valuation of Recreational Fishing
in Hawaii, NOAA Report H-83-11C.
Tihanski, D. P., 1973. "An Economic Assessment of Marine Water
Pollution Damages," Third Annual Conference, International Asso-
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tries, Montreal, Quebec, Canada, June 7.
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Treatment Plants:
Construction Costs of Municipal Wastewater
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U.S. EPAJ 1981. Operation and Maintenance Costs for Municipal
Wastewater Facilities, Office of Water Program Operations,
EPA/430/9-81 -004, FRD-22, Washington, DC.
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DC.
U.S. EPA, 1983. Benefit-Cost Assessment Handbook for Water
Programs. Vol. 1, Economic Analysis Division, EPA, Washington,
DC.
U.S. EPA, 1985. A Methodological Approach to an Economic
Analysis of the Beneficial Outcomes of Water Quality Improvements
from Sewage Treatment Plant Upgrading and Combined Sewer
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60
-------
U.S. EPA, 1985. "The Estimation of Recreation-Related Water
Pollution Control Benefits: Swimming, Boating and Marine Recre-
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Control Planning and Analysis Division, EPA, Washington, DC.
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Multipliers for BEA Economic Areas, as referenced in International
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Vaughan, W. J., and C. Russell, 1982. Freshwater Recreational
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for the Future, Inc., Washington, DC, November.
Vaughan, W. J., and C. S. Russell, 1982. "Valuing a Fishing Day:
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61
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Weithman, S., and M. Hass, 1982. "Socioeconomic Value of the
Trout Fishery in Lake Taneycomo, Missouri," Transactions of the
American Fisheries Society 111, pp. 223-230.
Wiliig, Robert D., 1976. "Consumer Surplus Without Apology,"
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Ziemer, R. F., W. N. Musser, and R. Carter Hill, 1980. "Recreation
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American Journal of Agricultural Economics 6, February, pp. 136-
141. , •-
62
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Exhibit A
Publications Available
Through EPA's Industrial
Technology Division
Estuary managers and project analysts are urged to gather and
review all relevant information before estimating the benefits of
improving estuarine water quality. The following technical
publications address industrial point source effluent guidelines,
limitations, and standards. These publications can provide valuable
information and are available through EPA's Industrial Technology
Division, which is also known as the Effluent Guidelines Division.
A1
-------
Exhibit A Publications Available Through EPA's Industrial Technology Division
40CFR
Part '- Rulemaklng
Number Industrial Point Source Category Status
402 Cooling Water Intake Structures Final
'105 Dairy Product Processing Final
406 Grain Mills Final
Final
Supplemental
437 Fruits & Vegetables - Canned & Preserved Final
Interim Final
408 Seafood Processing - Canned & Preserved Final
Final
Report
Title of Publication
Best Technology Available for the Location Design
Construction & Capacity of Cooling Water Intake
Structures for Minimizing Adverse Environmental Impact
Dairy Products Processing
Grain Processing
Animal Feed, Breakfast Cereal & Wheat Starch
Com Wet Milling
Apple, Citrus & Potato Processing
Fruits, Vegetables & Specialties
Catfish, Crab, Shrimp & Tuna
Fishmeal, Salmon, Bottom Fish, Sardine, Herring, Clam,
Oyster, Scallop & Abalone
EPA Document
Number
440/1-(YEAR/ID Number)
76/015-a
74/021-9 •.
74/02&8 ;
74/0393
75/20B-b
74/027-a
75/046
74/02f>a
75/041-a
Report to Congress: Section 74 Seafood Processing Study 80/020
- Executive Summary ' Vol. 1
, '••'- VoLII
Vol. Ill
Date of
Publication
April 1976
May 1974
March 1974
December 1974
1975
March 1974
October 1975
June 1974
September 1975
September 1980
NTIS
Accession
Number
PB 253573/AS
PB 238835/AS
PB 238316/AS
PB 240861/AS
-
PB238649/AS
-
PB 238614/AS
PB255840/AS
PB 81182362
PB 81 182370
PB 8112388
-------
Exhibit A (Continued)
40 CFR
Part
Number Industrial Point Source Category
409 Sugar Processing
410 Textile Mills
411 Cement Manufacturing •'-•
412 Fsadlots
413 Electroplating
414 Organic Chemicals
Rulemaklng
Status
Final
Final
Interim Final
Final
• Final
Final
Final
Guidance
Final
Final
EPA Document
Number
•ntteofPubBcatton 440/1-(YEAR/ID Number)
Sugar Processing - Beet Sugar
Sugar Processing - Cane Sugar Refining
Sugar Processing - Raw Cane Sugar Processing
Textile Mis
Cement Manufacturing
Feedlots
Metal Finishing
Guidance Manual for Electroplating and Metal Rnishing
Pretreatment Standards
Existing Source Pretreatment Standards for the
Electroplating Point Source Category
Organic Chemicals and Plastics & Synthetic Fibers
74/002-b
74/002-c
75/044
82/022
74/0054
74/0044
83/091
84/091-g
79/003
87/009
Vol.1
Vol. II
Date of
Publication
January 1984
March 1984
February 1965
September 1982
January 1974
January 1974
June 1983
February 1984,
August 1979
October 1987
NTIS
Accession
Number
PB238462/AS
PB 238147/AS
-
PB83-116871
PB 238610/AS
PB238651/AS
PB84 115489
PB87 192597
PB80 196483
PB88 171335
-------
Exhibit A (Continued)
40CFR
Part
Number
415
416
417
418
419
Industrial Point Source Category
Inorganic Chemicals Manufacturing
Plastics & Synthetic Fibers (Materials Mfg.)
Soap & Detergent Manufecturing
Fertilizer Manufacturing
Petroleum Refining
Rutemaking
Status
Final
Final
Final
Final
Final
Final
Report •
Final
EPA Document
Number
•me of Publication 440/1-(YEAR/ID Number)
Inorganic Chemicals Manufacturing Phase I
Inorganic Chemicals Manufacturing Phase R
Organic Chemicals and Plastics & Synthetic Fibers
Soap ami Detergent Manufacturing
Fertilizer Manufacturing - Formulated Fertilizer Segment
Fertilizer Manufacturing - Basic Fertilizer Chemicals
Summary Report - Phosphate Fertilizer Subcategory of tha
Fertilizer Point Source Category (40 CFR 418)
Petroleum Refining
82/007
84/007
87/009
Vol. 1
Vol. II
74/0180
75/0424
74/0114
82/014
Date of
Publication
June 1932
August 1984
October 1987
April 1984
1975
March 1974
January 1982
October 1984
NT1S
Accession
Number
PB82 265612
PB8S1S6446/
XAB
PB88 171335
PB288C13/AS
PB24_63/AS
PB238S52/AS
—
FBS3 172569
-------
Exhibit A (Continued)
40 CFR
Part
Number
420
421
422
Industrial Point Source Category
Iron & Steel Manufacturing
Nonferrous Metals Manufacturing
Phosphate Manufacturing
EPA Document
Rulemaking Number
Status Title of Publication 440/1 -(YEAR/ID Number)
Final Iron and Steel Manufacturing 82/024
Vol.l - General
Vol.il - Coke Making, Sintering, Iron Making
Vol. IN - Steel Making, Vacuum Degassing and
Continuous Casting
VoLIV - Hot Forming
Vo!.V - Salt Bath Descaling, Add Pickling
Vol. M - Cold Forming, Alkaline Cleaning, Hot Coating
Guidance Guidance Manual for Pretreatment
Steel Manufacturing Point Source Category
Final Dev. Doc. (Reference copy available In Public Record - EPA Headquarters)
Final Dev. Doc. Phosphorus Derived Chemicals Manufacturing 74/006-8
Final Dev. Doc. Other Non-Fertilizer Phosphate Chemicals 75/D43-a
Report Summary Report -Phosphate Fertilizer Subcategory of the Contract # 68-1-4975
Fertilizer Point Source Category (40 CFR 418)
NT1S
Date of Accession
Publication Number
May 1982
PB82 240425-a
PB82 240433-b
PB82 240441-c
PB82240458O
PB82 240466-e
PB82240474-f
September 1985
January 1974 PB241018/AS
June 1976 . -
January 1982
-------
s
Exhibit A (Continued)
40CFH
Part RulemaMng
Number Industrial Point Source Category Status Tttla of Publication
423 Steam Electric Power Generating Final Steam Electric
424 Ferroalloy Final Smelting and Slag Processing
Interim Final Calcium Carbide
Interim Final Electrolytic Ferroalloys
425 Leather Tanning Supplement Supplement Dev. Doc. -Leather Tanning and Finishing
Final
Guidance Guidance Manual for Leather Tanning and Finishing
Pretreatment Standards
Final Leather Tanning & Finishing
426 Glass Manufacturing Final Insulation Fiberglass Segment
Final Flat Glass Segment
Interim Final Pressed & Blown Glass Segment
EPA Document NTO
Number Date of Accession
440/1-{YEAR/1D Number) Publication Number
82/029-b November 1982 -
747008* 1974 PB_38650/AS
75/038 February 1975 -
75/0380 February 1975
88/016-s February 1988 PB88 3541
September 1986 -
82/016 November 1982 PB83 172593
74/001-b January 1974 PB238078/AS
74/001-C January 1974 PB238907/0
75/0344 August 1975 PB256854/AS
-------
Exhibit A (Continued)
40CFR
Part
Number Industrial Point Source Category
427
428
429
430
431
Asbestos
Rubber Processing
Timber Products Processing
Pulp, Paper, a Paperboard
Builder's Paper and Paperboard Mills
Rulemaking
Status
Final
Final
Final
Final
Final
Final
Guidance
Final
Proposed
Final
EPA Document
Number
Title of Publication 440/1-{YEAR/ID Number)
Building, Construction, and Paper Segment
Textile, Friction Materials and Sealing Devices Segment
Tire and Synthetic Segment
Fabricated & Reclaimed Rubber
Timber Products
BCT- Pulp and Paper
Guidance Manual for Pulp, Paper, and Paperboard &
Builder's Paper and Board Mills
Pulp, Paper, and Paperboard and the Builder's Paper and
Board Mills
Control of Potychtorfnated Biphenyls in the Deink
Subcategory
Pulp, Paper, and Paperboard and the Builder's Paper and
74/017-a
74/035*
74/013-a
74/030-a
81/023
86/025
82/025
82/025
Date of
Publication
February 1974
December 1974
February 1974
December 1974
January 1981
December 1988
Jury 1984
October 1982
1980
October 1982
NT1S
Accession
Number
PB238320/AS
PB240860/AS
PB238609/AS
PB241916/AS
PB81 227282
PB87 172243/
AS
-
PB83 163949
-
PB83 163949
Board Mills
-------
Exhibit A (Continued)
40CFR
Part RulemaWng
Number Industrial Point Source Category Status
432 Meat Products Processing & Rendering Final
Final
Supplement
Reprint/ Final
Supplement
433 Metal Finishing Final
Guidance
434 Coal Mining Final
EPA Document
Number
Title of Publication 440/1-{YEAH/ID Number)
Red Meat Processing
Renderer Segment
Supplement to Development Document for the Renderer
Segment of the Meat Products & Rendering
Supplement to Development Document for Meat Products
& Rendering - Renderer Segment
Metal Finishing
Guidance Manual for Electroplating and Metal Finishing
PrstTGatmsfrt
Coal Mining
74/012-a
74/031-d
78/031-9
77/031-e
83/091
84/091-g
82/057
Date of
Publication
1974
January 1975
September 1978
April 1977
June 1983
February 1984
October 1982
NTIS
Accession
Number
PB238836/AS
PB253S72/2
—
—
PB84 115989
PB87 192597
PB83 180422
-------
Exhibit A (Continued)
40CFR
Part
Number
435
436
439
440
443
Industrial Point Source Category
Oil & Gas Extraction
Report to Congress - December 1987; Office of
Solid Waste (382-4627)
Mineral Mining
Pharmaceutical Manufacturing
Ore Mining and Dressing
Paving & Roofing Materials (Tare & Asphalt)
Rulemaklng
Status
Proposed
Report
Interim Final
interim Final
Final
Final
Final
Final
Final
Final
EPA Document
Number
Title of Publication 440/1-(YEAR/ID Number)
Oil and Gas Extraction (Offshore)
Assessment of Environmental Fact and Effects of
Discharge from Offshore Oil and Gas Operations
Oil and Gas Extraction
Oil and Gas Extraction - Offshore
Mineral Mining and Processing
Pharmaceutical - BCT
Pharmaceutical
Placer Mining and Dressing - Gold Ptacer Mining Segment
Ore Mining and Dressing
Tars and Asphalt
85/055
4-85/02
76/0554
75/055
76AB9-b
86/084
83/084
88/061
82/061
75/050
Date of
Publication
July 1985
August 1985
September 1976
September 1975
July 1979
December 1986
September 1983
May 1988
NTIS
Accession
Number
-
PB114964/AS
-
-
PB80 110299
-
PB84 180066
PB89 117790
-------
Exhibit A (Continued)
40 CFR EPA Document
Part Rulemaklng Number
Number Industrial Point Source Category Status True of Publication 440/1-(YEAR/1D Number)
444 Auto & Other Laundries Guidance Guidance Document for Effluent Discharges from the Auto
and Other Laundries Point Source Category
446 Paint Formulating Interim Final Oil Base Solvent Wash Subcategories 75/049
Interim Final Paint and Ink Formulating 75/050
447 Ink Formulating Interim Final Oil Bass Solvent Wash Subcategories 75/049
448 Printing & Publishing Guidance Summary of Available Information on the Levels of Controls 83/400
of Toxic Pollutants Dischargers in the Printing and
Publishing Point Source Category
452 Concrete Products Guidance Concrete Products 78/090
454 Gum & Wood Chemicals Manufacturing Interim Final Gum and Wood Chemicals 76/060-b
455 Pesticide Chemicais Manufacturing Final Pesticides - BPT Only 78/060-e
Interim Final Pesticides Chemicals Manufacturing 75/060
-------
Exhibit A (Continued)
40CFR
Part
Number Industrial Point Source Category
457
458
459
460
461
Explosives
Carbon Black
Photographic Manufacturing
Hospitals
Battery Manufacturing
Rulemaking
Status
Interim Final
Interim Final
Interim Final
Guidance
Interim Final
Final
EPA Document
Number
Title of Publication 440/1-(YEAFVID Number)
Explosives Manufacturing
Carbon Black Manufacturing
Photographic Processing
Guidance Documem for the Control of Water Pollution in
the Photographic Processing Industry
Hospitals
Battery Manufacturing: Vol. 1
76/060-j
76/06041
76/0604
81/082-g
76/06041
84/067
Date of
Publication
March 1976
April 1976
June 1976
April 1981
April 1976
August 1984
NTIS
Accession
Number
_
_
-
PB82 177643
PB121507
- Cadmium Subcategory
- Calcium Subcategory
- Ladanche Subcategory
- Lithium Subcategory
- Magnesium Subcategory
- Zinc Subcategory
-------
to
40CFH
Part
Number Industrial Point Source Category
461 Battery Manufacturing (Continued)
(Com.)
463 Plastics Molding & Forming
464 Metal Molding & Forming (Foundries)
465 CollCoaUng
466 Porcelain Enameling
467 Aluminum Forming
468 Copper Forming
RulsmaWng
Status
Final
Guidance
Final
Final
Final
Final
Final
Final
Final
Final
Exhibit A (Continued)
Tito of Publication
Battery Manufacturing: Vol.11
- Lead Subcategory (erratta sheet p. 809)
Guidance Manual for Battery Manufacturing Pretreatment
Standards
Plastics Molding and Forming
Metal Molding and Casting (Foundries)
Con Coating: Phase 1
Coil Coating: Phase 1! - CanmaWng
Porcelain Enameling
Aluminum Forming: Vol.1
Aluminum Forming: Vol.11
Copper Forming
EPA Document
Number
440/1-(YEAFWD Number)
84/067
84/069
85/070
82/071
83/071
82/072
84/073
84/073
84/074
Date of
Publication
August 1984
August 1987
December 1984
October 1985
October 1982
November 1983
November 1982
Juna1SS4
June 1984
March 1984
NTiS
Accession
Number
PB121507
"•
PB84 186823
PB86161452/
XAB
PB83 205542
PB84 198647
- '
244425
PB 244433
PB84 192459
-------
Exhibit A (Continued)
40CFR
Part
Number Industrial Point Source Category
469 Electrical & Electronic Components
471 Nonferrous Metals Forming
472 EthanoMor-Fuel
Dioxin
Domestic Sewage Study - Hazardous Wastes
Rulemaking
Status
Final
Final
Final
Guidance
Guidance
Guidance
Study
Report
EPA Document
Number
We of Publication 440/1-(YEAfVID Number)
Electrical and Electronic Components: Phase I
Electrical and Electronic Components: Phase H
Nonferrous Metals Forming
Vol. I
Vol. II
Vol. Ill
Multimedia Technical Support Document EthanoHbr-Fuel
Industry
Low BTU Gasifler Wastewater (1986)
Low BTU Coal Gasification
U.S. EPA/Paper Industry Cooperative Dioxin Screening
Study
, Report to Congress on the Discharge of Hazardous Wastes
to Publicly Owned Treatment Works
83/075
84/075
86/019
86/093
88/025
530-SW-8S-004
Date of
Publication
March 1983
February 1984
September 1988
April 1986
July 1988
March 1988
February 1986
NTIS
Accession
Number
_
-
PB87 121760
PB87 121778
PB87 121788
PB88177557/
AS
PB88245438/
AS
PB88 184017/
AS
>
CO
-------
Exhibit A (Continued)
40CFR
Part
Number
Industrial Point Source Category
Fats of Priority Pollutants in POIWs
Rulemaklng
Status
Baseline Study
Vol. 1
Baseline Study
Vol. U
Baseline Study
30 day
Study
Title of Publication
Fate of Priority Pollutants in Publicly Owned Treatment
Works: VoLI
Fate of Priority Pollutants in Publicly Owned Treatment
Works: Vol. II
Fate of Priority Pollutanta in PubBdy Owned Treatment
Works: 30 Day Study
EPA Document
Number
440/1-{VEAR/ID Number)
82/303
VoLI
82/303
Vol.11
82/302
Date of
Publication
September 1982
September 1982
July 1982
NTIS
Accession
Number
PB83 122788
PB83 122796
PB82 26330
Baseline Study Fate of Priority Pollutants in Publicly Owned Treatment
Pilot Works: Riot Study
Study
Total Toxic Organics FICRA Information -POTW Baseline Study ROW information on Hazafdous Wastes for PubWy
. Guidance Owned Treatment Works
79/300
OWEP
1979
September 1985
-------
Exhibit A (Continued)
40CFR
Part
Number Industrial Point Source Category
RutemaWng
Status
We of Publication
EPA Document isms
Number Date of Accession
440/1-{YEAR/1D Number) Publication Number
Fateofl29PrlorityPollutant8-WaterRelated Basetao Study Water Reiated Errvlrortmental Fata of 129 Priority Pollutants
V°l' -Introduction to Tecnrdeal Background
4-79/029*
Vol.)
-Ofganlcs
-Pastiddaa
Standard Inductrva Classification Manual
Total ToxksOrganica-Pretreatmant Standards Guidance
BasaineStudy Water Related Emrfronmertal Fate of 129 Priority Pollutants 4-79AJ29*
VrtJ II - LJalrulnMAtwj Ait~k~jl~ tl—i— ^.-^^_- . . ^^
Combined Wastestream Formula
Paragraph 4(c) Program
Guidance
Report
• Hatogenated Aliphatic Hydrocarbons
- Hatoflenated Aramattes
- PoryoydkfWofflatlo Hydrocarbons
• NltfOS3tirIn63
• Miscellaneous Compourate
Guidance Manual tor Implementing Total Toxic Organics
(TTO) Pretreatmsnt Standards
Guidance Manual for the Use of Production Based
Pretreatrnent Standards and the Combined Wastestream
Formula
Paragraph 4
-------
>
0)
Exhibit A (Continued)
40CFR
Part
Number Industrial Point Source Category
Rutemaldng
Status
EPA Document
Number
TOte of Publication 440/1-(YEAR/1D Number)
Data of
Publication
NTIS
Accession
Number
Report to Congress: Limestone Discharge Report
Sampling Procedures and Protocols Methods
Analytical Methods Methods
EPA Methods 1634 and 1635 Methods
EPA Methods 1624 and 1625, Rev. C Methods
EPA Method 1618 Methods
Consolidate SO Method
Report to Congress: Trie Effects of Discharger From
Umestone Quarries on Water Quality and Aquatic
Blomonitortng
Sampling Procedures and Protocols for the National
Sewage Sludge Survey
Sampling and Analysis Procedures for Screening of
Industrial Effluent for Priority Pollutants
Method 1634 Volatile Organic Compounds In Municipal
Vfestewater Treatment Sludges by Isotope Dilution GC/MS;
Method 1635 Semwotatiie Organic Compounds in
Municipal Wastewater Treatment Sludges by Isotope
Dilution GC/MS
Method 1624 Revision C: Volatile Organic Compounds by
Isotope Dilution GC/MS
Method 1625 Revision C: Semivolatile Organic
Compounds by Isotope Dilution GC/MS
Nanativa on the Development and Validation of trta
"Consolidated GC Method for the Determination of
rro/RCHA Analytes Using Selective GC Detectors-
June 1982
March 1988
March 1977
revised
April 1977
July 1968
March 1988
July 1988
PB82 242207
-------
1
i
a
2
g 40CFR
Part
Number Industrial Point Source Category
Isotopa Dilution GC/MS - Organics
Sewage Sludge Survey
List of Lists
nulernaking
Status
Methods
Methods
Report
Report
Report
Exhibit A (Continued)
EPA Document
Number
Title of Publication 440/1-(YEAR/1D Number)
Analysis of Extracteble Organic Pollutant Standards by
Isotope Dilution GC/MS
Analytical Methods for the National Sewage Sludge Survey
The 1988 List of Lists
- List of (TD/RCRA AnaJytes
The 1987 Industrial Technology Division List of Analytes
Methods for Nonconventkmal Pesticides Chemical Analysis 83/079-C
of Industrial and Municipal Wastewater
NTTS
Data of Accession
Publication Number
July 1986
March 1988
March 1987
PB83 176636
Source: U.S. EPA, "Industrial Technology Division Technical Publications Availability Report," September 1968.
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