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.
                             Hi

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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).
8

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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.
                                                                                               13

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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)




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                           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

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                                                         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.

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      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

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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

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                    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

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¥
   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

-------
        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

-------
                                                                       Chapter VIII
                                                                  References
Altobello, M. A., D. A. Storey, and J. M. Conrad, 1977.  "The Atlan-
tic Sea Scallop Fishery:  A Descriptive and Econometric Analysis,"
Agricultural Experiment Station  Bulletin  No. 643, University  of
Massachusetts.

Austin, H. M., D. A. Evans, and B. L Norcross, 1986. "Time Series
Analyses as a Means of Examining Long Term Biological Data Sets."
In:  Proceedings of the Oceans '86 Symposium, Vol. Ill, Monitoring
Strategies Symposium, pp. 946-952, Marine Technology  Society,
Washington, DC.

Brown, W. G., C. N. Sorhus, and K. C. Gibbs,  1980.  Estimated
Expenditures by Salmon and Steelhead Sport Anglers for Specified
Fisheries in the Pacific Northwest, Special Report for the Pacific
Northwest Regional Commission, Contract No. 10790006, Corvallis,
OR.

Brown, W. G., C. Sorhus, P. Chou-yang, and J. A.  Richards, 1983.
"Using Individual Observations to  Estimate Recreation  Demand
Functions:  A Caution," American Journal of Agricultural Econom-
ics (February), pp. 154-157.

Cabelli, V. J., 1980.  Health Effects Quality Criteria for Marine
Recreational Waters. EPA-600/1-80-031, Washington, DC.

Cabelli, V. J., A. P. Dufour, L. J.  McCabe, and M.  A. Levin, 1982.
"Screening Associated Gastroenterites and Water Quality," Ameri-
can Journal of Epidemiology, 115:606-616.

Chesapeake Bay  Program, 1988.    Habitat Requirements for
Chesapeake Bay Living Resources. Chesapeake Executive  Council,
Annapolis, MD, January.

Crutchfield, J. A., and  K. Schelle,  1978. "An Economic Analysis of
Washington Ocean Recreational Salmon  Fishing  with Particular
Emphasis in the Role  Played by  the Charter Vessel Industry"
                                                                                         57

-------
                                  (mimeo),  Department of Economics,  University  of Washington,
                                  Seattle, WA.

                                  Donnelly, ID., J. B. Loomis, and C. F. Sorg, 1983.  "The Net Eco-
                                  nomic Value of Recreational Steelhead Fishing in Idaho," U.S. Forest
                                  Service, Rocky Mountain Forest and Range Experiment Station, Fort
                                  Collins, CO.

                                  Eliassen, R., and  W. Rowland, 1962.  "Industrial Benefits Derived
                                  from  Improved Raw Water Quality in the Contra Costa Canal,"
                                  Institute of Engineering-Economic Systems,  Stanford  University,
                                  September.
                                           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
                                  Quality," American Economics Association Annual Meeting, New
                                  York, NY.!

                                  Fisher, A.^ and R. Raucher, 1984.  "Intrinsic Benefits of Improved
                                  Water Quality: Conceptual and Empirical Perspectives."  In: Smith,
                                  V. Kerry (Ed.), Advances in Applied  Micro-Economics.  Vol. 3,  JAI
                                  Press Inc., pp. 37-66.
                                           i
                                  Freeman,;A. M., Ill, 1981. "Notes on Defining and Measuring Exis-
                                  tence Values," unpublished manuscript, Department of Economics,
                                  Bowdoin College, June.

                                  Greeley and Hansen,  1969.  "Study for Determination of Benefits
                                  from  Improved Great Lakes Water  Quality," Dredging  and  Water
                                  Quality Problems in the Great Lakes, U.S. Army Corps of Engineers,
                                  Buffalo, NY, June.

                                  Gulland, J. A., 1969. Manual of Methods for Fish Stock Assessment:
                                  Part 1," Fiish Population Analysis. FAO, Rome.
                                           i
                                  Huppert, p. D., 1983.  National Marine Fisheries Service Guidelines
                                  on Economic Valuation of Marine Recreational Fishing.  NOAATM
                                  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

-------
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
Research Center,  State University of New York, Stony Brook,  NY.

Menz, F. C., and J. K. Mullen, 1982. "Acidification Impact on  Fish-
eries:   Substitution  and the Valuation of Recreation Resources"
(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
National  Freshwater Quality  Improvements.  U.S. Environmental
Protection Agency, Resources for the Future, Inc., Washington, DC,
October.

Rorholm* N., H. Lampe, N. Marshall, and J. Farrell, 1965. "Economic
Impact of Marine Oriented Activities: A Study of the Southern New
England Marine Region," Agricultural Experiment Station Bulletin No.
396, University of  Rhode Island, Kingston, Rl.
                                                                                             59

-------
                                  Rowe, R., 1985. Valuing Marine Recreational Fishing on the Pacific
                                  Coast.  National  Marine  Fisheries Service,  Southwest Fisheries
                                  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
                                  Site Travel/Cost Method" (mimeo), University of Wisconsin, Madison,
                                  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-
                                  ciation for, Pollution Control, Pollution Control in the Marine Indus-
                                  tries, Montreal, Quebec, Canada, June 7.

                                  U.S. Coast Guard Survey, 1979.  Recreational  Boating  in the
                                  Continental United States in 1973 and 1976: The Nationwide Boating
                                  Survey,   : Document  Number  CG-B-003-78,   Call   Number
                                  GV835U5i321979.
                                  U.S. EPA,  1980.
                                  Treatment Plants:
 Construction Costs  of Municipal Wastewater
1973-1978, Office of Water Program Operations,
                                  EPA/430/9-80-003, FRD-11, Washington, DC.

                                  U.S. EPA,  1981.   Construction Costs of Municipal Wastewater
                                  Conveyance Systems:  1973-1979, Office of Water Program Oper-
                                  ations, EPA/430/9-81-003, FRD-21, Washington, DC.

                                  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.

                                  U.S. EPA,  1983.   A Comparison of Alternative Approaches for
                                  Estimating  Recreation  and  Related  Benefits of  Water Quality
                                  Improvement, Office of Policy, EPA/1230/05-83-001, Washington,
                                  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
                                  Overflow • Controls, Office  of Policy Analysis, EPA/230/11-85-017,
                                  Washington, DC.
60

-------
U.S. EPA,  1985.   "The Estimation  of  Recreation-Related  Water
Pollution Control Benefits:  Swimming, Boating and Marine Recre-
ational Fishing," Office of Policy Analysis, Washington, DC.  Pre-
pared by W. J. Vaughan and C. Russell, Resources for the Future,
Inc., Washington, DC.

U.S. EPA, 1986.  "Cost-Effective Operation and Maintenance:  Six
Cities Save Over One Million Dollars," Office of Municipal Pollution
Control Planning and Analysis Division, EPA, Washington, DC.

U.S. EPA, 1987.  Design Manual:  Phosphorus Removal, Office of
Research and Development, Water  Engineering Research  Labo-
ratory, EPA/625/1-87/001, Cincinnati,  OH.

U.S. EPA, 1987.  Handbook:  Retrofitting  POTWs for Phosphorus
Removal in the Chesapeake Bay Drainage Basin, Water Engineer-
ing Research Laboratory, EPA/625/6-87/017,  Cincinnati,  OH.

U.S. EPA, 1988.  "Industrial Technology Division Technical  Publi-
cations Availability Report,"  September.

U.S. Water Research Council, 1977. Industry-Specific Gross Output
Multipliers for BEA Economic Areas, as referenced in International
Regional Scenic Review, 1983.

U.S. Water Resources Council, 1979.  Procedures for Evaluation of
National Economic Development Benefits  and Costs in  Water
Resources Planning (44 FR  72892).

Vaughan, W. J., and C. Russell, 1981.  The National Benefits of Water
Pollution Control: Freshwater Recreational Fishing, Resources for
the Future, Inc. Washington, DC, April.

Vaughan, W. J., and  C. Russell,  1982.   Freshwater Recreational
Fishing: The National Benefits of Water Pollution Control, Resources
for the Future, Inc., Washington, DC, November.

Vaughan, W. J., and C. S. Russell, 1982.  "Valuing a Fishing Day:
An Application of a Systematic Varying Parameter Model," Land
Economics 58, November, pp. 450-463.

Walsh,  R. G., D. G. Greenley, R. A. Young, J. R. McKean, and A. A.
Prato, 1978.  Option Values. Preservation Values, and Recreational
Benefits of Improved Water Quality:  A Case Study of the South
Platte River Basin. Colorado. Office of Research and Development,
EPA-600/5-78-001, Washington, DC.

Wang, D. H., J. B. Dirlam, and V. J. Norton,  1978.  "Demand Anal-
ysis of Atlantic  Groundfish," National  Marine Fisheries Service,
Department of Resource Economics, University of Rhode  Island,
Kingston, Rl.
                                                                                             61

-------
                                  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,"
                                  American Economic Review, 4, September, pp. 589-597.

                                  Ziemer, R. F., W. N. Musser, and R. Carter Hill, 1980.  "Recreation
                                  Demand ^Equations:  Functional Forms and Consumer's Surplus,"
                                  American Journal of Agricultural Economics 6, February, pp. 136-
                                  141.     ,  •-
62

-------
                                                       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

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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

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                                                        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

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                                                               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

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                                                                         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
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>
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

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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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