United States
Environmental Protection
Agency
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U.S. Environmental Protection Agency
Office of Water (4303T)
1200 Pennsylvania Avenue, NW
Washington, DC 20460
EPA-821-R-03-003
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ENVIRONMENTAL AND ECONOMIC BENEFIT ANALYSIS OF
i
FINAL REVISIONS TO THE NATIONAL POLLUTANT
DISCHARGE ELIMINATION SYSTEM REGULATION AND
THE EFFLUENT GUIDELINES FOR
CONCENTRATED ANIMAL FEEDING OPERATIONS
Christine Todd Whitman
Administrator
G. Tracy Mehan ni
Assistant Administrator, Office of Water
Sheila E. Frace
Director, Engineering land Analysis Division
Linda Chappell
Economist
Lisa McGuire
Environmental Scientist
Charles Griffiths
Economist
Engineering and Analysis Division
Office of Science and Technology
U.S. Environmental Protection Agency
Washington, D.C. 20460
December 2002
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ACKNOWLEDGMENTS AND DISCLAIMER
I
This report has been reviewed and approved for publication by the Engineering
and Analysis Division, Office of Science and Technology. This report was
prepared with the support of Research Triangle Institute, Stratus Consulting, arid
Industrial Economics under the direction;and review of the Office of Science and
Technology.
Neither the United States government nor any of its employees, contractors,
subcontractors, or other employees makes any warranty, expressed or implied, or
assumes any legal liability or responsibility for any third party's use of, or the
results of such use of, any information, apparatus, product, or process discussed in
this report, or represents that its use by such a third party would not infringe on
privately owned rights.
11
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TABLE OF CONTENTS
EXECUTIVE SUMMARY ES-1
Summary of Benefits ES-2
Key Features of the Final Rule ES-3
Operations Regulated under Final Rule ES-3
Definition of CAFO under the Final Rule; ES-4
Effluent Limitation Guidelines under the Final Rule ES-6
Environmental Impacts Addressed Under the Final Rule ES-6
Key Pollutants in Animal Waste ES-7
Pollutant Pathways - ES-8
Impacts of Pollutants in Animal Waste ES-9
Reductions in Pollutant Discharges Under the Final Rule ES-9
Approaches to Analyzing Benefits of the Final Rule ES-10
INTRODUCTION AND SUMMARY i CHAPTER 1
1.1 Background Information 1-2
1.1.1 Definition and Population of AFOs 1-2
1.1.2 Existing Regulations for CAFOs 1-3
1.2 Current Issues Related to CAFOs 1-4
1.2.1 Potential Environmental Impacts of CAFOs 1-4
1.2.1.1 Water Quality Impairments 1-5
1.2.1.2 Ecological Impacts 1-5
1.2.1.3 Human Health Effects 1-6
1.2.1.4 Air Emissions 1-6
1.2.2 Recent Industry Trends 1-6
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1.2.2.1 Increased Production and Industry Concentration 1-7
1.2.2.2 Location of Animal Operations Closer to Consumer Markets i 1-7
1.2.2.3 Advances in Agriculture Production Practices to
Manage and Dispose Manure , J 1-8
1.3 Revisions to CAFO Regulations j 1-8
1.3.1 Changes to NPDES Regulations i 1-8
1.3.2 Changes to ELGs 1-10
1.3.3 Number of Regulated Operations • ! 1-11
1.4 Analytic Methods and Results ;....'. 1-11
1.5 Assessment of Data Used to Estimate Benefits i 1-13
1.6 Organization of Report 1-16
1.7 References .. i 1-17
• ' !
POTENTIAL IMPACTS OF AFOs ON . j
ENVIRONMENTAL QUALITY AND HUMAN HEALTH : CpHAPTER 2
2.1 Pathways for the Release of Pollutants from AFOs . i 2-2
2.1.1 Overland Discharge ; 2-3
2.1.1.1 Surface Runoff ! 2-5
2.1.1.2 Soil Erosion ; 2-5
2.1.1.3 Acute Events ....!.. 2-6
v • i
2.1.2 Leaching to Groundwater ; 2-7
2.1.3 Discharges to the Air and Subsequent Deposition , 2-7
2.2 Potential Ecological Hazards Posed by AFO Pollutants .. 2-8
2.2.1 Nutrients and Eutrophication i 2-9
2.2.1.1 Nitrogen and Nitrogen Compounds 1 2-9
: 2.2.1.2 Phosphorus 1 ..... 2-11
2.2.1:3 Eutrophication , i 2-12
2.2.2 Pathogens . . . i 2-13
2.2.3 Organic Compounds and Biochemical Oxygen Demand (BOD) ....: 2-15
2.2.4 Solids and Siltation ........: i. 2-16
2.2.5 Salts and Trace Elements 1 2-16
11
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2.2.6 Odorous/Volatile Compounds - 2-17
2.2.7 Other Pollutants and Ecosystem Effects 2-18
i
2.3 Human Health Impacts Related to AFO Pollutants : 2-19
2.3.1 Health Impacts Associated with Nitrates 2-19
2.3.2 Health Impacts Associated with Algal Blooms 2-20
2.3.3 Health Impacts Associated with Pathogens 2-21
2.3.4 Health Impacts Associated with Trace Elements and Salts 2-22
2.3.5 Other Health Impacts .' ....:... 2-23
2.4 References , 2-25
CONCEPTUAL FRAMEWORK AND OVERVIEW OF METHODS CHAPTERS
3.1 Possible Environmental Improvements and Resulting Benefits 3-1
3.2 Specific Benefits Analyzed 1 • 3'3
3.3 Predicting Change in Environmental Quality and Resulting Beneficial Use 3-5
3.4 Valuing Benefits ; 3'6
3.4.1 Overview of Economic Valuation 3-6
3.4.2 Primary Approaches for Measuring Benefits 3-7
3.4.3 Valuation of CAFO Regulatory Bjsnefits Based on Previous Studies .... 3-8
3.4.4 Aggregating Benefits ......... I 3-10
3.5 Summary : '• 3-11
3.6 References ! 3-11
MODELING OF IMPROVEMENTS IN SURFACE WATER QUALITY
AND BENEFITS OF ACHIEVING RECREATIONAL USE LEVELS CHAPTER 4
i
4.1 Introduction and Overview. 4-1
4.2 Model Facility Analysis 4-2
4.3 Edge-of-Field Loadings Analysis 4-6
i
4.3.1 Loadings from Manure Application 4-6
4.3.2 Loadings from Lagoons and Other Storage Structures 4-7
4.3.3 Loadings from Feedlots , - 4-8
4.3.4 Model Loadings Under Baseline and Post-Regulatory Conditions 4-9
4.4
i ,
Analysis of AFO/CAFO Distribution • 4-9
in
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4.4.1 Approach . . . .?..., _ ; ! 49
4.4.2 Estimated Number of AFOs and GAFOs '.'.'.'.'..'.'.'.'>"" "4-11
4.4.3 Geographic Placement of Facilities "\ 4.12
: • , i
4.5 Surface Water Modeling ! 4 12
-•'•." . >
4.5.1 Defining the Hydrologic Network ' | 4_13
4.5.2 Distributing AFOs and CAFOs to Agricultural Land • 4"14
4.5.3 Calculating AFO/CAFO-Related Loadings to Waterbodies .';.'! 4.14
4.5.4 Loadings from Other Sources 4_14
4.5.5 Fate and Transport Modeling ." y • • • •
• 4,5.6 Estimated Changes in Loadings ........' 4^15
4.5.7 Modeling Quality Assurance Steps .. .......... ! 4.17
4.6 Valuation of Water Quality Changes i 4_17
4.6.1 Water Quality Ladder Approach ' 4_1?
4.6.1.1 Water Quality Ladder Concept \ 4_18
4.6.1.2 Carson and Mitchell Study '.'.'.'.'.'." 1 4.19
4.6.1.3 Additional Considerations When Using the Ladder !..... 4-20
4.6.2 Water Quality Index Approach \ 4_21
4.6.3 Additional Considerations When Applying the Index 1 4 29
4.6.4 Estimated Benefits '.'.'.'.'.'""I"" 4.23
4.7 References _ ;
Appendix 4-A: NWPCAM Calculation of the Economic Benefits of '
Improved Surface Water Quality: Water Quality Ladder Approach 1 4 A i
Appendix 4-B: NWPCAM Calculation of the Economic Benefits of ' !" "
Improved Surface Water Quality: Water Quality Index Approach 4B 1
Appendix 4-C: Water Quality Ladder Threshold Conditions '..'!."!!! M'.'.'! 4C-1"
REDUCED INCIDENCE OF FISH KILLS CHAPTERS
5.1 Introduction ...... '
5.2 Analytic Approach " ' ! ."
' . • ' " !
5.2.1 Data Sources and Limitations . i 5 2
5.2.2 Predicted Change in Fish Kills Under the Revised CAFO Regulations . L.'.. 5-4
IV
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. 0 1 . .......... 5-4
5.2.2.1 Baseline Scenario , : • 5_5
5.2.2.2 Post-Regulatory Scenario .[
' ' ' ' ' ' c n
5.2.3 Valuation of Predicted Reduction in Fish Kills
5-7
5.2.3.1 Replacement Cost Approach
5.2.3.2 Recreational Use Value Approach
! ' 5-9
5.3 Results ; '' y/ " " " " 5_io
5.4 Limitations and Caveats ....-• • 5_^Q
5.5 References '• '
[
i • • -
! r'MAPTP'R fi
IMPROVED COMMERCIAL SHELLFISHINQ - - CHAFIUK
6-1
6.1 Introduction : 6-1
6.2 Analytic Approach :
6.2.1 Data on Shellfish Harvest Restrictions Attributed to AFOs 6-1
6.2.2 Estimated Impact on Shellfish Harvests
6.2.2.1 Baseline Annual Shellfish Landings '
6 2 2.2 Estimated Acreage of Harvested Waters -
6.2.2.3 Average Annual Yield of Harvested Waters °°
6.2.2.4 Characterization of Waters that are
Unharvested Due to Pollution from AFOs °-
6.2.2.5 Estimated Impact of Pollution from AFOs on
Commercial Shellfish Landings -. - - - - • .;"•."',
6.2.3 Estimated Impact of Alternate Regulations on 6g
Commercial Shellfish Harvests | "
6.2.4 Valuation of Predicted Change in Shellfish Harvests °-
6.2.4.1 Characterization of Consumer Demand for Shellfish 6-9
6.2.4.2 Determining the Change in Consumer Surplus
Associated with Increased Harvests
! 6-11
6.3 Results • • i 6_n
6.4 Limitations and Caveats j _• • •__:•;•;;..;;;..•;:.•.:.•.•.•.;.:;..,; " '".'.;,.'_'.'_'.'', 6_13
6.5 References • • *
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REDUCED CONTAMINATION OF PRIVATE WELLS CHAPTER 7
i ..
7.1 Introduction ... ' j •,
7.2 Analytic Approach .. V j_~
i !
7.2.1 Relationship Between Well Nitrate Concentrations and |
Nitrogen Loadings • j 7_3
7.2.1.1 Included Variables and Data Sources ! 7.4
7.2.1.2 Omitted'Variables ' ' 7 fi
' f '~°
7.2.2 Modeling of Well Nitrate Concentrations •....'.. 7-7
7.2.3 Discrete Changes from above the MCL to below the MCL i..... 7-8
7.2.4 Incremental Changes below the MCL \[ '7.9
7.2.5 Valuation of Predicted Reductions in Well Nitrate Concentrations ... i ..... 7-9
. 7.2.5. IPoe and Bishop (1992) .. L . 7-10
7.2.5.2 Crutchfield et al. (1997) ......' 7-12
7.2.5.3 De Zoysa (1995) .............].... 7-13
7.2.5.4 Adjustments to the Values !. 7.^3
7.2.5.5 Timing of Benefits ' 7_14
7.3 ELesults _ i, 7 \A
7.3.1 Annual Benefits over Time ...:.''• 7-14
7.3.2 Annualized Benefits ..... i 7-16
f- - ' j
7.4 Limitations and Caveats j 717
7.5 References ; i-jfy
i
Appendix 7-A: Model Variables _ ! 7A_j
Appendix 7-B: The GammaModel 7B-1
Appendix 7-C: Literature Search and Evaluation \ -jc_i
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REDUCED CONTAMINATION OF ANIMAL WATER SUPPLIES CHAPTER 8
8.1 Introduction . ! g i
8.2 Analytic Approach -...-..' '' •' i _
VI
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8-3
8.2.1 Number of Cattle Affected , .-••-.:•: ' V " " ' g-4
8.2.2 Baseline Cattle Mortality ^ g_5
8.2.3 Predicted Change in Cattle Mortality g_6
8.2.4 Valuation J '
! 8-7
8.3 Results - - • • • • ! 8_7
8.4 Limitations and Caveats \ • .. 8-8
8.5 References • :
POTENTIAL BENEFITS OF REDUCED j THAPTFR9
EUTROPHICATION OF U.S. ESTUARIES UiAr 11*
9-1
9 1 Introduction • •, ; • • •''' " ''. o_2
9.2 AnalysisofChangesinNutrientLoadingstoSelectedEstuanes ^
9-2
9.2.1 Estuaries Analyzed '' ^
9.2.2 Analytic Approach j 9_3
9.2.3 Results i " 9_3
9.2.4 Limitations and Caveats :.
9-5
9.3 Case Study: Albemarle andPamlico Sounds •
9.3.1 Introduction and Summary of Analytic Approach 9-5
9.3.2 Summary of Relevant Studies .:
9-8
9.3.2.1 Smith and Palmquist (1988) 9"8
9.3.2.2 Kaoru et al. (1995) .... r ; ' "
9.3.2.3 Kaoru (1995) : •
1 99
9.3.3 Evaluation and Selection of Value Estimates
9 10
9.3.3.1 Reductions in Phosphorus Loadings • "^
9.3.3.2 Reductions in Nitrogen Loadings "
9.3.3.3 Selection of Value Estimates
9.3.4 Value Conversion for Benefit Transfer r ^"^
9.3.5 Benefit Transfer Calculation 9"13
9.3.6 Results - ' 9_15
9.3.7 Limitations and Caveats ^. - • •
! 9-16
9.4 References •
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IMPROVEMENTS IN WATER QUALITY AND REDUCED :
DRINKING WATER TREATMENT COSTS ,..' CHAPTER 10
" i
10.1 Introduction : i . 10-1
10.2 .Analytic Approach !..... 10-1
10.2.1 Identification of Public Drinking Water Systems ! 10-2
10.2.2 Application of TSS Concentrations and Water System Data j 10-3
10.2.3 Estimation of Drinking Water Treatment Costs ;..... 10-4
10.3 Results ., 10-5
10.4 Limitations and Caveats . .| 10-6
10.5 References -.. .1 . 10-7
1 i
INTEGRATION OF RESULTS '.: '..... CHAPTER 11
/. i
11.1 Introduction ( 11-1
11.2 Integration of Analytic Results •....[ 11-1
11.3 Present Value of Benefits j . 11-2
11.4 Annualized Benefits Estimates !..... 11-3
11.5 Limitations of the Analysis and Implications for Characterizing Benefits 11-6
Appendix 11-A: Calculation of Present Values |... 11A-1
Appendix 11-B: Calculation of Annualized Benefits .. |.... 11B-1
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LIST OF EXHIBITS
Exhibit ES-1: Annualized Benefits of the Revised Regulatory Standards for Large CAFOs . ES-2
Exhibit ES-2: Estimated Number of CAFOs Subject to Revised Regulations ES-4
Exhibit ES-3: Size Standards for Large, Medium, and Small CAFOs ES-5
Exhibit ES-4: Key Pollutants in Animal Waste . ES-7
Exhibit ES-5: Edge of Field Loading Reductions'for Large CAFOs: Combined Total
for all Animal Sectors ; ES-10
Exhibit 1-1: Number of Animal Feeding Operations 1-3
Exhibit 1-2: Size Standards for Large, Medium, and Small CAFOs 1-9
Exhibit 1-3: Estimated Number of CAFOs Subject to Revised Regulations .1-12
Exhibit 1-4: Estimated Annualized Benefits of the Revised CAFO Regulations under
Alternate Discount Rates 1-14
Exhibit 2-1: Pathways for AFO-Related Pollutants 2-4
Exhibit 2-2: Key Pollutants in Animal Waste ..; 2-10
Exhibit 3-1: Potential Benefits of Water Quality improvements 3-2
Exhibit 3-2: Summary of Approach to Estimating Regulatory Benefits 3-12
t .
Exhibit 4-1: Overview of Recreational Benefits Analysis 4-2
Exhibit 4-2: Model Facility Analysis 4-3
Exhibit 4-3: Geographic Regions for Grouping AFOs 4-3
Exhibit 4-4: Summary of Model Facility Dimensions 4-4
Exhibit 4-5: Edge-of-Field Loadings Analysis for Model Facilities 4-7
Exhibit 4-6: Estimated Number of CAFOs Subject to Revised Regulations 4-11
Exhibit 4-7: Water Quality Modeling Analysis 4-13
Exhibit 4-8: Estimated Annual AFO/CAFO Nutrient/Pollutant Loadings to RF3 Lite Network
Under Baseline Conditions and Revised Standards 4-16
Exhibit 4-9: Estimated Annual Removals Under ^Revised Standards 4-16
Exhibit 4-10: Water Quality Ladder 4-18
Exhibit 4-11: Individual Household Willingness ,to Pay for Water Quality Improvements .. 4-20
Exhibit 4-12: Annual Economic Benefit of Estimated Improvements in Surface Water
Quality: Water Quality Ladder Approach 4-24
Exhibit 4-13: Annual Economic Benefit of Estimated Improvements in Surface Water
Quality: Water Quality Index Approach 4-25
IX
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\
Exhibit 5-1: Fish Kill Event Data Obtained by EPA j...... 5-3
Exhibit 5-2: Scaling Factors ; . .'5-6
Exhibit 5-3: Estimated Reduction in the Number of Fish Killed Annually Due to • ' .
Release of Pollutants from AFOs 5-6
Exhibit 5-4: Estimated Annual Benefits Attributed to Reduction in Fish Kills j 5-9
i
Exhibit 6-1: NSSP Standards for Classified Shellfish Growing Waters ' 6-2
Exhibit 6-2: Shellfish Harvest Limitations by Region ; 6-3
Exhibit 6-3: Consumer Demand and Consumer Surplus -.....; 6-8
Exhibit 6-4: Shellfish Demand Elasticities •••••; 6-9
Exhibit 6-5: Estimated Annual Benefits of Increased Commercial Shellfish Harvests .| 6-11
Exhibit 7-1: Percentage of Domestic Wells Exceeding the MCL for Nitrate ;...... 7-2
Exhibit 7-2: Overview of Analytic Approach j...... 7-4
Exhibit 7-3: Percent Reduction in Projected Nitrate Concentrations ; 7-8
Exhibit 7-4: Expected Reduction in Number of Households with Well Nitrate Concentrations
Above 10 mg/L | 7-8
Exhibit 7-5: Mean and Median Reductions in Nitrate Concentrations for Wells with !
Concentrations Between 1 and 10 mg/L at Baseline 7-9
Exhibit 7-6: Summary Information on Studies Used for Benefits Transfer .;..... 7-11
Exhibit 7-7: Willingness-to-Pay Values Applied to Benefits Transfer .....' 7-14
Exhibit 7-8: Annual Benefits of Reducing Private Well Contamination .;..... 7-15
Exhibit 7-9: Estimated Annual Benefits of Reduced Contamination of Private Wells
Under Steady State Conditions 7-15
Exhibit 7-10: Estimated Annualized Benefits of Reduced Private Well Contamination .... 7-16
Exhibit 7-11: Omissions, Biases, and Uncertainties in the Nitrate Loadings Analysis J..... 7-18
Exhibit 7A-1: Summary Statistics .; 7A-2
Exhibit 7B-1: Gamma Regression Results 1..... 7B-2
Exhibit 8-1: Exposure Scaling Factors ] 8-3
Exhibit 8-2: Nitrate Poisoning and Pathogen-Related Mortality Rates by Livestock Sector .. 8-4
Exhibit 8-3: Baseline Estimated Cattle Losses Per Year At Large CAFOs by Contaminant and
Livestock Sector 8-4
Exhibit 8-4: Estimated Changes in Nitrate and Pathogen Loadings by Sector and Land
Application Scenario I 8-5
Exhibit 8-5: Annual Reduction in Cattle Mortality at Large CAFOs by Land Application
Scenario and Sector i...... 8-6
Exhibit 8-6: Annual Monetary Benefit of Reduced Cattle Mortality at Large CAFOs by
Land Application Scenario and Sector , 8-7
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Exhibit 9-1: Effect of Revised CAFO Standards on Nutrient Loadings to Selected Estuaries . 9-4
Exhibit 9-2: Summary Description and Comparison of Selected Value Estimates 9-7
Exhibit 9-3: Estimated Annual Recreational Fishing Benefits in the APS Estuary Due to
Nutrient Loading Reductions 9-14
Exhibit 10-1: Estimated Annual Benefits of Reduced Drinking Water Treatment Costs .... 10-5
Exhibit 11-1: Present Value of the Estimated Benefits of the Revised CAFO Regulations
Under Alternate Discount Rates j 11-4
Exhibit 11-2: Estimated Annualized Benefits of the Revised CAFO Regulations Under
Alternate Discount Rates 11-5
XI
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EXECUTIVE SUMMARY
This report presents EPA's estimates of the environmental and human health benefits,
including pollutant reductions, that will occur from the Revisions to the National Pollutant Discharge
Elimination System Regulation and the Effluent Guidelines for Concentrated Animal Feeding
Operations (final rule). ,
i ....... .-
A number of the practices used to manage animal wastes at concentrated animal feeding
operations (CAFOs) can have adverse impacts on the environment. For example, waste lagoons that
are not properly managed can leak or overflow; land application of manure can exceed the ability
of the land to absorb nutrients; and management of large quantities of litter in uncovered outdoor
stacks can allow excessive runoff during rain events. All of these practices can result in releases of
manure to surface waters, where nutrients, solids, and pathogens in the waste cause damage to
aquatic life (including large fish kills) and risks to human health from drinking or swimming in
contaminated water. Releases can also cause degradation of groundwater and air-related impacts.
The severity of potential environmental and health impacts can be exacerbated when operations are
very large or are concentrated geographically. Recent industry trends have resulted both in larger
operations (i.e., with more animals) and in greater regional concentration of facilities.
Several recent events, including large manure releases in North Carolina and incidences of
drinking water contamination related to livestock, have highlighted the need to update regulations
to improve management of animal wastes. Morjeover, emerging research on the health effects of
various compounds (e.g., hormones) found in manure suggests that the impact of manure on human
and animal populations may be broader than previously understood.
USDA estimates that in 1997 manure generation from all livestock and poultry production
totaled 1.1 billion tons — six times the waste generated by humans in the United States. Confined
animals account for roughly half (500 million tons) of the animal waste produced. While strict
pollutant discharge limits have been applied to human waste treatment facilities for years, regulation
for animal waste, even of large CAFOs that generate as much waste as a small town, has typically
been less stringent. • . '
ES-1
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addressing CAFO F^Tt f "TJ** ^^ the re
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'ypes of Benefits
Deduced eutrophication of estuaries and coastal
waters
Case study of potential recreational fishing
benefits to the Albemarle-Pamlico Estuary
_____————————•—^—————
Exhibit ES-1
i
ANNUALIZED BENEFITS OF THE REVISED REGULATORY
STANDARDS FOR LARGE CAFOS*
(millions of 2001$)
Deduced pathogen contamination of private &
oublic underground sources of drinking water
£ ;
Reduced human & ecological risks from
antibiotics, hormones, metals, salts
Improved soil properties
^^«^»^—^^™«^^—"^
Other benefits
i • —
Total Benefits
3 Percent Discount
Rate
not monetized
$0.2
$1.1-51.7
not monetized
not monetized
not monetized
not monetized
$218.9 + [B] to
$355.0 + [B]**
7 Percent Discount
Rate
* Benefit estimates do not include reduced impacts from medium-sized CAFOs.
** fB] represents non-monetized benefits of the rule.
not monetized
$0.2
$1.1-$1.7
m^-.^^—«^—i^^——
not monetized
not monetized
not monetized
_____«—«^——•-
not monetized
$204.1+[B]to
$340.2 + [B]**
KEY FEATURES OF THE FINAL RULE
EPA is revising both the National Pollutant Discharge Elimination System (NPDES)
re^lationsfor CAFOs and the Effluent Limitation Guidelines (ELGs) for feedlots. The revved
NPDES regulations for CAFOs affect whicivanimal feeding operations (AFOs are defined as
CAPOs andare therefore subject to the NPDE^ permit program. Changes to the ELGs for feedlots
affect which technology-based requirements will apply to certain CAFOs.
Operations Regulated under Final Rule
USDA reports that there were 1.2 miliion livestock and poultry operations in the United
States in 1997 This number includes all operations that raise beef or dairy cattle, hogs, chickens
Broilers or layers), and turkeys, and includes both confinement and non-confinement (i e., grazing
£? SgefeS production. Of these, EPA estimates that there are about 238,000 AFOs that raise or
S«5L s in confinement. EPA has further estimated that 15 198 facilities will be CAFOs
sublet to the final rule, based on the number of facilities that discharge or have the potential to
ES-3
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discharge to U.S. waters and which meet the minimum size thresholds (i.e., number of animals)
defined by the revised regulations (Exhibit ES-2). (
Exhibit ES-2 j
ESTIMATED NUMBER OF CAFOS SUBJECT TO REVISED REGULATIONS";
Production
Sector
Beef
Dairy
Heifers
Veal
Swine
Layers
Broilers
Turkeys
Horses
Ducks
Total
Currently
Regulated
1,940
3,399 ,
0
0
5,409
433
683
425
195
21
12,505
Regulated Under New Rule |
Large CAFOs
1,766
1,450
242
12
3,924
1,112
1,632
388
195
21
10,742
Medium
CAFOs
174
1,949
230
7
1,485
50 ,
520
37
0
• 4
4,456
Total
1,940 !
3,399 !
472 ;
19
5,409
1,162 ;
2,152
425 !
195 i
25 j
15,198 !
* AFOs that stable or confine animals in different sectors are counted more than once. ;
Definition of GAFO under the Final Rule . i- ."
EPA's final rule defines CAFOs in three categories: Large, Medium, and Small; (see Exhibit
ES-3 for the size standards). The revised regulations require all large CAFOs to apply for an NPDES
permit. This includes several types of operations that were previously not considered CAFOs,
including: large facilities that discharge only as the result of a large storm event; large 'fdry" poultry
operations; and stand-alone immature swine or heifer operations. In the rare event that a large CAFO
has no potential to discharge, the new requirements provide a process for a demonstration to that
effect, in lieu of obtaining a permit. I
i
Medium-size AFOs are defined as CAFOs only if they meet one of two specific criteria
governing the method of discharge: j
ES-4
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Pollutants are discharged into waters of the United States through a manmade
ditch, flushing system, or other similar man-made device; or
I
Pollutants are discharged directly into waters of the United States that
originate outside of and pass over, across, or through the facility or otherwise
come into direct contact with the confined animals.
Exhibit ES-3
SIZE STANDARDS FOR LARGE, MEDIUM, AND SMALL CAFOS
Sector
Mature Dairy Cattle
Veal Calves
Cattle or Cow/Calf Pairs
Swine (weighing over 55
pounds)
Swine (weighing less than 55
pounds)
Horses
Sheep or Lambs
Turkeys
Chickens (liquid manure
handling systems)- includes
Laying Hens
Chickens Other than Laving
Hens (other than liquid
manure handling)
Laying Hens (other than liquid
manure handling)
Ducks (dry operations)
Ducks (wet operations) •
. Large '
more than 700
more than 1,000 [
more than 1,000 !
i
more than 2,500 <
more than 10,000
more than 500 ,
more than 10,000
more than 55,000 j
more than 30,000 :
more than 125,000
more than 82,000 |
more than 30,000
more than 5,000 i
Medium1
200 - 700
300 - 1,000
300-1,000
750 - 2,500
3,000 - 10,000
150 - 500
3,000 - 10,000
16,500-55,000
9,000 - 30,000
37,500 - 125,000
25,000 - 82,000
10,000-30,000
1,500 - 5,000
Small2
less than 200
less than 300
less than 300
less than 750
less than 3,000
less than 150
less than 3,000
less than 16,500
less than 9,000
less than 37,500
less than 25,000
less than 10,000
less than 1,500
1 Must also meet one of two criteria to be defined as a CAFO.
2 Must be designated by EPA or the State permit authority.
Similarly, small facilities are considered CAFOs only if they are designated as such by EPA
or the State NPDES permit authority. Such designation must be based on a determination that a
ES-5
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facility is a significant contributor of pollutants to waters of the United States. On identical grounds,
medium-size operations that are not CAFOs by definition may also be designated as CAFOs.
Under the final rule all CAFOs, regardless of size, must apply for an NPDES permit and must
develop and implement a nutrient management plan. Such plans must identify practices necessary
to demonstrate compliance with the effluent limitation guideline (if applicable), and include
requirements to land apply manure and wastewater in a manner consistent with technical standards
for nutrient management established to ensure appropriate utilization of nutrients. '-•:'.
Effluemt Limitation Guidelines under the Final Rule !
i
EPA's final rule also applies revised effluent guidelines to large CAFOs; for other permitted
facilities, technology-based discharge limits will be established on the basis of the permit writer's
best professional judgment. The key feature of these requirements is prohibition of discharge of
manure and other process wastewater from the production area.1 An exception to this restriction is
made for rainfall-related overflows from facilities that are designed, constructed, operated, and
maintained to contain all process wastewater and runoff from a 25-year, 24-hour (or more severe)
rainfall event. In addition, the ELG requires all large CAFOs to comply with best management
practices to ensure the proper application of manure, including a requirement to apply manure at
rates based on technical standards for nutrient management.2 :
ENVIRONMENTAL IMPACTS ADDRESSED UNDER THE FINAL RULE i
!
i
The release of pollutants in animal waste from CAFOs to surface water, groundwater, soil,
and air is associated with a range of human health and ecological impacts, and contributes to the
degradation of the nation's surface water. Data collected for EPA's 2000 National Water Quality
Inventory, prepared under Section 305(b) of the Clean Water Act, identify agriculture (including
irrigated and non-irrigated crop production, rangeland, feedlots, pastureland, and animal holding
areas) as the leading contributor to identified water quality impairments in the nation's rivers and
lakes, and the fifth leading contributor to identified water quality impairments in the nation's
estuaries. The data indicate that the agricultural sector contributes to the impairment of at least
129,000 river miles, 3.2 million lake acres, and over 2,800 square miles of estuary. Anijmal feeding
operations are only a subset of the agriculture category, but 29 states specifically identified animal
feeding operations as contributing to water quality impairment. Finally, the data also identify the
1 The production area of an AFO includes the animal confinement area, the litter or manure
storage area, the raw materials storage area, and the waste containment area.
'! These requirements apply to any land under the control of the owner or operator of the
production area — whether it is owned, rented, or leased—to which manure and wastewater from
the production area is applied.
ES-6
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key pollutants and stressors that impair the nation's waters. Among the most problematic pollutants
are several - including pathogens, nutrients, and!oxygen depleting substances - that are associated
commonly, although not exclusively, with animal waste.
Key Pollutants in Animal Waste
The primarypollutants associated with animal wastes are nutrients (particularly nitrogen and
phosphorus), organic matter, solids, pathogens, and odorous/volatile compounds. Animal waste is
also a source of salts and trace elements, and to a lesser extent, antibiotics, pesticides, and hormones.
Exhibit ES-4 describes the key pollutants in animal waste, the pathways by which they reach the
environment, and their potential impacts. '
Exhibit ES-4
KEY POLLUTANTS IN ANIMAL WASTE
Pollutant
Description of Pollutant Forms
in Animal Waste '
Pathways
Potential Impacts
Nutrients ,
Nitrogen
Phosphorus
Potassium
Organic
Compounds
Solids
Pathogens
Exists in fresh manure in organic (e.g., urea)
and inorganic forms (e.g., ammonium and >
nitrate). Microbes transform organic nitrogen
to inorganic forms that may be absorbed by
plants. 1
Exists in both organic and inorganic forms, As
manure ages, phosphorus mineralizes to
inorganic phosphate compounds that may be
absorbed by plants.
Most potassium in manure is in an inorganic
form available for absorption by plants; it can
also be stored in soil for future uptake. i
Carbon-based compounds in manure that are
decomposed by soil and surface water micro-
organisms. Creates biochemical oxygen '
demand, or BOD, because decomposition
consumes dissolved oxygen in the water.
Includes manure itself and other elements
(e.g., feed, bedding, hair, feathers, and
corpses).
Includes range of disease-causing organisms,
including bacteria, viruses, protozoa, fungi,
and algae. Some pathogens are found in ,
manure, others grow in surface water due to
increased nutrients and organic matter. '.
>• Overland discharge
>• Le'achate into
groundwater
>• Atmospheric deposition
as ammonia
*• Overland discharge
*• Leachate into
groundwater (water
soluble forms)
*• Overland discharge
* Leachate into
groundwater
>• Overland discharge
> Overland discharge
*• Atmospheric deposition
>• Overland discharge
* Growth in waters with
high nutrient, organic
materials
»• Eutrophication
* Animal, human
health effects
* Eutrophication
*• Increased salinity
*• Depletion of
dissolved oxygen
>• Reduction in aquatic
life
•• ' Eutrophication
»• Turbidity
•• Siltation
>• Animal, human
health effects
ES-7
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Exhibit ES-4 !
KEY POLLUTANTS IN ANIMAL WASTE . ',
Pollutant
Salts
Trace Elements
Volatile
Compounds
Other
Pollutants
Description of Pollutant Forms
in Animal Waste
Includes cations sodium, potassium, calcium,
and magnesium; and anions chloride, sulfate,
bicarbonate, carbonate, and nitrate.
Includes feed additives arsenic, copper,
selenium, zinc, cadmium; and trace metals
molybdenum, nickel, lead, iron, manganese,
aluminum, and boron (pesticide ingredients).
Includes carbon dioxide, methane, nitrous
oxide, hydrogen sulfide, and ammonia gases
generated during decomposition of waste.
Includes pesticides, antibiotics, and hormones
used in feeding operations.
Pathways
*• Overland discharge
>• Leachate into
groundwater
>• Overland discharge
>• Inhalation
*• Atmospheric deposition
of ammonia
* Overland discharge
Potential Impacts
>• Reduction in aquatic
life
*. Human health
effects '
*• Soil impacts
>• Toxicity at high
levels |
>• Human health
effects
i
*• Eutrophication
>• Globaliwarming
* Impacts unknown
i
Pollutant Pathways
Pollutants in animal waste and manure enter the environment through a number of pathways,
including surface runoff and erosion, direct discharges to surface water, spills and other dry-weather
discharges, leaching into soil and ground water, and releases to air (including; subsequent
redeposition to land and surface waters). Releases of manure pollutants can originate from animal
confinement areas, manure handling and containment systems, manure stockpiles, and from cropland
where manure is spread. ' .
i
, ' i
Runoff and erosion occur during rainfall, when rain water carries pollutants over land to
surface waters. Runoff of animal wastes is more likely when rainfall occurs soon after application
and when manure is over-applied or misapplied. Erosion can be a significant transport mechanism
for land applied pollutants, such as phosphorus, that are strongly bonded to soils. :
f
Direct discharge of pollutants to surface water occurs when animals have access to water
bodies and when manure storage areas overflow. Dry weather discharges to surface waters result
from accidental (or intentional) discharges from lagoons and irrigation systems. Othejr discharges
to surface waters include overflows from containment systems following rainfall, catastrophic spills
from failure of manure containment systems, washouts from floodwaters, or equipment malfunction,
such as pump or irrigation gun failure. I
ES-8
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Discharge to groundwater occurs when water traveling through the soil to ground water
carries with it pollutants (e.g., nitrates) from livestock and poultry wastes on the surface. Leaking
lagoons are also a potential source of manure pollutants in ground water.
Air releases of CAFO pollutants result from volatilization of manure constituents and the
products of manure decomposition. Alternatively, manure pollutants can enter the air through spray
irrigation systems and as particulates wind-borne in dust. Once airborne, these pollutants can settle
in nearby water bodies, or can be directly inhaled.
Impacts of Pollutants in Animal Waste ;
i
The most dramatic ecological impacts associated with manure pollutants in surface waters
are massive fish kills. Incomplete records indicate that every year dozens of fish kills associated
with AFOs result in the deaths of hundreds of thousands offish. In addition, manure pollutants such
as nutrients and suspended solids can seriously disrupt aquatic systems by over-enriching water (hi
the case of nutrients) or by increasing turbidity (in the case of solids). Excess nutrients cause
fast-growing algae blooms that reduce the penetration of sunlight in the water column, and reduce
the amount of available oxygen in the water, reducing fish and shellfish habitat and affecting fish
and invertebrates. Manure pollutants can also encourage the growth of toxic organisms, including
Pfiesteria, which has also been associated with fish kills and fish disease events. Reduction in
biodiversity due to animal feeding operations has also been documented; for example, a study of
three Indiana stream systems found fewer fish and more limited diversity offish species downstream
of CAFOs than were found downstream of study reference sites.
A variety of pollutants in animal waste can also affect human health. Manure contains over
100 human pathogens; contact with some of these pathogens during recreational activities in surface
water can result in infections of the skin, eye, ear, nose, and throat. Eutrophication due to excess
nutrients can also promote blooms of a variety of organisms that are toxic to humans either through
ingestion or contact. This includes the dinoflagellate Pfiesteria piscicida. While Pfiesteria is
primarily associated with fish kills and fish disease events, the organism has also been linked with
human health impacts through dermal exposure. Finally, even with no visible signs of algae blooms,
shellfish such as oysters, clams and mussels can carry toxins produced by some types of algae in
their tissue. These can affect people who eat contaminated shellfish.
Contaminants from manure, including nitrogen, algae, and pathogens, can also affect human
health through drinking water sources and can result in increased drinking water treatment costs.
For example, nitrogen in manure can be transported to drinking water as nitrates, which are
associated with human health risks. EPA has identified nitrate as the most widespread agricultural
contaminant in drinking water wells. Algae blooms triggered by nutrient pollution can affect
drinking water by clogging treatment plant intakes, producing objectionable tastes and odors; and
reacting with the chlorine used to disinfect drinking water to produce harmful chlorinated byproducts
(e.g., trihalomethanes).
ES-9
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REDUCTIONS IN POLLUTANT DISCHARGES UNDER THE FINAL RULE!
EPA's analysis of pollutant discharges under the final rule addresses changes in pollutant
discharges occurring at the production area, and also changes in the quantity of pollutants in runoff
from land on which manure has been applied. Estimates of pollutant discharges from these manure
application sites, or "edge-of-field" loadings, include nutrients, metals, pathogens, and Sediment for
both pre-rule conditions (baseline) and post-rule conditions. EPA estimated reductions in pollutant
discharges using the Groundwater Loading Effects of Agricultural Management Systems'(GLEAMS)
model, which uses information on soil characteristics and climate, along with characteristics of the
applied manure and commercial fertilizers, to estimate losses of nutrients, metals, pathogens, and
sediment in surface runoff, sediment, and ground water leachate. ;
EPA used GLEAMS to quantify the reduction of nitrogen and phosphorus loads, and
reductions of discharges of zinc, copper, cadmium, nickel, lead, and arsenic. Fecal coliform and
Fecal streptococcus were used as surrogates to estimate pathogen reductions that would likely be
achieved by this rule. Table ES-5 presents the results of these analyses. i
Exhibit ES-5
EDGE OF FIELD LOADING REDUCTIONS FOR LARGE CAFOS:
COMBINED TOTAL FOR ALL ANIMAL SECTORS
Paraimeter/Units
Nutrients (million Ib.)
Metals (million Ib.)
Pathogens (1019cfu)
Sediment (million Ib.)
Baseline
Pollutant
Loading
(Pre-regulation)
658
20
5,784
35,493
Post-regulation
Pollutant Loading
503
19
3,129
' 33,434
Pollutant Reduction
Units
155
1
2,655
2,059
Percent
i' 24
5
46
6
APPROACHES TO ANALYZING BENEFITS OF THE FINAL RULE '
EPA has analyzed the water quality improvements attributable to the regulation of large
CAFOs under the final rule and has estimated the environmental and human health benefits of the
pollutant reductions that will result. The monetized benefits generally reflect direct improvements
in surface and groundwater quality, but the rule will also result in benefits associated with improved
soil conditions, costs associated with increased energy consumption, and changes in emissions of
air pollutants. j
ES-10
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EPA's benefits analysis estimates the effect of pollutant reductions and other environmental
improvements on human health and the ecosystem, and to the extent possible assigns a monetary
value to these benefits. As previously noted, the analysis focuses solely on the benefits attributable
to the revised standards for large CAFOs; the impacts of the final rule on medium-sized CAFOs are
not considered. In addition, EPA has identified certain types of environmental improvements that
will result from this rule that it is unable to quantify or value. Given the limitations in assigning
monetary values to some of the improvements, the economic benefit values summarized in Exhibit
ES-1 and described in the Benefits Analysis should be considered a subset of the total benefits of the
new regulations. These monetized benefits should be evaluated along with descriptive qualitative
assessments of the non-monetized benefits with the acknowledgment that even these may fall short
of the real-world benefits that may result from this rule. For example, the benefits analysis assigns
monetary values to water quality improvements due to reductions of nitrogen, phosphorus, pathogens
and sediment, but does not include values for potential water quality improvements expected due
to reduced discharges of metals or hormones.
To estimate the impacts of controlling animal waste from CAFOs, EPA conducted seven
benefit studies. The first analysis employs a national water quality model (National Water Pollution
Control Assessment Model) that estimates runofffrom land application areas to rivers, streams, and,
to a lesser extent, lakes in the U.S. This study estimates the value society places on improvements
in surface water quality associated with the revised rule. The second analysis examines the expected
improvements in shellfish harvesting resulting from improved water quality under the new CAFO
rule. A third study looks at the fish kills that1 are attributed to animal feeding operations and
estimates the benefits of reducing such incidents. The fourth analysis estimates the benefits
associated with reduced contamination of groundwater for people who draw their water from private
wells, while the fifth examines the benefits of reduced contamination of animal water supplies. The
sixth analysis presents a case study of the benefits of reducing the discharge of nutrients to estuaries,
focusing on North Carolina's Albemarle and Pamlico Sounds. Finally, the seventh study evaluates
the beneficial impact of improved source water quality on the cost of treating public water supplies.
Research documented in the record and! summarized in the Benefits Analysis shows that
CAFO wastes affect the environment and human health in a number ways beyond those for which
benefits have been monetized. Examples of other types of impacts or potential benefits include:
! | '
• Reductions in loadings of metals, antibiotics, hormones, salts, and other
pollutants in animal waste from CAFOs, and reductions in associated human
health and ecological effects;
i
• Reduced eutrophication of coastal and estuarine waters beyond the
Albemarle and Pamlico Sounds region, due to reductions in nutrient-rich
runoff from CAFOs and reductions in the deposition of NH3 (ammonia)
volatilized from CAFOs;
ES-11
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• Reduced human exposure to' pathogens during recreational activities in
estuaries and coastal waters; !
• Potential improvements to soil properties due to reduced overapplication
of manure and an increase in the acreage of land to which manure is applied
at agronomic rates; and
Reduced pathogen contamination in private drinking water wells. \
:
EPA's benefits analysis does not include monetary values for these other areas of
environmental improvements. In some cases, data limitations prevent the measurement of the
magnitude of improvement. In other cases, the economic literature does not support the development
of an economic value for these benefits. Nevertheless, these environmental benefits are tangible and
result in improved ecological conditions and reduced risk to human health.
ES-12
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INTRODUCTION AND SUMMARY
CHAPTER 1
The U.S. Environmental Protection Agency (EPA) is revising and updating the two primary
regulations that ensure that manure, litter, wastewater, and other process waters generated by
concentrated animal feeding operations (CAFOs) do not impair water quality.1 EPA's regulatory
changes affect the existing National Pollutant Discharge Elimination System (NPDES) provisions
that define and establish permit requirements for CAFOs, and the existing effluent limitations
guidelines (ELGs) for feedlots, which establish the technology-based effluent discharge standard that
is applied to specified CAFOs. Both of these existing regulations were originally promulgated in
the 1970s. EPA is revising the regulations to address changes that have occurred in the animal
industry sectors over .the last 25 years, to clarify and improve implementation of CAFO
requirements, and to improve the environmental protection achieved under these rules.
This report addresses the environmental and economic benefits of the revised regulations.
It examines in detail several environmental quality improvements that EPA expects will result from
the regulatory changes: improvements in the suitability of freshwater resources for recreational
activities; reduced incidence offish kills; improved commercial shellfishing; reduced contamination
of private wells; reduced contamination of animal water supplies; reduced eutrophication of
estuaries; and improvements in source water quality that will reduce drinking water treatment costs
for pubic water supply systems. Because these are not the only beneficial impacts of the revised
regulations — and because, in general, EPA takes a conservative approach to quantifying the
benefits analyzed — the Agency believes that this report presents a lower-bound estimate of the
beneficial impacts of the new CAFO rules.
This chapter first provides background information on animal feeding operations and EPA's
previously established CAFO regulations. It then briefly summarizes the environmental problems
and industry changes associated with animal feeding operations that EPA is addressing with its
revised regulations. Finally, the chapter outlines the regulatory changes that EPA is implementing,
and provides a summary of the methods and results of the detailed benefits analyses presented in
1 As used throughout this report, the term manure is defined to include manure, litter, and
other process wastewater generated by CAFOs.
1-1 '
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subsequent chapters of the report. The detailed analyses and summary present the economic benefits
of the standards promulgated by the Agency for the NPDES provisions and ELGs.
It is important to note that the analysis that EPA has conducted focuses solely on the
economic benefits attributable to the revised standards for large CAFOs; the potential beneficial
impact of the revise4 standards for medium-sized CAFOs is not addressed. The analysis assumes
that affected CAFOs will land-apply manure, litter, and other process wastewater in accordance with
a nutrient management plan that establishes application rates for each field based on the nitrogen
requirements of the crop, or on the crop's phosphorus requirements where necessary because of soil
or other field conditions. The promulgated regulation requires CAFOs to prepare and implement a
site-specific nutrient management plan that establishes manure application rates for each field based
on the technical standards for nutrient management established by the permitting authority's director.
The promulgated, standard is referred to throughout this report as the phosphorus-based standard.
The report also presents results for a nitrogen-based regulatory alternative that the Agency
considered but did not select. ;
1.1 BACKGROUND INFORMATION
.1.1.1 Definition and Population of AFOs ;
i
The term CAFO is a regulatory designation that describes certain animal feeding operations
(AFOs). AFOs are defined by federal regulation as lots or facilities where animals "have been, are,
or will be stabled or confined and fed or maintained for a total of 45 days or more in any 12 month
period and crops, vegetation forage growth, or post-harvest residues are not sustained in the normal
growing season over any portion of the lot or facility" (40 CFR 122.23(b)(l)). AFOs congregate
animals on a small land area where feed must be brought to the animals. Winter feeding of animals
on pasture or rangeland is not normally considered an AFO. j
USDA reports that there were 1.2 million livestock and poultry operations in the United
States in 1997. This number includes all operations that raise beef or dairy cattle, hogs, chickens
(broilers or layers), and turkeys, and includes both confinement and non-confinement (i.e., grazing
and rangefed) production. Of these, EPA estimates that there are about 238,000 AFOsithat raise or
house animals in confinement, as defined by the USDA. For many of the animal sectors, it is not
possible to estimate from available data what proportion of the total livestock operations have
feedlots (i.e., confinement) and what proportion are grazing operations only. For analytical purposes,
EPA has therefore assumed that all dairy, hog, and poultry operations are AFOs. i Exhibit 1-1
summarizes the estimated total number of AFOs of all sizes in each of the four major livestock
categories, based on 1997 data. i
1-2
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Exhibit 1-1
NUMBER OF ANIMAL FEEDING OPERATIONS
(based on 1997 data)
' Sector ;
Beef operations, including both cattle and veal operations.
Dairy operations, including both milk and heifer operations.
Hog operations, including both "farrow to finish" and "grower to finish" operations.
Poultry operations, including broilers, layers (both wet and dry operations) and turkeys.
Sum Total
Total AFOs1
Total AFOs
57,598
98,630
51,772
27,530
235,530
237,821
Source: EPA estimates derived from published USDA/NRCS data. For more information, see Robert L. Kellogg;
Profile of Farms -with Livestock in the United States: A Statistical Summary, USDA/NRCS, 2002.
1 "Total AFOs" accounts for "specialty cases" defined as dairies that went out of business, farms with only
feeder pigs, and egg hatching operations.
1.1.2 Existing Regulations for CAFOs ,
\
The regulations that EPA established in the 1970s identify three categories of AFOs that are
subject to regulation as CAFOs. The first category of facilities includes any animal feeding
operation where more than 1,000 "animal units" (AUs) are confined; such facilities are by definition
CAFOs unless discharges from the operation occurred only as the result of a 25-year, 24-hour (or
more severe) storm event.2 The second group of facilities includes AFOs that confine 300 to 1000
AUs; these facilities are defined as CAFOs if:
• Pollutants were discharged into navigable waters through a manmade ditch,
flushing system, or other similar man-made device; or
• Pollutants were discharged directly into waters that originate outside of and
pass over, across, or through the facility or come into direct contact with the
confined animals.
The established regulations do not extend the definition of a CAFO to operations with fewer than
300 AUs. Under certain circumstances, however (e.g., a facility causing significant surface water
impairment), a permitting authority may designate such facilities as CAFOs.
2 Animal units are defined in EPA's current regulations at 40 CFR 122 and vary by animal
type. An AU is considered equivalent to one beef cow.
1-3
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On the basis of the manure management or watering systems they employ, the established
regulations do not define certain poultry operations as CAFOs. In addition, the CAFO definition
considers only swine over 55 pounds and mature dairy cattle, assuming that immature swine and
heifers would be raised in the same operations as adults. As a result, the regulatory definition does
not address the "stand-alone" immature swine or heifer operations that have proliferated in the last
two decades. . ' • -
1.2 CURRENT ISSUES RELATED TO CAFOS
AFOs (including CAFOs) produce and manage large amounts of animal waste, most in the
form of manure. USDA estimates that 710 billion pounds (322 million metric tons) of "as excreted"
manure were generated in 1997 from major livestock and poultry operations. Despite the existing
ELG and NPDES regulations that define CAFOs and regulate their discharges, the management of
animal wastes at AFOs has continued to be associated with environmental problems, including large
spills of manure, fish kills, and outbreaks ofPfiesteria. In addition, industry changes inirecent years
may contribute to and exacerbate the problems caused by releases of manure from AFOs. EPA is
revising the existing regulations with the following goals: • . j
• To address persistent reports of discharge and runoff of manure and manure
nutrients from CAFOs; • > '
To update the existing regulations to reflect structural changes in the animal
production industries over the last few decades; and ;
• To improve the effectiveness of the CAFO regulations in protecting or
restoring water quality. . |
Below we summarize the potential environmental impacts of manure releases from AFOs,
and outline the recent industry changes that may exacerbate these impacts. ;
1.2.1 Potential Environmental Impacts of CAFOs ;
Manure management practices at AFOs can include storage in piles or in open waste lagoons,
followed by land application to agricultural fields as fertilizer. While some discharges from
regulated CAFOs are governed as point sources, unregulated releases of manure from waste piles
or lagoons and over-application of manure to agricultural lands can also affect nearby; surface and
groundwater. National and local studies have confirmed the presence of manure pollutants in surface
waters. Once contaminants from manure have reached surface waters they can cause;a variety of
ecological and human health problems, including water quality impairments, ecological impacts, and
human health effects from recreational exposure or from contaminated drinking water!.;
1-4
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1.2.1.1
Water Quality Impairments
EPA's National Water Quality Inventory; 2000 Report identifies agricultural operations,
including CAFOs, as the leading contributor to identified water quality impairments in the nation's
rivers, streams, lakes, ponds, and reservoirs, and the' fifth leading contributor to identified water
quality impairments in the nation's estuaries.3 The report also identifies the key pollutants and
stressors that impair the nation's waters. Among the most problematic pollutants are several -
including pathogens, nutrients, sediment/siltation, metals, and oxygen depleting substances - that are
associated commonly, although not exclusively, With animal feeding operations.4
1.2.1.2
Ecological Impacts
The most dramatic ecological impacts associated with manure pollutants in surface waters
are massive fish kills. Incomplete records indickte that every year dozens of fish kills associated
with AFOs result in the deaths of hundreds of thousands offish. In addition, manure pollutants such
as nutrients and suspended solids can seriously disrupt aquatic systems by over-enriching water (in
the case of nutrients) or by increasing turbidity (in the case of solids). Excess nutrients cause
fast-growing algae blooms that reduce the penetration of sunlight in the water column, and reduce
the amount of available oxygen in the water, reducing fish and shellfish habitat and affecting fish
and invertebrates. Manure pollutants can also encourage the growth of toxic organisms, including
Pfiesteria, which has been associated with fish kills and fish disease events. Reduction in
biodiversity due to animal feeding operations has also been documented; for example, a study of
three Indiana stream systems found fewer fish and more limited diversity offish species downstream
of CAFOs than were found downstream of study reference sites.
3 EPA prepares this report every two years, as required under Section 305(b) of the Clean
Water Act. It summarizes State reports of water quality impairment and the suspected sources and
causes of such impairment.
4 The National Water Quality Inventory: 2000 Report notes that the agricultural sector
contributes to the impairment of at least 129,000 river miles, 3.2 million lake acres, and over 2,800
square miles of estuary. Forty-eight states and tribes reported that agricultural activities contributed
to water quality impacts on rivers, 40 states identified such impacts on lakes, ponds, and reservoirs,
and 14 states reported such impacts on estuaries. Animal feeding operations are only a subset of the
agriculture category, but 29 states specifically identified animal feeding operations as contributing
to water quality impairment. '
1-5
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1.2.1.3
Human Health Effects
Manure contains over 100 human pathogens; contact with some of these pathogens during
recreational activities in surface water can result in infections of the skin, eye, ear, nose, and throat.
Eutrophication due to excess nutrients can also promote blooms of a variety of organisms that are
toxic to humans either through ingestion or contact. This includes the dinoflagellate Pfiesteria
piscicida. While Pfiesteria is primarily associated with fish kills and fish disease events, the
organism has also been linked with human health impacts through dermal exposure. Finally, even
with no visible signs of algae blooms, shellfish such as oysters, clams and mussels can; carry toxins
produced by some types of algae in their tissue. These can affect people who eat contaminated
shellfish. : j
Contaminants originating from manure pollutant loadings, including nitrogen, pathogens, and
algae (whose growth can be stimulated by manure nutrient loadings), can also affect human health
through drinking water sources and can result in increased drinking water treatment costs. For
example, nitrogen in manure can be transported to drinking water as nitrates, which are associated
with human health risks. EPA has identified nitrate as the most widespread agricultural 6ontaminant
in drinking water wells. Algae blooms triggered by nutrient pollution can affect drinking water by
clogging treatment plant intakes, producing objectionable tastes and odors, and reacting with the
chlorine used to disinfect drinking water to produce harmful chlorinated byproducts (e.g.,
trihaloniethanes). i '
1.2.1.4
Air Emissions
CAFOs are also sources of air pollutants. Animal feeding operations generate various types
of animal wastes, including manure (feces and urine), waste feed, water, bedding, and dust, which
can become airborne or generate emissions. Air emissions occur as a result'of manure
decomposition throughout the process of waste management and treatment. The rab at which
emissions are generated varies as a result of a number of operational variables (e.g., animal species,
type of housing, waste management system) and weather conditions (e.g., temperature, humidity'
wind, time of release). Chapter 13 of EPA's Technical Development Document provides further
discussion and references relating to air emissions from CAFOs. !
i
1.2.2 Recent Industry Trends
Since EPA promulgated the existing ELG and NPDES regulations governing CAFOs in the
1970s, a number of trends in the livestock and poultry industries have influenced the nature of
pollution from AFOs and the potential for contamination of surface and groundwater. These trends
include a combination of industry growth and concentration of animals on fewer, larger farms;
location of farms closer to population centers; and advances in farm production practices and waste
1-6
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management techniques. The changes in the industry have limited the effectiveness of the current
regulations that define and govern releases from CAFOs.
1.2.2.1
Increased Production and Industry Concentration
U.S. livestock and poultry production has risen sharply since the 1970s, resulting in an
increase in the amount of manure and wastewater generated annually. The Census of Agriculture
reports 1997 turkey sales of 299 million birds, Compared to 141 million sold in 1978. Sales of
broilers increased to 6.4 billion in 1997 from 2.5 billion in 1974.5 Red meat production also rose
during the 1974-1997 period; the number of hogs and pigs sold in 1997 totaled 142.6 million,
compared to 79.9 million in 1974.
As production has increased, the U.S. livestock and poultry sectors have also consolidated
animal production into a smaller number of (larger-scale, highly specialized operations that
concentrate more animals (and manure) in a single location. At the same time, significant gains in
production efficiency have increased per-animal yields and the rate of turnover of animals between
farm and market. These large AFOs can present considerable environmental risks because of the
large amount of manure they produce and because they often do not have an adequate land base to
dispose of the manure through land application. As a result, large facilities must incur the risks
associated with storing significant volumes of manure, attempt to maximize the application of
manure to the limited land they have available, or arrange for the use of manure on other farms. By
comparison, smaller AFOs manage fewer animals and tend to concentrate less manure at a single
location. These operations are more likely to have sufficient cropland and fertilizer needs to land
apply manure nutrients generated at a livestock or poultry business.
1.2.2.2
Location of Animal Operations Closer to Consumer Markets
Since the 1970s, the combined forces of population growth and re-location of operations
closer to consumer markets and processing sectors have resulted in more AFOs located near densely
populated areas. Surface waters in these areas face additional stresses from urban runoff and other
point sources. The proximity of large AFOs to human populations thus increases the potential for
human health impacts and ecological damage if manure or wastewater at AFOs is improperly
discharged.
5 This more than two-fold increase in the number of broilers raised annually signals the need
to review the existing CAFO regulations, which effectively do not cover broiler operations since
virtually no such operations use wet manure management systems.
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1.2.2.3 Advances in Agriculture Production Practices to Manage and Dispose Manure
Continued research by USDA, state agencies and universities has led to advances in
technologies and management practices that minimize the potential environmental degradation
attributable to discharge and'runoff of manure and wastewater. Today, there are many more
practicable options to properly collect, store, treat, transport, and utilize manure and wastewater than
there were in the 1970s, when the existing regulations were instituted. As a result, current
regulations do not reflect the full range of management practices and technologies that may be
implemented to achieve greater protection of the environment (e.g., by more effectively treating
certain constituents present in animal manure or by converting manure into a more marketable form).
In addition, during the time since promulgation of the existing regulation, certain practices have
proven to be relatively less protective of the environment. There is documented eVidence that
lagoons may leak if not properly maintained, and evidence of over-application of manure and
nutrient saturation of soils in some parts of the country. I
1.3 REVISIONS TO CAFO REGULATIONS i
In response to persistent reports of environmental problems, and to changes in the industries
and technologies associated with AFOs, EPA is revising both the NPDES regulations for CAFOs
and the ELG regulations for feedlots. The revisions to the NPDES regulations for CAFOs affect
which animal feeding operations are defined as CAFOs and are therefore subject to the NPDES
permit program. Changes to the ELG regulations for feedlots affect which technology-based
requirements will apply to certain CAFOs. Additional detail on the revisions to the NPDES and
ELG regulations is provided below. I
1-3.1 Changes to NPDES Regulations ;
EP A's revised rule retains some of the basic elements of the existing structure for determining
which AFOs are CAFOs, but with important exceptions for large facilities (see Exhibit 1-2 for the
size standards for Large, Medium, and Small CAFOs).6 Under the revised regulations, all large
CAFOs have a mandatory duty to apply for an NPDES permit. This change has two important
effects. First, it removes ambiguity over whether a large facility needs an NPDES permit, even if
it discharges only as the result of a large storm event. Second, large poultry operations are covered,
regardless of the type of watering system used or whether the litter is managed in wet or dry form.
In addition, the revised CAFO definition includes size standards for operations that stable or confine
immature dairy cattle or veal calves, cow/calf pairs, or swine weighing less than 55 pounds, thus
extending the regulations to address stand-alone immature swine or heifer operations.1 hi the rare
6 Note that the new size standards are specified with respect to the number of animals
confined; they no longer reference "animal units." I
1-8
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event that a large CAFO has no potential to discharge, the new requirements provide a process for
a demonstration to that effect, in lieu of obtaining a permit.
Exhibit 1-2
SIZE STANDARDS FOR LARGE, MEDIUM, AND SMALL CAFOS
Sector
Mature Dairy Cattle
Veal Calves
Cattle or Cow/Calf Pairs
Swine (weighing over 55
pounds)
Swine (weighing less than 55
pounds)
Horses
Sheep or Lambs
Turkeys
Chickens (liquid manure
handling systems)- includes
Laying Hens
Chickens Other than Laying
Hens (other than liquid
manure handling)
Laying Hens (other than liquid
manure handling)
Ducks (dry operations)
Ducks (wet operations)
Large
more than 700 '
more than 1,000
more than 1,000 •
more than 2,500
more than 10,000
more than 500
more than 10,000
more than 55,000
more than 30,000
more than 125,000 ;
more than 82,000
more than 30,000 -
more than 5,000 ;
Medium1
200 - 700
300-1,000
300 - 1,000
750-2,500
3,000 - 10,000
150-500
3,000 - 10,000
16,500-55,000
9,000 - 30,000
37,500 - 125,000
25,000 - 82,000
10,000-30,000
1,500 - 5,000
Small2
less than 200
less than 300
less than 300
less than 750
less than 3,000
less than 150
less than 3,000
less than 16,500
less than 9,000
less than 37,500
less than 25,000
less than 10,000
less than 1,500
' Must also meet one of two criteria to be defined as a CAFO.
2 Must be designated by EPA or the State permit authority.
The factors that lead smaller AFOs to be classified as CAFOs are largely unchanged. As with
the existing regulations, medium-size AFOs are defined as CAFOs only if they meet one of two
specific criteria governing the method of discharge:
• Pollutants are dischargedinto waters of the United States through a manmade
ditch, flushing system, or other similar man-made device; or
1-9
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Pollutants are discharged directly into waters of the United States that
originate outside of and pass over, across, or through the facility or otherwise
come into direct contact with the confined animals. i
Similarly, small facilities are considered CAFOs only if they are designated as such by EPA or the
State NPDES permit authority. Such designation must be based on a determination that a facility
is a significant contributor of pollutants to waters of the United States. On identical grounds,
medium-size operations that are not GAFOs by definition may also be designated as CAFOs.
Under the new regulations, all CAFOs, regardless of size, must be covered by ian NPDES
permit and are required to develop and implement a nutrient management plan. Such;plans must
identify practices necessary to demonstrate compliance with the effluent limitation guideline (if
applicable), and include requirements to land apply manure and wastewater in a manner consistent
with the appropriate agricultural utilization of nutrients.
1.3.2 Changes to ELGs
As with the previous CAFO regulations, EPA's revised effluent guidelines will apply only
to large CAFOs; for other permitted facilities, technology-based discharge limits will continue to be
established on the basis of the permit writer's best professional judgment. The revised regulations,
however, introduce differing requirements for existing sources and new sources. The key features
of these requirements areas follows: }
I
" Existing Sources — In the case of existing sources, the effluent limitation
guideline will continue to prohibit the discharge of manure and other process
wastewater from the production area.7 An exception to this prohibition
allows the discharge of process wastewater in overflow whenever rainfall
causes an overflow from a facility designed, constructed, operated, jand
maintained to contain all process wastewater and runoff from a 25-year,
24-hour (or more severe) rainfall event. The ELG also establishes certain
best management practices (BMPs) that apply to the production areaj In
addition, the ELG requires Large CAFOs to prepare and implement a site-
specific nutrient management plan that establishes manure application rates
for each field based on the technical standards for nutrient management
established by the permitting authority's director. Large CAFOs also must
implement certain other BMPs that apply to the land application area.8',
7 The production area of an AFO includes the animal confinement area, the litter or manure
storage area, the raw materials storage area, and the waste containment area. j
i
8 These requirements apply to any land under the control of the owner or operator of the
production area — whether it is owned, rented, or leased — to which manure and wastewater from
1-10 I
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New Sources — For new sources in the beef and dairy sector, the
requirements for managing the production area are the same as for existing
sources. In contrast, the discharge of process wastewater from the production
area of new sources hi the swine, veal, and poultry sectors is prohibited,
except for facilities designed to contain all process wastewater and the direct
precipitation and runoff from a 100-year, 24-hour rainfall event. The land
application requirements for new sources are identical to those for existing
sources.
1.3.3 Number of Regulated Operations
EPA has estimated the likely number of AFOs that would be regulated under the revised
CAFO rules. EPA analyzed data from the USDA's 1997 Census of Agriculture to identify AFOs and
CAFOs. EPA first determined the number of operations that raise animals under confinement by
using available data on the total number of livestock and poultry facilities. Next, EPA determined
the number of CAFOs based on the number of; facilities that discharge or have the potential to
discharge to U.S. waters and which meet the minimum size thresholds (i.e., number of animals)
defined by the revised regulations. Exhibit 1 -3 shows the number of CAFOs estimated to be subject
to the new rules.
1.4 ANALYTIC METHODS AND RESULTS
To determine the economic benefits of;the revised regulations, EPA performed several
analyses of expected changes hi environmental quality that would likely result from reduced AFO
pollution, focusing solely on the impact of the revised standards for Large CAFOs. The detailed
analyses addressed the following issues: .
Improvements in Water Quality and Suitability for Recreational
Activities: this analysis estimates the economic value of improvements in
inland surface water quality that would increase opportunities for recreational
boating, fishing, and swimming;
the production area is or may be applied.
1-11
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Exhibit 1-3 I
ESTIMATED NUMBER OF CAFOS SUBJECT TO REVISED REGULATIONS*
Production
Sector
Beef
Dairy
Heifers
Veal
Swine
Layers
Broilers
Turkeys
Horses
Ducks
Total
Currently
Regulated
1,940
3,399
0
0
5,409
433
.683
425
195
21
12,505
!
Regulated Under New Rule
Large CAFOs
1,766
1,450
242
12
3,924
1,112
1,632
388
195
21
10,742
Medium
CAFOs
174
1,949
230
7
1,485
50
520
37
0
4
4,456
Total ;
1,940 '.
3,399 ;
472 ;'
19
5,409 i
1,162 i
2,152 '••
425 i
195 :
25 >
15,198 i
* AFOs that stable or confine animals in different sectors are counted more than once.
Reduced Incidence of Fish Kills: this analysis estimates the economic
value of a potential reduction in the number of fish kills caused by AFO-
related waste;
i
Improved Commercial Shellfishing: this analysis characterizes the impact
of pollution from AFOs on access to commercial shellfish growing waiters,
and values the potential increase in commercial shellfish harvests that may
result from improved control of that pollution; ;
Reduced Contamination of Private Wells: this analysis examines: the
impact of the revised regulations on groundwater quality, and values
predicted improvements in the quality of aquifers that supply private wells;
Reduced Contamination of Animal Water Supplies: this analysis
characterizes the impact of pollution from AFOs on livestock mortality, and
values the potential impact of the revised regulations in reducing mortality
rates; . ; . -
1-12
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• Reduced Eutrophication of Estuaries: this analysis examines the impact
of the revised regulations on nutrient loadings to selected estuaries, and
presents a- case study illustrating the potential economic benefits of the
anticipated reduction in such loads; and
Reduced Water Treatment Costs: this analysis examines the revised
regulations' beneficial effect on source water quality and the consequent
reduction in treatment costs for public water supply systems.
Exhibit 1-4 summarizes the results of these studies for the final rule, reflecting the
following requirements: zero discharge from a facility designed, maintained, and operated to
hold manure, litter, and other process wastewater, including direct participation and runoff from
a 25-year, 24-hour rainfall event; implementation of feedlot best management practices,
including storm water diversions; lagoon and pond depth markers; periodic inspections;
elimination of manure application within 100 fe,et of any surface water, tile drain inlet, or
sinkhole; compliance with mortality-handling, nutrient management planning, and record
keeping guidelines; and phosphorus-based agronomic application rates. The exhibit also presents
analytic results for the final rule assuming nitrogen-based agronomic application rates, rather
than the proposed phosphorus-based standard. Jt is important to note that these results are not
intended to represent the total value of all benefits associated with a reduction in AFO pollutants;
they include only the subset of benefits that is addressed by EPA's analyses. Moreover, EPA's
analyses generally take a conservative approach to quantifying benefits; therefore, the results are
likely to reflect conservative estimates of the spjecific benefits that EPA has examined.
EPA also considered how today's rule would affect the amount and form of compounds
released to air, as well as the energy that is required to operate the CAFO. In addition to the
water quality impacts and benefits discussed above, EPA's evaluated non-water quality
environmental impacts, including changes in air emissions from CAFOs and changes in energy
use at CAFOs. EPA's estimates of changes in air emissions and energy use are described in
more detail in the Technical Development Document. In addition, during the rulemaking, EPA
evaluated a number of regulatory options and, as part of those analyses, also considered the
potential air quality benefits associated with changes in ammonia emissions. For further
discussion of those analyses, refer to Chapter 13 of the Technical Development Document and
Section 22 of the rulemaking record.
1.5 ASSESSMENT OF DATA USED TO, ESTIMATE BENEFITS
The majority of the data EPA used to estimate the environmental and economic benefits
associated with the revised standards for CAFOs are from existing sources. As defined in the
Office of Water 2002 Quality Management Plan (USEPA 2002), existing (or secondary) data are
data mat were not directly generated by EPA to support the decision at hand. Existing data were
used to identify animal feeding operations that are defined as CAFOs and subject to the NPDES
permit program under the final rule, and to model the effects of changes to the effluent guidelines
forfeedlots.
1-13
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In keeping with the graded approach to quality management embodied in the quality
management plan, EPA must assess the quality of existing data relative to their intended use.
The procedures EPA used to assess existing data for use in estimating the benefits associated
with the revised standards for CAFOs varied with the specific type of data. In general, EPA's
assessment included:
• Reviewing a description of the existing data that explains how the data
were collected or produced (e.g., ;who collected and uses the data; what
data were collected; when, why, and how the data were collected;
whether the data were gathered as part of a one-time or long-term effort;
and the level of review the data have received from others);
• Specifying the intended use of the existing data relative to the CAFO final
rule;
• Developing a rationale for accepting data from the source, either as a set of
acceptance criteria or as a narrative discussion; and
• Describing any known data limitations and their impact on EPA's use.
Brief descriptions of the data and their limitations are presented later in this document, as each
data source is introduced.
In searching for existing data sources and determining their acceptability, EPA generally
used a hierarchical approach designed to identify and utilize data with the broadest representation
of the industry sector or topic of interest. EPA began by searching for national-level data from
surveys and studies by USD A and other federal agencies. When survey or study data did not
exist, EPA considered other types of data from federal agencies.
Where national data did not exist, as the'second tier, EPA searched for data from land
grant universities. Such data are often local or regional in nature. EPA assessed the
representativeness of the data relative to a national scale before deciding to use the data. When
such data came from published sources, EPA gave greater consideration to peer-reviewed
professional journals than to publications lacking a formal review process.
The third tier was data supplied by industry. Prior to publication of proposed changes to
the rule, EPA requested data from a variety of industry sources, including trade associations and
large producers. The level of review applied to data supplied by industry depended on the level
of supporting detail that was provided. For example, if the industry supplied background
information regarding how the data were collected, such as the number of respondents and the
total number of potential respondents, EPA reviewed the results, comparing them to data from
other potential sources to determine their suitably for use in this rulemaking. If the data provided
by industry originated from an identifiable non-industry source (e.g., a state government agency),
-------
EPA reviewed the original source before determining the acceptability of the data. In a limited
number of instances, EPA conducted site visits to substantiate information supplied by industry.
In contrast, data supplied by industry without any background information were given much less
weight and generally were not used by EPA. Further, some data that were supplied by industry
prior to the proposal were included in the proposal for comment. In the absence of any negative
comments, such data were relied on to a greater extent than data submitted by industry during the
comment period itself. ;
1.6 ORGANIZATION OF REPORT ;
The remainder of this report presents EPA's analysis of the benefits of the revised CAFO
regulations. Specifically:
Chapter 2 provides a detailed description of the potential impacts of
CAFOs on environmental quality and human health;
Chapter 3 describes the range of benefits that would result from decrea'sed
CAFO loadings, and outlines EPA's general approach to quantifying and
valuing the subset of benefits analyzed;
Chapter 4 assesses the value of changes in surface water quality that would
result from the estimated reduction in CAFO loadings arising from the;
final regulation, focusing on changes in the quality of freshwater resources
that would improve their suitability for recreational activities;
Chapters assesses the value of a reduced incidence of fish kills !
attributable to pollution from CAFOs, as estimated under the final rule;
Chapter 6 assesses the value of improved commercial shellfishing
resulting from decreased CAFO loadings, as estimated under the final rule;
Chapter 7 assesses the value of reduced contamination of private wells
associated with reductions in the pollution of groundwater by CAFOs;;
Chapter 8 estimates the economic benefits associated with reductions in
livestock mortality that are predicted to occur under the final rule as a :
result of reduced contamination of animal water supplies; I
" Chapter 9 examines the impact of the revised regulations on nutrient !
loadings to selected estuaries, and presents a case study illustrating the
potential economic benefits of the anticipated reduction in such loads; '
1-16
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Chapter 10 evaluates the impact bf the revised regulations on source water
quality and estimates the subsequent reduction in treatment costs for
public water supply systems; and
Chapter 11 summarizes the benefits analysis for the final rule.
1.7 REFERENCES
!
Kellogg, Robert L. 2002. Profile of Farms witty Livestock in the United States: A Statistical
Summary. U.S. Department of Agriculture, Natural Resources Conservation Service.
Kellogg, Robert L. et al. 2000. Manure Nutrients Relative to the Capacity of Cropland and
Pastureland to Assimilate Nutrients: Spatial and Temporal Trends for the United States.
U.S. Department of Agriculture, Natural Resources Conservation Service and Economic
Research Service. December.
USDA/USEPA (U.S. Department of Agriculture and U.S. Environmental Protection Agency).
1999. Unified National Strategy for Animal Feeding Operations, Section 4.2., Available
on EPA's web site at: http://www.epa.gbv/owm/finafost.htm#l .0.
USEPA. 2002. Office of Water Quality Management Plan. April 2002. EPA 821-X-02-001.
1-17
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POTENTIAL IMPACTS OF AFOS ON ;
ENVIRONMENTAL QUALITY AND HUMAN HEALTH
CHAPTER 2
Animal manure, the primary cause of pollution related to AFOs, contains a variety of
pollutants that can cause environmental degradation, particularly when released to surface waters in
large quantities.1 Documented releases from AFOs have been associated with a number of adverse
human health and ecological impacts, including fish kills, disease outbreaks, and degradation of
water quality and aquatic life.
EPA's National Water Quality Inventory: 2000 Report identifies agricultural operations,
including CAFOs, as the leading contributor to identified water quality impairments in the nation's
rivers, streams, lakes, ponds, and reservoirs, and the fifth leading contributor to identified water
quality impairments in the nation's estuaries.2 The report also identifies the key pollutants and
stressors that impair the nation's waters. Among the .most problematic pollutants are several -
including pathogens, nutrients, sediment/siltation, metals, and oxygen depleting substances - that are
associated commonly, although not exclusively, with animal feeding operations.3
1 This document uses the term manure to ;refer to both "solid" manure and urine, since these
wastes are typically managed together. Additional animal wastes associated with AFOs (e.g., hair,
feathers, bedding material and carcasses) are identified separately in the discussion.
2 EPA prepares this report every two years, as required under Section 305(b) of the Clean
Water Act. It summarizes State reports of water quality impairment and the suspected sources and
causes of such impairment.
3 The National Water Quality Inventory: 2000 Report notes that the agricultural sector
contributes to the impairment of at least 129,000 river miles, 3.2 million lake acres, and over 2,800
square miles of estuary. Forty-eight states and tribes, reported that agricultural activities contributed
to water quality impacts on rivers, 40 states identified such impacts on lakes, ponds, and reservoirs,
and 14 states reported such impacts on estuaries.' Animal feeding operations are only a subset of the
agriculture category, but 29 states specifically identified animal feeding operations as contributing
to water quality impairment.
2-1
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The animal waste management practices and pollutant transport pathways that can lead to
contamination of surface waters are well known. Animal wastes at AFOs are typically managed by
land application and/or storage in waste piles or lagoons. Land application and storage of manure
are centuries-old farming practices. In small or low-density farming operations these methods pose
minimal pollution potential. AFOs, however, manage large amounts of manure in a concentrated
area. Under these circumstances, the following waste management failures pose an increased
potential for pollution: i
• Over-application of manure: While land application of manure can provide
valuable nutrients to soil and crops, the capacity of soil and crops to absorb
nutrients over any given period is limited. Excess manure applied to
cropland can damage crops and soil, and is more likely to run off into surface
waters or be released to air through volatilization or erosion (for example,
through spray application). ,
• Runoff from uncovered manure piles: Manure piles are frequently used
for temporary storage of animal wastes. Precipitation may wash pollutants
from uncovered manure piles into nearby surface waters.
i
* Lagoon failures: AFOs frequently store large quantities of manure in
lagoons prior to land application or other disposal. While lagoons are
designed to prevent the release of wastes into the environment, they are
subject to various types of failure, including spills due to overfilling;
washouts in floods; liner failures; failures of dikes, pipes, or other above-
ground structures; and accidental and intentional operator-related releases.
This chapter briefly describes the pathways, pollutants, and environmental and human health effects
associated with releases from AFOs. More detailed information is available in Environmental
Assessment of the Proposed Effluent Limitation Guidelines for Concentrated Animal Feeding
Operations.
2.1 PATHWAYS FOR THE RELEASE OF POLLUTANTS FROM AFOS ;
Pollutants in animal wastes can reach surface waters by several pathways, including overland
discharge, migration through groundwat.er, and atmospheric deposition. The most common pathway
is overland discharge, which includes surface runoff (i.e., land-applied or piled maiiure that is
washed into surface waters by rain), soil erosion, and acute events such as spills or impoundment
failures. Contamination can also occur when pollutants leach through soil into groundwater and then
to surface water through groundwater recharge. In addition, airborne pollutants i created by
volatilization or by spray-application of manure to land can contaminate surface water through
atmospheric deposition. Exhibit 2-1 illustrates the various pathways by which AFO releases can
2-2
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affect surface waters and groundwater.
greater detail.
The following discussion describes these pathways in
2.1.1 Overland Discharge
Contamination from manure often reaches surface water though overland discharge; that is,
by flowing directly into surface waters from land application sites or lagoons. There are three
distinct types of overland discharge: surface runoff, soil erosion, and direct discharge of manure to
surface water during acute events. For example, a single flood event might include lagoon
"washouts," soil erosion and surface runoff. This section describes the various types of overland
discharge in more detail.
2-3
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£
••a
cs
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2.1.1.1 Surface Runoff
Surface runoff occurs whenever rainfall or snowmelt is not absorbed by soil and flows
overland to surface waters.4 Runoff from land application sites or manure piles can transport
pollutants to surface waters, especially if rainfall occurs soon after application, if manure is over-
applied, or if it is misapplied.5 The potential for runoff of animal wastes varies considerably with
climate' soil conditions, and management practices. For example, manure applied to saturated or
frozen soils is more likely to runoff the soil surface (ODNR, 1997). Other factors that promote
runoff to surface waters are steep land slope, high rainfall, low soil porosity or permeability, and
close proximity to surface waters. Surface runoff is a particularly significant transport mechanism
for water soluble pollutants, including nitrogen compounds. Runoff can also carry solids.
Runoff of manure pollutants has been identified as a factor in a number of documented
impacts from AFOs, including hog, cattle, and chicken operations. For example, in 1994, multiple
runoff problems were cited for a hog operation in Minnesota, and in 1996 runoff from manure spread
on land was identified at hog and chicken operations in Ohio. In 1996 and 1997, runoff problems
were identified for several cattle operations in numerous counties in Minnesota (CWAA, 1998;
ODNR, 1997). ;
2.1.1.2 Soil Erosion
In addition to simple surface runoff, pollutants from animal wastes can enter surface water
through erosion, in which the soil surface itself is worn away by the action of water or wind. Soil
erosion often occurs in conjunction with surface: runoff as part of rainfall events, but it represents a
transport mechanism for additional pollutants that are strongly sorbed (i.e., chemically bound) to
soils. The most important of these pollutants is phosphorus. Because of its tendency to sorb to soils,
many agricultural phosphorus control measures focus on soil erosion control. However, soils do not
have infinite adsorption capacity for phosphorus or other pollutants, and dissolved pollutants
(including phosphates) can still enter waterways through runoff even if soil erosion is controlled
(NRC, 1993).
4 Surface discharges can also result from direct contact between confined animals and surface
waters. Certain animals, particularly cattle, will wade into the surface waters to drink, and will often
urinate and defecate there as well, This practice is now restricted for CAFOs, but may still occur at
other types of AFOs. i
5 Experiments show that for all animal wastes, application rates have a significant effect on
runoff concentrations of pollutants. See Daniel etal, 1995.
2-5
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In spite of control efforts, soil
erosion remains a serious challenge for
agriculture. For example, in 1997 the
USDA Natural Resources Conservation
Service (NRCS) reviewed the connection
between manure production, soil erosion,
and water quality in a watershed in South
Carolina. NRCS calculated that soil
erosion from the 13,000 acres of cropland
in the watershed ranged from 9.6 to 41.5
tons per acre per year. The report further
found that manure and erosion-related
pollutants such as bacteria, nutrients, and
sediment are the primary contaminants
affecting streams and ponds in the
watershed (USEP A, 1997).
Catastrophic Release of Manure:
New River, North Carolina, 1995 >
On June 21, 1995, a breach in the dike of a 30 million
gallon hog waste lagoon discharged over 25 million
gallons' of waste into tributaries of the N,ew River in
Onslow County, North Carolina.
Within a week of the event, North Carolina state officials
estimated that roughly 2,600 fish were destroyed, though
monitoring indicated that oxygen levels had, recovered in
the river -within a week of the event. JoAnne Burkholder,
a North Carolina State University marine scientist, noted
that the initialwaste deluge probably smotheredmany fish.
Others were killed more slowly by declining oxygen levels
and the toxic effects of ammonia and bacteria in the water.
Two days after the spill scientists sampling in some of the
affected areas found ammonia levels of about 20 times the
lethal limit for most fish. \
Though oxygen levels recovered rapidly, Burkholder noted
that it could take years for the upper New ecosystem to
fully recover and support the range offish, clams and
other creatures that existed before the spill. In addition to
immediate problems, longer term problems Caused by the
breach would include rains churning up settled pollution
and potential algae blooms. I
State environmental officials also confirmed that high
levels of fecal coliform bacteria were detected in the river,
and Onslow County health officials posted, warnings in
public recreation areas to prevent people from swimming.
According to local newspaper reports, in some places fecal
coliform levels were 10,000 times the state standard for
swimming.
Sources: Warrick and Stith, 1995b; Warrick 199 5b,
1995c, 1995d.
2.1.1.3 Acute Events
In addition to surface runoff and
erosion, acute events such as spills,
floods, or other lagoon or application
failures can affect surface waters. Unlike
runoff and erosion, which generally affect
land-applied wastes, acute events
frequently affect waste management
lagoons. Spills can result from
mechanical malfunctions (e.g., pump
failures, manure irrigation gun
malfunctions, and failures in pipes or
retaining walls), overfilling, or washouts
during flood events. There are even
indications that some operators discharge
wastes into surface waters deliberately in
order to reduce the volume of waste in
overfull lagoons (CWAA, 1998), Acute events frequently result in large waste discharges and are
often associated with immediate ecological effects such as fish kills. In addition to immediate fish
kills, large releases can be linked with eutrophication, sedimentation, and the growth of pathogens.
All of these impacts can also cause acute mortality in fish and other aquatic species. ,
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2.1.2 Leaching to Groundwater
Pollutants from animal waste can migrate to groundwater and subsequently contaminate
surface waters through the process of "groundwater recharge," in which hydrological connections
between aquifers and surface waters allow transfer of water (and pollutants). Groundwater
contamination itself can result from leaching of land-applied pollutants into the soil, or from leaking
lagoons. Although most lagoons are lined with clay or are designed to be "self-sealed" by manure
solids that prevent infiltration of pollutants into groundwater, these methods are not always effective.
For example, a survey of hog and poultry lagoons in the Carolinas found that the contents of nearly
two-thirds of the 36 lagoons sampled had leaked into the groundwater (Meadows, 1995). Similarly,
clay-lined lagoons can crack or break as they age, and are susceptible to burrowing worms. In a
three-year study of clay-lined swine lagoons on the Delmarva Peninsula, researchers found that
leachate from lagoons located in well-drained loamy sand adversely affected groundwater quality
(Ritterefa/., 1990). ,
Surface water contamination from groundwater is most likely to occur in areas with high soil
permeability and shallow water tables, and is most likely to involve water soluble contaminants such
as nitrate (Smith et al, 1997). Overall, the potential for contamination by this pathway may be
considerable. For example, in the Chesapeake Bay watershed, the USGS estimates that about half
of the nitrogen loads from all sources to non-tidal streams and rivers originates from groundwater
(ASCE, 1998). In addition, about 40 percent of the average annual stream flow in the United States
results from groundwater recharge (USEPA, 1993).
i
2.1.3 Discharges to the Air and Subsequent Deposition
Discharges to the air from AFOs include both volatile pollutants (e.g., ammonia and various
by-products of manure decomposition) and particulate matter from dried manure, feed, hair, and
feathers. The degree of volatilization of pollutants from manure depends on environmental
conditions and the manure management system employed. For example, spray application of manure
increases the potential for volatilization, as does the practice of spreading manure on the land
without incorporating it into the soil. Volatilization is also affected by climate and soil conditions,
(e.g., soil acidity and moisture content), and is reduced by the presence of growing plants (Follett,
1995).
Particulate matter from manure forms an organic dust made up of dried manure, feed, and
epithelial cells. These airborne particles can contain adsorbed gases, endotoxin (the toxic protoplasm
liberated when a microorganism dies and disintegrates), and possibly steroids from animal waste.
According to information presented to the Centers for Disease Control, at least 50 percent of the dust
2-7
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emissions from swine operations are believed to be respirable and may therefore be associated with
inhalation-related human health effects (Thu, 1998).6 !
In addition to creating the potential for air-related health effects, both volatilized pollutants
and particulate matter can contaminate nearby surface waters through atmospheric ^deposition.
Volatilization of the ammonia originating from animal waste, in particular, has been linked with
atmospheric deposition of nitrogen (Lander et al, 1998). While it is not clear what percentage of
total deposition of pollutants can be linked to AFOs, EP A's National Water Quality Inventory: 2000
Report indicates that atmospheric deposition from all sources is among the leading causes of water
quality impairment in estuaries, lakes, reservoirs and ponds.
2.2 POTENTIAL ECOLOGICAL HAZARDS
POSED BY AFO POLLUTANTS
The primary pollutants associated with animal waste are nutrients (particularly nitrogen and
phosphorus), organic matter, solids, pathogens, and odorous/volatile compounds. Animal waste is
also a source of salts and trace elements and, to a lesser extent, antibiotics, pesticides, and hormones.
The concentration of particular pollutants in manure varies with animal species, the size, maturity,
and health of the individual animal, and the composition (e.g., protein content) of animal feed.7 The
range of pollutants associated with manure is evident in a 1991 U.S. Fish and Wildlife Service
(USFWS) report on suspected water quality impacts from cattle feedlots on Tierra Blanca Creek in
the Texas Panhandle. The water quality impacts the USFWS reported includdd elevated
concentrations of ammonia, coliform bacteria, chloride, nitrogen, and suspended solids, as well as
reduced concentrations of dissolved oxygen. In addition, USFWS found elevated concentrations of
the feed additives copper and zinc in creek sediment (USFWS, 1991). • j
The ecological impacts of animal waste releases to surface water can range from minor,
temporary fluctuations in water quality (e.g., associated with limited surface runoff): to chronic
degradation of ecosystems (e.g., associated with consistently poor management practices such as
over-application), to dramatic impacts such as extensive fish or wildlife kills (e.g., associated with
acute events such as spills and consequent oxygen depletion, increased ammonia concentrations, or
toxic algae blooms). In some cases, individual pollutants associated with animal waste are the clear
and direct cause of observable ecological effects. In other cases, ecological effects such as declines
in aquatic populations are the result of complex systemic changes that are linked j directly or
indirectly to pollution from AFOs.
6 "Respirable" generally refers to particles less than 10 microns in diameter, or PM10; these
particles are responsible for the majority of human health effects related to air pollution because they
are small enough to travel through the nasal passage and into the lungs. I
i
7 For more detailed discussion of the pollutants associated with animal waste, see Phillips
etal, 1992. . I
s
2-8 \ . '
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Exhibit 2-2 lists the key pollutants associated with AFO waste, and notes their potential
impacts. The remainder of this section describes in more detail the relationship between AFO
pollutants and observed ecological effects. Section 2.3 focuses on the specific impacts of AFO
pollutants on human health.
2.2.1 Nutrients and Eutrophication
EPA's National Water Quality Inventory: 2000 Report indicates that nutrients from all
sources comprise the leading stressor in impaired lakes, ponds, and reservoirs, and are among the
most frequent stressors in impaired rivers, streanas, and estuaries. Nutrients are naturally occurring
elements that are necessary for plant growth. However, when excess nutrients enter surface waters
they can stimulate overgrowth of algae and bacteria, changing ecosystems in a process called
"eutrophication." In addition, nutrients (nitrogen, in particular) in high concentrations can be toxic
to animals and humans.
The two nutrients of most concern related to AFOs are nitrogen and phosphorus.8 Each of
these elements exists in several forms in the environment, and is involved hi several phases of uptake
and digestion by animals and plants. This section briefly describes the processes by which nitrogen
and phosphorus enter aquatic ecosystems, then discusses the process and impacts of eutrophication.
2.2.1.1
Nitrogen and Nitrogen Compounds
Nitrogen, an element essential to plant growth, moves through the environment in a series
of chemical reactions known as the nitrogen cycle. Nitrogen in manure exists in both organic forms
(e.g., urea) and inorganic forms (e.g., ammonium and nitrate) (NCAES, 1982). In fresh manure, 60
to 90 percent of total nitrogen is present in the organic form. Inorganic nitrogen can enter the
environment by volatilizing in the form of ammonia, or through soil or water microbe processes that
transform organic nitrogen to an inorganic form (that can be used by plants (i.e., as fertilizer). Both
ammonia and ammonium are toxic to aquatic life, and ammonia in particular reduces the dissolved
oxygen in surface waters that is necessary for aquatic animals. Nitrites pose additional risks to
aquatic life: if sediments are enriched with nutrients, nitrite concentrations in the water may be
raised enough to cause nitrite poisoning or "bro^vn blood disease" in fish (USDA, 1992).
8 Potassium contributes to the salinity pf animal manure, which may in turn contribute
salinity to surface water polluted by manure. Actual or anticipated levels of potassium in surface
water and groundwater, however, are unlikely to pose hazards to human health or aquatic life. For
more information see Wetzel, 1983.
2-9
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Exhibit 2-2
. ' . ' - !
KEY POLLUTANTS IN ANIMAL WASTE
Pollutant
Description of Pollutant Forms
in Animal Waste
Pathways
Potential Impacts
Nutrients ' !
Nitrogen
Phosphorus
>. ^
Potassium
Organic:
Compounds
Solids
Pathogens
Salts
Trace Elements
Volatile
Compounds
Other
Pollutants
Exists in fresh manure in organic (e.g., urea)
and inorganic forms (e.g., ammonium and
nitrate). Microbes transform organic nitrogen
to inorganic forms that may be absorbed by
plants.
Exists in both organic and inorganic forms. As
manure ages, phosphorus mineralizes to
inorganic phosphate compounds that may be
absorbed by plants.
Most potassium in manure is in an inorganic
form available for absorption by plants; it can
also be stored in soil for future uptake.
Carbon-based compounds in manure that are
decomposed by soil and surface water micro-
organisms. Creates biochemical oxygen
demand, or BOD, because decomposition
consumes dissolved oxygen in the water.
Includes manure itself and other elements
(e.g., feed, bedding, hair, feathers, and,
corpses).
Includes range of disease-causing organisms,
including bacteria, viruses, protozoa, fungi,
and algae. Some pathogens are found in
manure, others grow in surface water due to
increased nutrients and organic matter.
Includes cations sodium, potassium, calcium,
and magnesium; and anions chloride, sulfate,
bicarbonate, carbonate, and nitrate.
Includes feed additives arsenic, copper,
selenium, zinc, cadmium; and trace metals
molybdenum, nickel, lead, iron, manganese,
aluminum, and boron (pesticide ingredients).
Includes carbon dioxide, methane, nitrous
oxide, hydrogen sulfide, and ammonia gases
generated during decomposition of waste.
Includes pesticides, antibiotics, and hormones
used in feeding operations.
*• Overland discharge
*• Leachate into
groundwater
>• Atmospheric deposition
as ammonia
* Overland discharge
*• Leachate into
groundwater (water
soluble forms)
* Overland discharge
*• Leachate into
groundwater
*• Overland discharge
> Overland discharge
* Atmospheric deposition
+ Overland discharge
>• Growth in waters with
high nutrient, organic
materials
> Overland discharge
*• Leachate into
groundwater
* Overland discharge
* Inhalation
»• Atmospheric deposition
of ammonia
>• Overland discharge
*• Eutrophication
>• Animal, human
health effects
»• Eutrophication
i
+ Increased salinity
> Depletion of
dissolved oxygen
* Reduction in aquatic
life
> Eutrophication
>• Turbidity
>• Siltation
>• Animal, human
health effects
i
*• Reduction in aquatic
life :
* Human health
effects i
*• Soil impacts
»• Toxicity at high
levels ;
i
?
* Human! health
effects i
>• Eutrophication
*• Global .warming
i
>• Impacts unknown
i
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A 1975 study found that up to 50
percent or more of the nitrogen in fresh
manure may be in ammonia form or
converted to ammonia relatively quickly
once manure is excreted (Vanderholm,
1975). Ammonia is highly volatile, and
ammonia losses from animal feeding
operations can be considerable. In North
Carolina, animal agriculture is responsible
for over 90 percent of all ammonia
emissions; ammonia composes more than 40
percent of the total estimated nitrogen
emissions from all sources. Once airborne,
these volatile pollutants may be deposited
onto nearby streams, rivers, and lakes. Data
from Sampson County, North Carolina show
that "ammonia rain" has increased as the hog
industry has grown, with ammonia levels in
rain more than doubling between 1985 and
1995(Anejae*cr/., 1998).
Ammonia is highly toxic to aquatic life and is a leading cause offish kills. In a May 1997
incident in Wabasha County, Minnesota, ammonia in a dairy cattle manure discharge killed 16,500
minnows and white suckers (CWAA, 1998). In addition, ammonia and other pollutants in manure
exert a direct biochemical oxygen demand (BOD) on the receiving water. As ammonia is oxidized,
dissolved oxygen is consumed. Moderate depressions of dissolved oxygen are associated with
reduced species diversity, while more severe depressions can produce fish kills (USFWS, 1991).
National Study of Nitrogen Sources to Watersheds
: In 1994, the USGS analyzed potential
nitrogen sources to 107 watersheds, including
manure (from both confined and unconfmed animals),
fertilizers, point sources, and atmospheric deposition.
While the study found that proportions of nitrogen
originating from various sources differ according to
climate, hydrologic conditions, land use, population,
and physical geography, results for selected
watersheds for the 1987 base year showed that in
some instances, nitrogen from manure represents a
large portion of the total nitrogen added to the
watershed. For example, in nine study watersheds
more than 25 percent of nitrogen originates from
manure.
Source: Puckett, 1994.
2.2.1.2
Phosphorus
Like nitrogen, phosphorus is necessary for the growth of plants, but is damaging in excess
amounts. Phosphorus exists in solid and dissolved phases, in both organic and inorganic forms. Over
70 percent of the phosphorus in animal manure is in the organic form (USDA, 1992). As manure
ages, phosphorus mineralizes to inorganic phosphate compounds that are available to plants. Organic
phosphorus compounds are generally water soluble and may leach through soil to groundwater or
runoff into surface waters. In contrast, inorganic phosphorus tends to adhere to soils and is less
likely to leach into groundwater, though it can reach surface waters through erosion or over-
application. A report by the Agricultural Research Service noted that phosphorus bound to eroded
sediment particles makes up 60 to 90 percent of phosphorus transported in surface runoff from
cultivated land (USDA/ARS, 1999). Animal wastes typically have lower nitrogen-to-phosphorus
ratios than crop requirements. The application of manure at a nitrogen-based agronomic rate can
therefore result in application of phosphorus at several times the agronomic rate. Soil test data in
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the United States confirm that many soils in areas dominated by animal-based agriculture exhibit
excessive levels of phosphorus (Sims, 1995).
Available Nitrogen and Phosphorus . \ -
1998 U.S. Department of Agriculture Study
In 1998, the USDA studied the amount of manure nitrogen and phosphorus produced by confined
animals relative to crop uptake potential. USDA evaluated the quantity of nutrients available from
recoverable livestock manure relative to crop growth requirements, by county, based on data from the
1992 Census of Agriculture. The analyses did not consider manure from grazing animals, in pasture.
When calculating available nutrients, USDA also corrected for unrecoverable manure, nutrient losses that
occur during storage and treatment, and losses to the environment that can occur through runoff, erosion,
leaching to groundwater, and volatilization (especiallyfor nitrogen in the form of ammonia). Considering
typical management systems, USDA estimates that average manure nitrogen losses range from 31 to 50
percent for poultry, 60 to 70 percent for cattle (including the beef and dairy categories), and 75 percent
for swine. The typical phosphorus loss is 15 percent. i
i
USDA's study examined the potential for available manure nitrogen and phosphorus generated
to meet or exceed plant uptake in each of the 3,141 mainland counties, considering harvested non-legume
cropland and hayland. Based on the analysis of 1992 conditions, available manure nitrogen exceeds crop'
system needs in 266 counties, and available manure phosphorus exceeds crop system needs in 485
counties. The relative excess ofphosphorus compared to nitrogen is expected because manure is typically
nitrogen-deficient relative to crop needs. Therefore, when manure is applied to meet a crop's nitrogen
requirement, phosphorus is typically over-applied with respect to crop requirements (Sims, 1995).
These analyses do not evaluate environmental transport of applied manure nutrients. \ Therefore,
an excess of nutrients does not necessarily indicate that a water quality problem exists; likewise, a lack
of excess nutrients does not imply the absence of water quality problems. Nevertheless, the analyses
provide a general indicator of excess nutrients on a broad basis. ,
1
Source: Lander et al, 1998. . '
2.2.1.3
Eutrophication
Eutrophication is a process in which excess phosphorus or nitrogen over-enriches water
bodies and disrupts aquatic ecosystems. Excess nutrients cause overgrowth of plants, including fast-
growing algae "blooms." Eutrophication can affect the population diversity, abundance, aftdbiomass
of phytoplankton and zooplankton, and can increase the mortality rates of aquatic species (USEPA,
1991). Even when algae are not themselves directly harmful to aquatic life, floating algal mats cari
reduce the penetration of sunlight in the water column and limit growth of seagrass beds and other
submerged vegetation. Reduction in submerged aquatic vegetation adversely affects both fish and
shellfish populations, and is the leading cause of biological decline in Chesapeake Bayi(Carpenter
2-12
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et al, 1998). The National Water Quality Inventory: 2000 Report indicates that excess algal growth
alone is among the leading causes of impairment in lakes, ponds, and reservoirs.
Increased algal growth can also raise the pH of water bodies as algae consume dissolved
carbon dioxide to support photosynthesis. This elevated pH can harm the gills of aquatic organisms.
The pH may then drop rapidly at night, when algal photosynthesis stops. In extreme cases, such pH
fluctuations can severely stress aquatic species. In addition, excess nitrogen can contribute to water
quality decline by increasing the acidity of surface waters (USEPA, 1995, 1991).
Damage from eutrophication increases \\faen algae blooms die and are digested by bacteria
in a decomposition process that depletes the level of oxygen in the water. Dissolved oxygen is
necessary for the survival of aquatic life in a healthy ecosystem, and depressed levels of dissolved
oxygen can cause widespread morbidity and mortality among aquatic species. Algal decay and
night-time respiration can lower the dissolved oxygen content of a water body to levels insufficient
to support fish and invertebrates. Severe reductions in dissolved oxygen can result in dramatic fish
kills (Carpenter et al, 1998).
In addition to reducing plant diversity and dissolved oxygen, eutrophication can encourage
the growth of toxic microorganisms such as cyanobacteria (a toxic algae) and the dinoflagellate
Pfiesteriapiscicida. These organisms can be toxic to both wildlife and humans. Researchers have
documented stimulation of Pfiesteria growth by swine effluent spills, and have shown that the
organism's growth can be highly stimulated by both inorganic and organic nitrogen and phosphorus
enrichment (NCSU, 1998).
2.2.2 Pathogens i
i
Pathogens are organisms that cause disease in humans and other species; they include certain
species of bacteria, viruses, protozoa, fungi, and algae. Animal waste itself contains hundreds of
species of microorganisms, including bacteria, viruses, protozoa, and parasites (USDA, 1998;
Jackson et al, 1987; Boyd, 1990). Pathogens may be transmitted directly from manure to surface
water, and pathogens already in surface water may increase in number due to loadings of animal
manure nutrients and organic matter. Of particular concern are certain pathogens associated with
algaeblooms. EPA'sNational Water Quality Inventory: 2000 Report focuses on bacterial pathogens
and notes that they are the leading stressor in impaired rivers and streams and the fourth-leading
stressor in impaired estuaries.
Over 150 pathogens in livestock manure are associated with risks to humans; these include
the bacteria Escheria coli and Salmonella species, and the protozoa Cryptosporidium parvum and
Giardia species. A recent study by the USDA revealed that about half the cattle at the nation's
feedlots carry E. coli (NAS, 2000). The pathogens C. parvum, Giardia, and E. coli are able to
survive and remain infectious in the environment for long periods of time (Stehman, 2000). hi
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addition, some bacteria in livestock waste cause avian botulism and avian cholera, which have in the
past killed tens of thousands of migratory waterfowl annually (USEPA, 1993). ;
Eutrophication is associated with blooms of a variety of organisms that can be toxic to fish.
This includes the dinoflagellate Pfiesteria piscicida, which is believed to be the primary cause of
many major fish kills and fish disease events in North Carolina estuaries and coastal areas, as well
as in Maryland and Virginia tributaries to the Chesapeake Bay (NCSU, 1998; USEPA, 1993). In
1997, hog operations were linked to a Pfiesteria piscicida outbreak in North Carolina rivers in which
450,000 fish died (U.S. Senate, 1997). That same year, poultry operation wastes caused Pfiesteria
outbreaks that killed tens of thousands offish in Maryland waters, including the Pokomoke River,
King's Creek, and Chesapeake Bay (Shields, 1997; Shields and Meyer, 1997; New ^ork Times,
1997). . ' ;
• i .
The generation of toxins associated with eutrophication can also threaten other species. In
freshwater, cyanobacterial toxins have - . • ;
caused many incidents of poisoning of
wild and domestic animals that have
consumed contaminated waters (Health
Canada Environmental Health
Program, 1998; Carpentered/., 1998).
In coastal waters, visible algae blooms
known as red or brown tides have
caused significant mortality in marine
mammals. Even when algae blooms
are not visible, shellfish such as
oysters, clams and mussels can carry
the toxins from certain algae in their
tissue. Shellfish are filter feeders, and
pass large volumes of water over their
gills to obtain nutrients. As a result,
they can concentrate a broad range of
microorganisms in their tissues, and
provide a pathway for pathogen
transmission from surface water to
higher trophic organisms (Chai et al.,
1994). Information is becoming
available to assess the health effects of
contaminated shellfish on wildlife
receptors. In 1998, the death of over
400 California sea lions was linked to
ingestion of mussels contaminated by
a bloom of toxic algae (Scholin et al.,
1995 Algae Blooms and Pfiesteria Outbreaks:
Neuse River, North Carolina '< '
Algae blooms and Pfiesteria outbreaks oh the Neuse
River in North Carolina during the summer and fall of 1995
were the identified causes of three major fish kills and the
suspected causes of several incidents of human illness.
Heavy rains in June of 1995 caused overflows of
•wastewater treatment plants-and hog lagoons in the
watershed. Within weeks, large mats of algae and aquatic
weeds were reported near the town of New Bern on the
Trent River, a tributary of the Neuse. By July, historically
low levels of dissolved oxygen were recorded in 'a stretch of
the Neuse downstream from New Bern, coinciding with the .
deaths of over 100,000 fish. A second fish kill in August on
another Neuse tributary numbered in the thousands.
In September and. October a third major fish kill
occurred along a 35-mile stretch of the Neuse River itself;
the dead fish were covered with sores, and the cause of the
outbreak was determinedto be the dinoflagellate Pfiesteria.
After multiple reports of similar welts and sores on the
bodies of those who went swimming or fishing in
contaminated areas, state officials declared a health
warning, urging people not to swim, boat, or fish in the
affected area. In addition, the area was\ closed to
commercial fishing for two weeks. '
Source: Leavenworth, 1995a, 1995b. :
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2000). Previous incidents associated the deaths of manatees and whales with toxic and harmful
algae blooms (Anderson, 1998).
In August 1997, the National Oceanic and Atmospheric Administration (NOAA) released
The 1995 National Shellfish Register of Classified Growing Waters. The register characterizes the
status of 4,230 shellfish-growing water areas in 21 coastal states, reflecting an assessment of nearly
25 million acres of estuarine and non-estuarine waters. NOAA found that 3,404 shellfish areas had
some level of impairment. Of these, 110 (3 percent) were impaired to varying degrees by feedlots,
and 280 (8 percent) were impaired by "other agriculture," which could include land where manure
is applied (NOAA, 1997).
2.2.3 Organic Compounds and Biochemical Oxygen Demand (BOD)
Livestock manures contain many carbon-based, biodegradable compounds. Once these
compounds reach surface water, they are decomposed by aquatic bacteria and other microorganisms.
During this process dissolved oxygen is consumed, which in turn reduces the amount of oxygen
available for aquatic animals. EPA's National Water Quality Inventory: 2000 Report indicates that
oxygen-depleting substances are the third leading stressor in estuaries. They are also the fourth
leading stressor in impaired rivers and streams and the fifth leading stressor in impaired lakes, ponds,
and reservoirs.
Carbon compounds and associated biochemical oxygen demand (BOD) can deplete oxygen
and affect the health of aquatic ecosystems in the absence of any other pollutants (e.g., due to
decaying vegetation).9 When carbon compounds enter aquatic ecosystems in conjunction with
nutrients (which is generally the case in manure-related pollution), the impacts of BOD are
compounded by eutrophication and the presence and growth of pathogens. The result is often a rapid
decrease in biodiversity. A study of three Indiana stream systems documents such a reduction in
biodiversity due to AFOs (Hoosier Environmental Council, 1997). The study found that waters
downstream of animal feedlots (mainly hog and dairy operations) contained fewer fish and a limited
number of species offish in comparison with reference sites. It also found excessive algal growth,
altered oxygen content, and increased levels of ammonia, turbidity, pH, and total dissolved solids.
9 Biochemical oxygen demand (BOD) is an indirect measure of the concentration of
biodegradable substances present in an aqueous solution. Anaerobic lagoon effluent from AFOs
typically contains BOD values 10 to 200 times higher than treated domestic sewage. See NCAES,
1982; USDA, 1992; USDA/NRCS, 1992/1996..
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2.2.4 Solids and Siltation
Solids from animal manure include the manure itself and any other elements that have been
mixed with it, such as spilled feed, bedding, hair, feathers, and corpses. Smaller solids with less
weight remain in the water column as "suspended solids" while heavier solids sink to the bottom of
receiving waters in the gradual process of "siltation." j
f
Solids entering surface water can degrade aquatic ecosystems to the point of non-viability.
Suspended particles can reduce the depth to which sunlight can penetrate, decreasing phptosynthetic
activity and the resulting oxygen production by plants and phytoplankton. The increased turbidity
also limits the growth of aquatic plants, which serve as critical habitat for fish, crabs, shellfish, and
other aquatic organisms upon which these animals feed. In addition, suspended particles can clog
fish gills, reduce visibility for sight feeders, and disrupt migration by interfering with a fish's ability
to navigate using chemical signals (Goldman and Home, 1983; Abt, 1993). EPA's National Water
Quality Inventory: 2000 Report indicates that suspended solids from all sources are the fourth
leading stressor in lakes, ponds, and reservoirs.
A major source of siltation is
erosion from agricultural lands, including
AFOs, cropland, and grazing lands
(USEPA, 1992b). Silt can contain heavier
manure particles as well as the soil particles
carried by erosion. Such sediment can
smother fish eggs and otherwise interrupt
the reproduction of aquatic species (Boyd,
1990). It can also alter or destroy habitat
for benthic organisms. Solids can also
degrade drinking water sources, thereby
increasing treatment costs.
Arkansas Water Quality Inventory Report:
Agricultural Activities and Turbidity \
Arkansas' 1996 Water Quality Inventory Report
discussed a sub-watershed in northwestern Arkansas.
Land uses in that area, primarily poultry production and
pasture management, are major sources of nutrients and
chronic high turbidity, and water in the area only
partially supports aquatic life. \
Source: USEPA, J993. \
2.2.5 Salts and Trace Elements
Animal manure contains a number of salts and trace elements such as metals. While these
contaminants do not directly alter or interfere with ecosystem processes such as oxygen 'availability,
they are toxic in high concentrations, both to animals and plants.. For example, bottom feeding birds
may be susceptible to metal toxicity because they are attracted to shallow feedlot wastewater ponds
and waters adjacent to feedlots. In addition, metals can remain in aquatic ecosystems for long
periods of time because of adsorption to suspended or bed sediments or uptake by aquatic biota.
The salinity of animal manure is due to the presence of dissolved mineral salts. In particular,
significant concentrations of soluble salts containing sodium and potassium remain from undigested
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feed that passes unabsorbed through animals.10 Salinity tends to increase as the volume of manure
decreases during decomposition, and can have an adverse effect on aquatic life and drinking water
supplies (Gresham et al, 1990). Repeated application of manure can lead to increased soil salinity
in the root zone and on top of the soil, where it can damage crops; to reduce salinity farmers apply
excess water, and salts are washed into surface waters in runoff. In fresh waters, increasing salinity
can disrupt the ecosystem, making it difficult for resident species of plants and animals to remain.
For example, laboratory experiments have linked increased salinity with inhibited growth and slowed
molting in mallard ducklings (USFWS, 1992). ;
Trace elements in manure can include arsenic, copper, selenium, zinc, cadmium,
molybdenum, nickel, lead, iron, manganese, aluminum, and boron. Of these, arsenic, copper,
selenium, and zinc are often added to animal feed as growth stimulants or biocides (Sims, 1995).
Trace metals may also end up in manure through use of pesticides that are applied to livestock to
suppress houseflies and other pests (USDA/ARS, 1998).
A recent Iowa investigation of chemical and microbial contamination near large scale swine
operations demonstrated the presence of trace elements not only in manure lagoons used to store
swine waste before it is land applied, but also in drainage ditches, agricultural drainage wells, tile
line inlets and outlets, and an adjacent river (CDCP, 1998). Similarly, USFWS has reported on
suspected impacts from a large number of cattle feedlots on Tierra Blanca Creek, upstream of the
Buffalo Lake National Wildlife Refuge in the Texas Panhandle. USFWS found elevated
concentrations of the feed additives copper and zinc in the creek sediment (USFWS, 1991).
2.2.6 Odorous/Volatile Compounds
Sources of volatile compounds and odor from AFOs include animal confinement buildings,
manure piles, waste lagoons, and land application sites, where decomposition of animal wastes by
microorganisms produces gases. The four main gases generated are carbon dioxide, methane,
hydrogen sulfide, and ammonia. Aerobic conditions yield mainly carbon dioxide, while anaerobic
conditions that dominate in typical, unaerated animal waste lagoons generate both methane and
carbon dioxide. Anaerobic conditions are also associated with the generation of hydrogen sulfide
and about 40 other odorous compounds, including volatile fatty acids, phenols, mercaptans,
aromatics, sulfides, and various esters, carbonyls? and amines (USDA, 1992; BouzahereZa/, 1993).
Volatile compounds affect aquatic ecosystems through atmospheric deposition; ammonia
(discussed in Section 2.2.1.1) is the most important AFO-related volatile because it is itself toxic and
also contributes to eutrophication as a source of nitrogen. Other compounds are less clearly
associated with broad ecological impacts, but may have localized impacts.
10 See Boyd, 1990 and NCAES, 1982. Other major cations contributing to manure salinity
are calcium and magnesium; the major anions are chloride, sulfate, bicarbonate, carbonate, and
nitrate. See NRC, 1993.
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2.2.7 Other Pollutants and Ecosystem Effects
In addition to the pollutants discussed above, pesticides, antibiotics, and hormones used in
animal feeding operations may exist in animal wastes and may be present in increased levels in the
environment (USDA/ARS, 1998). These compounds may pose risks such as chronic aquatic toxicity
(from pesticides) and reproductive impairment (from hormones). While there is limited information
on the quantities of these compounds that reach surface waters from AFOs, some research suggests
that manure-related runoff may be a significant source of these contaminants. ;
Pesticides: Pesticides are used to suppress houseflies and other livestock
pests. There is little information on the rate at which pesticides in manure
enter surface water, but a 1999 literature review by the University of
Minnesota notes a 1994 study that links quantities of cyromazine (used to
control flies in poultry litter) in runoff to the rate of manure application • and
rainfall intensity. The review also identifies a 1995 study finding that roughly
one percent of all applied pesticides enter surface water. The impacts of
these compounds on aquatic ecosystems are unclear, but there is some
concern that pesticides may contribute to endocrine disruption (Mulla, 1999).
Hormones: Animal operations use a variety of hormones such as steroids
(e.g., estrogen, progesterone, testosterone) and proteins (e.g., prolactin,
growth hormone) to improve animal health and productivity. Studies have
identified hormones in animal manures. Naturally high hormone .
concentrations in birds contribute to higher hormone levels in poultry
manure, including measurable amounts of estrogen and testosterone. When
present in high concentrations, hormones in the environment are linked to
reduced fertility, mutations, and the death offish. There is evidence that fish
in some streams are experiencing endocrine disruption (Shore et al, 1995;
Mulla, 1999).''
* Antibiotics The majority of livestock (roughly 60 to 80 percent) receive
antibiotics during their productive life span. Some of these agents are used
only therapeutically (e.g., to treat illness), but in both the swine and poultry
industries, most antibiotics are administered as feed additives to promote
growth or to improve feed conversion efficiency. Essentially all of an
1' The presence of estrogen and estrogen-like compounds in surface water has been the focus
of recent research. While their ultimate fate in the environment is unknown, studies indicate that no
common soil or fecal bacteria can metabolize estrogen (Shore et al, 1995). Estradiol, an estrogen
hormone, was found in runoff from a field receiving poultry litter at concentrations up to 3.5
micrograms per liter (ug/L). Fish exposed to 0.25 ug/L of estradiol can undergo gender changes, and
exposures at levels above 10 ug/L can be fatal (Mulla, 1999). '
2-18 ',
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antibiotic administered is eventually excreted, either unchanged or in
metabolite form (TetraTech, 2000). Little information is available regarding
the concentrations of antibiotics in animal wastes, or on the fate and transport
of antibiotics in the environment. However, the key concern related to
antibiotics in animal manure is the potential emergence of antibiotic-resistant
pathogens in surface and drinking water. As antibiotics use has increased,
more strains of antibiotic resistant pathogens are emerging (Mulla, 1999).
Finally, manure pollutants of all types can affect terrestrial as well as aquatic ecosystems.
Over-application of manure, in particular; can haye terrestrial effects. High oxygen depletion rates
due to microbial activity have been reported in manure-amended agricultural soils. In addition,
elevated microbial populations can affect crop growth by competing with plant roots for soil oxygen
and nutrients. Trace elements (e.g., feed additives such as arsenic, copper, and selenium) and salts
in animal manure can accumulate in soil and become toxic to plants (USDA, 1992 and USFWS,
1991). :
2.3 HUMAN HEALTH IMPACTS RELATED TO AFO POLLUTANTS
Human health impacts from waterborne manure-related contaminants are primarily associated
with drinking contaminated water, contact with contaminated water, and consuming contaminated
shellfish. The most common causes of health effects are ingestion of nitrates in drinking water,
ingestion of water containing pathogens from manure, and contact with or ingestion of harmful algae
or toxic algal by-products. The ingestion of elevated concentrations of trace elements (e.g., arsenic,
copper, selenium, and zinc) may also affect human health, and certain gases associated with AFOs
may directly and indirectly (i.e., through the formation of secondary participate matter) pose
inhalation risks for nearby residents.
f
While some recorded human health effects stem from contamination of public drinking water
supplies and ingestion of shellfish, more frequently health effects are caused by contamination of
private wells, or recreational ingestion or contact Public water supplies are generally protected by
monitoring and treatment, though contaminants and algae blooms may increase treatment costs and
affect system operation. Ingestion of contaminated shellfish is reduced by monitoring and closure
of shellfish beds in response to excessive levels of contaminants.
2.3.1 Health Impacts Associated with Nitrates
Nitrogen in manure is easily transformed into nitrate form, which can be transported to
drinking water sources (e.g., through leaching to groundwater) and presents a range of health risks.
EPA found that nitrate is the most widespread agricultural contaminant in drinking water wells, and
estimates that 4.5 million people served by wells are exposed to elevated nitrate levels (USEPA,
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1990). Elevated nitrate levels can cause nitrate poisoning, particularly in infants (this: is known as
methemoglobinemia or "blue baby syndrome"), in which potentially fatal oxygen starvation gives
a "blue" appearance to the skin. In addition to blue baby syndrome, low blood oxygen due to
methemoglobinemia has been linked to birth defects, miscarriages, and poor health in|humans and
animals. !
Reported cases of methemoglobinemia are most often associated with wells that were
privately dug and that may have been badly positioned in relation to the disposal of human and
animal excreta (Addiscott et at., 1991). Reported cases of methemoglobinemia are rare, though the
incidence of actual cases may be greater than the number reported. Studies in South; Dakota and
Nebraska have indicated that most cases of methemoglobinemia are not reported. Under-reporting
may result from the Tact that methemoglobinemia can be difficult to detect in infants because its
symptoms are similar to other conditions. In addition, doctors are not always required to report it
(Michel, 1996; Meyer, 1994). . • \
i .•
hi 1 995, several private wells in North Carolina were found to be contaminated with nitrates
at levels 1 0 times higher than the health standard; this contamination was linked with a nearby hog
operation (Warrick 1995c, 1995d). In 1982, nitrate levels greater that 10 milligrams per liter were
found in 32 percent of the wells in Sussex County, Delaware; these levels were associated with local
poultry operations (Chapman, 1996). In southeastern Delaware and the Eastern Shore of Maryland,
where poultry production is prominent, over 20 percent of wells were found to have nitrate levels
exceeding EPA's maximum contaminant level (MCL) (Ritter et al, 1989). Nitrate is not removed
by conventional drinking water treatment processes. Its removal requires additional, relatively
expensive treatment units.
2-3-2 Health Impacts Associated with Algal Blooms
Eutrophication can affect human health by encouraging the formation of algal blooms. Some
algae release toxins as they die and may affect human health through dermal contact or through
consumption of contaminated water or shellfish. In marine ecosystems, algal blooms ;such as red
tides form toxic byproducts that can affect human health through recreational contact or consumption
of contaminated shellfish (Thomann and Muller, 1987). In freshwater, blooms of cyanobacteria
(blue-green algae) may pose a serious health hazard to those who consume the water. When
cyanobacterial blooms die or are ingested, they release water-soluble compounds that are toxic to
the nervous system and liver (Carpentered al, 1998). ' i
12 See USEPA, 1991. hi addition, studies in Australia found an increased risk of congenital
malformations with consumption of high-nitrate groundwater. Nitrate- and nitriteicontaining
compounds also have the ability to cause hypotension or circulatory collapse. Nitrate metabolites
such as N-nitroso compounds (especially nitrosamines) have been linked to severe human health
effects such as gastric cancer. See Bruning-Fann and Kaneene, 1993. |
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Non-toxic algae blooms triggered by nutrient pollution can also affect drinking water by
clogging treatment plant intakes and by producing objectionable tastes and odors. In addition,
increased algae in drinking water sources can increase production of harmful chlorinated byproducts
(e.g., trihalomethanes) by reacting with chlorine used to disinfect drinking water.
Impacts of Manure Pollutants on Water Treatment Costs
Public water providers may incur considerable expenses associated with removing manure-related
contaminants and algae from public water supplies. For example:
*• In California's China Basin, it could cost over $1 million per year to remove the nitrates from
drinking water due to loadings from local dairies.
*• In Wisconsin, the City qfOshkosh has spent an extra $30,000 per year on copper sulfate to kill
the algae in the water it draws from Lake Winnebago. The thick mats of algae in the lake have
been attributed to excess nutrients from manure, commercial fertilizers, and soil.
*• In Tulsa, Oklahoma, excessive algal growth in Lake Eucha is associated with poultry farming.
The city spends $100,000 per year to address taste and odor problems in the drinking water.
Sources: For more details on these examples, see tfSEPA, 1993; Behm, 1989; Lassek, 1998; andLassek,
1997. '<
2.3.3 Health Impacts Associated with Pathogens
Over 150 pathogens in livestock manure are associated with risks to humans (Juranek, 1991;
CAST, 1992). Although human contact can occUr through contaminated drinking water, adequate
treatment of public water supplies generally prevents exposure. Most exposure occurs through
incidental ingestion during recreation in contaminated waters or through ingestion of contaminated
shellfish (Stelma and McCabe, 1992). Relatively few microbial agents are responsible for the
majority of human disease outbreaks from water-based exposure routes. Intestinal infections are the
most common type of waterborne infection, but contact recreation with pathogens can also result in
infections of the skin, eye, ear, nose, and throat (Juranek, 1995; and Stehman, 2000). hi 1989, ear
and skin infections and intestinal illnesses were reported in swimmers as a result of discharges from
a dairy operation in Wisconsin (Behm, 1989).
A study for the period 1989 to 1996 revealed that Cryptosporidium parvum (a pathogen
associated with cows) was one of the leading causes of infectious water-borne disease outbreaks in
which an agent was. identified. C. parvum can produce gastrointestinal illnesses such as
cryptosporidiosis, with symptoms that include severe diarrhea (Stehman, 2000). While otherwise
healthy people typically recover quickly from illnesses such as cryptosporidiosis, these diseases can
be fatal in certain subpopulations, including children, the elderly, people with HIV infection,
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chemotherapy patients, and those taking medications that suppress the immune system.13 In
Mil waukee, Wisconsin in 1993, C. parvum contamination of a public water supply caused more than
. 100. deaths and an estimated 403,000 illnesses. The source was not identified, but speculated sources
include runoff from cow manure application sites (Gasman, 1996). More recently, a May, 2000
outbreak of Escherichia coli O157:H7 in Walkerton, Ontario resulted in at least seven deaths and
1,000 cases of intestinal problems; public.health officials theorize that flood waters washed manure
contaminated with E. coli into the town's drinking water well (Brooke, 2000).
Algae blooms are associated with a variety of organisms that are toxic to humans, including
the algae associated with "red tide" and a number dinoflagellates. One pathogen of particular
concern is the estuarine dinoflagellate Pfiesteriapiscicida. While Pfiesteria is primarily associated
with fish kills and fish disease events, the organism has also been linked with human health impacts
through dermal or inhalation exposure. Researchers working with dilute toxic cultures of Pfiesteria
have exhibited symptoms such as skin sores, severe headaches, blurred vision, nausea/vomiting,
sustained difficulty breathing, kidney and liver dysfunction, acute short-term memory loss, and
severe cognitive impairment. In addition, people with heavy environmental exposure have exhibited
symptoms as well. In a 1998 study, such environmental exposure was definitively linked with
cognitive impairment, and less consistently linked with physical symptoms (NCSU, 1998- Morris
etal, 1998). i • •
While many soil types prevent most pathogens from reaching aquifers, groundwater in areas
of sandy soils, limestone formations, or sinkholes is more vulnerable to contamination. Private
wells, in particular, are prone to contamination because they tend to be shallower than public wells
and therefore more susceptible to contaminants leaching from the surface.14 While the general extent
of groundwater contamination from AFOs is unknown, there are incidents that indicate a connection
between livestock waste and contaminated well water. For example, in cow pasture areas of Door
County, Wisconsin, where a thin topsoil layer is underlain by fractured limestone bedrock,
groundwater wells have commonly been shut down due to high bacteria levels (Behm, 1989).
2-3.4 Health Impacts Associated with Trace Elements and Salts !
Trace elements in manure include feed additives such as zinc, arsenic, copper, arid selenium.
While these are necessary nutrients, they are toxic at elevated concentrations, and tend to persist in
13 By the year 2010, about 20 percent of the human population (especially infants, the
elderly, and those with compromised immune systems) will be classified as particularly vulnerable
to the health effects of pathogens (Mulla, 1999). |
14 hi a 1997 survey of drinking water standard violations in six states over a four-year period,
the U.S. General Accounting Office reported that bacterial standard violations occurred in up to 6
percent of community water systems each year and in up to 42 percent of private wells See
USGAO, 1997. ;' ' '"
2-22 . ' . . '
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the environment and to bioconcentrate in plant and animal tissues. Trace elements are associated
with a variety of illnesses. For example, over-exposure to selenium can cause liver dysfunction and
loss of hair and nails, while ingestion of too much zinc can produce changes in copper and iron
balances, particularly copper deficiency anemia (IRIS, 2000).
Total concentrations of trace elements in animal manures have been reported as comparable
to those in some municipal sludges, with typical values well below the maximum concentrations that
EPA allows in land-applied sewage sludge (Sims, 1995). Based on this information, trace elements
in agronomically applied manures should pose Jittle risk to human health and the environment.
However, repeated application of manures above agronomic rates could result in exceedances of the
cumulative metal loading rates that EPA considers safe, potentially affecting human health and the
environment. There is some evidence that this is happening. For example, in 1995, zinc and copper
were found building to potentially harmful leyels on the fields of a North Carolina hog farm
(Warrick and Stith, 1995b). v
Salts in manure can also affect the salinity of drinking water. Increased salts in drinking
water can in turn increase blood pressure in salt-sensitive individuals, increasing the risk of stroke
and heart attack (Anderson, 1998; Boyd, 1990).
2.3.5 Other Health Impacts
Potential health effects associated with other contaminants in manure include inhalation-
related risks associated with volatile organic chemicals and odors, and the effects of hormones,
antibiotics, and pesticides that are found in animal feed.
Volatile Compounds
In 1996, the Minnesota Department of Health found levels of hydrogen sulfide gas at
residences near AFOs that were high enough to cause symptoms such as headaches, nausea,
vomiting, eye irritation, respiratory problems (including shallow breathing and coughing), achy
joints, dizziness, fatigue, sore throats, swollen glands, tightness in the chest, irritability, insomnia,
and blackouts (Hoosier Environmental Council, 1997). In an Iowa study, neighbors within two miles
of a 4,000-sow swine facility reported more physical and mental health symptoms than a control
group (Thu, 1998). These symptoms included chronic bronchitis, hyperactive airways, mucus
membrane irritation, headache, nausea, tension, anger, fatigue, and confusion. Odor is itself a
significant concern because of its documented effect on moods, such as increased tension,
depression, and fatigue (Schiffman et al., 1995). .Heavy odors are the most common complaint from
neighbors of swine operations (Agricultural Animal Waste Task Force, 1996).
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Pesticides
Various ingredients in pesticides have been linked to a variety of human health effects, such
as systemic toxicity and endocrine disruption (see below). However, information linking pesticide
levels in surface and drinking water to human exposure and to animal manure is currently limited.
It is therefore unclear what health risks are posed by pesticide concentrations in AFO wastes.
Hormones and Endocrine Disruption '
Hormones in the environment can act as endocrine disrupters, altering hormone pathways
that regulate reproductive processes in both human and animal populations. Estrogen hormones
have been implicated in the drastic reduction in sperm counts among European and North American
men (Sliarpe and Skakkebaek, 1993) and widespread reproductive disorders in a variety of wildlife
(Colburn et al, 1993). A number of agricultural chemicals have also been demonstrated to cause
endocrine disruption as well, including pesticides (Shore et al, 1995). The effects of these
chemicals on the environment and their impacts on human health through environmental exposures
are not completely understood, but they are currently being studied for evidence that they cause
neurobiological, developmental, reproductive, and carcinogenic effects (Terra Tech, 2000). No
studies exist on the human health impact of hormones from manure watersheds. •
Antibiotics and Antibiotic Resistance \
i
While antibiotics themselves are not generally associated with human health impacts,
antibiotic resistance poses a significant health threat. In April 2000, the New England Journal of
Medicine published an article that discussed the case of a 12-year old boy infected with a strain of
Salmonella that was resistant to no fewer than 13 antimicrobial agents (Fey, 2000). The cause of the
child's illness is believed to be exposure to the cattle on his family's Nebraska ranch. The Centers
for Disease Control, the Food and Drug Administration, and the National Institutes of Health issued
a draft action plan in June, 2000, to address the increase in antibiotic resistant diseases (CDCP,
2000). The plan is intended to combat antimicrobial resistance through surveys, prevention and
control activities, research, and product development. Some actions are already underWay.
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National Academy Press: Washington, D.C. !
ODNR (Ohio Department of Natural Resources). 1997. Division of Wildlife Pollution Investigation
Report - Manure Related Spills and Fish and Wildlife Kills. June 9. ;
Phillips, J. M.,.H. D. Scott, and D. C. Wolf. 1992. Environmental Implications of Animal Waste
Application to Pastures. In: Proceedings from the South Pasture Forage Crop Improvement
Conference. USDA/Agricultural Research Service (September), pp. 30-38.
2-28
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Puckett, LJ. 1994. Nonpoint and point sources of nitrogen in major watersheds of the United
States. U.S. Geological Survey, National Water Quality Assessment.
Ritter, W.F., A.E.M. Chirnside, and R.W. Lake. 1989. Influence of Best Management Practices on
Water Quality in the Appoquinimink Watershed. J. Environ. Sci. Health, A24(8):897-924.
Ritter, W. F., and A. E. M. Chirnside. 1990. Impact of Animal Waste Lagoons on Groundwater
Quality. Biological Wastes. 34:39-54.
Sehiffman, S.S., E.A. Sattely Miller, M.S. Suggs, and E.G. Graham. 1995. The Effect of
Environmental Odors Emanating from Commercial Swine Operations on the Mood of
Nearby Residents. Brain Research Bulletin, 37:369-375.
Scholin, Christopher A., et al. 2000. "Mortality of sea lions along the central California coast
linked to a toxic diatom bloom." Nature 403, 80 - 84.
Shields,!. 1997. Fish Kills Seen as'Alarm Bell'For Chesapeake, Tributaries. The Washington
Post, 17 August. Bl.
Shields,!, and E.L.Meyer. 1997. New Fish Kills Found Miles from Pocomoke. The Washington
Post, September 11. Al.
Sims, J. Thomas. 1995. "Characteristics of ;Animal Wastes and Waste-Amended Soils: An
Overview of the Agricultural and Environmental Issues" in Animal Waste and the Land-
Water Interface. Kenneth Steele, eel., CRC Press/Lewis Publishers, Boca Raton.
Smith, R., G. Schwarz, and R. Alexander. 1997. "Regional Interpretation of Water-Quality
Monitoring Data." Water Resources Research. Vol. 33(12): 2781-2798. December.
Stehman, Susan M. 2000. "Ag-Related water borne pathogens" in Managing Nutrients and
Pathogens from Animal Agriculture, Proceedings of a Conference for Nutrient Management
Consultants, Extension Educators, and Producer Advisors. Natural Resource, Agriculture,
and Engineering Service (NRAES). pp. 93-107. March 28-30.
TetraTech. 2000. Literature Review and Assessment of Pathogens, Heavy Metals, and Antibiotic
Content of Waste and Waste-water Generated by CAFOS. Unpublished report prepared at
the request of U.S. Environmental Protection Agency, Office of Water, EPA Contract 68-C-
99-263. •
Thomann, R. V., and J.A. Muller. 1987. Principles of Surface Water Quality Modeling and
Control. Harper Collins Publishers.
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1
Thu, Kendall. 1998. Information presented at the Center for Disease Control Workshop on Public
Health Issues Related to Concentrated Animal Feeding Operations, June 23-24.
USDA (U.S. Department of Agriculture). 1992. Agricultural Waste Management Field Handbook.
210-AWMFH. April. .'.'-,
USDA. (U.S. Department of Agriculture). 1998. Agricultural Uses of Municipal, Animal, and
Industrial Byproducts. Agricultural Research Service. January.
USDA/ARS (U.S. Department of Agriculture/Agricultural Research Service). 1998. Agricultural
Uses of Municipal, Animal, and Industrial Byproducts. Conservation Research Report
Number 44. January. . ;
USDA/NRCS (U.S. Department of Agriculture/Natural Resources Conservation Service). 1992 and
1996 revisions. Agricultural Waste Management Field Handbook. 210-AWMFH,
USEPA (U.S. Environmental Protection Agency). 1990. National Survey of Pesticides in Drinking
Water Wells, Phase I Report. EPA-570990015. !
USEPA (U. S. Environmental Protection Agency). 1991. Nitrogen Action Plan. Draft (March).
PM-221. 400/90/003. Nitrogen Work Group. I "
USEPA (U. S. Environmental Protection Agency). 1992b. Managing Nonpoint Source Pollution:
Final Report to Congress. Office of Water. ;
USEPA (U. S. Environmental Protection Agency). 1993. The Report of the EPA/State Feedlot
Workgroup. Office of Wastewater Enforcement and Compliance. '•' '
USEPA (U. S. Environmental Protection Agency). 1995. National Water Quality Inventory: 1994
Report to Congress. Office of Water. EPA 841-R-95-005. December.
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Sections 1911.
USEPA (U.S. Environmental Protection Agency). 2002. National Water Quality Inventory: 2000
Report. Forthcoming. i
USFWS (U.S. Fish and Wildlife Service). 1991. Contaminants in Buffalo Lake National Wildlife
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Available at: www.nando.net.
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i
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_ CONCEPTUAL FRAMEWORK AND OVERVIEW OF METHODS
CHAPTER 3
Pollutants associated with AFOs can have a range of harmful impacts on water quality, on
aquatic and shoreline ecosystems, and on the range of uses (or services) that water resources provide.
While some pollutants pose a direct threat to human health (e.g., pathogens that prevent drinking
or contact with contaminated water), AFO-related pollutants can also contribute to the decline of
recreational and commercial activities, injury to species that live in or depend on contaminated
waters (e.g., aquatic shorebirds), and even a reduction in the intrinsic "existence" value that people
place on a pristine or well-protected ecosystem.
The benefits of a regulation that reduces AFO pollution are reflected by identifiable changes
in environmental quality that result from the regulation, and by the related improvements in the range
of potential uses of the resource. The value of the regulation is then measured according to the value
that people place on the changes in these potential uses. EPA characterizes these changes by
considering the use and non-use benefits that water resources provide under baseline conditions, and
contrasting these benefits with the enhanced benefits realized under each of the regulatory scenarios.
This chapter describes the general approach that EPA uses to value environmental quality
improvements associated with reduced AFO pollution. The first section describes the types of
environmental improvements and benefits to humans that would likely result from changes in water
quality due to the regulation of CAFOs. The chapter then identifies the key environmental changes
and benefits that are the focus of the evaluation of EPA's proposed regulations, and describes EPA's
approaches to measuring and valuing the selected benefits. The broad methods outlined in this
chapter form the basis of the specific benefits analyses described in Chapters 4 through 10.
3.1 POSSIBLE ENVIRONMENTAL IMPROVEMENTS
AND RESULTING BENEFITS
Groundwater and surface water resources (including rivers, lakes, estuaries, and oceans)
provide a range of benefits to humans and other species that reflect the actual and potential "uses"
that they support. Potential uses can include active consumption or diversion of water for industry,
agriculture, or drinking water, and can also include a range of active and passive "in-place" uses such
as swimming, fishing, and aesthetic enjoyment..
3-1
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Water resources also provide intrinsic (or non-use) benefits that reflect the importance of
protecting environmental quality regardless of any specific use that humans may enjoy or intend.
Intrinsic benefits include "existence value," i.e., the sense of well-being that people derive from the
existence of pristine water resources, even when they do not expect to see or use these resources.1
The protection of resources for future generations (intergenerational equity) or for non-human
species (ecological benefits) are other key intrinsic benefits.
Degradation of a water resource may restrict its use or the intrinsic benefits it provides, and
therefore reduce its value. Conversely, improvement in environmental quality provides benefits
associated with an increase in the range of potential uses and intrinsic benefits that a resource can
support. Exhibit 3-1 provides a summary of the potential benefits associated with an improvement
in the quality of aquatic resources.
ExhibitS-1
POTENTIAL BENEFITS OF WATER QUALITY IMPROVEMENTS !
In-Stream
Near Stream
Option Value
Diversionary
Aesthetic
Bequest
Existence
Ecological
l
Use Benefits
• Commercial fisheries, shell fisheries, and aquaculture; navigation i
• Recreation (fishing, boating, swimming, etc.)
• Subsistence fishing
• Human health risk reductions '. •
• Water-enhanced non-contact recreation (picnicking, photography, jogging, camping, etc )
• Nonconsumptive use (e.g., wildlife observation) ' . '
• Premium for uncertain future demand i
• Premium for uncertain future supply '
• Industry/commercial (process and cooling waters) '
• Agriculture/irrigation I
• Municipal/private drinking water (treatment cost savings and/or human health risk
reductions) '•
• Residing, working, traveling and/or owning property near water, etc. '.
Intrinsic (Non-Use) Benefits ' '
• Intergenerational equity
• Stewardship/preservation [
• Vicarious consumption
• Reduced mortality/morbidity for aquatic and other species
• Improved reproductive success for aquatic and other species ;
• Increased diversity of aquatic and other species '
• Improved habitat, etc.
1 A common example of intrinsic value is the broad public support for the preservation of
National Parks, even by people who do not expect to visit them.
3-2
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AFO pollutants have impacts on a broad range of water resource services. Pollution by
nutrients, for example, can reduce the value of both groundwater and surface water as a drinking
water source, and algae in eutrophied surface water can reduce recreational and aesthetic uses (due
to foul odor and appearance), as well as clog municipal and industrial intakes. Acute nitrogen
loadings and decaying algae cause fish kills, which affect commercial and recreational fishing, and
indicate injury to natural resources; some of these injuries may require restoration in order to achieve
full recovery of the ecosystem. Both chronic and acute nutrient loadings can reduce aquatic
populations and the shoreline species that depend on them; this affects both opportunities to view
wildlife and ecological "existence" values. Finally, nutrient-related red tide and Pfiesteria events
can restrict access to shellfish and beaches, affecting shellfishing and recreational opportunities.
Other AFO pollutants have similar impacts or can cause additional effects (e.g., turbidity
from solids, humanhealth effects from pathogens). In addition, any pollutant that reduces the quality
of an environmental resource may adversely affect intrinsic values, such as bequest values (i.e.,
preserving environmental quality for future generations). While the beneficial impacts of improved
control of any one pollutant can be difficult, to isolate, AFO-related pollution generally involves a
broad range of impacts that, taken together, affect to some degree most of the potential uses and
intrinsic benefits of water resources.
3.2 SPECIFIC BENEFITS ANALYZED
The benefits of water quality improvements are a function of the specific pollutants reduced,
the water resources affected, and the improvements in the potential uses of these resources. The key
challenge of a benefits calculation is to establish a clear link between the implementation of a
regulation, the reduction of a pollutant, the resulting improvement in environmental quality, and the
value of that improvement.
While AFO-related pollutants can affect most potential uses of surface'and groundwater,
EPA has identified a set of environmental quality changes that meet three criteria: 1) they represent
identifiable and measurable changes in water quality; 2) they can be linked with the proposed CAFO
regulations; and 3) together, they represent a broad range of potential human uses and benefits and
are likely to capture important environmental changes that result from the rule.' Specifically, EPA
implements the following analyses:
Improvements in Water Quality and Suitability for Recreational
Activities: this analysis addresses increased opportunities for recreational
boating, fishing, and swimming, as well as the potential increase in non-use
values associated with improvements in inland surface water quality;
• Reduced Incidence of Fish Kills: this analysis assesses the value of
reducing the incidence offish kills attributable to pollution from AFOs;
3-3
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Improved Commercial Shell Fishing: this analysis characterizes the impact
of pollution from AFOs on access to commercial shellfish growing waters,
and values the potential increase in commercial shellfish harvests that may
result from improved control of that pollution;
Reduced Contamination of Private Wells: this analysis values the impact
of the revised regulations in reducing the concentration of nitrates in water
drawn from private wells; |
Reduced Contamination of Animal Water Supplies: this analysis
characterizes the effect of pollution from AFOs on livestock mortality, and
values the potential impact of the revised regulations in reducing mortality
rates; ;
Reduced Eutrophication of Estuaries: this analysis examines the impact
of the revised regulations on nutrient loadings to selected estuaries, ,and
presents a case study illustrating the potential economic benefits of; the
anticipated reduction in such loads; and
Reduced Water Treatment Costs: this analysis examines the revised
regulations' beneficial effect on source water quality and the consequent
reduction in treatment costs for public water supply systems. [
EPA's analysis does not attempt to comprehensively identify and value all potential
environmental changes associated with proposed revisions to the CAFO regulations. For example,
the analysis of the suitability of water resources for recreational use excludes most estuarine or
marine waters. In addition, the analysis does not value the potential impact of improvements in
water quality on near-stream activities, such as birdwatching or camping, nor does it consider non-
water related benefits, such as potential reductions in odor from waste management areas.
'While changes in water quality resulting from CAFO regulations may have real impacts on
these types of uses, and may even be associated with significant benefits, several factors make it
difficult to measure the specific impacts of the regulation and identify related changes in value. For
example, analysis of potential changes in estuarine or marine water quality nationwide;is currently
beyond the capabilities of the water quality model employed in this study. In addition, while EPA's
proposed CAFO regulations will contribute to improvements in environmental quality beyond
surface waters, it is difficult to establish clear relationships between regulation of CAFOs and certain
environmental quality changes, such as reductions in odor or improvements in the health of
shorebirds. Although these benefits are not specifically addressed by the analysis,! they likely
represent additional benefits of the regulation.
3-4
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3.3 PREDICTING CHANGE IN ENVIRQNMENTAL
QUALITY AND RESULTING BENEFICIAL USE
To calculate the benefits associated with new regulations, an analysis must explore the
difference between present conditions (i.e., the baseline scenario) and the likely future conditions
that would result from the regulation. The baseline scenario is typically assessed using the best and
most recently collected data that characterize existing environmental quality. Because likely future
conditions are theoretical, the characterization of environmental quality under the new regulations
must be evaluated through environmental modeling or other approaches designed to simulate
possible future conditions. The anticipated difference in environmental quality under present and
future conditions thus represents the marginal environmental quality gains or human benefits that
the new regulations are expected to produce.
EPA's analysis of the new CAFO regulations examines the difference between the baseline
and expected future conditions once the new regulations have taken effect. Ideally, the baseline
scenarios would be constant across benefit categories and analyses; however, data limitations forced
EPA to define baseline conditions based on the most up to date record of existing conditions for each
analysis. For instance, the analysis of increased commercial shellfish supply benefits relies upon
1995 data on shellfish bed closures to define basieline conditions, whereas the analysis offish kill
events relies upon data collected between 1980 and 1999. Detailed information on the time frame
used to define baseline scenarios for each of the selected environmental benefit categories is
provided for each of the analyses addressed in Chapters 4 through 10.
For each of the benefit categories analyzed, conditions following implementation of the new
regulations are assessed using modeling approaches most applicable to the specific analysis. For
each of the selected benefit categories, EPA models anticipated future conditions as follows:
• Improvements in Water Quality and Suitability for Recreational
Activities: EPA relies on a national water quality model to predict changes
in the ambient concentration of pollutants attributable to changes in pollutant
loadings from CAFOs. Under each regulatory scenario, the model determines
whether estimated changes in pollutant concentrations would improve the
suitability of water resources for recreational uses such as boating, fishing,
and swimming.
• Reduced Incidence of Fish Kills: Through modeling of nitrogen and
phosphorus loading reductions, the analysis estimates changes in the
frequency offish kill events under each regulatory scenario.
• Improved Commercial Shell Fishing: EPA employs data on the impact of
agricultural pollution on commercial shellfish harvesting, combined with
modeled estimates of the change hi pathogen loadings from CAFOs, to
estimate the potential increase in annual shellfish harvests under each
regulatory scenario. i
3-5
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Reduced Contamination of Private Wells: EPA employs data from the
U.S. Geological Survey (USGS), EPA, and the Bureau of Census to model
the relationship between nitrate concentrations in private domestic wells and
sources of nitrogen to aquifers. EPA uses this model, combined with
estimates of the change in nitrogen loadings following implementation of the
new regulations, to predict changes in well nitrate concentrations nationally.
Reduced Contamination of Animal Water Supplies: EPA employs data on
livestock mortality at CAFOs, combined with modeled reductions in the
loadings of nitrates and pathogens to animal water supplies, to estimate
reductions in livestock mortality attributable to the consumption of
contaminated water.
Reduced Eutrophication of Estuaries: EPA relies on its national water
quality model to estimate the impact of the final rule on loadings of nutrients
to 10 estuaries.
Reduced Water Treatment Costs: EPA employs its national water quality
model to estimate the impact of the final rule on the concentration' of
suspended solids in the source waters serving public water supply systems.
3.4 VALUING BENEFITS
The final step of the benefits analyses is to estimate the economic value of the modeled
physical changes in environmental quality. This section provides a brief overview of economic
valuation concepts and discusses the valuation approach applied in the studies performed for the
CAFO rale. ;
3.4.1 Overview of Economic Valuation
— « _ l
Economists define benefits by focusing on measures of individual satisfaction or well-being,
referred to as measures of welfare or utility. A fundamental assumption in economic theory is that
individuals can maintain the same level of utility while trading-off different "bundles" of goods,
services, and money. The tradeoffs individuals make reveal information about the value they place
on these goods and services. \
3-6
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The willingness to trade-off compensation for goods or services can be measured by an
individuals' willingness to pay. While these measures can be expressed in terms of goods, services,
or money, economists generally express willingness to pay in monetary terms. In the case of an
environmental policy, willingness to pay represents the amount of money an individual would give
up to receive an improvement (or avoid a decrement) in environmental quality.2
The use of willingness to pay to measure benefits is closely related to the concept of
consumer surplus. Resource economists generally rely on consumer surplus as a measure of overall
economic welfare for benefits to individuals. The concept of consumer surplus is based on the
principle that some consumers benefit at current prices because they are able to purchase goods (or
services) at a price that is less than their total willingness to pay for the good. For example, if a
consumer is willing to pay $4 for an additional gallon of clean drinking water that costs the
consumer only $1.50, then the marginal consumer surplus is $2.50.
3.4.2 Primary Approaches for Measuring Benefits
Economists generally define the economic benefits provided by a natural resource as the sum
of individuals' willingness to pay for the goods and services the resource provides, net of any costs
associated with enj oying these services .3 In some cases (e.g., commercial fishing), natural resource
products are traded in the marketplace, and willingness to pay information can be directly obtained
from demand for these commodities, hi other cases, when natural resource goods or services are not
traded in the market, economists use a variety of analytic techniques to value them, or to estimate
the economic benefits of improvements in environmental quality.4 These non-market methods,
which are grounded hi the theory of consumer choice, utility maximization, and welfare economics,
attempt to determine individuals' willingness to pay for natural resource services directly, through
survey research, or indirectly, through the examination of behavior in related markets. Descriptions
of market and non-market methods for analyzing benefits follow below.
Market Methods: To measure the economic value of environmental
improvements, market methods rely upon the direct link between the quality
or stock of an environmental good or service and the supply or demand for
2 Economists also sometimes consider a similar concept of "willingness to accept
compensation"; i.e., the amount of monetary; compensation that would make the individual
indifferent between having an environmental improvement and foregoing the improvement.
3 In the case of goods and services traded in the marketplace, net benefits also include
producer surplus: the excess of producer revenues over costs. For simplicity, we leave aside for now
any discussion of producer surplus in assessing the benefits associated with enjoyment of natural
resource services.
4 These same techniques can be applied to estimate the economic damages attributable to a
decline in environmental quality.
3-7
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that market commodity. Market methods can be used, for example, to
characterize the effect of an increase in commercial fish and shellfish harvests
on market prices. In turn, these market changes affect the welfarp of
consumers and producers in quantifiable ways. '
Revealed Preference: Revealed preference approaches are premised ori the
assumption that the value of natural resource services to users of those
services can be inferred by indirect economic measures. For example,
willingness to pay for recreational beach services can be estimated by
observing how the number of visits individuals make to a beach varies with
the cost of traveling to. the beach. Similarly, property values can be
influenced by proximity to an environmental amenity or disamemty;
econometric analysis can estimate the nature and magnitude of such effects,
providing a basis for valuing natural resource services.
Stated Preference: Stated preference models involve the direct elicitation
of economic values from individuals through the use of carefully designed
and administered surveys. Contingent valuation techniques are the most
widely used stated preference approach, and rely on surveys designed to
derive people's willingness to pay for an amenity (e.g., improved \yater
quality) described in the study. This method can be used to estimate both
use and non-use values.
Averted Cost: Changes in environmental quality can impose additional
costs on the users of an affected resource. For example, contamination of
drinking water supplies might lead homeowners to purchase in-home wjater
filters. A potential proxy measure of the benefits of preventing pollution of
the resource is the averted cost of these expenditures. ;
3.4.3 Valuation of CAFO Regulatory Benefits Based on Previous Studies :
Because of their high resource demands, the use of primary approaches is beyond the scope
of this analysis. Instead, the analysis draws on previous studies that evaluated similar water quality
benefits issues. This approach—typically referred to as "benefits transfer"—involves the;application
of values, functions, or data from existing studies to estimate the benefits of the resource changes
currently being considered, and is commonly used in analyzing the benefits of'new environmental
regulations. The primary research material and analytic approach used for the valuation of each
benefit category are summarized below; more detailed descriptions of the methods applied are
provided in subsequent chapters of this report. !
3-8
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Improvements in Water Quality and Suitability for Recreational
Activities: To determine how people value improvements in the suitability
of water resources for recreational activities (e.g., boating, fishing,
swimming), the analysis relies on the results of a contingent valuation survey
conducted by Carson and Mitchell (1993). Based on this study, the analysis
estimates the economic benefits attributable to projected reductions in
pollution of the nation's rivers and streams.
Reduced Incidence of Fish Kills: The valuation of benefits from the
reduced incidence offish kills employs two approaches - an estimate based
solely on fish replacement costs, as reflected in an American Fisheries
Society (1990) report, and an estimate that takes into account potential
recreational use values. :
Improved Commercial Shell Fishing: To value the economic benefit of
increased shellfish harvests, the analysis relies on available literature that
models consumers' demand for shellfish. Based on the demand equations
from these primary sources, EPA determines the increase in consumer surplus
that would result from increased harvests.
Reduced Contamination of Private Wells: The analysis surveys the
literature concerning the values people place on avoiding or reducing nitrate
contamination in private domestic wells. Based on this review, it develops
estimates of people's willingness'-to-pay to reduce nitrate concentrations to
certain levels, and applies these estimates to value predicted changes in the
quality of water that supplies private wells.
Reduced Contamination of Animal Water Supplies: To value reductions
hi livestock mortality, EPA employs estimates of livestock replacement costs.
Reduced Eutrophication of Estuaries: To characterize the benefits of
reduced eutrophication of estuaries, EPA conducts a case study of North
Carolina's Albemarle and Pamlico Sounds. The case study estimates the
economic benefits of changes in nutrient loadings in this region based on
revealed preference studies of the relationship between water quality and
willingness to pay for recreational fishing opportunities.
Reduced Water Treatment Costs: EPA relies on estimates of averted
drinking water treatment costs to value predicted improvements in source
water quality.
3-9
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3.4.4 Aggregating Benefits
»w——& 0 - |
The final step in determining the benefits of the revised CAFO regulations is aggregation of
the benefits calculated for each of the benefit categories. To avoid over-estimation, this requires
consideration of the extent to which underlying analyses may double-count certain benefits. For this
analysis, however, the benefits that each of the underlying studies explore are relatively distinct. As
a result, the potential for double-counting appears to be small.
i-
Another consideration in aggregating benefits is ensuring that all values are reported on a
comparable basis, taking into account the effects of inflation on real dollar values. For purposes of
this analysis, all values are reported in 2001 dollars. The price indices employed in converting
source data to 2001 dollars vary, depending on which index is most appropriate. Further information
on these adjustments is provided in the detailed discussion of each analysis.
The detailed analyses presented in Chapters 4 through 10 report benefits on an annual basis.
To determine the present value of these benefits, EPA employs three alternative discount rates: a
7 percent real discount rate, which is representative of the real rate of return on private investments
and consistent with the rate mandated by the Office of Management and Budget for analysis of
proposed regulations; a 3 percent real discount rate, which is representative of the social rate of time
preference for consumption of goods and services, and consistent with the rate recommended by
many economists for analysis of environmental benefits; and a 5 percent real discount rate, which
represents the mid-point of the 3 to 7 percent range. '•
In calculating the present value of benefits at the time new regulations are implemented, EPA
assumes an infinite time frame; i.e., as long as the regulations remain in effect, the associated
benefits will be enjoyed in perpetuity. EPA further assumes that its estimates of beneficial impacts
on most water resources will be fully realized in the year immediately following implementation of
the revised regulations. This assumption reflects EPA's judgment that reductions in the! loadings of
pollutants from CAFOs will quickly yield improvements in water quality. With respect to reduced
contamination of private wells, however, EPA assumes that several years will pass before the full
benefits of the regulation are realized. To permit consistent comparison of these benefits to the
annual benefits estimated for other water resources, EPA presents the benefits of reduced
contamination of private wells on an annualized basis, as well as on a present value .basis. The
calculation of an annualized value for this benefits category indicates the constant flow of benefits
over time that would generate the same present value as the anticipated, uneven, flow of benefits.
Additional information on the calculation of present values and the aggregation of benefits
is presented in Chapter 11. • ;
3-10
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3.5 SUMMARY i
Exhibit 3-2 summarizes EPA's approach to measuring and valuing the anticipated benefits
of the revised CAFO regulations. Additional information on the methods employed is provided in
the detailed discussion of each analysis that follows.
3.6 REFERENCES
AFS. 1990. American Fisheries Society Socioeconomics Section, A Handbook of Monetary Values
of Fishes and Fish-Kill Counting Guidelines, Draft, July 1990.
Carson, Richard T. and Robert Cameron Mitchell. 1993. "The Value of Clean Water: The Public's
Willingness to Pay for Beatable, Fishable, and Swirnmable Water Quality." Water
Resources 'Research, Vol. 29, No. 7. i
31-11
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Exhibit 3-2 ;
SUMMARY OF APPROACH TO ESTIMATING REGULATORY BENEFITS
Benefit Category
Improvements in
Water Quality and
Suitability for
Recreational
Activities
Reduced Incidence
of Fish Kills
Improved
Commercial Shell
Fishing
Reduced
Contamination of
Private Wells
Reduced
Contamination of
Animal Water
Supplies
Reduced
Eutrophication of
Estuaries
Reduced Water
Treatment Costs
- Human Use
Recreational boating,
fishing, swimming, and
non-use benefits associated
with freshwater resources.
Recreational fishing, near-
stream use and non-use
benefits.
Commercial shell fishing.
Drinking water.
Livestock production
Recreational fishing
Drinking water
Measurement Approach
Model potential changes in
water quality based on
estimated changes in
loadings of CAFO-related
pollutants.
Estimate changes in the
frequency offish kill events
based on estimated
reductions in nutrient
loadings.
Estimate increased access to
shellfish growing waters
and resulting increase in
annual shellfish harvests,
based on modeled changes
in fecal coliform
concentrations.
Model potential changes in
private domestic well water
quality based on estimated
changes in loadings of
CAFO-related pollutants.
Model potential reductions
in animal mortality based
on estimated changes in
exposure to CAFO-related
pollutants.
Case study of estimated
changes in nutrient loadings
to North Carolina's
Albemarle and Pamlico
Sounds.
Estimate reductions in the
concentration of total
suspended solids in surface
waters that supply
community drinking water
systems.
Valuation Approach
Stated preference approach
assessing willingness-to-
pay for water quality that
supports recreation.
i
Avoided damages based on
fish replacement costs and
estimates of recreational use
value.
Market estimate ;of
increased consumer surplus.
i
i
i
Stated preference approach
assessing willingness-to-
pay to reduce the
concentration of nitrates in
water drawn from private
domestic wells. |
Averted costs of cattle
replacement.
i -
i
Revealed preference-based
estimate of relationship
between water quality and
willingness to pay for
recreational fishing
opportunities in (the region.
Averted costs of drinking
water treatment. :
i
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MODELING OF IMPROVEMENTS IN •
SURFACE WATER QUALITY AND BENEFITS
OF ACHIEVING RECREATIONAL USE LEVELS
CHAPTER 4
4.1 INTRODUCTION AND OVERVIEW
A major component of EPA's CAFO benefits analysis is an assessment of how water quality
in freshwater rivers and lakes would be influenced by reduced CAFO pollution, accompanied by an
evaluation of the economic value of these changes to society. EPA has developed a comprehensive
analysis of these benefits using the methodology summarized in Exhibit 4-1. As shown, key
components of the analysis include:
• Development of model facilities that typify conditions across different
production sectors, facility sizes, and geographic regions;
• Modeling of "edge-of-field" pollutant releases that take into account manure
management practices, manure constituents, and physical conditions (e.g.,
soil characteristics); ;
• Calculation of the number of AFOs in the various production sectors/size
categories to allow extrapolation of the model facility loadings estimates;
• Modeling of the change in surface water pollutant concentrations as
determined by changes in loadings; and
• Valuation of the water quality changes through a benefits transfer analysis
focused primarily on the public's willingness to pay for improved water
conditions necessary to support recreation.
EPA implements this set of analyses for baseline conditions as well as the various regulatory
scenarios under consideration to allow estimation of overall water quality benefits. The following
sections summarize the five analytic components and the resulting estimates.
4-1
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Exhibit 4-1
OVERVIEW OF RECREATIONAL BENEFITS ANALYSIS
Model Facility
Analysis
Edge-of-Field
Loadings
Analysis
Surface
Water
Modeling
t
Analysis of
AFO/CAFO
Distribution
Valuation of
Water Quality
Changes
4.2 MODEL TACILITY ANALYSIS j
Assessing the impacts of CAFO regulatory scenarios 'requires that EPA recognize the
diversity of animal feeding operations across the country. Exhibit 4-2 provides an ovefview of the
analysis used to define model facilities and their associated pollution potential.1 For detailed
information regarding the development of model facilities, see Chapters 4 and 11 of the Technical
Development Document of Proposed Effluent Limitations Guidelines for Animal Feeding Operations
(EPA, 2000a), hereafter referred to as the "TDD". . • •
i
First, EPA disaggregates the universe of AFOs according to a suite of characteristics directly
affecting manure generation, manure management, and pollutant loadings. AFOs are grouped into
five geographic regions, as shown in Exhibit 4-3. To establish geographic regions, EPA developed
algorithms to estimate the number of facilities by size (number of animals), using a combination of
inventory and sales data. NASS applied the algorithms to 1997 Census of Agriculture data to
generate the output by which EPA estimated facility counts. Due to disclosure criteria jestablished
by NASS to protect respondent-level census data, the regions were aggregated into broader
production regions. '
• - -i
Note that for this analysis, the term agriculture facility, facility, or operation includes the
feedlot and the land application area under the control of the feedlot operator.
4-2
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Analyses:
Input Data:
1997 Census
of Agriculture
Exhibit 4-2
MODEL FACILITY ANALYSIS
Calculate
Pollutant
Production
Determine Application
Rates and Nutrient
Removal Capabilities
for Model Facility
Calculate
Excess Nutrients
Applied
1" • A
j ! ;1 " , ' ,j ,; ii, ,
| I . .! ' ' " •••'<•
i 1 i
• Manure Production
• Nutrient Content :
• Pathogen & Metal Content,
• Commercial Fertilizer
Content and Application
• Number of Operations
• Available Land for Manure Applications
• Typical Cropping Systems and Yields
• Crop Removal Rates
• Commercial Fertilizer Content and
Application
Agronomic Manure
Application Rates
Exhibit 4-3
GEOGRAPHIC REGIONS FOR GROUPING AFOS
Wicomico
Poultry
[~1 County with Highest
L^—J Production by Sector
State Boundaries
AFO Regions
Okeechobee
Beef-Dairy
4-3
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Within each geographic region, EPA defines model facilities by production sectot, subsector,
and size (number of animals). Based on these various dimensions, an example of a model facility
would be a large beef facility with more than 8,000 head in the Midwest region. Exhibit 4-4
summarizes the key dimensions on which model facilities are defined. In all, EPA considered 200
different model facilities. The key model facilities are those that reflect the majority of production,
resulting in approximately 76 different model facilities used for further analysis. ,
Exhibit 4-4
SUMMARY OF MODEL FACILITY DIMENSIONS
Production Sector
Facility Size
Regions:
Beef, cattle
Beef, veal
Dairy, rnilk
Dairy, heifers
Swine, farrow-finish
Swine, grower-finish
Layer, wet manure system
Layer, dry manure system
Broiler
Turkey
>1,800 Animal Units
1,000-1,800 Animal Units
750-1,000 Animal Units
500-750 Animal Units
300-500 Animal Units
Pacific
Central
Midwest
South
Mid-Atlantic
To guide the selection of modeling parameters related to fields and soils, EPA must identify
a specific location for each model facility in a given geographic region. For these purposes, the
analysis assumes that the model facility is located in the highest animal-production cdunty of the
region's highest production state for a given animal type.
EPA calculates manure production and the associated production of pollutants for each model
facility using a process developed by Lander et al. (1998), and refined by Kellogg et al. (2000). The
number of animals per operation is converted to USDA animal units2 using conversion factors
standardized to a 1,000-pound beef cow. EPA multiplies the number of animal units'per model
facility by the manure production per animal unit to determine total manure production. Manure
production is adjusted to reflect the fraction that is recoverable, i.e., the portion of manure that is
collected, stored, or otherwise managed so as to be available for land application. Finally, EPA
calculates total generation of nutrients based on the typical nitrogen and phosphorus concentrations
2 The USDA animal unit is based on average liveweight of the animal, and is markedly
different from the animal unit definition in EPA's regulations at 40 CFR 122 and 412. >
4-4
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per unit of recoverable manure for each animal type, e.g., pounds of nitrogen per ton of manure from
finishing pigs in the swine sector.3
Next, EPA defines land application practices for each model facility and the capacity for soil
and crop removal of nutrients applied to the land. This analysis entails several steps. The analysis
first considers the total nitrogen and phosphorus generated in manure at the model facility. EPA
divides these figures by the average total acreage available for land application of manure for an
operation in the given region, size class, and production sector; this average acreage is drawn from
a recent NRCS study (Kellogg et al., 2000). '
EPA then considers the likely cropping systems at the model facilities and relates the quantity
of nutrients applied annually to the nutrient requirements of the cropland and pastureland. For
example, typical cropping systems for the Mid-Atlantic AFO Region are corn, soybean, and wheat
in two-year rotation. The ratio of nutrients applied to crop nutrient requirements provides a measure
of the excess nutrients applied in the manure.4 This in turn forms the foundation for loadings
analyses of regulatory scenarios that call for adherence to agronomic rates of nutrient application.
To characterize land application practices, the analysis considers three categories of facilities:
• Category 1 facilities include CAFOs with sufficient crop- or pastureland on-
site to apply the manure they generate at agronomic rates. The analysis
assumes that these facilities apply all manure on-site (i.e., no manure is
shipped off-site) under both baseline and post-regulatory conditions.
Category 2 facilities include those with insufficient crop- or pastureland on-
site to apply the manure they generate at agronomic rates. For the baseline
scenario, the analysis assumes that these facilities apply all the manure they
generate on-site. (An exception ;to this approach is made in the case of dry
poultry operations. The baseline analysis assumes that these operations apply
the manure they generate on-site, up to a limit of five times the agronomic
rate; any manure in excess of this limit is assumed to be transported off-site
for application to crop- or pastureland.) For the post-regulatory scenario, the
analysis assumes that on-site manure application is limited to the agronomic
rate, and that the remaining manure is shipped off-site for application to crop-
or pastureland at agronomic rates. EPA's model captures the pollutant
3 Metal production (zinc, copper, cadmium, nickel, lead) is calculated in terms of pounds of
metals excreted per animal unit, while pathogen production (fecal coliform and fecal streptococcus)
is calculated in terms of colonies per animal unit.
4 EPA assumes that 30 percent of the animal waste's nitrogen content volatilizes during and
shortly after land application. The analysis also assumes that facilities use no fertilizers other than
manure.
4-5
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loadings associated with both on-site and off-site application of the manure
generated by Category 2 facilities.5
• . • i
i
Category 3 facilities include CAFOs without crop- or pastureland for manure
application. EPA assumes that these facilities transfer all manure off-site for
use or disposal. The pollutant loadings associated with this manure are
captured in modeling baseline conditions and the impacts of the final rule..
4.3 EDGE-OF-FIELD LOADINGS ANALYSIS |
i
The second major component of the water quality analysis is the estimation of pollutant
loadings leaving the model facility, i.e., edge-rof-field loadings. EPA estimates the loadings
associated with: (1) application of manure and commercial fertilizer; (2) lagoons and other storage
structures; and (3) feedlots. The sections below review the methods applied for each of these
analyses.
4.3.1 Loadings from Manure Application ',
EPA's loadings analysis first examines loadings from manure application to cropland and
pastureland. The analysis combines information on manure generation and land application practices
(see above) with data on the timing of application, hydrological conditions, geological conditions,
and weather patterns (see Exhibit 4-5). EPA, integrates these data using the Groundwater Loading
Effects of Agricultural Management Systems (GLEAMS) model. This field-scale model simulates
hydrologic transport, erosion, and biochemical processes such as chemical transformation and plant
uptake. The model uses information on soil characteristics and climate, along with nutrient
production data, to model losses of nutrients in surface runoff, sediment, and groundwatpr leachate.
Loadings are modeled for the pre- and post-regulatory scenarios to estimate changes in loadings
attributable to the proposed standards. |
i
'• v 5
The data used in the GLEAMS model runs include the following: !
[
! -
• Soils Data: GLEAMS uses data from the State Soil Geographic (STATSGO)
data base maintained by USDA's Natural Resources Conservation Service.
Key soil parameters drawn or estimated from the data base include
permeability, soil porosity, baseline organic matter content, percent clay, and
percent silt. EPA employs data on these parameters, in combination with
5 For consistency, pollutant loadings from the off-site cropland to which these facilities are
assumed to ship manure are also captured in the baseline analysis. The modeling of baseline
conditions assumes the application of commercial fertilizer to this land. !
4-6 i
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Exhibit 4-5
EDGE-OF-FIELD LOADINGS ANALYSIS FOR MODEL FACILITIES
Input Data
Excess Nutrients Applied
(from model facility analysis)
Farm Practice Data/Assumptions:
• Planting Date
• Harvest Data
• Manure Application Date
Soils Information
(permeability, porosity, etc.)
Climate Data
Manure Characteristics
GLEAMS Modeling to
Calculate Pollutant Runoff
from Manure Application
Calculate Seepage Losses
from Lagoons and Other
Storage Structures
Calculate Feedlot
Total Loadings for
Each Model Facility
(pre-and post-regulation)
data on other factors (see below), to characterize soil erosion, surface runoff,
and groundwater leaching at model facilities.
Climate Data: EPA prepared climate data using CLIGEN, a synthetic climate
generator commonly used in conjunction with a variety of agricultural runoff
models. CLIGEN simulates weather patterns based on 25 or more years of
precipitation and temperature data.
Crop Planting and Harvest Dates: EPA developed assumptions for crop
planting and harvesting using USDA reports and determined likely manure
application dates for model facilities based on contacts with USDA Extension
Agents in relevant locations. The application dates are a function of the crops
grown. Some single-cycle crops (e.g., corn) allow only one application per
year, while other crops (e.g., alfalfa) allow multiple applications.
4.3.2 Loadings from Lagoons and Other Storage Structures
Lagoons and other manure storage structures at animal feedlots are also potential pollution
sources, posing risks primarily through seepage to groundwater and subsequent discharge to surface
water. For the purposes of this analysis, EPA assumes that all lagoons and other storage structures
leak. Storage structure seepage estimates were obtained from Ham and DeSutter (1999), who
4-7
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measured nitrogen that leaked from three established swine-waste lagoons in Kansas.' From these
results, it was assumed that 2,000 pounds per acre per year leaked from manure storage structures
lined with silt loam soils. EPA scales seepage estimates for clay and sandy soils from these
estimates as described in the TDD. ;
For most storage structures, EPA models transport of pollution through grouridwater and
estimates the associated attenuation of pollutants. However, conditions in some cases (ajs defined by
Sobecki and Clipper, 1999) suggest that leaks, from lagoons or other storage structures may seep
directly to surface water, i.e., hydrologic conditions are such that pollutant concentrations are not
attenuated by dilution in groundwater. This might occur, for example, in the presence of sandy soils
or karst-like terrain. To characterize the potential for leaks from lagoons or other storage structures
to seep directly to surface water, EPA evaluated soil and hydrological conditions in each AFO
region. Based on this evaluation, EPA determined the percentage of the region's area in which the
potential for direct contamination of surface water is high. EPA's analysis assumes that this
percentage of storage leaks in each region would result in direct contamination of surface water.
Finally, distinct from seepage losses, EPA modeled overflow losses and resulting pollutant
loads associated with lagoons. Specifically, loads were modeled for swine and poultry liquid
containment systems that may experience overflow losses attributable to improper management,
precipitation, and other factors. EPA developed these estimates using a variety of design (e.g.,
lagoon depth) and operational (e.g., removals for land application) assumptions. EPA combined data
on the estimated overflow quantities and animal-specific waste .characteristics to model mass
pollutant discharges for each relevant facility. These discharges were weighted according to the
number of facilities in each sector and region, yielding total industry pollutant loadings for the swine
and poultry/wet layers sectors. '-.-.'••
4.3.3 Loadings from Feedlots ;
!
Another pollution source that EPA analyzes is runoff from feedlots. These loadings can be
particularly significant hi the beef sector because the animals are typically housed in open lots.
To estimate feedlot runoff loadings, EPA first calculates the volume of runoff from the
feedlot at the model facility. The annual depth of runoff from the feedlot is calculated for each of
the five AFO regions using average precipitation from the National Climatic Data Center. The
volume of runoff is calculated using this depth of runoff and the estimated area of the dry lot and
feedlot handling areas for each model facility.6 1
To characterize the loadings of pollutants in feedlot runoff, EPA assumes a solids content
of 1.5 percent. The composition of these solids is estimated based on the characteristics of dry
manure, which varies across production sectors. Annual loadings of specific pollutants are then
6 EPA assumes that only surface runoff occurs from the feedlot.
4-8
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determined, based on the estimated composition of solids, the assumed percentage of solids in
feedlot runoff, and the estimated annual volume of runoff from the feedlot.
4.3.4 Model Loadings Under Baseline and Post-Regulatory Conditions
EPA applies the data and methods described above to analyze loadings under baseline
conditions and under the revised CAFO standards. In the latter case, the analysis assumes that
regulated facilities modify current activities to;comply with feedlot best management practices,
mortality handling requirements, nutrient management planning/recordkeeping, and elimination of
manure application within 100 feet of surface water. The GLEAMS model simulates the effects of
feedlot BMPs and nutrient management planning on edge-of-field pollutant losses. The surface
water quality model that EPA employs in subsequent stages of this analysis (see Section 4.5)
simulates the effects of eliminating manure application within the setback area.
4.4 ANALYSIS OF AFO/CAFO DISTRIBUTION
To develop a national estimate of baseline pollutant loadings from AFOs, as well as estimates
of the change in loadings under the revised regulations, EPA must determine the number of
operations governed by the CAFO standards, i.e., the number of facilities considered to be AFOs and
the number of AFOs considered to be CAFOs, and therefore subject to regulatory requirements.
These operations represent the universe to which model facility results are extrapolated.
The sections below discuss EPA's approach and the resulting characterization of the
population of AFOs and CAFOs. More detailed information on the procedure used by EPA to
estimate the number of operations that may be subject to the proposed regulations can be found in
the TDD.
4.4.1 Approach
EPA estimates the number of operations that may be affected by the revised CAFO
regulations using a two-step procedure. First, EPA determines the number of operations that raise
animals under confinement by using available data on the total number of livestock and poultry
facilities (see below). Next, the number of CAFOs is determined based on operations that are
defined as CAFOs and smaller operations that are designated as CAFOs based on site-specific
conditions, as determined by the permitting authority. For purposes of this discussion, the affected
CAFO population includes those facilities that discharge or have the potential to discharge to U.S.
waters. This definition does not include those smaller operations that are not defined or designated
as CAFOs.
4-9
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The USD A Census of Agriculture is a complete accounting of United States'agricultural
production and is the only source of uniform, comprehensive agricultural data for every county in
the nation. The Census is conducted every five years by USDA's National Agricultural Statistics
Service (NASS).7 The Census is implemented through a mail questionnaire that is sent to a list of
known U.S. agriculture operations from which $1,000 or more of agricultural products were
produced and sold or normally would have been sold during the census year.
Aggregated 1997 Census data are readily available from USD A. In general, the published
compendium provides summary inventory and sales data for the nation and for states. The Census
database itself, however, contains respondent-level information that can be aggregated into more
precise agriculture facility size groupings. The requested data summaries used for EPA's analysis
were compiled with the assistance of staff at USDA's NASS, who performed special tabulations of
the data, to obtain information on the characteristics of facilities at specific size thresholds for each
sector. All data provided to EPA were aggregated to ensure the confidentiality of an individual
operation. EPA supplemented the available data with information from other sources, including
other USDA data sets and industry publications. The following discussion briefly notes the nature
of key gaps in the Census data and EPA's approach to addressing them.
» All USDA Census data are reported across all animal agriculture operations
and do not distinguish between confinement and non-confinement production
types (e.g., pasture or rangeland animals). However, only operations that
raise animals under confinement (as defined under 40 CFR122 Appendix B)
are potentially subject to regulation as CAFOs. The facility counts for
confined animal operations reported in USDA's "Profile of Farms with
Livestock in the United States: A Statistical Summary" (Kellogg, 2002) are
used in EPA's analysis.
« USDA data are not available on the number of poultry operations with Iwet
manure management systems. EPA estimated these figures using available
data from USDA and supplemental information from industry experts and
agricultural extension agency personnel. ;
« Information on the number of animal facilities that raise more than a single
animal type is also not available. To adjust for this consideration and reduce
the likelihood of double-counting, EPA relied on a methodology used by
USDA (Kellogg, 2002). :
• Finally, USDA Census data report the number and size of livestock ;and
poultry facilities as of year-end (December 31) and may not adequately reflect
seasonal fluctuations in beef, dairy, and layer inventory, or the year-to-year
fluctuations in number of animals sold. EPA algorithms reflect average herd
Census.
7 In prior years, the Census was conducted by the Department of Commerce's Bureau of the
4-10
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r
sizes at larger confinement facilities over the year. The outputs are based on
both reported inventory and sales, adjusted by expected turnovers. This
approach is consistent with that developed by USDA to estimate potential
manure nutrient loadings from animal agriculture (Lander et al., 1998;
Kellogg et al., 2000).
4.4.2 Estimated Number of AFOs and CAFOs
Based on the USDA data sources described above, there were 1.3 million livestock and
poultry facilities hi the United States in 1997. This number includes all operations in the beef, dairy,
pork, broiler, layer, and turkey production sectors, and includes both confinement and non-
confinement (grazing and range fed) production.
Of all these operations, EPA estimates that approximately 23 8 thousand AFOs raise or house
animals in confinement, as defined by the existing regulations. Under the final rule, an estimated
15,198 AFOs will be defined or designated as CAFOs, and therefore required to obtain a permit.8
Exhibit 4-6 summarizes the estimated number of CAFOs by production sector and facility size.
Exhibit 4-6
ESTIMATED NUMBER OF CAFOS SUBJECT TO REVISED REGULATIONS*
Production
Sector
Beef
Dairy
Heifers
Veal
Swine
Layers
Broilers
Turkeys
Horses
Ducks
Total
Currently
Regulated
1,940
3,399
0
0
5,409
433
683
425
195
21
12,505
Regulated Under New Rule
Large CAFOs
1,766
1,450
242
12
3,924
1,112
1,632
388
195
21
10,742
Medium
CAFOs
174
1,949
230
7
1,485
50
520
37
0
4
4,456
Total
1,940
3,399
472
. 19
5,409
1,162
2,152
425
195
25
15,198
* AFOs that stable or confine animals in different sectors are counted more than once.
8 This number is likely the upper bound estimate of the total number of operations that will
be subject to the final rule.
4-11
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4.4.3 Geographic Placement of Facilities
Finally, AFOs and CAFOs by region are placed into counties (and eventually watersheds)
using the published county level Census data (see section 4.5.2 for more details). Where county
level data was not presented, the facilities in the undisclosed counties were imputed from state- and
region-level data. . i .
4.5 SURFACE WATER MODELING i
EPA develops estimates of changes in surface water quality by building on the analysis of
edge-of-field pollutant loadings for model facilities and the analysis of the distribution of AFOs and
CAFOs. These data are integrated into the National Water Pollution Control Assessment Model
(NWPCAM), a national-scale model, designed to translate pollutant loadings into water quality
changes and associated economic benefits to support policy-level regulatory decision-hiaking.
i
NWPCAM covers virtually all inland waters in the U.S., allowing EPA to examine how
changes in loadings under various regulatory scenarios would influence key water quality
parameters.9 The model incorporates routines that simulate overland transport of pollutants,
discharge of pollutants to nearby surface waters, discharges to surface water from Bother (non-
AFO/CAFO) sources, and the fate and transport of pollutants in the interconnected!network of
surface waters. Specifically, the modeling involves the following steps: i
i
» Developing the network of rivers and streams that serves as the geographic
foundation for the modeling; ' - •
<> Distributing AFO/CAFOs and associated facility-level edge-of-field loadings
to agricultural lands within a defined watershed or county; . -. j
<> Simulating transport of nutrients/pollutants and subsequent discharge to
nearby waterbodies; '
«> Delivering nutrient/pollutant loadings from point sources (e.g., AFO/CAFO
production area loads, municipal wastewater treatment plants, industrial
facilities) and non-point sources (e.g., non-AFO/CAFO agricultural run-off,
municipal run-off) to waterbodies; and !
» Simulating dilution, transport, and kinetics of the nutrients/pollutants loa.ded
to the waterbody as the nutrients/pollutants are transported along the
waterbody.
9 NWPCAM does not address water quality benefits in bays, estuarine waters, or o|ther coastal
or marine waters. . ' . - I
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Exhibit 4-7 summarizes these steps and the primary data used in the analysis. The sections below
discuss the modeling in more detail and provide an overview of the estimated changes in pollutant
loadings under the revised CAFO standards.10
Exhibit4-7
WATER QUALITY MODELING ANALYSIS
Deliver Loadings from
Other Point and Non-Point
Sources to Waterbodies
Calculate Nutrient/Pollutant
Loadings from AFOs/CAFOs
to Waterbodies
Analysts: /Develop Hydrologic1
Network
Input Data:
I
t
•Reach File Data on
Surface Waters
•Land Use/Land
Cover Data
•Watershed Dan
•Loadings Data for Point Sources
•Loadings Data for Non-Point
Sources (other than AFOs/CAFOs)
4.5.1 Defining the Hvdrologic Network
In the initial step of the analysis, EPA prepares the hydrological network of rivers and
streams that serves as the geographic backdrop to the modeling. The hydrological network is
developed from EPA's Reach Files, a series of hydrologic databases describing the inland surface
waters of the U.S. Each "reach" in the database represents a segment of a river or stream; these
segments are linked together to characterize complete systems of rivers and streams. EPA's Reach
File 3 (RF3) forms the geographic foundation for NWPCAM, allowing the model to simulate the
flow of water and pollutants from a point of origin to major rivers, and ultimately to ocean
discharge.11
Once the hydrologic network is established, EPA uses a geographic information system (GIS)
approach to overlay information on land-cover, characterizing land across the U.S. at a square-
kilometer degree of resolution. From these data, EPA can identify areas classified as "agricultural"
10 Both the water quality modeling and the economic benefits analysis are presented in greater
detail in Estimation of National Economic Benefits Using the National Water Pollution Control
Assessment Model to Evaluate Regulatory Options for Concentrated Animal Feeding Operations
(USEPA, 2002). This report is provided under separate cover.
11 RF3 includes numerous tributaries and headwaters. EPA uses a subset of the RF3
network, referred to as RF3Lite, to develop itS'benefit estimates. This subset of RF3 represents
larger streams (i.e., reaches on streams that are at least 10 miles in length and/or reaches that connect
streams that are at least 10 miles in length).
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land. Each land section, or "cell", is associated with the nearest RF3 river reach in the hydrologic
network for subsequent drainage area, stream discharge, and hydrologic routing purposes.
4.5.2 Distributing AFOs and CAFOs to Agricultural Land 1
Once the hydrologic network is established, NWPCAM integrates data on the'location of
AFOs and CAFOs to spatially orient the facilities relative to surface waters. This analytic step links
directly to the analyses discussed above wherein EPA determined the numbers of AFOs and CAFOs
by county and, through analysis of model facilities, estimated the edge-of-field loading^ associated
with each facility and the acreage with which the loads are associated.12 Here, AFOs/CAFOs and
their associated edge-of-field loadings are randomly distributed to the appropriate' amount of
agricultural acreage in the appropriate county. In this manner, AFO/CAFO pollutant loads are
geographically distributed over agricultural land in U.S. watersheds as accurately as possible given
the available data. ' ' '
4.5.3 Calculating AFO/CAFO-Related Loadings to Waterbodies i
... • • . i
Once facility pollutant loadings are linked to a geographic area and river reach, these loadings
are delivered from the agriculture cells to the river reaches using a routine to simulate an overland
transport process. Overland travel times and associated nutrient decay are based on flowliii a natural
ditch or channel, as may typically be found on agricultural lands. A unit runoff (ft3/sec/km2) is
derived for each watershed (i.e., hydrologic cataloging unit, the smallest element in a hierarchy of
hydrologic units, as described at http://water.usgs.gov/GIS/huc.html) based on data compiled by the
U.S. Geological Survey. The unit runoff therefore represents runoff from each agricultural cell
within the watershed and can be used to derive time-of-travel estimates necessary to route pollutants
from the land cover cell centroid to a river reach. NWPCAM also calculates nutrient/pollutant decay
and transformation associated with overland transport. Total loadings to any given river reach are
the total loadings discharged from all land-use cells draining to the reach (as well as discharges from
upstream river reaches). ;
4.5.4 Loadings from Other Sources • ' i -
In addition to loadings from AFOs/CAFOs, NWPCAM integrates data on loadings from
other pollutant sources. This complete inventory of loadings is needed to assess the Cumulative
changes in water quality (i.e., the attainment of beneficial use levels) in surface waters. Specifically,
the model integrates data on discharges from municipal and industrial point sources las well as
loadings from (non-AFO) non-point sources, holding these loadings constant across!regulatory
scenarios. Point source loadings are based on several EPA databases, including the 1997 Permit
Compliance System, Clean Water Needs Survey, and Industrial Facilities Database. Combined
12 EPA did not model facilities with fewer than 300 animals.
4-14
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sewer overflows (CSOs) are integrated using loadings data on biochemical oxygen demand (BOD5),
total suspended solids (TSS), and fecal coliform, and default values for nitrogen and phosphorus
content.
To model nutrient loads for non-point sources, EPA uses SPARROW (SP^itially Referenced
Regression On Watershed attributes) (Smith et al., 1997), a statistical modeling approach for
estimating major nutrient source loadings at a detailed geographic scale based on watershed
characteristics. EPA developed export coefficients for nitrogen and phosphorus using an
optimization process that provided the best match with SPARROW estimates. BOD5 loadings were
developed using a simple export coefficient term by land cover type. Export coefficients were
developed for three major categories of land use or land cover (agriculture, forest, urban). TSS
loadings for non-agricultural lands were estimated using an export coefficient for each land cover
class. For agricultural lands, TSS loadings were estimated using a Revised Universal Soil Loss
Equation (RUSLE). Background non-point source loadings are adjusted where necessary to remove
contributions from land application of manure, which are accounted for separately in the AFO/C AFO
pollutant loads described hi Sections 4.3.1 and 4.5.6. These approaches allow estimation of total
nitrogen, total phosphorus, total suspended solids, and BOD5 loadings to the RF3 stream network.13
4.5.5 Fate and Transport Modeling
Once all loadings to surface waters have been estimated, NWPCAM routes pollutants
through the hydrologic network from upstream to downstream reaches. The model simulates
pollutant transport during this routing process, incorporating various hydrodynamic characteristics
such as channel depth, channel width, and velocity. The model employs separate decay routines for
BODS, nitrogen, phosphorus, TSS, fecal coliform, fecal streptococci, and DO to simulate changes
in pollutant concentrations throughout the RF3 network. The resulting pollutant concentrations for
the six water quality parameters (BOD5, nitrogen, phosphorus, TSS, fecal coliform, and DO) used
in the beneficial use value analysis below are then compared to beneficial use criteria to determine
how potential recreational uses would change with improved water quality.
4.5.6 Estimated Changes in Loadings
Exhibit 4-8 summarizes the NWPCAM estimates of baseline loadings from AFOs and
CAFOs and shows loadings associated with the phosphorus-based and nitrogen-based standards.14
Similarly, Exhibit 4-9 presents the resulting removals associated with the standards. As shown,
removal of all pollutants is greater under EPA's chosen phosphorus-based standard.
13 Non-point source data for fecal streptococci were not available at the national level and
were not addressed hi the analysis of non-AFO non-point sources.
14 Loadings to the RF3 Lite network are the basis of the economic benefit estimates below.
Therefore, we report RF3 Lite loadings and removals.
4-15
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4.5.7 Modeling Quality Assurance Steps
A number of quality assurance steps have been taken to reduce potential sources of error or
uncertainty in applying the NWPCAM model. These potential sources include model inputs (e.g.,
AFO/CAFO nutrient loadings, errors in hydrologic inputs from the RP3 file), model parameters (e.g.,
decay rates for BOD), benefits valuation methods, and data management or processing procedures.
The measures taken to reduce these potential sources of error or uncertainty include (1) reviewing
model inputs for reasonableness, (2) evaluating the robustness of the model's predictions with
respect to changes in model parameters, (3) comparing baseline water quality predictions to observed
water quality conditions, (4) evaluating the sensitivity of predicted monetary benefits to the benefits
valuation methods selected, and (5) performing data processing quality assurance steps for each
computational module of the NWPCAM system. These steps are discussed in USEPA 2002.
4.6 VALUATION OF WATER QUALITY CHANGES
To value predicted reductions in the pollution of rivers and streams by CAFOs, NWPCAM
applies estimates of Americans' willingness to pay for improvements in water quality. The
foundation of these estimates is a contingent valuation survey developed by Richard Carson and
Robert Mitchell (Carson and Mitchell, 1993). This survey, which is national in scope, characterizes
households' annual willingness to pay to improve freshwater resources from baseline conditions to
conditions that better enable beneficial uses such as boating, fishing, and swimming. EPA uses the
Carson and Mitchell research in two separate analyses:
• First, EPA develops benefits based on the public's willingness to pay for
improvements in water quality that allow discrete movement to higher levels
on a "ladder" of potential water uses.
• Second, EPA develops benefits biased on a continuous water quality index.
Below, we discuss these two methods in greater detail. We then review the resulting economic
benefit estimates.
4.6.1 Water Quality Ladder Approach
The water quality ladder approach entails relating changes in water quality parameters to the
ability of a body of water to support activities such as boating, fishing, or swimming. Once the
potential improvement in the ability of modeled rivers and streams to support these uses is
determined, the analysis relies upon estimates of willingness to pay for such improvements. The
following discussion explains the process by which EPA relates the results of the surface water
modeling effort to the ability of a body of water to support a particular use. It then describes Carson
and Mitchell's contingent valuation study and how the results are applied in NWPCAM.
4-17
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4.6.1.1 Water Quality
Ladder Concept
EPA's approach to relating
surface water conditions to the
ability of a body of water to support
a particular designated use is based
on a water quality ladder that
Resources for the Future initially
developed to support Carson and
Mitchell's contingent valuation
survey. As Exhibit 4-10 shows, the
ladder uses a scale that ranges from
0 to 10, with 0 representing the
worst possible water quality and 1.0
representing the best possible
quality. The low end of the scale
represents water quality so poor that
it supports no plant or animal life,
and human contact with it would be
unsafe; the high end of the scale
represents water safe enough to
drink. Between these extremes, the
ladder depicts levels of water
quality sufficient to support
boating, fishing, or swimming.
Exhibit 4-10
WATER QUALITY LADDER
Best Possible
Water Quality
10
- 9
- 8
-7
- 6
- 5
- 4
- 3
-2
- 1
Worst Possible
Water Quality
OA
OB
SWIMMABLE:
Safe for swimming
V
FISHABLE:
Game fish like
bass can live in it
CBOATABLE:
'
Okay for boating
The ability of a waterbody I
to support beneficial uses at each step of the water quality ladder is defined by measures of the
following parameters: I
i
• dissolved oxygen content; ,
• biological oxygen demand; I
• suspended sediment concentrations; and •
i
• pathogen counts. i
4-18
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In order for a body of water to be considered beatable, fishable or swimmable, it must satisfy the
minimum numeric criteria consistent with that use for all modeled parameters.15 These minimum
conditions are the same for all geographic areas (see Appendix 4-C).
Based on the framework described above, NWPCAM classifies each segment of each
modeled river or stream as swimmable, fishable^ boatable, or non-supportive of any of these uses.
The model calculates the total stream-miles that support each designated use under each set of
loadings conditions (i.e. baseline conditions or conditions following implementation of the revised
CAFO regulations).
4.6.1.2
Carson and Mitchell Study
The contingent valuation survey upon which this analysis relies examined households'
willingness to pay to maintain or achieve specified levels of water quality in freshwater lakes, rivers
and streams throughout the United States (Carson and Mitchell, 1993).16 The survey was conducted
in 1983 via in-person interviews at 61 sampling points nationwide, and employed a national
probability sample based on the 1980 Census. Respondents were presented with the water quality
ladder depicted in Exhibit 4-10 and asked to state how much they would be willing to pay to
maintain or achieve various levels of water quality throughout the country. In eliciting responses,
the survey used a payment card showing the amounts average households were currently paying in
taxes or higher prices for certain publicly provided goods (e.g., national defense); respondents were
then asked their willingness to pay for a given water quality change. The survey respondents were
told that improvements in water quality would be paid for in higher product prices and higher taxes.
Exhibit 4-11 presents the results of the survey. These values represent "best estimates" of
mean annual household willingness to pay (WTP) for the specified water quality improvement. Note
that the values the exhibit reports are those originally obtained from the Carson and Mitchell survey,
and are expressed in 1983 dollars. To provide benefit estimates appropriate for this analysis, EPA
adjusts these values to account for inflation and changes in real income between 1983 and 2001.1?
15 The criteria for each beneficial use category are based on criteria used by W. J. Vaughn to
develop the original water quality ladder (see Carson and Mitchell (1993) for discussion of Vaughn's
ladder). Vaughn's ladder included pH in addition to the four parameters adopted for this analysis.
16 The scope of the survey excluded the Great Lakes.
17 EPA employs the Consumer Price Index to adjust 1983 values to 2001 values. In addition,
the adjustment to 2001 values takes into account the increase in real per capita disposable income
over the period of interest. The adjustment for changes in real income is consistent with the survey's
results, which found that respondents' willingness to pay for water quality improvements increased
in almost direct proportion to household income.
4-19
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Exhibit4-ll ;
INDIVIDUAL HOUSEHOLD WILLINGNESS TO PAY '
FOR WATER QUALITY IMPROVEMENTS ;
(1983$)
Water Quality Improvement
Swimmaible: WTP to raise all sub-swimmable water quality to swimmable
Fishable
Beatable
Source:
WTP to raise all sub-fishable water quality to fishable
: WTP to maintain boatable water quality
Total WTP
$241
$163
$93
Incremental
iWTP
: $78
j $70
! $93
Carson and Mitchell, 1993. • i .
4.6.1.3
Additional Considerations When Using the Ladder
Applying the willingness to pay estimates obtained from the Carson and Mitchell study to
analyze the benefits of revised CAFO regulations requires consideration of how households'
willingness to pay for water quality improvements is likely to vary with the extent and location of
the resources affected. All else equal, people are likely to value an action that improves water
quality along a ten-mile stretch of river more highly than they would value an action that improves
only a one-mile stretch. Similarly, people are likely to place greater value on improving! the quality
of water resources that are nearer to them. This is simply because less time and expense is typically
required to reach nearer resources; as a result, these resources generally provide lower cost and more
frequent opportunities for recreation and enjoyment. This assumption is supported by the results of
the Carson and Mitchell survey, which asked respondents to apportion their willingness toj pay values
between improving the quality of local waters — where local waters were defined as thbse in each
respondent's own state — and improving the quality of non-local waters (i.e., those located out-of-
state). On average, respondents allocated two-thirds of their values to achieving water quality goals
in-state, and one-third to achieving those goals in the remainder of the nation. i
\
To reflect the considerations noted above, the analysis of the benefits of the revised CAFO
regulations examines water quality improvements on a state-by-state basis and separately calculates
the benefits of in-state and out-of-state improvements, assuming that households will allocate two-
thirds of their willingness to pay values to the improvement of in-state waters. In addition, the
analysis takes into account the extent of the final rule's estimated impacts (i.e., the number of stream-
miles that improve from non-supportive to boatable; non-supportive or boatable to fishable; or non-
supportive, boatable or fishable to swimmable) by scaling household willingness to pay for a given
improvement in the quality of the nation's waters by the proportion of total stream-miles in-state or
out-of-state that are proj ected to make the improvement. Appendix 4-A provides a detaile'd summary
of the calculations employed. ;
4-20
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The water quality ladder captures the benefits of categorical changes in the type of beneficial
uses supported by water bodies (i.e., improvements from one use category to another). In doing so,
it reflects the principles of water quality standards where determinants of beneficial use attainment
are based on water quality criteria. However, it should be emphasized that the pollutant criteria in
the discrete ladder include pollutants (such as TSS and BOD) that are not typically adopted by States
as numerical criteria for determining beatable, fishable, and swimmable conditions, hi addition, the
ladder criteria are relatively stringent (e.g., lOOmg/lTSS for beatable). Inclusion of criteria for these
pollutants therefore implies lower probability of beneficial use attainment under the ladder than
might be indicated by other methods for determining use attainment in the nation's waters. For
example, 71 percent of assessed streams and rivers in the nation are judged to be supporting
swimmable uses (National Water Quality Inventory (NWQI): 2000 Report) (EPA 841-R-02-001),
yet only five percent of RF3 Lite reach segments are meeting swimmable criteria at baseline (i.e.,
in the absence of the CAFO final rule) using the ladder.18 Similar results are observed for the
beatable amenity where the NWQI (2000) shows that 76 percent of the nation's assessed streams and
rivers are supporting secondary contact recreation but only 14 percent of RF3 Lite reach segments
are achieving boatable conditions under the ladder.
4.6.2 Water Quality Index Approach
A key limitation of the water quality ladder approach is that it only values changes in water
quality to the extent that they lead to changes in beneficial-use attainment. As a result, the approach
may overstate the benefits of relatively small changes that occur at the thresholds between beneficial
use categories, while failing to capture the benefits of changes that occur within (i.e., without
crossing) the thresholds. Furthermore, the use classification is determined by the worst individual
water quality parameter. For example, if TSS changes to boatable but fecal coliform does not, the
reach would still be classified as non-boatable. Finally, another limitation of the water quality
ladder is that changes in nitrogen and phosphorus concentrations, both of which are CAFO
parameters of interest with respect to eutrophication, are not directly included in use support
determinations.
The water quality index approach is designed to address these concerns. Under this
approach, NWPCAM calculates a score for each river reach based on six water quality parameters:
BOD, DO, fecal coliform, total suspended solids, nitrate, and phosphate. Scores are assigned on a
scale of 0 to 100, based on a weighting process that translates the six conventional water quality
measures to a continuous, composite index. The weighting process reflects the judgments of a panel
18 Baseline results provided in Estimation of National Economic Benefits Using the National
Water Pollution Control Assessment Model to Evaluate Regulatory Options for Concentrated
Animal Feeding Operations - see docket.
4-21
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I '
of 142 water quality experts convened as part of a 1974 study by McClelland (McClelland, 1974).19
The impact of the revised C AFO regulations for a given river reach is measured as the dhange in the
water quality index for that reach (i.e., the difference between the reach's score under baseline
conditions and its score under the post-regulatory scenario). i
i
To value changes in the water quality index, EPA relies on a willingness to pay function
derived by Carson and Mitchell using their survey results. This equation specifies household
willingness to pay for improved water quality as a function of the level of water quality to be
achieved (as represented by the water quality index value), household income, and other attributes
(i.e., household participation in water-based recreation and respondents' attitudes toward
environmental protection). EPA estimates changes in index values using NWPCAM,! and applies
the willingness to pay function to estimate benefits. Based on this approach, EPA is able to assess
the value of improvements in water quality along the continuous 0 to 100 point scale. Appendix 4-B
specifies the willingness to pay function and describes its derivation. As with the water quality
ladder atpproach, the calculation of benefits is developed by State and takes into account differences
in willingness to pay for local and non-local water quality improvements (i.e., it assumes! households
will allocate two-thirds of their willingness to pay to improvements in in-State waters).
4.6.3 Additional Considerations When Applying the Index |
An issue in applying the results of the Carson and Mitchell survey in the context pf the water
quality index is the treatment of water quality changes occurring below the boatable range and above
the swirnmable range. There are concerns that the survey's description of non-boatable; conditions
was exaggerated, which implies that willingness-to-pay estimates for improving waterito boatable
conditions may be biased upwards. In addition, the survey did not ask respondents how much they
would be willing to pay for improved water quality above the swirnmable level.20 These issues
increase the uncertainty associated with valuing water quality changes outside the boatable to
swimmaible range (i.e., for water quality index values below 26 or above 70). In recognition of this
uncertainty, value estimates for changes in water quality within each range are presented' separately.
In contrast to the water quality ladder, the water quality index approach maintains greater
consistency with baseline water quality conditions (i.e., NWQI results). For example, 90 to 95
percent of RF3 Lite reaches are estimated to have composite index values greater than 25 (the
boatable threshold in the Carson and Mitchell survey) under baseline conditions (see memorandum
summarizing distribution in record). This result is similar to the baseline conditions specified by
Carson and Mitchell (approximately 99 percent of the nation's freshwater is boatable) and better
19 EPA modified the original McClelland index to eliminate three parameters not modeled
in NWPCAM (temperature, turbidity, and pH). '
20 However, respondents were made aware of the potential for water quality to improve
beyond swimmable in the ladder (e.g., drinkable).
4-22
-------
represents NWQI results where 76 percent of assessed rivers and streams are identified as supporting
beneficial uses associated with secondary contact. Note also that the WTP function used in the index
approach assumes decreasing marginal benefits with respect to water quality index values; this is
consistent with consumer demand theory and implies that willingness to pay for incremental changes
in water quality decreases as index values increase. Other advantages of the index approach, as
noted in earlier sections, include the ability to capture benefits of (1) marginal changes in water
quality without triggering changes in beneficial use; and (2) changes in other parameters of interest
(i.e., nitrate, phosphate) that are not included in the ladder.
4.6.4 Estimated Benefits
Exhibits 4-12 and 4-13 summarize NWPCAM's estimates of the annual economic benefits
of the revised CAFO regulations. Using the water quality ladder methodology, the annual benefits
attributable to the regulation of Large CAFOs under EPA's chosen phosphorus-based standard are
estimated to be $ 166.2 million; in contrast, annual benefits under the nitrogen-based standard, which
EPA considered but did not select, are estimated to be $102.4 million.21 As Exhibit 4-12 shows, a
large share of the benefits under both standards is realized in improving the condition of waters
previously classified as non-boatable to beatable.
The estimates yielded by the water quality index approach are higher by roughly a factor of
two. Applying this approach, the annual benefits attributable to the regulation of Large CAFOs
under the phosphorus-based standard are estimated to be $298.6 million. Under the nitrogen-based
standards, the analysis yields estimated annual benefits of $ 182.6 million.
The lower benefits estimated under the ladder approach are due, in part, to the likelihood that
predicted changes in some parameters (e.g., TSS) are not sufficiently large to meet criteria necessary
for changes in beneficial use, even in the case of boatable water. Under the index approach, benefits
are not constrained by limiting parameters, and the benefits of all changes in water quality
parameters are captured.
Apparent inconsistencies in the distribution of benefits between the two methods arise
because many water bodies fail to meet boatable criteria under the ladder approach, yet estimated
water quality index values for most of these same water bodies exceed the minimum threshold index
of 25 for boatable waters. As a result, a majority of water quality changes under the ladder approach
occur within the non-boatable category, while a majority of water quality changes under the
continuous index approach create benefits in reaches that fall within the index range of 25 to 70.
This occurs because the process for calculating the index provides opportunities for low
concentrations of some pollutants to offset high concentrations of other pollutants, thereby driving
21 The results reported are limited to the impact of the revised standards on Large CAFOs.
The change in standards will also affect pollutant loads from Medium CAFOs, but the analysis of
these impacts was not available when this report was submitted for publication.
4-23
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up the composite score. As a final note regarding the distribution of benefits, it is also possible that
a regulation, such as the final CAFO rule, may affect specific geographic areas where nbn-boatable
waters predominate, thus implying that a majority of benefits would be attributable to improvements
from non-boatable to boatable conditions. i
Regulatory Standard
Phosphorus-Based
Nitrogen-Based
Waters
Improved to
Boatable**
$114.1
$73.1
Waters
Improved to
Fishable**
$38.8
$23.2
Waters Improved
to Swimmable**
$13.3
$6.1
i
Total Benefits
$166.2
$102.4
Exhibit 4-12
ANNUAL ECONOMIC BENEFIT OF ESTIMATED
IMPROVEMENTS IN SURFACE WATER QUALITY:
WATER QUALITY LADDER APPROACH*
(2001 $, millions)
Source: Estimation of National Economic Benefits Using the National Water Pollution Control i
Assessment Model to Evaluate Regulatory Options for Concentrated Animal Feeding '<
Operations (USEPA, 2002). |
i
* These figures account for changes in loadings from Large CAFOs only. The impact of revised standards
on loadings from Medium CAFOs is not considered. j
** Boatable benefits include only those benefits attributable to improvements from non-boatable to beatable.
Benefits from improvements to other beneficial use categories appear in the other columns. For a reach that
improved from non-boatable to flshable, for example, a portion of the benefits appear in the boatable column,
while the remainder appears in the fishable column. Similarly, fishable and swimmable benefits include only
those benefits attributable to improvements from boatable to fishable and from fishable to swimmable,
respectively. Benefits from improvements to other use categories appear in the other columns as described
above. i
4-24
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Regulatory Standard
Phosphorus-Based
Nitrogen-Based
WQK26
$10.1
$7.2
26 70***
$47.0
$40.1
Total Benefits
$298.6
$182.6
Exhibit 4-13
ANNUAL ECONOMIC BENEFIT OF ESTIMATED
IMPROVEMENTS IN SURFACE WATER QUALITY:
WATER QUALITY INDEX APPROACH*
(2001 $, millions)
Source: Estimation of National Economic Benefits Using the National Water Pollution Control
Assessment Model to Evaluate Regulatory Options for Concentrated Animal Feeding
Operations (USEPA, 2002).
* These figures account for changes in loadings from Large CAFOs only. The impact of revised standards
on loadings from Medium CAFOs is not considered.
** This category includes only the benefits attributable to improvements between 26 and 70. For example,
for a reach that improved from 24 to 30, the portion of benefits from the increase from 24 to 26 appears in
the WQI<26 category; the remainder appears in the 2670. For a reach that
improved from 24 to 80, for example, a portion of the benefits is allocated to each of the WQI<26, the
2670 categories. ,
4.7 REFERENCES
Carson, Richard T. and Robert Cameron Mitchell. 1993. "The Value of Clean Water: The Public's
Willingness to Pay for Beatable, Fishable, and Swimmable Water Quality." Water
Resources Research, Vol. 29, No. 7.
Ham, J.M. and T.M. DeSutter. 1999. "Seepage Losses and Nitrogen Export from Swine-Waste
Lagoons: A Water Balance Study." Journal of Environmental Quality. 28:1090-1099.
Kellogg, Robert L., Charles Lander, David Moffitt, and Noel Gollehon. 2000. Manure Nutrients
Relative to the Capacity of Cropland and Pastureland to Assimilate Nutrients: Spatial and
Temporal Trends for the U.S. Forthcoming. U.S. Department of Agriculture, National
Resources Conservation Service. Washington, DC.
Kellogg, Robert L. 2002. Profile of Farms with Livestock in the United States: A Statistical
Summary. U.S. Department of Agriculture, Natural Resources Conservation Service.
Washington, D.C.
4-25
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Lander, C.H., D. Moffitt, and K. Alt. 1998. Nutrients Available from Livestock Manure Relative
to Crop Growth Requirements. U.S. Department of Agriculture, Natural, Resources
Conservation Service. Washington, DC. February. .- •
McClelland, Nina I. 1974. Water Quality Index Application in the Kansas River Basin. Prepared
for the U.S. Environmental Protection Agency, Region VII. EPA-907/9-74-001.
NPPC (National Pork Producers Council). 1998. Pork facts 1998/1999. Des Moines, LA: National
Pork Producers Council. http://www.nppc.org/PorkFacts/pfindex.html. . . • i •
Smith, Richard A., Gregory E. Schwarz, and Richard B.Alexander. 1997. "Regional Interpretation
of Water-Quality Monitoring Data." Water Resources Research, Vol. 33, no. 12j December.
Sobecki, T.M., and M. Clipper. 1999. Identification of Acreage of U.S. Agricultural Land with a
Significant Potential for Siting of Animal Waste Facilities and Associated Limitations from
Potential of Groundwater Contamination, Draft. U.S. Environmental Protection Agency,
Office of Water. December.
r
USDA/APHIS (Animal and Plant Health Inspection Service). 1995. Swine '95. Part III and Part
I: Reference of 1995 Swine Management Practices. October. ,
USDA/NASS (U.S. Department of Agriculture, National Agricultural Statistics Service). 1999a.
1997 Census of Agriculture. Volume I, Geographic Area Series Part 51. Washington, DC.
March. :
USDA/NASS (U.S. Department of Agriculture, National Agricultural Statistics Service). 1999b.
Cattle Final Estimates 1994-1998. January. i
USEPA (U.S. Environmental Protection Agency). 2000a. Technical Development Document for
Proposed Effluent Limitations Guidelines for Animal Feeding Operations. Office of Water.
i
USEPA (U.S. Environmental Protection Agency). 2002. Estimation of National Surface Water
Quality Benefits Using the National Water Pollution Control Assessment Model'to Evaluate
Regulatory Options for Concentrated Animal Feeding Operations. Prepared for the Office
of Water by Research Triangle Institute. October.
4-26
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Appendix 4-A
NWPCAM CALCULATION OF THE ECONOMIC BENEFITS
OF IMPROVED SURFACE WATER QUALITY:
WATER QUALITY LADDER APPROACH
Definitions '
N = national benefits of estimated improvements in water quality
Sj = total benefits of estimated improvements hi water quality for residents of state "j"
B^n = benefits of in-state improvements in water quality for residents of state "j"
B/n j) = benefits of out-of-state improvements in Svate'r quality for residents of state "j"
MJ = total stream-miles in state "j"
Mn — total stream-miles outside state "j"
M (Xij) = stream-miles in state "j" that achieve water quality improvement "x"
M ,x „•) = stream-miles outside state "j" that achieve water quality improvement "x"
H j = total households in state "j "
WTPX = average household willingness to pay for water quality improvement "x"
Calculations
Sj~B(U)+B(n,J)
B(U)=E (M (XJ)/ Mj)(Hj)(WTPx)(2/3)
B(ntj)= E (M {x,n)/ MJCHj
A
4A-1
-------
Appendix 4-B ,
i
NWPCAM CALCULATION OF THE ECONOMIC BENEFITS ;
OF IMPROVED SURFACE WATER QUALITY:
WATER QUALITY INDEX APPROACH !
The following willingness-to-pay function is used to derive economic benefits using the
water quality index approach. This equation was estimated and reported by Carson and Mitchell
using responses from their survey sample.
TOTWTP = exp [0.413 + 0.819 x log(WQI/10) + 0.959 x log(Y) + 0.207 x w + 0.46;x A] (1)
where ;
TOTWTP
Y
W
= each household's total WTP (in 1983 dollars) for increasing water
quality up to each of the three water quality index (WQI) values
\
= household income (sample average = $33,170 in 1983 dollars)
= dummy variable indicating whether the household engaged in water-
based recreation in the previous year (sample average =:0.59)
i
A = dummy variable indicating whether the respondent regarded the
national goal of protecting nature and controlling pollution as very
important (sample average = 0.65). f
To develop this equation, Carson and Mitchell used the water quality ladder to map each beneficial-
use category to a corresponding index value (boatable =? 25, fishable = 50, and swirnmable = 70).
Equation 1 can also be used as a benefit-transfer function, to assess the value of increasing
water quality along the continuous 100-point water quality index. Assuming that*the sample
averages for Wand A are representative of the current population, the incremental value associated
with increasing WQI from WQI0 to WQI, can be calculated as ',
ATOTWTP = exp[0.8341 + 0.819 x logCWQyiO) + 0.959 x log(Y)]
- exp[0.8341 + 0.819 x log(WQyiO) + 0.959 x log(Y)]
(2)
Y, in this case, would be selected to correspond to average (or median) household income in
the year of the water quality change (expressed in 1983 dollars). The resulting value estimates can
be inflated to current dollars based on the growth rate in the consumer price index (CPI) !since 1983.
4B-1
-------
Note that Equation 2 estimates average household willingness to pay to increase all impaired
waters addressed in Carson and Mitchell's study by the increment WQI0 to WQI,. Additional
adjustments, identical to those employed under the water quality ladder approach, are required to
distinguish between values for local (i.e., in-state) and non-local water quality improvements.
4B-2
-------
Appendix 4-C <
WATER QUALITY LADDER THRESHOLD CONCENTRATIONS!
Beneficial Use
Swimmable
Fishable
Beatable
Biological Oxygen
Demand (mg/L)
1.5
3
4
Total Suspended
Solids (mg/L)
10
50
100
Dissolved Oxygen
(% saturated) r
0.83
0.64
0.45
Fecal Coiiforms
(MEI^OOmL)
;200
i,ooo
2,000
4C-1
-------
-------
REDUCED INCIDENCE OF FISH KILLS
CHAPTER 5
5.1 INTRODUCTION
Episodic fish kills resulting from manure runoff, spills, and other discharges from AFOs
remain a serious problem in the United States. As described in Chapter 2, large releases of nutrients,
pathogens, and solids from AFOs can cause sudden, extensive kill events.1 In less drariiatic cases,
nutrients contained in runoff from AFOs can trigger increases in algae growth — often called algae
blooms — that reduce concentrations of dissolved oxygen in water and can eventually cause fish to
die.2 ;
In addition to killing and harming fish directly, pollution from AFOs can affect other aquatic
organisms that in turn harm fish. In particular, the Eastern Shore of the United States has been
plagued with problems related to Pfiesteria, a dinoflagellate algae that, under certain circumstances,
can transform into a toxin that attacks fish, breaking down their skin tissue and leaving lesions or
large gaping holes that often result in death. The transformation of Pfiesteria to its toxic form is
believed to be the result of .high levels of nutrients in water (Morrison, 1997). Fish kills related to
Pfiesteria in North Carolina's Neuse River have been blamed on waste spills and runoff from the
state's booming hog industry (Leavenworth, 1996; Warrick, 1996). |
This chapter examines the damages attributable to AFO-related fish kills and estimates the
economic benefits that the revised CAFO standards would provide in reducing such incidents. As
explained below, the analysis employs state data on historical fish kill events, combined with
predicted reductions in the frequency of such events under the new regulations, to estimate the
1 For example, in 1998, the release of manure into the West Branch of Wisconsin's
Pecatoniica River resulted in a complete kill of smallmouth bass, catfish, forage fish, and all but the
hardiest insects in a 13-mile reach (Wisconsin DNR, 1992).
2 For example, in 1996, the gradual runoff of manure into Atkins Lake, a shallow lake in
Arkansas, resulted in a heavy algae bloom that depleted the lake of oxygen, killing many fish
(Arkansas DEQ, 1997).
. 5-1
-------
decrease that would occur in the number offish killed annually in AFO-induced incidents. It then
employs two alternate approaches to estimate the economic benefits associated with the predicted
reduction in fish kill incidents. The first of these approaches values reduced fish mortality on the
basis of average fish replacement costs; the second values reduced fish mortality on the basis of
recreational anglers' willingness to pay for improved fishing opportunities.
5.2 ANALYTIC APPROACH
5.2.1 Data Sources and Limitations
EPA does not maintain a comprehensive database detailing the frequency or severity of fish
kill events, and States are not required to report; fish kills to EPA. As a result, the Agency lacks a
uniform source of national information on which to rely in evaluating the potential impact of the
revised CAFO standards on fish kill incidents.
Despite the lack of EPA reporting requirements, many states do record information on fish
kills. For purposes of this analysis, EPA has compiled a database offish kill events in 19 states.
This database incorporates a range of information on each incident. Exhibit 5-1 lists the 19 states
included in the database, and for each state indicates the years for which data were obtained, the total
number of reported events, the average number of reported events annually, the. estimated total
number offish killed in the events reported, and the average number offish killed per event.3
As Exhibit 5-1 indicates, the data upon which this analysis relies are not comprehensive. The
fish kill database excludes 31 states, including several, such as Oklahoma, that host a relatively large
number of AFOs. The period of time for which data were obtained also varies from state to state;
the information collected from some states, such as Missouri, covers nearly two decades, while that
collected from others, such as West Virginia, covers only a few years. In addition, even in the states
and years for which data were collected, it is likely that some fish kill events remain unreported,
particularly if they occurred in remote areas.4 These data gaps introduce considerable uncertainty
into the analysis.
3 EPA's database incorporates records on fish kills obtained from the Natural Resources
Defense Council and the Izaak Walton League (Frey, Hooper, and Fredregill, 2000).
4 For instance, in 1995 the Raleigh News & Observer reported a 1991 manure spill incident
in the North Carolina town of Magnolia that neither the town nor the responsible farm reported to
state water quality officials (Warrick and Smith, 1995).
5-2 •
-------
State
Arkansas
Illinois
Indiana
Iowa
Kansas
Kentucky
Minnesota
Mississippi
Missouri
Montana
Nebraska
Slew Mexico
New York
North Carolina
Ohio
South Carolina
Texas
West Virginia
Wisconsin
Exhibits-!
FISH KILL EVENT DATA OBTAINED BY EPA ;
Years
1995-1999
1987-1999
1994-1999
1981-1998
1990-1999
1995-1998
1981-1991
1990-1998
1980-1999
1994-1998
1991-1998
1995-1998
1984-1996
1994-1998
1995-1998
1995-1998
1990-1998
1995-1997
1988-1998
Total
Recorded
Events
43
182
163
473 '
157
62
263
167
2,505
9
177 .
19
234
206
81
22
1,032
18
70
5,883
Average
Annual Events
8.6
14.0
27,2
26.3
15.7
15.5
23.9
18.6
125.3
1.8
22.1
4.8
18.0
41.2
20.3
5.5
114.7
6.0
6.4
515.9
Estimated Number
of Fish Killed
108,174
629,118
4,901,290
2,342,296
574,519
202,912
607,910
3,065,565
701,821
11,212
167,628
3,356
915,159
1,020,903
30,923
77,760
141,910,079
64,676
171,131
157,506,432
Average Mortality
per Event
2>516
3^457
30,069
4952
3[659
3J273
2J311
18,357
280
1£46
947
177
3,911
4J956
382
3,535
137,510
3,593
2,445
26'773
1
In addition to the data gaps cited above, the analysis is limited by inconsistencies in the
information collected in state fish kill reports. Some states appear to have established consistent
guidelines for investigating a kill, which often include reporting the number of stream miles or lake
acres affected, estimating the number of fish killed, describing the exact location 6f the kill,
identifying the source of the pollutants suspected to have caused the kill, and obtaining water quality
samples for testing. Other states appear to gather information on an ad hoc basis. In addition, ,the
data present a number of anomalies or other limitations. For example, 25 percent of tlhe records
5-3
-------
included in EPA's database give no estimate of the number offish killed or provide only a qualitative
description of the incident's magnitude. Another 13 percent of the records indicate that the number
offish killed in the event was zero.5 hi addition, most reports do not indicate the type(s) of fish
killed.
Despite the apparent limitations of these data, they are useful for purposes of this analysis.
EPA's database is the most comprehensive source of information on fish kill events currently
available, and in most instances characterizes the source of the pollutants that caused individual fish
kill events. Thus, EPA can apply these data to characterize a baseline of kill events potentially
attributable to pollution from AFOs.
5.2.2 Predicted Change in Fish Kills Under the Revised CAFO Regulations
To estimate the potential benefits of the revised CAFO regulations in reducing fish kill
incidents, EPA's analysis must first assess the current—or baseline — number of AFO-related fish
kills. It must then determine the impact of the new regulations in reducing these incidents. EPA's
approach to this analysis is described below.
5.2.2.1
Baseline Scenario
The EPA database records fish kill events attributable to a wide range of pollutants, sources,
causes, and effects. The classification of this information varies from state to state. For purposes
of identifying AFO-related fish kills, EPA applies the following criteria:
• If the source of the pollution that caused a fish kill was identified as "animal
feeding/waste operations," the event was classified as AFO-related.
• If the source of the pollution that caused a fish kill was identified as
"agriculture" and additional information indicated that a "lagoon break,"
"manure," or "ammonia toxicity" was a factor, the event was classified as
AFO-related.
5 This may be due to a variety of circumstances. In some cases, the report may accurately
indicate an event in which contamination occurred (such as a manure spill or municipal waste
release) but no fish were killed. In other cases, a rpcord may indicate zero fish killed simply because
investigators were unable to develop a count (e.g., because the number killed was too great to count,
or because the investigation was conducted too late to determine the number killed).
5-4
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On this basis, EPA has classified 482 of the fish kill events contained in its database as AFO-related.
These incidents killed a reported total of approximately 4 million fish. Based on these data, EPA
estimates that in the states evaluated, incidents attributable to pollution from AFOs kill an average
of 351 thousand fish per year.6 ;
5.2.2.2 Post-Regulatory Scenario ;
Due to time and resource constraints, EPA has not conducted a detailed analysis of the impact
of the revised CAFO standards on the frequency or severity offish kill events. It is likely, however,
that the implementation of the new regulations will have a number of beneficial effects. For
example, because more AFOs would be subject to regulation as CAFOs, the numberj of fish kill
incidents caused by lagoon breaks and similar catastrophic events would likely diminish. In
addition, the improvements in manure management practices required under the new regulations
would likely reduce the chronic discharge of nutrients to the nation's waters, and thus| reduce the
number of fish killed as a result of severe eutrophication. j
][n lieu of more detailed modeling, EPA has attempted to develop a reasonable ^estimate of
the impact of the revised CAFO standards on fish kills. The analysis begins with EPA's! estimate of
the number of fish killed annually by releases from AFOs. EPA multiplies this figure by the
anticipated percentage reduction in nutrient loadings from the animal feeding operations modeled
by NWPCAM (see Chapter 4).7 The resulting value represents an estimate of the reduction in the
number of fish killed annually by releases from AFOs. , 1. •
Because the relationship between nutrient loadings and fish kill events is complex, this
approach provides only a rough approximation of the beneficial impacts of the revised regulations.
To reflect the underlying uncertainty, the analysis employs two different scaling factors:
» . the percentage reduction in phosphorus loadings; and • '
• the percentage reduction in nitrogen loadings. j
6 EPA estimates the average number offish killed annually in the 19 states oif record by
dividing the total number offish killed in each state by the number of years for which data from the
state are reported. EPA then sums the state averages to obtain the annual average for all 19 states.
7 The analysis of changes in loads is limited to the impact of the revised standards on Large
CAFOs. The change in standards will also affect pollutant loads from medium CAFOs, but the
analysis of these impacts was not available when the report was submitted for publication.
5-5 : '
-------
Exhibit 5-2 summarizes the estimated percentage reduction in nitrogen and phosphorus
loadings under the revised CAFO standards. The exhibit presents results for both the phosphorus-
based land application standard that EPA has incorporated into the final rule and the alternative
nitrogen-based standard, which EPA considered but did not select. The values reported in each case
are those estimated by NWPCAM for the full RF3 set of rivers and streams. The analysis uses these
values, rather than those reported for the RF3 Lite subset, in order to reflect changes hi loadings to
small as well as large rivers and streams.8
Exhibit 5-2
SCALING FACTORS'
Regulatory Standard
Phosphorus-Based
Nitrogen-Based
Percent Nitrogen Reduction2
9.7
3.9
Percent Phosphorus Reduction'1
14.0
7.0
1 These figures account for changes in loadings from Large CAFOs only. The impact of revised
standards on loadings from Medium CAFOs is not Considered.
2 The load reductions reported are NWPCAM estimates for the full RF3 set of rivers and streams.
Based on the methods described above, EPA estimates the anticipated reduction in fish kills
under the revised standards. Exhibit 5-3 presents the results. As the exhibit shows, EPA estimates
that under EPA's chosen phosphorus-based standard, the reduction in fish killed annually would
range from 34 thousand to 49 thousand. Under the alternative nitrogen-based standard, the reduction
in fish killed annually would range from 14 thousand to 26 thousand.
Exhibit 5-3
ESTIMATED REDUCTION IN THE NUMBER OF FISH KILLED ANNUALLY DUE TO
RELEASE OF POLLUTANTS FROM AFOs1
(thousands)
Regulatory Standard
Phosphorus-Based
Nitrogen-Based
Nitrogen Reduction Scaling
Factor
34
14
Phosphorus Reduction Scaling
Factor
49
26
1 These figures account for changes in loadings from Large CAFOs only. The impact of revised
standards on loadings from Medium CAFOs is not considered.
8 Chapter 4 provides additional detail on the RF3 and RF3 Lite datasets.
5-6
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5.2.3 Valuation of Predicted Reduction in Fish Kills
The economic damages that stem from natural resource injuries like fish kills include the
costs of restoring the resource to its prior state, any interim lost use values (e.g., the economic value
of lost fishing days from the time the damage occurs until fish stocks are restored), and!any interim
lost non-use values. Estimating these values for a large number of heterogeneous fish kill events
nationwide is infeasible without a significant investment of analytic resources. Determining full
habitat restoration costs requires a case-by-case assessment of the nature of the injury and the
restoration options available, while estimating interim lost non-use values requires the use of stated
preference techniques to explore people's willingness to pay to avoid temporary depletions offish
stocks and associated damage to fish habitat. The economics literature does provide estimates of
potential lost use values — e.g., willingness to pay for another day of fishing or willingness to pay
for an additional fish caught — that could, theoretically, be applied to the analysis using a benefit
transfer approach. Conducting such an assessment at a national level, however, requires general
assumptions about a number of highly variable site-specific factors, such as the duration of the
reduction in fish stocks, the effect of this reduction on recreational fishing activity in the affected
areas, and the availability and characteristics of alternative fishing areas. Thus, an evaluation of
interim lost use values is subject to considerable uncertainty.
In light of the difficulties cited above, this analysis employs two approaches to estimating
the economic benefits of reducing the frequency offish kills. The first of these approaches values
reduced fish mortality based on one component of resource restoration costs: the replacement cost
of the fish. The second approach is based on a review of case studies designed to assess the damages
to recreational fishing values attributable to specific fish kill events. Additional information on each
approach is provided below.
5.2.3.1
Replacement Cost Approach
1990)
EPA's first approach to valuing reduced fish mortality employs fish replacement
estimates presented in a report developed by the American Fisheries Society (AFS,
replacement values incorporate the cost of raising fish at a hatchery, transporting them,
them in the water. As such, they provide a conservative estimate of the economic
reducing the incidence of fish kills.9
cost
These
and placing
benefits of
The American Fisheries Society report provides replacement cost estimates for a variety of
fish species and size categories. Unfortunately, the available data on fish kills do not always indicate
9 The analysis employs fish replacement costs as a proxy measure for valuing
reductions in fish kill incidents. The approach does no
be restocked.
5-7
anticipated
Dt presume that all fish killed would necessarily
-------
the species offish affected, and generally do not report mortality by size offish. In light of these
limitations, EPA applies a general fish replacement cost estimate, derived by selecting species
known to have been killed in incidents related to AFOs and averaging reported replacement costs
for these species across all size classes. The resulting average replacement cost employed in the
analysis equals $1.37 per fish (2001 $).10 To value the benefits of the revised regulations, the
analysis simply multiplies this average replacement cost by the estimated reduction in the number
of fish killed each year.
5.2.3.2
Recreational Use Value Approach
EPA's second approach to valuing reduced fish mortality relies on an analysis of recreational
fishing studies conducted to assess the damages attributable to fish kill events (lEc, 2002). Although
the scope of this analysis was limited, it identified two studies that provide useful insights into the
valuation of fish kills.
>• The first study, of an industrial spill to Indiana's White River, examined the
impacts of the spill on populations of warmwater sportfish and characterized
the likely reduction in recreational fishing effort until the fishery recovered.
On this basis, the study estimated interim lost use damages that equate to
approximately $1.60 per fish killed (1999 $).
>• The second study evaluated the recreational fishing impacts associated with
fish entrainment at two hydroelectric dams on the Potomac River. The study
estimated the reduction in warmwater sportfish stocks caused by entrainment,
and assumed a proportional impact on anglers' catch rates. The study then
used available estimates of anglers' willingness to pay to catch an additional
fish to translate the reduction in catch into economic losses. The results
range from $2.69 to $3.69 per fish killed (1999 $).
10 To adjust replacement costs to 2001 dollars, EPA applies the Gross Domestic Product
deflator.
5-8
-------
On the basis of these findings the analysis estimates recreational fishing damages of approximately
$2.50 per sportfish mortality (1999 $).n EPA's database, however, suggests that approximately 10
percent of fish kill events do not involve sportfish. Thus, the analysis recommends the use of a
weighted-average figure of $2.25 per fish (1999 $) to value the recreational use benefits of reducing
fish kills. EPA's analysis of the revised CAFO regulations adopts this recommendation:, employing
an inflation-adjusted value of $2.35 per fish (2001 $).12 !
5.3 RESULTS |
i
Exhibit 5-4 presents estimates of the annual benefits attributable to the reduced incidence of
fish kills under EPA's phosphorus-based standard and under the nitrogen-based standard that EPA
considered but did not select. As the exhibit indicates, the estimated benefits range from $47
thousand to $115 thousand annually under the phosphorus-based standard and from $19 thousand
to $61 thousand annually under the nitrogen-based standard, depending upon the valuation approach
and scaling factor employed. - > .
Exhibit 5-4 i
I
ESTIMATED ANNUAL BENEFITS '
ATTRIBUTED TO REDUCTION IN FISH KILLS'
($2001, thousands)
Regulatory Standard
Phosphorus-Based
Nitrogen-Based
Valuation Method
Replacement Cost
Nitrogen
Scaling
$47 .
$19
Phosphorus
Scaling
$67
$36.
Recreational Use Value
Nitrogen
Scaling
$80
$33
Phosphorus
Scaling
$115
$61
1 These figures account for changes in loadings from Large CAFOs only. The impact of revised standards
on loadings from Medium CAFOs is not considered. • j •
11 The analysis notes that these figures reflect recreational fishing values for warmwater
sportfish, primarily bass. Such values are higher than those for most other warmwater species (e.g.,
bullhead, catfish), but lower than those for coldwater species (e.g., trout). ' ,
i
i
12 EPA applies the Gross Domestic Product deflator to adjust the base value to 2001 dollars.
i
5-9
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5.4 LIMITATIONS AND CAVEATS
I
EPA's analysis of the benefits of the revised CAFO regulations in reducing fish kills is
subject to numerous data gaps and uncertainties. In the face of these uncertainties, the analysis
employs a number of simplifying assumptions and presents a range of results. The major limitations
of the analysis are summarized below.
• The scope of the analysis is limited to 19 states. The data available from
these states may not include all fish kill events, and the data on reported
incidents often fail to include estimates of the number of fish killed.
Therefore, EPA's baseline estimate is likely to understate the number offish
kill events and the total number of fish killed nationwide each year in
incidents related to pollution from AFOs.
• EPA has not undertaken a detailed analysis of the impact of the revised
regulations on the incidence offish kills. In lieu of a detailed analysis, EPA
assumes that fish kills attributable to releases of pollution from AFOs will
be reduced in proportion to estimated reductions in loadings of nutrients from
AFOs. The direction and magnitude of bias associated with these
assumptions is unknown.
• To value estimated reductions in fish kill incidents, the analysis applies two
approaches. The- first, which employs an estimate of average fish
replacement costs, ignores other aspects of the economic damages associated
with fish kills (i.e., habitat restoration costs, interim lost use values, and
interim lost non-use values). Thus, it likely understates the economic benefit
of reducing fish kill incidents. The second, which is based on an estimate of
recreational use values, rests on a limited number of studies that reflect
highly variable case-specific factors, and thus is subject to considerable
uncertainty.
In addition to these caveats, the analysis is limited to the impact of the revised CAFO
standards onpollutant loadings from Large CAFOs. Excluding effects on Medium CAFOs from the
analysis is a source of downward (negative) bias in our estimate of the economic benefits of the new
standards.
5.5 REFERENCES
AFS. 1993. American Fisheries Society Socioeconomics Section, Sourcebookfor Investigation and
Valuation of Fish Kills. Supplement to American Fisheries Society Special Publication 24.
Bethesda, Maryland.
5-10
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Arkansas DEQ (Department of Environmental Quality). 1997. Report of Pollution Caused Fish
Kills. June 27. ?'''•'>• i
Frey, Merritt, Rachel Hopper, and Amy Fredregill. 2000. "Spills and Kills: Manure Pollution and
America's Livestock Feedlots." Clean Water Network, New York, NY. August.
Griffiths, Charles and Cynthia Morgan. 2002. "Benefits of Reduced Fish Kills from the NPDES
and Effluent Guidelines Rule for CAFOs." National Center for Environmental Economics,
U.S. Environmental Protection Agency. August 15. !
j
lEc (Industrial Economics, Incorporated). 2002. Bob Black, Brian Morrison, and Dan Hudgens,
lEc. "Alternatives for Evaluating Fish Kill Reduction Benefits." Memorandum to Charles
Griffiths, U.S. Environmental Protection Agency. July 22. ,
Leavenworth, S. 1996. "Coastal Playground Turned Killing Ground." The News & Observer.
March 7. ;
Mancl,K. andM. A. Veenhuizen. 1991. "Avoiding Stream Pollution from Animal Manure." Ohio
State University Extension Fact Sheet. i
Morrison, C. 1997. "The Cell from Hell and Poultry Farmers: Do They Have Anything in
Common?" The Shore Journal. August 31. '.
Wanick, Joby. 1996. "A Bumper Crop of Waste." The News & Observer. March 5.;'
Warrick, Joby and Pat Smith. 1995. "New studies show that lagoons are leaking: Grioundwater,
rivers affected by waste." The News & Observer. February 19.
Wisconsin DNR (Department of Natural Resources). 1992. Wisconsin Water Quality Assessment
Report to Congress.
i
U.S. Department of the Interior. 1996. "Natural Resource Damage Assessments \— Type A
Procedures." Federal Register. Vol. 61, No. 89 (May 7), pp. 20560-20614. i
U.S. Fish and Wildlife Service. 2001. The Economic Benefits of Improved Fish Passage at
Potomac River Dams 4 and 5. Draft Final Report. October.
U.S. Fish and Wildlife Service. 1998. 1996 Net Economic Values for Bass, Trout and Walleye
Fishing, Deer, Elk and Moose Hunting, and Wildlife Watching: Addendum to the 1996
National Survey of Fishing, Hunting, and Wildlife-Associated Recreation. August.
5-11
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IMPROVED COMMERCIAL SHELLFISHING
CHAPTER 6
6.1 INTRODUCTION !
The National Oceanic and Atmospheric Administration (NOAA) has identified pathogen
contamination of U.S. coastal waters as a leading cause of government restrictions on commercial
shellfish harvesting. Among the sources of pollution that contribute to such contamination are
animal feeding operations (AFOs) and runoff from agricultural lands. This chapter estimates the
impact of pollution from AFOs on commercial access to shellfish growing waters, the resulting
impact on commercial shellfish harvests, and the potential increase in harvests that would result
under the revised standards governing the discharge of pollutants from CAFOs. It then uses
available estimates of consumer demand for shellfish to calculate the economic benefits associated
with the predicted increase in commercial shellfish harvests under the new rule. .
6.2 ANALYTIC APPROACH :
6.2.1 Data on Shellfish Harvest Restrictions Attributed to AFOs >
EPA's analysis of the impact of pollution from AFOs on shellfish harvests is based on
information from The 1995 National Shellfish Register of Classified Growing Waters (NOAA, 1997)
and related databases. NOAA produces the Register, which is published every five years, in
cooperation with the nation's shellfish-producing states, federal agencies such as the U.S. Food and
Drug Administration (FDA), and the Interstate Shellfish Sanitation Conference (ISSC). jits purpose
is to summarize the status of shellfish-growing waters under the National Shellfish Sanitation
Program (NSSP), which ISSC administers. The NSSP establishes comprehensive guidelines to
regulate the commercial harvesting, processing, and shipment of shellfish. These guidelines include
the measurement of fecal coliform concentrations as an indicator of pollution in shellfish-growing
waters. Based in large part upon these measurements, shellfish-growing areas are designated as
approved, conditionally approved, restricted, conditionally restricted, prohibited, or unclassified, and
subjected to appropriate harvest and processing standards. Exhibit 6-1 describes these standards for
each designation. ; .
6-1
-------
Exhibit 6-1
NSSP STANDARDS FOR CLASSIFIED SHELLFISH GROWING WATERS
Classification
Approved Waters
Conditionally
Approved Waters
Restricted Waters
Conditionally
Restricted
Waters
Prohibited Waters
Unclassified
Waters
Description
Growing waters from which shellfish may be harvested for
.direct marketing.
Growing waters meeting the approved classification
standards under predictable conditions. These waters, are
open to harvest when water quality standards are met. At
all other times these waters are closed.
Growing waters from which shellfish may be harvested
only if they are relayed or depurated before direct
marketing.2
Growing waters that do not meet the criteria for restricted
waters if subjected to intermittent microbiological
pollution, but maybe harvested if shellfish are subjected to
a suitable purification process.
Growing waters from which shellfish may not be harvested
for marketing under any conditions.
Growing waters that are part of a state's shellfish program
but are inactive (i.e., there is no harvesting) and
unmonitored.
Standard1
MPN may not exceed 14
per 100 ml, and not more
than 10 percent of the
samples may exceed an
MPN of 43 per 100 ml for a
5-tube decimal dilution test.
MPN may not exceed 88
per 100 ml, and not more
than 10 percent of the
samples may exceed an
MPN of 260 per 100 ml for
a 5-tube decimal dilution
test.
NA
NA
Source: National Oceanic and Atmospheric Administration, The 1995 National Shellfish Register of Classified
Growing Waters, obtained from: http://seaserver.nos.noaa.gov/projects/95register/, 1 1 June 2000.
Notes: ;
1 MPN = fecal coliform most probable number (median or geometric mean).
2 Theprocess of relaying shellfish refers to the transfer of shellfish from restricted waters to approved waters
for natural biological cleansing using the ambient environment as a treatment system, usually for a minimum
of 14 days before harvest. Depuration is the process of removing impurities by placing the contaminated
shellfish in clean water for a period of time. '
The 1995 Shellfish Register provides information on 21.4 million acres of estuarine and non-
estuarine commercial shellfish-growing waters as of January 1, 1995. A companion CD contains
a GIS-based database of the location of all 4,320 shellfish growing areas in 21 coastal states, the
acreage of each growing area, and the species harvested.1 These species are classified into 13
1 The Shellfish Register includes data for the following states: Alabama, California, Connecticut,
Delaware, Florida, Georgia, Louisiana, Massachusetts, Maryland, Maine, Mississippi, North
Carolina, New Hampshire, New Jersey, New York, Oregon, Rhode Island, South Carolina,
6-2
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I
categories of clams, four categories of oysters, six categories of mussels, and two categories of
scallops. In most cases, each category represents a unique species (e.g., Blue Mussel (Mytilus
edulis)),but in some instances a category may include two or more species (e.g,, Other Mussels
(Mytilus galloprovincialis and Mytilus edulis}). The types of species harvested vary geographically,
with large differences between the East and West Coasts.
In addition to the data described above, the shellfish database notes for each growing area
any harvest limitations imposed and the known or possible source(s) of pollutants causing any
impairment. The list of pollutant sources includes both "Animal Feedlots" and "Agriculture
Runoff." Sources of impairment are further classified as actual or potential contributors. If a source
is listed as an actual contributor, its significance as a cause of impairment is rated as high, medium,
or low. Exhibit 6-2 shows the acreage of shellfish-growing waters that are potentially or known to
be impaired by pollution from AFOs and/or agricultural runoff. As the exhibit indicates, AFOs
and/or agricultural runoff are known or potential contributors to the impairment of mpre than 1.6
million acres of shellfish-growing waters. :
Exhibit 6-2 !
SHELLFISH HARVEST LIMITATIONS BY REGION
Region
North Atlantic (MA, ME, NH)
Middle Atlantic (CT, DE, MD, NJ, NY, RI, VA)
South; Atlantic (FL, GA, NC, SC)
Gulf of Mexico (AL, LA, MS, TX)
Pacific (CA, OR, WA)
Total
Approved
Acres
2,920,575
4,969,680
3,505,729
3,238,431
206,574
14,840,989
Harvest-
Limited
Acres
714,191
. 973,715
1,751,844
3,067,730
214,494
6,721,975
Harvest-Limited
Acres with
Impacts from
AFOs and/or
Agricultural
Runoff
\ 33,626
i 100,284
• 660,679
; 718,828
' 96,296
1,609,713
Discrepancies between reported totals and sum of regional totals are due to rounding. i
Source: U.S. National Oceanic and Atmospheric Administration, The 1995 National Shellfish Register of
Classified Growing Waters, U.S. Department of Commerce, Silver Spring, MD, August 1997
Texas, Virginia, and Washington.
6-3
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6.2.2 Estimated Impact on Shellfish Harvests
As a causal factor in the imposition of government restrictions or prohibitions on shellfish
harvesting, pollution from AFOs likely serves to reduce shellfish landings below levels that would
otherwise be realized. To evaluate the potential beneficial effects of the new CAFO regulations,
EPA's analysis begins by estimating the adverse impacts currently attributable to pollution from
AFOs. The approach to this analysis involves the following steps.
• Step 1: characterize current, or baseline,, annual shellfish landings.
• Step 2: estimate the area of shellfish-growing waters from which current
landings are harvested.
Step 3: calculate the average annual per-acre yield of shellfish from
harvested waters.
Step 4: estimate the area of shellfish-growing waters that are currently
unharvested as a result of pollution from AFOs.
Step 5: estimate the foregone harvest, i.e., the potential annual harvest of
shellfish from waters that are currently unharvested as a result of pollution
from AFOs.
Each of these steps is described in greater detail below.
6.2.2.1 Baseline Annual Shellfish Landings
To characterize the baseline quantity (Q0) of shellfish harvested in each coastal state, the
analysis relies on data collected by NOAA's National Marine Fisheries Service (NMFS), which
reports commercial fishing harvests by state, year, and species (NMFS, 2000). NMFS maintains
complete commercial harvest data on various species of clams, mussels, oysters and scallops for each
state. The data consist of total pounds harvestediand total ex-vessel revenues for harvested species.
The data are provided as state-wide totals only and do not disaggregate harvest quantities between
shellfish growing areas within each state. For the purpose of this analysis, EPA obtained shellfish
harvest data by species and state for the five most recent years available: 1994 through 1998. The
analysis employs the mean of the reported annual values for each species and state to characterize
shellfish harvests under baseline conditions.2 .
2 The calculation of the mean ignores years for which harvest data for a particular species are
unavailable. If landings in these years were actually zero, this approach will overstate average
annual landings.
6-4
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6.2.2.2
Estimated Acreage of Harvested Waters
The available data do not indicate the distribution of shellfish landings from waters that the
1995 Shellfish Register identifies as approved, conditionally approved, restricted, or conditionally
restricted. For purposes of this analysis, EPA assumes that baseline landings are harvested primarily
from approved or conditionally approved waters. Thus, in a given state (j), the area of shellfish
growing waters assumed to be harvested is determined by the following calculation: ,
Acres Harvested^) = Acres Approved(j)+Acres Conditionally Approved^) :
6.2.2.3
Average Annual Yield of Harvested Waters
To calculate the average annual yield (Y) of harvested waters for a given species (n) in a
given state (j), the analysis simply divides the annual baseline harvest (Q0) for that species and state
by the acres assumed to be harvested: I
This calculation provides an estimate of the pounds of shellfish landed per year from harvested
waters. '
6.2.2.4 Characterization of Waters that are
Unharvested due to Pollution from AFOs j .
. , ' i
The next step in the analysis is to estimate the area of shellfish-growing waters that are
currently unharvested due, at least hi part, to pollution from AFOs. Consistent with the approach
outlined thus far, EPA assumes that waters classified in the 1995 Shellfish Register as restricted,
conditionally restricted, or prohibited are essentially unharvested. Thus, in a given state (j), the area
of shellfish growing waters assumed to be unharvested is determined by the following calculation:
Acres Unharvested0) = Acres Restricted0)+ Acres Conditionally Restricted^ + Acres Prohibited™
This calculation, however, includes all impaired waters. To identify areas impaired, in whole or in
part, by pollution from AFOs, EPA's analysis considers two cases. Under Case 1, EPA evaluates
only those shellfish-growing waters for which AFOs are specifically identified as a contributing
source of impairment. Under Case 2, EPA expands the analysis to include shellfish-growing waters
that the Register identifies as impaired, in whole or in part, by"AFOs and/or agricultural funoff. The
inclusion of Case 2 is justified by the classification of shellfish-growing waters on the basis of fecal
6-5
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coliform levels. To the extent that agricultural runoff causes elevated fecal coliform counts, animal
manure, potentially from AFOs, is the likely contributing factor.3
6.2.2.5 Estimated Impact of Pollution from
AFOs on Commercial Shellfish: Landings
To characterize the impact of pollution from AFOs on commercial shellfish landings, it is
necessary to estimate the potential yield of impaired shellfish growing areas. For purposes of this
analysis, EPA assumes that the average annual yield from harvested waters, as calculated above, is
representative of the potential annual yield from impaired waters. Thus, the foregone harvest (QF)
from an area of any size for a given species (n) in a given state (j) is calculated as follows:
= Y(nj) x Acres
EPA calculates the foregone harvest for each of the two cases described above. Under Case 1, the
calculation estimates the foregone harvest from shellfish-growing waters for which AFOs are
specifically identified as a contributing source of impairment. Under Case 2, EPA expands the
analysis to estimate the foregone harvest from shellfish-growing waters identified as impaired, in
whole or in part, by AFOs and/or agricultural runoff.
6.2.3 Estimated Impact of the Revised
Regulations on Commercial Shellfish Harvests
The next step in EPA's analysis is to estimate the impact of the new CAFO regulations on
commercial shellfish harvests. To do so, EPA employs information obtained from the surface water
quality modeling effort described in Chapter 4. The modeling exercise does not extend to estuaries
ornear-coastal waters, where most commercial shellfish-growing areas are located; however, it does
consider the impact of the new regulations on fecal coliform counts in the terminal reaches of rivers
and streams that flow into commercial shellfish growing areas. In lieu of more detailed modeling,
this information provides a reasonable proxy for estimating the impact of the rule on water quality
in shellfish growing areas.
EPA's approach to estimating the beneficial effects of the new CAFO regulations on
commercial shellfish harvests assumes that the adverse impact of pollution from AFOs will be
3 In addition, NOAA staff who maintain the Register suggest that difficulty in pinpointing
the source of pollution often results in classifying impacts from AFOs under the more general
heading of "Agriculture Runoff." Personal communication with Jamison Higgins, NOAA, April 12,
1999.
6-6
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I
reduced in proportion to modeled reductions in fecal coliform loadings to shellfish growing waters.
The details of this approach are described below. !
First, EPA identifies all terminal reaches in each state that flow into waters
supporting commercial shellfish beds. The total fecal coliform load from
these waters is calculated under both baseline conditions and under the
revised standards. The analysis examines fecal coliform loads under both the
phosphorus-based land application standard incorporated into the final jrule
and the nitrogen-based alternative standard, which EPA considered but did
not select. •
Next, for each state, EPA calculates the percentage reduction in fecal
coliform loads predicted under the revised standards.4
. . i
" Third, EPA multiplies its estimates of the percentage reduction in fecal
coliform counts by its previously developed estimates of the impact of
pollution from AFOs and/or agricultural runoff on shellfish harvests (QF).
This calculation was performed separately for each species and state. The
result, QR, represents the incremental increase in harvest associated with the
new CAFO standards.
Adding QR to baseline harvests (Q0) yields an estimate of annual shellfish harvests following
implementation of the revised CAFO regulations (Qj). This calculation is performed for each state
and species. Thus: ,
6.2.4 Valuation of Predicted Change in Shellfish Harvests i
The appropriate measure of the economic benefits of an increase in commercial shellfish
harvests is the welfare gain (i.e., the change in producer and consumer surplus) associated with the
increased harvest. For purposes of this analysis, EPA focuses solely on changes in consumer
surplus.5 This focus is necessary because the information required to evaluate any 'changes in
4 The analysis of changes in loads is limited to the impact of the revised standards on Large
CAFOs. The change in standards will also affect fecal coliform loads from Medium GAFOs, but
an analysis of these impacts was not available when this report was submitted for publication.
5 As discussed in Chapter 3, the concept of consumer surplus is based on the principle that
some consumers benefit at current prices because they are able to purchase a good at a price that is
less than the amount they are willing to pay. ;
6-7 l
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producer surplus that might result from an increase in shellfish harvests (i.e., a long-run supply curve
for each species harvested) is difficult to obtain.'. In addition, the shellfish harvesting industry is to
a significant extent characterized by regulated harvest levels and unregulated harvester effort (i.e.,
open access fisheries).6 Generally accepted natural resource economics theory suggests that, in open
access fisheries, overcapitalization leads to zero producer surplus. Thus, although shellfish
harvesting is not entirely open access, any producer surplus in the industry is likely to be small, and
any changes in producer surplus brought about by the new CAFO regulations is likely to be minor.
To calculate the change in consumer surplus associated with an increase in commercial
shellfish harvests, the analysis makes use of information on consumer demand. Exhibit 6-3
illustrates a simple demand curve. The demand curve is the downward sloping solid line labeled D,
and the initial quantity sold is the dashed, vertical line at Q0. The intersection of these two lines
gives the price at which quantity Q0 is sold. This price is marked as P0 and represented by the dashed
horizontal line. The consumer surplus for quantity Q0 is the area below the demand curve and above
the horizontal line at P0. That is, the consumer surplus for Q0 is the area labeled "C" in Exhibit 6-3.
Exhibit 6-3
CONSUMER DEMAND AND CONSUMER SURPLUS
Price
PO
P1
Quantity
QO
Q1
6 Anecdotal evidence suggests that some shellfishing areas are leased by municipalities to
individual enterprises with sole rights to harvest the area. In these cases, the limits on competition
could lead to positive producer surplus. The extent of this practice, however, is unclear.
6-8
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The measurement of the benefits of the revised CAFO regulations relies on the .'assumption
that a decrease in the contamination of shellfish-growing waters would increase commercial access
to shellfish beds, and thus increase the quantity of shellfish supplied to consumers (i.e.,: an increase
from Q0 to Q,). This in turn would result in a lower market price for shellfish (i.e., PJ. The benefit
to consumers can be determined based on the old and new.prices and quantities. Before'the change,
the area labeled "C" in Exhibit 6-3 measures consumer surplus. After the change, consumer surplus
is measured by the area of A+B+C. Thus, the difference in consumer surplus between these
scenarios (i.e., Area A + Area B) is the additional consumer surplus attributable to the proposed rule
and the appropriate economic measure of benefits to consumers.
6.2.4.1
Characterization of Consumer Demand for Shellfish
Analysis of the changes in consumer surplus that might result from an increase; in shellfish
harvests requires an understanding of the effect of an increased harvest on market prices. To gather
the necessary information, EPA reviewed the economics literature. This review identified a number
of relevant studies: Lipton and Strand (1992), which estimates a demand equation for surf clams and
ocean quahogs on the East Coast; Wessells et al. (1995), which estimates a demand equation for U.S.
harvested mussels in Montreal; Cheng and Capps, Jr. (1988), which estimates demand equations for
oysters and total shellfish in the U.S.; and Capps, Jr. and Lambregts (1991), which estimates demand
equations for scallops and oysters in Houston, Texas. Exhibit 6-4 lists the demand elasticities
obtained from each of these studies.7 These demand elasticities provide the means to determine the
change In consumer surplus associated with changes in shellfish harvests. ,
Exhibit 6-4
SHELLFISH DEMAND ELASTICITIES
Citation
Cheng and Capps
Cheng and Capps
Capps and Lambregts
Capps and Lambregts
Wessells et al.
Lipton and Strand
Lititon and Strand
Species
oysters
total shellfish
oysters
scallops
mussels
surf clams
ocean guahogs
Elasticity
-1.132
-0.885 1
not significant
-1.84
-1.98
-2
-087
6.2.4.2 Determining the Change in Consumer
Surplus Associated with Increased Harvests
7 The price elasticity of demand represents the percentage change in demand for a good
brought about by a one percent change in its price; thus, a price elasticity of-2 implies that a one
percent increase in price will result in a two percent decrease in demand. •
i
6-9
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EPA's analysis of the benefits of an increase in shellfish harvests begins by estimating prices
and quantities (i.e., P0 and Q0) under baseline conditions, as well as the quantity of shellfish that
would be harvested following the implementation of the new CAFO regulations (C^)- Consistent
with the analysis of shellfish harvests described above, Q0 for each state and species is based on
NMFS data, and specified as the mean annual harvest for the years 1994 through 1998. P0 is
calculated by dividing the total reported revenues from 1994 through 1998 for each species and state,
adjusted to 2001 dollars, by the total quantity harvested.8 Ch is determined as described above,
adding to Q0 the increase in shellfish harvests estimated to occur under the new regulations (QR).
EPA determined the value of these factors for each broad category of shellfish for which NMFS data
are available: scallops, oysters, mussels, and clams. When the data allow, EPA developed separate
values for quahogs, surf clams, and other clams. This approach enables the analysis to take
advantage, whenever possible, of the demand equations identified for the quahog and surf clam
subcategories.9
Once P0, Qo, and Q, are estimated, the appropriate price elasticities of demand are applied
to determine the new price (Pj) associated with an increase in shellfish harvests. For purposes of this
analysis, the percentage change in price is determined by dividing the percentage increase in the
quantity of shellfish supplied in each case by the appropriate price elasticity. This percentage change
is then applied to the initial price (P0) to calculate the new price (Pj for each species harvested.10
8 EPA adjusts reported revenues to 2001 dollars using the Consumer Price Index. In
calculating P0, EPA considers only those years for which harvest and revenue data are available.
9 The analysis employs the Wessells et al. demand elasticity for mussels and the Capps and
Lambregts demand elasticity for scallops for all states in which these species are harvested. When
disaggregated data on surf clam or quahog harvests are available, the analysis relies on the demand
elasticities for these species developed by Lipton and Strand; in all other instances, demand for clams
is analyzed using the total shellfish price elasticity estimated by Cheng and Capps. For oysters, the
analysis relies upon the demand elasticity estimated by Cheng and Capps; this value was selected
because it was based on evaluation of a broader market than that considered by Capps and
Lambregts. j
10 Mathematically, the price elasticity of demand (e) is calculated as:
where:
therefore:
5Q = (Q,-Q0)/Qo
ap=(p1-p0)/p0
dP = 3Q/e
(Qi-Qo)(Po)/[(e)(Qo)]+
6-10
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EPA employs the estimated values for P0, P,, Q0 and Q, to measure the increase in consumer
surplus associated with the projected increase in shellfish harvested and resulting reduction in market
price under the new regulations. This calculation is conducted for every state and species category.
The estimated annual benefit of the revised CAFO standards is simply'the sum of the estimated
increase in consumer surplus across states and species.11 j
6.3 RESULTS ;
Exhibit 6-5 summarizes the estimated economic benefits associated with increased shellfish
harvests under the new CAFO standards. Results are provided for both the phosphorus-based land
application standard incorporated into the final rule and the nitrogen-based alternative standard,
which EPA considered but did not select. The exhibit also presents two cases: Case 1, which
considers beneficial impacts on shellfish growing waters that the Shellfish Register specifically
identifies as impaired by pollution from AFOs; and Case 2, which expands the analysis to consider
beneficial impacts on shellfish growing waters identified as impaired bypollution from AFOs and/or
agricultural runoff. As the exhibit indicates, EPA's estimates of annual benefits in Case 2 are more
than an order of magnitude greater than in Case 1; this range reflects the significant increase in the
number and area of shellfish growing waters considered to be impaired by AFOs when runoff from
agricultural land, as opposed to pollution specifically attributed to AFOs, is included in the analysis.
Under EPA's chosen phosphorus-based standard, the estimate of annual benefits ranges from
approximately $0.3 million in Case 1 to $3.4 million in Case 2. Under the alternative nitrogen-based
standard, the estimates of annual benefits are lower, ranging from $0.1 million in Case 1 to $1.9
million in Case 2. i
Exhibit 6-5
ESTIMATED ANNUAL BENEFITS OF INCREASED COMMERCIAL SHELLFISH HARVESTS'
(2001 $, millions)
Regulatory Standard
Phosphorus-Based
Nitrogen-Based
Casel: AFOs
$0.3
$0.'l
Case 2: AFOs and
Agricultural Runoff
$3.4 i
$2.0 :
1 The analysis accounts for changes in the regulation of Large CAFOs only. The impact of revised standards for
JMedium CAFOs is not considered i
11 The calculation of increased consumer surplus is based on a simple geometric
approximation of the change in areas under the demand curve, rather than formal integration using
calculus. As a result, the estimated increase in consumer surplus may be slightly overstated.
6-11 • '
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6.4 LIMITATIONS AND CAVEATS
The analysis set forth above is subject to a number of uncertainties and relies upon several
simplifying assumptions. These factors may lead to a potential under- or over-estimation of the
benefits of decreasing AFO-related contamination of commercial shellfish growing waters. The
most significant of these limitations are described below.
• The analysis assumes that a reduction in pollution from AFOs will result in
an increase in commercial shellfish harvests. While this assumption appears
reasonable in light of the extent to which AFOs contribute to current
restrictions or prohibitions on shellfish harvesting, the actual impact of these
restrictions or prohibitions on annual shellfish landings is unknown.
• To estimate the potential impact of pollution on annual shellfish landings, the
analysis calculates an average annual yield (pounds per acre) for shellfish
growing waters. The calculation of this figure assumes that current harvests
are obtained from waters classified as approved or conditionally approved.
To the extent that this approach over- or understates the increase in annual
yields that might be realized from waters currently subject to harvest
restrictions or prohibitions, the analysis may either over- or understate the
impact of pollution on annual shellfish landings.
• The actual contribution of AFOs to the impairment of shellfish growing
waters is unclear. In light of ambiguities in the data and uncertainties
associated with the impact of pollution from other sources, the analysis
considers two cases to characterize the impact of pollution from AFOs on
shellfish harvests. The broad range of results across the cases analyzed
suggests considerable uncertainty concerning the impact of pollution from
AFOs.
• Similarly, in characterizing the impact of the revised regulations, the analysis
assumes that the adverse impact of pollution from AFOs (i.e., the foregone
harvest) will be reduced in proportion to modeled reductions in fecal coliform
loadings from rivers and streams that flow into shellfish-growing areas.
While this approach may provide a reasonable approximation of the impacts
of the new CAFO standards, it is less reliable than detailed modeling of
pathogen concentrations in waters that support commercial shellfish beds.
The direction and magnitude of any bias introduced by reliance on this
approach is unclear.
• The analysis relies on estimates of the price elasticity of demand for shellfish
that are not necessarily representative of current conditions or of conditions
6-12
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nationwide. The direction and magnitude of any bias introduced by reliance
on these estimates, however, is unclear. ;'
Finally, the analysis is limited to the impact of the revised CAFO standards on pollutant
loadings from Large CAFOs. Excluding effects on Medium CAFOs from the analysis is a source
of downward (negative) bias in the estimated economic benefits of the final rule. '
6.5 REFERENCES
Capps, Oral Jr. and Johannes Adrianus Lambregts. 1991. "Assessing Effects of Prices and
Advertising on Purchases of Finfish and Shellfish in a Local Market in Texas," Southern
Journal of Agricultural Economics, Vol. 23, July, pp. 181-194. • '•
[
Cheng, Hsiang-tai and Oral Capps, Jr. 1998. "Demand Analysis of Fresh and Frozen JFinfish and
Shellfish in the United States," American Journal of Agricultural Economics, Vol 70
August, pp. 533-542. i
Griffiths, Charles and Sabrina Lovell. 2002. "Benefits of CAFO Regulations to Shellfish Beds,"
Office of Economy and Environment, U.S. Environmental Protection Agency, December 12.
Lipton, D.W. and I. Strand. 1992. "Effect of Stock Size and Regulations on Fishing Industry Cost
and Structure: The Surf Clam Industry," American Journal of Agricultural Economics Vol
64, February, pp. 197-208. ! ' '
U.S. National Oceanic and Atmospheric Administration. 1997. The 199 5 National Shellfish Register
of Classified Growing Waters, Office of Ocean Resources Conservation and Assessment,
Silver Spring, MD. Available from: http://seaserver.nos.noaa.gov/projects/95register/.
i
U.S. National Oceanic and Atmospheric Administration, Fisheries Statistics and Economics
Division, "Commercial Fisheries," U.S. Department of Commerce, obtained from
http://www.st.nmfs.gov/stl/commercial/index.html.
Wessells, Cathy R., Christopher J. Miller and Priscilla M. Brooks. 1995. "Toxic Algae
Contamination and Demand for Shellfish: A Case Study of Demand for Mussels in
Montreal," Marine Resource Economics, Vol. 10, pp. 143-159. . ! .
6-13
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REDUCED CONTAMINATION OF PRIVATE WELLS
CHAPTER 7
7.1 INTRODUCTION ,
CAFOs can contaminate aquifers and thus impose health risks and welfare losses on those
who rely on groundwater for drinking water or other uses. Of particular concern are nitrogen and
other animal waste-related contaminants (which come from manure and liquid wastes) that leach
through soils and ultimately reach groundwater. Nitrogen loadings convert to elevated nitrate
concentrations at household and community system wells, and elevated nitrate levels in turn pose
a risk to human health. i
The federal health-based National Primary Drinking Water Standard for nitrate is 10 mg/L.
This Maximum Contaminant Level (MCL) applies to all Community Water Supply systems, but not
to households that rely on private wells. As a result, households served by private wells are at risk
of exposure to nitrate concentrations above 10 mg/L, which EPA considers unsafe for sensitive
subpopulations (e.g., infants). Nitrate above concentrations of 10 mg/L can cause
methemoglobinemia ("blue baby syndrome") in bottle-fed infants (National Research Council,
1997), which causes a blue-gray skin color, irritability or lethargy, and potentially long-term
developmental or neurological effects. Generally, once nitrate intake levels are reduced,!symptoms
abate. If the condition is untreated, however, methemoglobinemia can be fatal.1
U.S. Census data for 1990, the most recent available for this analysis, ;show that
approximately 13.9 million households located in counties with AFOs are served by domestic wells.
A number of sources provide information on the percentage of such wells with nitrate concentrations
in excess of 10 mg/L. As indicated in Exhibit 7-1, the values reported vary widely, depending on
the location studied, local hydrology, and other factors. According to the nationwide USGS (1996)
Retrospective Database, however, the concentration of nitrate exceeds the 10 mg/L threshold in 9.45
1 No other health impacts are consistently attributed to elevated nitrate concentrations in
drinking water. As discussed in Chapter 2, however, other health effects are suspected.
7-1 ! '
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percent of domestic wells in the United States. Thus, EPA estimates that approximately 1.3 million
households in counties with AFOs are served by domestic wells with nitrate concentrations above
10 mg/L.2 ;
Exhibit 7-1
pFpnriMTAfiF OF DOMESTIC WELLS EXCEEDING THE MCL FOR NITRATE
Study
CDC, 1998
Agriculture Canada, 1991 (as
cited by Giraldez and Fox,
1995)
Krossetal., 1993
Retrospective Database;
USGS, 1996
Richards etal., 1996
Spalding and Exner, 1993
Swistock etal., 1993
U.S. EPA, 1990
USGS, 1985
USGS, 1998
Vitosh, 1985 (cited in Walker
Location
Illinois, Iowa, Kansas, Minnesota,
Missouri, Nebraska, North Dakota,
South Dakota, Wisconsin
Ontario
Iowa
National
Indiana, Kentucky, Ohio, West
Virginia
Iowa, Kansas, Nebraska, North
Carolina, Ohio, Texas
Pennsylvania
National i
Upper Conestoga River Basin
Nemaha Natural Resources District,
Nebraska
Southern Michigan
Type of
Well
Domestic
Domestic
farm
Rural
Domestic
Rural
Rural
Private
Rural
domestic
Rural
Rural
Rural
Percent Exceeding
10 mg/L
13.4%
13%
18%
9.5%
3.4%
20%, 20%, 20%,
3.2%, 2.7%, 8.2%,
respectively
9%
2.4%
' 40+%
10%
34%
2 Based on analysis of the 1990 Census data, 13,871,413 households served by private wells
are located in counties with AFOs. The USGS database indicates that nitrate concentrations exceed
10 mg/L in 9.45 percent of domestic wells nationwide. Applying this percentage to the figure above
(13,871,413 x .0945) yields an estimate of 1,310,849 domestic wells that (1) are located in counties
with AFOs and (2) exceed the MCL for nitrate.
7-2
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EPA' s revisions to the NPDES regulation and effluent guidelines affect the number and type
of facilities subject to regulation as CAFOs, and also introduce new requirements governing the land
application of manure. As a result, EPA anticipates that the revised regulations will reduce nitrate
levels in household wells. In light of clear empirical evidence from the economics literature that
households are willing to pay to reduce nitrate concentrations in their water supplies — especially
to reduce concentrations below the MCL — the anticipated improvement in the quality of water
drawn from private domestic wells represents a clear economic benefit. This chapter estimates these
benefits for the final effluent guideline and final NPDES regulation.
7.2 ANALYTIC APPROACH
Exhibit 7-2 provides an overview of EPA's approach to estimating the benefits of well nitrate
reductions. As the exhibit indicates, the analysis begins by developing a statistical model of the
relationship between nitrate concentrations in private domestic wells and a number of variables
found to affect nitrate levels, including nitrogen loadings from AFOs. It then applies this model, in
combination with the projected change in nitrogen loadings from CAFOs, to characterize the
distribution of expected changes in well nitrate concentrations. Next, the analysis applies this
distribution to the number of households served by private domestic wells to calculate (1) the
increase in the number of households served by wells with nitrate concentrations that are below the
MCL arid (2) the marginal change in nitrate concentrations for households currently served by wells
with nitrate concentrations below the MCL. Finally, the analysis employs estimates of households'
values for reducing well nitrate concentrations to develop a profile of the economic; benefits of
anticipated improvements in well water quality. Additional detail on EPA's analytic approach is
provided below.
7.2.1 Relationship Between Well Nitrate Concentrations and Nitrogen Loadings
!
EPA's approach begins with the use of regression analysis to develop a model characterizing
the empirical relationship between well nitrate concentrations and a number of variables that may
affect nitrate levels, including nitrogen loadings from AFOs. The variables included in the model
are based on a review of hydrogeological studies that have observed statistical relationships between
groundwater nitrate concentrations and various other hydrogeological and land use factors. The
following discussion describes the variables included in EPA's model and the sources of data for
each variable. It also notes potentially significant variables that the model does not include.
Appendix 7-A and Appendix 7-B provide additional detail on the model's development.
7-3
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Exhibit 7-2
OVERVIEW OF ANALYTIC APPROACH
Data Sources Analysis
NPLA
Retrospective database
U.S. Census
Ag census
NPLA scenarios
U.S. Census
Benefits transfer
Baseline model: Statistical model estimation
Nitrates = Po+ p, Xl + ... + Pnjcn + e
Calculation of changes in well
nitrates under options/scenarios
1 Change in number of households
above 10 mg/L MCL
• Change in nitrates 1 < N < 10 mg/L
Net present value of
nitrate reductions
Annualized benefit estimates for
CAFO regulatory options
7.2.1.1
Included Variables and Data Sources
Although the groundwater monitoring and modeling studies that EPA reviewed covered
different geographic areas and focused on varying nitrate sources (e.g., septic systems, agricultural
fertilizers, animal feedlots), they often found similar significant variables. In particular, nitrogen
7-4
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application or loadings rates, whether from animal wastes, private septic systems, or agricultural
fertilizers, were the most consistent and significant factor affecting well nitrate levels (e.g., Burrow,
1998; CDC, 1998). .EPA's model includes variables characterizing nitrogen loadings from each of
these sources: i
• AFOs — Studies that addressed the effect of animal manure production on
groundwater nitrate concentrations found a positive correlation between these
variables (e.g., Ritter and Chirnside, 1990; Division of Water Quality,
Groundwater Section, 1998). EPA's model therefore includes a variable that
characterizes nitrogen loadings from AFOs. EPA obtained data on these
loadings, aggregated at the county level, from the National Pollutants
Loadings Analysis (NPLA; TetraTech, 2002). :
• Septic Systems — Several studies found that the proximity of septic systems
to wells is a small, but significant, contributing factor to elevated nitrate
concentrations (e.g., Carleton, 1996; Richards et al., 1996). As a proxy
measure for loadings from septic systems, EPA's model includes a variable
characterizing the use of private septic systems in each county. Information
on septic system use was drawn from the 1990 U.S. Census. ! .
• Other Sources — Several studies found that the type of crop cultivated in the
vicinity of wells significantly influences well nitrate levels, reflecting
variation in the crops' nutrient and water needs and suggesting ithat
agricultural fertilizers are a significant source of nitrogen to groundwater
(e.g., Swistock et al., 1993; Lichtenberg and Shapiro, 1997). EPA obtained
data on nitrogen loadings associated with agricultural fertilizers from the
NPLA. EPA obtained data on atmospheric deposition of nitrogen from the
USGS Retrospective Database (1996). i
In addition to variables characterizing nitrogen loadings, EPA's model includes the following
variables describing well, soil, and land use characteristics found to significantly influence well
nitrate concentrations:
» Well Depth: Several studies found well depth to be a significant variable,
inversely correlated with well nitrate concentrations, regardless of nitrate
source (e.g., Detroy, 1988; Ham etal., 1998). l
'• Soil Group: A number of studies identified at least one hydrogeological
characteristic, such as aquifer composition and soil type, as a significant
factor affecting well nitrate concentrations (e.g., Lichtenberg and Shapiro,
1997; Lindsey, 1997). ' i
7-5
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Land Use: Agricultural land use in the vicinity of wells was found to be
associated with higher groundwater nitrate in several studies (e.g., Mueller
et al., 1995; Carleton, 1996).
For purposes of model development, EPA obtained data on these variables from the USGS
Retrospective Database (1996).
EPA's model also includes variables that describe each well's location with respect to the five
regions identified in the NPLA: Central, Mid-Atlantic, Midwest, Pacific, or South. The use of these
variables helps to account for potential regional differences (e.g., differences in climate) that may
affect the transfer of leached nitrogen into nitrates in groundwater, as well as geological differences
that may relate to background (natural) levels of nitrate in groundwater. The states that each region
encompasses are as follows:
Central — AZ, CO, ID, MT, NV, NM, OK, TX, UT, WY;
Mid-Atlantic— CT, DE, KY, ME, MD, MA, NH, NJ, NY, NC, OH, PA, RI,
TN, VT,VA,WV;
Midwest — IA, IL, IN, KS, MI, MN, MO, NE, ND, SD, WI;
Pacific — AK, CA, HI, OR, WA;
South — AL, AR, FL, GA, LA, MS, SC.
7.2.1.2
Omitted Variables
Because of incomplete or unreliable national data, EPA's model does not include all of the
potentially significant variables identified in the literature. For example, several studies cite well
construction and age as significant variables with respect to well nitrate concentrations (e.g.,
Spalding and Exner, 1993; Swistock et al., 1993). In general, older wells are more vulnerable to
nitrate contamination because their casings are more likely to be cracked, allowing surface
contaminants to enter the well. Different construction materials and methods also affect how easily
nitrate or other pollutants can reach groundwater via direct contamination at the wellhead. Data on
this variable, however, are often unreliable because they are generally obtained by surveying well
owners and relying on their subjective assessment of when and how a well was constructed; no
reliable, nationally comprehensive data on well construction are available.
7-6
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Several studies also found the distance from a pollutant source to the well to be significantly
correlated with well nitrate concentrations (e.g., Swistock et al., 1993; Division of Water Quality,
Groundwater Section, 1998). Although spatial data for well locations are available, data on the
location of animal feedlots, cropland, and septic systems are not; therefore, the model excludes this
variable.
7.2.2 Modeling of Well Nitrate Concentrations
To estimate the impact of selected variables on well nitrate concentrations, EPA compiled
a database of 2,985 records. Each record provides information characterizing a different well,
including the observed well nitrate concentration; well location, depth, soil, and land use
information; data on baseline nitrogen loadings from AFOs; and data characterizing nitrogen
loadings from septic systems, agricultural fertilizer, and atmospheric deposition. EPA developed
its regression model on the basis of this database. |
After estimating the regression model using baseline loading information, EPA estimated
expected values for well nitrate concentrations under baseline conditions and: following
implementation of the.new CAFO regulations. Two regulatory options were analyzed: the,
phosphorus-based land application standard incorporated into the final rule, and a nitrogen-based
application standard, which EPA considered but did not select. In each case, the calculation of
expected values employed data on AFO nitrogen loadings obtained from the NPLA (Terra Tech,
2002).3 Exhibit 7-3 summarizes the expected percentage changes in well nitrate concentrations
under each regulatory standard.4 !
3 Chapter 4 provides additional information on the development of pollutant loadings
estimates for both the baseline and post-regulatory scenarios. For purposes of this analysis, the
characterization of post-regulatory conditions is limited to the impact of the revised standards on
Large CAFOs. The impact of the revised standards on Medium CAFOs is not addressed.
4 Testing of EPA's model indicates that it underestimates well nitrate concentrations. As a
result, comparing predicted values to observed baseline values would bias the analysis. To avoid this
bias, EPA compares the well nitrate concentrations the model predicts to the values it predicts under
baseline conditions. The benefits assessment is based on the resulting projected percentage changes
in expected well nitrate concentrations. i
7-7 . :
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Exhibit 7-3
PERCENT REDUCTION IN PROJECTED NITRATE
CONCENTRATIONS1
Regulatory Standard
Nitrogen-based
Phosphorus-based
Projected Nitrate Concentration (mg/L)
Mean Percent Reduction
1.8%
2.0%
Median Percent
Reduction
0.2%
0.2%
1 The results reported reflect the impact of the revised standards on Large
CAFOs Inroads on Medium CAFOs are not addressed.
7.2.3 Discrete Changes from above the MCL to below the MCL
As noted above, the most recent U.S. Census data show that approximately 13.5 million
households located in counties with AFOs are served by domestic wells. The USGS Retrospective
Database indicates that the concentration of nitrate in 9.45 percent of U.S. domestic wells exceeds
10 mg/L. Thus, under the baseline, EPA estimates that approximately 1.3 million households in
counties with AFOs are served by domestic wells with nitrate concentrations above 10 mg/L.
To estimate the impact of the new CAFO regulations on the number of wells that would
exceed the nitrate MCL, EPA applied the mean percentage reduction in nitrate concentrations
predicted above to the nitrate concentration values that the USGS Retrospective Database reports.
Based on the resulting values, EPA calculated the percentage reduction in the number of wells with
nitrate concentrations exceeding 10 mg/L. As shown in Exhibit 7-4, it then applied these values to
EPA's baseline estimate of the number of households in counties with AFOs that are served by
domestic wells with nitrate concentrations above 10 mg/L. Based on this analysis, EPA estimates
that the phosphorus-based regulatory standard would bring approximately 111 thousand households
under the 10 mg/L nitrate threshold, while the nitrogen-based standard would have a similar effect
on approximately 121 thousand households.
Exhibit 7-4
EXPECTED REDUCTIONS IN NUMBER OF HOUSEHOLDS WITH WELL
NITRATE CONCENTRATIONS ABOVE 10 mg/L1
Regulatory
Standard
Nitrogen-based
Phosphorus-based
Percentage of Wells
above MCL at Baseline
Expected to Achieve MCL
9.2%
8.5%
Reduction in Number of
Households
above the MCL
120,823
111,529
1 The results reported reflect the impact of the revised standards on Large CAFOs.
Imoacts on Medium CAFOs are not addressed.
7-8
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7.2.4 Incremental Changes below the MCL
Households currently served by wells with nitrate concentrations below the 10 mg/L level
may also benefit from marginal reductions in nitrate concentrations. For purposes of this analysis,
EPA assumes that such incremental benefits would be realized only for wells with baseline nitrate
concentrations between 1 and 10 mg/L; presumably, an individual would not benefit if nitrate
concentrations were reduced to below background levels, which for purposes of this analysis are
assumed to be 1 mg/L.5 Exhibit 7-5 shows EPA's estimate of the new CAFO regulations' impact
on mean and median nitrate concentrations in wells with baseline values between 1 arid 10 mg/L.
The exhibit also indicates in each case the total expected reduction in nitrate levels, expressed in
mg/L.6 EPA estimates that approximately 5.6. million households would benefit from thdse marginal
reductions.
Exhibit 7-5 !
MEAN AND MEDIAN REDUCTIONS IN NITRATE CONCENTRATIONS FOR WELLS WITH
CONCENTRATIONS BETWEEN 1 AND 10 mg/L AT BASELINE1 |
Regulatory Standard
Nitrogen-based
Phosphorus-based
Mean Nitrate
Reduction
(mg/L)
0.114
0.126
Median Nitrate
Reduction
(mg/L)
0.015
0.016
Total Expected National
Nitrate Reduction
(mg|L)
695,662
768,221
1 The results reported reflect the impact of the revised standards on Large CAFOs. Impacts on Medium CAFOs
are not addressed.
7.2.5 Valuation of Predicted Reductions in Well Nitrate Concentrations ,
EPA's analysis relies on a benefits transfer approach to value predicted reductions in well
nitrate concentrations. EPA used three general steps to identify and apply values for benefits
transfer:
5 EPA's analysis also ignores marginal reductions in nitrate concentrations for wells that
would remain above the MCL. The Agency's review of the economics literature failed to identify
studies that would provide an adequate basis for valuing such changes. <
6 The information reported in Exhibit 7-5 pertains only to wells with baseline nitrate
concentrations below the MCL. Information for wells with baseline nitrate concentrations above the
MCL is not included, since the benefits associated with reducing nitrate concentrations in these wells
to below the MCL are potentially captured in valuing the achievement of safe nitrate concentrations.
7-9
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(1) A literature search to identify potentially applicable primary studies.
(2) Evaluation of the validity and reliability of the studies identified. Primary
evaluation criteria included:
the relevance (applicability) of the commodity being valued in the
original studies to the policy options being considered for CAFOs;
and
• the robustness (quality) of the original study, evaluated on multiple
criteria such as sample size, response rates, significance of findings
in statistical analysis, etc.
(3) Selection and adjustment of values for application to CAFO impacts.
Appendix 7-C provides detailed information on EPA's literature search and the criteria applied to
evaluate and select the studies employed in the benefits assessment.
Through its review and evaluation of the relevant literature, EPA selected three studies to
provide the primary values used for the benefit transfer:
• A study by Poe and Bishop (1992), which EPA employs to value changes in
well nitrate concentrations from above the MCL to below the MCL.
• A study by Crutchfield et al. (1997), which EPA employs to value marginal
changes in nitrate concentrations below the MCL.
• A study by De Zoysa (1995), which EPA employs to value marginal changes
in nitrate concentrations below the MCL.
The Crutchfield et al. and De Zoysa studies were rated as having similar overall quality. From each
of these studies EPA identified a per milligram value for marginal changes in well nitrate
concentrations; the analysis employs the average of these two values for the benefits transfer.
The discussion below briefly summarizes these studies. Additional information is provided
in Exhibit 7-6.
7.2.5.1
Poe and Bishop (1992)
Poe and Bishop (1992,1999) and Poe (1993) report on the results of a contingent valuation
study conducted in rural Portage County, Wisconsin, to estimate the conditional incremental benefits
7.10
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of reducing nitrate levels in household wells. The area had experienced extensive nitrate problems,
and previous research suggested that 18 percent of private wells in the area exceeded the MCL. The
survey comprised two stages. In the first stage, individuals were asked to submit water samples from
their tap and to complete an initial questionnaire. In the second stage, individuals were provided
with their nitrate test results, general information about nitrates, and a graphical depiction of their
exposure levels relative to both natural levels and the MCL; they then were asked to: respond to
contingent valuation questions (expost). ;
Exhibit 7-6
SUMMARY INFORMATION ON STUDIES USED FOR BENEFITS TRANSFER
Study Reference
Year of Analysis
Place
Household Water
Supply/
Groundwater Use
Groundwater
Baseline Scenarios
Change in
Groundwater
Scenario
Source of
Contaminants
Types of Values
Estimated
Duration of
Payment Vehicle
Mean Annual HH
WTP in 2001
Dollars
Poe and Bishop
1991
Portage County, WI
100% on private wells
An increase in the number
of wells in Portage
County with nitrate
contamination
Groundwater protection
program to keep nitrate
levels below EPA
standards
Agricultural activities
Option price (use value)
Annually, for as long as
respondent lives in the
county
$536 (25% reduction in
nitrates to safe level)
$629 (households with
100% probability of
future contamination) —
Average $583
Crutchfield et al.
1994
IN, Central NE, PA, WA
IN 73%; NE 31%; PA 47%;
WA 26% nonmunicipal
None given
If tap water has 50% greater
N levels than EPA's MCL,
how much to reduce to min.
safety standards; how much
to eliminate
Not specified
Total value
Monthly, in perpetuity
$2.29 per mg/L
De Zoysa
1994 ;
Maumee River Basin,
northwest Ohio
Not specified
Typical N concentrations
range from 0;5 to 3
mg/L, although some are
much higher;
Reduce levels to
0.5-1 mg/L
Agricultural fertilizer
Total value
One time
$ 1 .89 per mg/L (using
3% discount rate)
The respondents' willingness-to-pay values varied, as expected, in accordance with the
results of their wells' nitrate tests and other information provided to them. Poe (1993) reports that
households whose wells were considered certain at some point in the future to exceed!the nitrate
7-11
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MCL would be willing to pay, on average, $629 (2001 dollars) per year for a program to keep all
wells in Portage County at or below the MCL. Poe and Bishop (1999) expand on the results of the
survey by developing a nonlinear valuation function that characterizes how household willingness
to pay for a 25 percent reduction in well nitrate concentrations varies with the initial extent of nitrate
contamination. Their analysis shows that household willingness to pay for such a program increases
as baseline well nitrate concentrations increase from 2 mg/L to 14.5 mg/L, then declines to zero at
a baseline concentration of approximately 22.5 mg/L. Based on their valuation function, Poe and
Bishop estimate that households would be willing to pay an average of $536 (2001 dollars) per year
for a 25 percent reduction from a baseline nitrate contamination level of 14.5 mg/L. Since such a
change would reduce nitrate concentrations to very near the MCL, EPA considers it representative
of household willingness to pay to reduce such concentrations to safe levels. Taking the midpoint
of the $629 and $536 values reported by Poe (1993) and Poe and Bishop (1999), respectively, EPA
estimates that households whose wells exceed the nitrate MCL would be willing to pay $583 (2001
dollars) per year to reduce nitrate concentrations to safe levels.
The reliability ofthese results appears to b;e reasonably high because the contingent valuation
(CV) instrument was developed and implemented with careful attention to detail and established C V
research protocol. A potential limitation is that the study is based on a relatively small sample size
(480 households); however, good response rates were obtained from this sample (approximately 80
percent for the first stage and 64 percent for the ex post stage). The Poe and Bishop study is the only
study EPA reviewed that elicited such informed ex post values. These value statements may be
considered more reliable than others because respondents knew more about the condition of their
own water supply and thus were able to make better informed decisions. Moreover, in comparison
to the other studies evaluated, the value estimates from this study seemed to represent a conservative
lower bound on households' values for reducing nitrates to the MCL.
7.2.5.2
Crutchfield et al. (1997)
Crutchfield et al. (1997) evaluated the potential benefits of reducing or eliminating nitrates
in drinking water by estimating average willingness to pay for safer drinking water. They surveyed
800 people in rural and nonrural areas in four;regions of the United States (Indiana, Nebraska,
Pennsylvania, Washington) using the contingent valuation method (CVM) and posing questions in
a dichotomous choice format. Respondents were specifically asked what they would be willing to
pay to have the nitrate levels in their drinking water (a) reduced to "safe levels" and (b) completely
eliminated. Respondents were told that this would be accomplished using a filter installed at their
tap, and the cost would be included in their monthly water bill. Respondents were also asked
questions regarding sociodemographic characteristics such as income, age, education, and whether
they currently use treated or bottled water. Across all regions, the resulting household willingness
to pay to reduce nitrates to safe levels ranged from $45.42 per month to $60.76 per month, with a
mean of $52.89 (1994 dollars). The willingness to pay to completely remove nitrates from drinking
water ranged from $48.26 per month to $65.11 per month, with a mean of $54.50 (1994 dollars).
The study found two variables to be significantly related to a respondent's willingness to pay: "years
7-12
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lived in ZIP code," which was positively correlated with willingness to pay, and "age of respondent'
which was negatively correlated. ] '
7.2.5.3
De Zoysa (1995)
De Zoysa (1995) applied the contingent valuation method to evaluate the benefits of a
number of programs to enhance environmental quality in Ohio's Maumee River basin,1 including a
program to stabilize and reduce groundwater nitrate levels. The study solicited willingness-to-pay
values from residents of both rural and urban areas in the river basin, as well as residents of one out-
of-basin urban area. A portion of respondents were asked whether they would pay different amounts,
via a one-time special tax, to reduce nitrate contamination from fertilizer applied to fields. Under the
hypothetical scenarios^ nitrate concentrations would be reduced from the current range of 0.5-3.0
mg/L to a range of 0.5-1.0 mg/L. Individuals were also asked questions regarding sociodemographic
characteristics, preferences for priorities for public spending, and how they used the resource in
question. Based on the lower bound of the mean values reported, the study found an average one-
time household willingness to pay of $52.78 (1994 dollars) for a 1 mg/L reduction in groundwater
nitrate concentrations. The study also found that income, the level of priority placed on groundwater
protection, and interest in increasing government spending on education, healthcare, and vocational
training all were positively and significantly correlated with willingness to pay to improve
groundwater quality. I
7.2.5.4
Adjustments to the Values
EPA employs the results of the Crutchfield et al. and De Zoysa reports to estimate annual
household willingness to pay to reduce well nitrate concentrations when those concentrations are
already below the nitrate MCL. EPA derives the appropriate value from Crutchfield byicomparing
the reported monthly willingness-to-pay values for reducing nitrate concentrations from above the
MCL to the MCL and from above the MCL to zero. The difference between these values is $ 1 61
per month. For a change between the MCL of 10 mg/L and 0 mg/L, this represents a per mg/L
monthly willingness to pay of $0.16, or $1.92 annually (1994 dollars). To derive a comparable
annual value from De Zoysa, EPA annualizes the willingness to pay value obtained from that study
- an average one-time household willingness to pay of $52.78 (1994 dollars) for a 1 mg/L reduction
in groundwater nitrate concentrations - using an annual discount rate of 3 percent. This calculation
yields an estimated annual household willingness to pay for a 1 mg/L reduction^ in nitrate
concentrations of $ 1.58 (1994 dollars). EPA applied the Consumer Price Index (CPI) to convert these
values to 2001 dollars.7 The Agency then applied the midpoint of the two values, $2.09 per mg/L
per household per year, to value changes in well nitrate concentrations between 10 mg/L ahd 1 mg/L.
Reductions in well nitrate concentrations below 1 mg/L are not valued, since EPA assumes a natural
nitrate background level of 1 mg/L. ;
7
CPI-U Series ID CUUROOOOSAO, not seasonally adjusted, U.S. city average, all items.
• !
7-13 ;
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As noted above, EPA relies on the findings of Poe and Bishop to estimate that households
whose wells exceed the nitrate MCL would be willing to pay $583 (2001 dollars) per year to reduce
nitrate concentrations to safe levels. These values are expressed as willingness to pay per year as
long as the individual lives in the county, and thus can be directly translated to value the benefits of
the new regulations.
Exhibit 7-7 summarizes the point value estimates used for benefits transfer.
Exhibit 7-7
WILLINGNESS-TO-PAY VALUES APPLIED TO BENEFITS TRANSFER
Study
Poe and Bishop
A-verage of Crutchfield et al. and De Zoysa
Value
Annual WTP to reduce nitrate to below 10 mg/L
Annual WTP per mg/L between 10 mg/L and 1 mg/L
2001$
$583.00
$2.09
7.2.5.5
Timing of Benefits
It is unlikely that changes in CAFO regulations would immediately result in the changes in
well nitrate concentrations that EPA's statistical model predicts. While hydrogeological conditions
and other factors may vary significantly from case to case, considerable time may pass before most
wells reach the steady state nitrate concentrations the model forecasts. Therefore, it is necessary to
develop a time profile of the anticipated benefits of revised CAFO standards.
EPA estimates that approximately 75 percent of affected wells would realize the full benefits
of reduced nitrogen loadings within 20 years (Hall, 1996). Assuming that the number of wells
achieving new steady state conditions increases linearly over time, this translates to approximately
3.7 percent of wells achieving new steady state conditions each year. At this rate, all affected wells
would achieve new steady state conditions in approximately 27 years. For purposes of characterizing
the benefits of reduced contamination of private wells, EPA's analysis adopts these assumptions.
7.3 RESULTS
7.3.1 Annual Benefits over Time
Exhibit 7-8 illustrates the time profile of benefits for EPA's revisions to the CAFO rule. For
the phosphorus-based application standard that EPA selected, the annual benefits attributable to the
new regulations on Large CAFOs increase from approximately $2.3 million in the first year
following implementation to $66.6 million in the twenty-seventh and subsequent years. For the
nitrogen-based application standard, which EPA considered but did not select, the annual benefits
attributable to the new regulations on Large CAFOs increase from approximately $2.5 million in the
7-14
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first year following implementation to $71.9 million in the twenty-seventh and subsequent years.
Exhibit 7-9 summarizes the estimated annual benefits oiice steady state conditions are achieved
under both regulatory standards. As the exhibit indicates, these benefits are estimated to be $72
million under the nitrogen-based standard and $67 million under the phosphorus-based standard.
Exhibit 7-8
ANNUAL BENEFITS OF REDUCING PRIVATE WELL CONTAMINATION |
$80 -
~ $60 -
o
o
g $40 -
Q
.j=j
^ $20 -
$0 -
(
• '
. . : /'"'".".„„,„,„„„„,„„„„„„,„„„„,„„„„„„,„„„,
'/ !
• . . ». . .. ,
/ . i
i i i i i .
i
) 20 40 60 80 100
Years from Implementation !
N-Based - -*- - P-Based '
r
Exhibit 7-9
ESTIMATED ANNUAL BENEFITS OF REDUCED
CONTAMINATION OF PRIVATE WELLS UNDER STEADY
STATE CONDITIONS1
(2001 $, millions)
Regulatory Standard
Nitrogen-based
Phosphorus-based
Annual Benefits
$71.89
$66.63
1 The results reported reflect the impact of the revised standards on Large
'AFOs. Impacts on Medium CAFQs are not addressed.
7-15
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7.3.2 Annualized Benefits
As discussed above, the benefits associated with reduced contamination of private wells are
likely to increase for a number of years, until steady state conditions are reached. This is in contrast
to the estimates of benefits developed in previous chapters, which EPA assumes will be constant
over time. To report all benefits on a comparable basis, it is necessary to calculate the constant
stream of benefits — the "annualized" benefits — that would yield the same present value as the
uneven stream of benefits described above.
Exhibit 7-10 presents EP A's estimate of the annualized benefits associated with the reduction
of nitrate concentrations in private wells under both the proposed phosphorus-based standard and
the alternate nitrogen-based standard. As the exhibit indicates, the calculation of annualized benefits
depends on the discount rate employed — 3, 5, or 7 percent — with lower rates yielding higher
benefits.8 Under the phosphorus-based standard, the annualized benefits attributable to the new
regulations for Large CAFOs range from approximately $30.9 million to $45.7 million per year. The
benefits under the nitrogen-based standard range from $33.3 million to $49.3 million per year.
Exhibit 7-10
ESTIMATED ANNUALIZED BENEFITS OF REDUCED PRIVATE WELL CONTAMINATION
(2001 $, millions)
Regulated Entities
Large CAFOs
Nitrogen-Based Standard
Discount Rate
3 Percent
$49.29
5 Percent
$39.98
7 Percent
$33.34
Phosphorus-Based Standard
Discount Rate
3 Percent
$45.68
5 Percent
$37.05
7 Percent
$30.90
Under both regulatory standards, the benefits are achieved largely as a result of reducing the
concentration of nitrate in private wells from above to below the 10 mg/L MCL. As discussed above,
EPA estimates the value of these reductions, based on willingness-to-pay studies, to be $583
annually (2001$) per household. Under the nitrogen-based standard, for Large CAFOs, the total
annualized value of these reductions is estimated to be $32.7 million to $48.3 million. Under EPA's
chosen phosphorous-based standard, for Large CAFOs, the total annualized value of these reductions
is estimated to be $30.2 million to $44.6 million. Another 5.6 million households that currently have
nitrate levels in their private wells below the MCL are predicted to experience further reductions in
nitrate levels because of this rule. EPA estimates a willingness-to-pay value of $2.09 per mg/L for
such reductions. For Large CAFOs, these additional reductions provide estimated annualized
8 Chapter 8 provides additional information on the selection of discount rates, the calculation
of present values, and the calculation of annualized benefits.
7-16
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benefits of $0.7 million to $1.0 million under the nitrogen-based standard and $0.7 million to $1.1
million under EPA's chosen phosphorous-based rule. i
7.4 LIMITATIONS AND CAVEATS
Omissions, biases, and uncertainties are inherent in any analysis relying on several different
data sources, particularly those that were not developed specifically for that analysis. Exhibit 7-11
summarizes key omissions, uncertainties, and potential biases for this analysis.
7-17
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Exhibit 7-11
OMISSIONS, BIASES. AND UNCERTAINTIES IN THE NITRATE LOADINGS ANALYSIS
Variable
Likely Impact
on Net Benefit
Comment
Well. Land, and Nitrate Data
Geographic coverage
Well location selection
Year of sample
titrate loadings from AFOs
with 0-300 AU
Percent of wells above 10
mg/L
Sampling methods
Unknown
Unknown
Unknown
Positive
Unknown
Unknown
Data availability limited the well samples used in the statistical
modeling to those from 374 counties nationwide.
Wells sampled in the USGS Retrospective database may not be
random. Samples appear to be focused on areas with problems
with high levels of agricultural activities and possibly higher
nitrate levels.
Samples taken over 23 years. Land use and other factors
influencing nitrate concentrations in the vicinity of the well may
have changed over time.
Data for the smallest AFOs were not included in this analysis
because they will not be affected by the revised regulations.
This may subsequently underestimate total loadings, resulting in
an overestimate of the impact of nitrogen loadings on well
nitrate concentrations.
Based on the USGS Retrospective Database, EPA assumes that
9.45 percent of wells currently exceed the MCL. If the true
national percent is lower (higher), EPA's analysis overstates
(understates) benefits.
Data set compiled from data collected by independent state
programs, whose individual methods for measuring nitrate may
differ.
Model Variables
Well construction and age
Spatial data
Unknown
Unknown
No reliable data available nationally.
No national data available on the distance from well to pollutant
source.
Benefit Calculations
Per household value for
reducing well nitrates to the
MCL
Years until wells achieve
steady state.
Values for marginal
reductions below the MCL
Negative
Negative
Positive
The Poe and Bishop values generally appear to be a lower
bound estimate of households' WTP for reducing nitrates to the
MCL.
The analysis assumes a linear path over 27 years until reduced
nitrogen loadings would result in most wells achieving reduced
nitrate concentrations. A large portion of wells (especially
shallower wells) may achieve this much faster.
If most of the benefits from reductions in nitrate concentrations
below the MCL are related to a threshold effect or removing all
human induced nitrates, then the assumption that benefits
increase linearly with reductions in nitrate concentrations from
10 mg/L to 1 mg/L will overstate the benefits of marginal
reductions.
7-18
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Exhibit 7-11
OMISSIONS, BIASES, AND UNCERTAINTIES IN THE NITRATE LOADINGS ANALYSIS
Variable
Likely Impact
on Net Benefit
Comment
Baseline characterization
Negative
Baseline well concentrations are based on observed levels that
are in some cases more than 20 years old. These reflect APO
loadings from past decades that most likely understate current
loadings and, hence, underestimate anticipated well
concentrations absent regulations. i
Exclusion of values for
reduced nitrate
concentrations in wells that
would remain above the
MCL after the
implementation of new
regulations
Negative
Reductions in nitrate concentrations in wells that would remain
above the MCL after the implementation of new regulations are
not valued. The Agency's review of the economics, literature
failed to identify studies that would provide an adequate basis
for valuing such changes.
Exclusion of values for
marginal reductions in nitrate
concentrations below the
MCL, for wells with nitrate
concentrations above the
MCL at baseline and below
the MCL after
implementation of new
regulations
Negative
The benefits of marginal changes in nitrate concentrations
between 10 mg/L to 1 mg/L for wells with nitrate lervels above
the MCL at baseline and below the MCL after implementation
of new regulations are not calculated. These benefits are
potentially captured in valuing the achievement of safe nitrate
concentrations. >
Percent change in well
nitrate levels.
Positive
Poe and Bishop values are based on a 25% reduction from
current levels. Modeled changes in nitrate levels fpr wells
crossing from above to below the MCL are considerably less
than 25% on average. To the extent that the value from moving
from above to below the MCL is for the absolute change in
nitrate levels rather than from the threshold effect, the WTP
estimates used from Poe and Bishop will overstate values.
7-19
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7.5 REFERENCES
Agriculture Canada.
Ottawa.
1991. Ontario Farm Groundwater Quality Survey. Agriculture Canada,
Burrow, K.R. 1998. Occurrence of Nitrate and Pesticides in Groundwater beneath Three
Agricultural Land-Use Settings in the Eastern San Joaquin Valley, California. USGS,
Denver, CO.
Carleton, G.B. 1996. Nitrate in Groundwater and Surface Water in a Residential Subdivision, West
Mercer Township, New Jersey. USGS, Denver, CO.
CDC. 1998. A Survey of the Quality of Water Drawn from Domestic Wells in Nine Midwest
States. NCEH 97-0265. Centers for Disease Control and Analysis. National Center for
Environmental Health.
Crutchfield, S.R., J.C. Cooper, and D. Hellerstein. 1997. Benefits of Safer Drinking Water: The
Value of Nitrate Reduction. • Agricultural Economic Report 752. U.S. Department of
Agriculture, Economic Research Service, Food and Consumer Economics Division.
De Zoysa, A.D.N. 1995. A Benefit Evaluation of Programs to Enhance Groundwater Quality,
Surface Water Quality and Wetland Habitat in Northwest Ohio. Dissertation, The Ohio State
University, Columbus.
Desvousges, W.H., M.C. Naughton, and G.P. Parsons. 1992. "Benefit Transfer: Conceptual
Problems in Estimating Water Quality Benefits Using Existing Studies." Water Resources
Research 28(3):675-683.
Detroy, M.G. 1988. Groundwater Quality Monitoring Program in Iowa: Nitrate and Pesticides in
Shallow Aquifers. USGS, Denver, CO.
Division of Water Quality, Groundwater Section. 1998. Impact of Animal Waste Lagoons on
Ground Water Quality. Draft Report. Department of Environment and Natural Resources,
Raleigh, NC.
Giraldez, C. and G. Fox. 1995. "An Economic Analysis of Groundwater Contamination from
Agricultural Nitrate Emissions in Southern Ontario." Canadian Journal of Agricultural
Economics 43:387-402.
Hall, M.D. 1996. Simulation of Nitrates in a Regional Subsurface System: Linking Surface
Management with Ground Water Quality. Ph.D. Thesis. Colorado State University, Fort
Collins.
7-20
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Ham, J.M., L.N. Reddi, C.W. Rice and J.P. Murphy. 1998. Evaluation of Lagoons for Containment
of Animal Waste. Department of Agronomy, Kansas State University, Manhattan.
Kross, B.C., G.R. Hallberg, and D.R. Bruner. 1993. "The Nitrate Contamination of Private Well
Water in Iowa." American Journal of Public Health 83:270. i
Lichtenberg, E. and L.K. Shapiro. 1997. "Agriculture and Nitrate Concentrations in Maryland
Community Water System Wells." Journal of Environmental Quality 26:145-153.
i
Lindsey, B.D. 1997. Nitrate in Groiindwater and Streambase Flow in the Lower Susquehanna River
Basin, Pennsylvania and Maryland. USGS, Denver, CO.
Mueller, O.K., P.A. Hamilton, D:R. Helsel, K.J. Hitt, and B.C. Ruddy. 1995. Nutrients in Ground
. Water and Surface Water of the United States — An Analysis of Data through 1992. U. S.
Geological Survey Water Resources Investigations Report 95-4031.
National Research Council. 1997. Valuing Ground Water: Economic Concepts and Approaches.
National Academy Press, Washington, DC. i
Poe, G.L. 1993. Information, Risk Perceptions, and Contingent Value: The Case of Nitrates in
Groundwater. Ph.D. Dissertation, University of Wisconsin-Madison. ;
Poe, G.L. and R.C. Bishop. 1992. Measuring the Benefits of Groundwater Protection from
Agricultural Contamination: Results from a Two-Stage Contingent Valuation Study. Staff
Paper Series, University of Wisconsin-Madison. :
• • . i
Poe, G:L. and R.C. Bishop. 1999. "Valuing the Incremental Benefits of Groundwater; Protection
When Exposure Levels Are Known." Environmental and Resource Economics 13:341-367.
Richards, R.P. et al. 1'996. "Well Water Quality, Well Vulnerability, and Agricultural
Contamination in the Midwestern United States." Journal of Environmental Quality 25:3 89-
402. . ;
Ritter, W.F. and A.E.M. Chirnside. 1990. "Impact of Animal and Waste Lagoons on Groundwater
Quality." Biological Wastes 34:39-54. j
Spalding, R.F. and M.E. Exner. 1993. "Occurrence of Nitrate in Groundwater — A Review."
Journal of Environmental Quality 22:392-402. |
Swistock, B.R., W.E. Sharpe, and P.D. Robillard. 1993. "A Survey of Lead, Nitrate, !and Radon
Contamination of Individual Water Systems in Pennsylvania." Journal of Environmental
Health 55:6. :
7-21
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Tetra Tech. 2002. "Development of Pollutant Loading Reductions from Revised Effluent Limitation
Guidelines for Concentrated Animal Feeding Operations." Draft report prepared for U.S.
Environmental Protection Agency, Office of Science and Technology.
U.S. EPA. 1990. National Survey of Pesticides in Drinking Water Wells. U.S. Environmental
Protection Agency, Washington, DC.
USGS. 1985. Occurrence of Nitrate and Herbicides in Groundwater in the Upper Conestoga River
Basin, Pennsylvania. Water Resources Investigations Report 85-4202.
USGS. 1996. Retrospective Database for Nutrients in Groundwater and Surface Water. USGS.
http://water.usgs.gov/nawqa/nutrients/datasets/retrodata.html. Accessed 6/1/00.
USGS. 1998. Nitrate Concentrations in Ground Water in the Paleovalley Alluvial Aquifiers of the
Nemaha Natural Resources District, Nebraska, 1989 and 1994-96. USGS Water Resources
Investigations Report 98-4106. USGS, Lincoln, NE.
Vitosh, M.L. 1985. "Nitrogen Management Strategies for Corn Producers." Extension Bulletin
WQ06. Cooperative Extension Service, Michigan State University. August.
Walker, D.R. and J.P. Hoehn. 1990. "The Economic Damages of Groundwater Contamination in
Small Rural Communities: An Application to Nitrates." Northcentral Journal of
Agricultural Economics 12:47-56.
7-22
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Appendix 7-A • ;
MODEL VARIABLES j
EPA's statistical analysis of the relationship between nitrogen loadings and iwell nitrate
concentrations is based on the following linear model:
\ . .
Nitrate (mg/L) = J30 + J3, Ag Dummy + B2 Soil Group + B3 Well Depth + B4 Septic Ratio
+ B5 Atmospheric Nitrogen+ J36 Loadings Ratio + B7 Regional Dummies + e^, I
where nitrate concentration (mg/L) is the dependent variable. ;
. :. -|
The variables used to explain nitrate concentrations in well water (i.e., the model's
independent variables) can be classified into two groups: well and land characteristics, and nitrogen
inputs. Definitions of these variables are provided below. Unless otherwise noted, EPA obtained
the data used in developing the model from the USGS Retrospective Database. i ' '• .
f
Well amd Land Characteristics I
Ag Dummy: This variable describes the predominant land use at the well's location (1 for
agricultural land; 0 otherwise). Other land uses identified in the database include woods, range,
urban, and other. : '
Soil Group: The soil group variable-is an index that integrates several factors — including
runoff potential, permeability, depth to water table, depth to an impervious layer, water capacity, and
shrink-swell potential — to characterize hydrological conditions in the vicinity of the well. Values
range from a minimum of 1 to a maximum of 4. i
WellDepth: The well depths reported in the USGS database range from 1 foot to 5,310 feet.
For observations used in the regression analysis, the maximum well depth is 1,996 feet.
Nitrogein Inputs '
. - i
Loadings Ratios and Analysis of New Regulations: The loadings ratio is the sum of three
variables measuring pounds of leached nitrogen per acre in each county from three different sources:
CAFOs, the application of manure from CAFOs, and commercial fertilizers (because of the
correlation between these nitrogen input measures, EPA was not able to estimate their parameters.
separately). The loadings ratio is a unique value for each county. It is calculated by dividing
estimated leached nitrate loadings for the county (pounds per year) by the county's total area (acres).
The analysis employs baseline loadings data to estimate the coefficients for the independent
7A-1
-------
variables. It applies these coefficients, combined with loadings data representative of post-regulatory
conditions, to estimate changes in well nitrate concentrations under the new regulations.
Septic Ratio: The septic ratio is a proxy measure of potential nitrogen loadings from septic
systems. The analysis develops a unique value for each county. This value is calculated by dividing
the number of housing units in the county that use septic systems by the county's total area (acres).
EPA obtained data on septic system use from the 1990 U.S. Census.
Atmospheric Nitrogen: The atmospheric nitrogen variable accounts for nitrogen loadings
from atmospheric deposition. Values for this variable are reported in pounds per acre per year.
Regional Dummies: The regional dummy variables describe the well's location with respect
to the five regions identified in the NPLA: Central, Mid-Atlantic, Midwest, Pacific, or South. The
variable is assigned a value of 1 for the region in which the well is located, and a value of zero for
all other regions. The use of these variables helps to account for potential regional differences (e.g.,
differences in climate) that may affect the transfer of leached nitrogen into nitrates in groundwater,
as well as geological differences that may relate to background (natural) levels of nitrate in
groundwater.
Summary Statistics
Exhibit 7A-1 reports summary statistics on the variables used in the analysis.
Exhibit 7A-1
SUMMARY STATISTICS
Variable
Nitrate Concentrations
Loadings Ratio
Atmospheric Nitrogen
Well Depth
Soil Group
Septic Ratio
Ag Dummy
Central Region Dummy
Mid-Atlantic Region Dummy
Pacific Region Dummy
South Region Dummy
N
2985
2985
2985
2985
2985
2985
2985
2985
2985
2985
2985
Mean
3.569668
2.023526
5.071787
170.0693
2.422781
0.028794
0.776214
0.064657
0.3933
0.123953
0.070687
Standard
Deviation
6.514109
4.156983
1.865252
136.1121
0.655885
0.027698
0.41685
0.24596
0.488564
0.329583
0.256344
Minimum
0.05
0.001196
0.5375
1
1
0.000217
.0
0
0
0
0
Maximum
84.3
18.950392
8.921875
1996
4
0.151336
1
1
1
1
1
7A-2
-------
Appendix 7-B
THE GAMMA MODEL
The analysis uses a gamma model to fit the right skew of observed values for well nitrate
concentrations as well as the nonnegative constraint on the dependent variable. Visual inspection
of the nitrate concentration distribution suggests a gamma distribution with density function:
sxp(-Qy)y°
F(ce)
For this distribution, the expected value of y{ is:
The use of the gamma distribution instead of the more commonly employed exponential
distribution is appropriate because a is assumed to equal 1 in the exponential distribution, but was
estimated to be significantly different than 1 in EPA's empirical work. The gamma distribution also
offers the advantages of making the density function more flexible and giving more curvature to the
distribution. The likelihood function is: . ;
Exhibit 7B-1 provides statistical results from the gamma model. All coefficients are of the
expected sign. The coefficient for the loadings ratio variable is significant and positive!, indicating
that an increase in nitrogen loadings leads to increased well nitrate concentrations. \
7B-1
-------
Exhibit 7B-1
GAMMA REGRESSION RESULTS
Variable
Intercept
Loadings Ratio
Atmospheric Nitrogen
Well Depth*
Soil Group
Septic Ratio
Ag Dummy
Central Region Dummy
Mid-Atlantic Region Dummy
Pacific Region Dummy
South Region Dummy
Alpha
Parameter
Estimate
2.2013
0.0456
0.0315
-0.1705
-0.3844
1.6179
0.6856
-0.0757
-0.1654
0.8117
-0.9073
0.4967
Standard
Error
0.1939
0.0070
0.0275
0.0124
0.0444
1.7278
0.0643
0.1596
0.0978
0.1173
0.1265
0.0098
Asymptotic T-
Statistic
11.352
6.543
1.144
-13.782
-8.660
0.936
10.663
-0.475
-1.691
6.918
-7.170
50.639
Significance
0.000
0.000
0.2527
0.000
0.000
0.3491
0.000
0.6350
0.0908
0.000
0.000
0.000
Mean log-likelihood = -1.85646
N- 2,985
*In the model well depth is scaled to units of hundreds of feet.
7B-2
-------
Appendix 7-C
LITERATURE SEARCH AND EVALUATION
Literature Search
The objective of EPA's literature search was to identify prior studies that had developed or
elicited values for changes in groundwater quality, focusing in particular on values for reduced
nitrates. The search drew in part on two databases: the Colorado Association of Research Libraries
(CARL), which includes the holdings of several university libraries in Colorado and the West; and
the Environmental Valuation Resource Inventory (EVRI), a database compiled by Environment
Canada that includes empirical studies on the economic value of environmental benefits; and human
health effects. In addition, EPA solicited suggestions for studies pertaining to groundwater valuation
and nitrate contamination through the ResEcon listserver, which reaches a network of approximately
700 academics, professionals, and other individuals with interests in natural resource and
environmental economics. Through this extensive search and additional review of selected
bibliographies, EPA identified 11 potentially relevant studies. Since most households!" values for
reducing nitrates in private domestic wells are primarily nonmarket values, most of the identified
studies involve stated preference value elicitation (e.g., contingent valuation).
Evaluating Studies for Benefits Transfer
I
The economics literature suggests several criteria in evaluating primary studies for undertaking
benefits transfer. Desvousges et al. (1992) develop five criteria to guide the selection of studies for
application to a surface water quality issue: that the studies to be transferred (1) be based on
adequate data, sound economic method, and correct empirical technique (i.e., "pass scientific
muster"); (2) evaluate a change in water quality similar to that expected at the policy site; (3) contain
regression results that describe willingness to pay as a function of socioeconomic characteristics; (4)
have a study site that is similar to the policy site (hi terms of site characteristics and populations);
and (5) have a study site with a similar market as the policy site. NOAA condenses the five
Desvousges criteria into three considerations: (1) comparability of the users and of the resources
and/or services being valued and the changes resulting from the discharge of concern; (2)
comparability of the change in quality or quantity of resources and/or services; and (3) the quality
of the studies being used for transfer [59 FR 1183]. In a general sense, items (2), (4)? and (5) of
Desvousges et al. and items (1) and (2) of NOAA are concerned with the applicability of an original
study to a policy site. Items (1) and (3) of Desvousges et al. and item (3) of NOAA are concerned
with the quality of the original study. :
To assess original studies for use in valuing estimated changes in well nitrate levels under
revised CAFO regulations, EPA evaluated the applicability and the quality of the original studies
on several criteria. To the extent feasible, EPA obtained or derived information from 'each of the
7C-1
-------
reports or papers for 28 categories of information used to characterize the studies. Because
applicability to CAFOs and quality of the value estimates are distinct concepts, EPA evaluated these
characteristics of the studies separately. Overall, the goal of the rating process was to identify studies
that elicited high-quality value estimates (reliable and valid) and which were most applicable to the
benefits assessment. There were three steps in the rating process:
(1) identify study characteristics upon which to judge applicability and quality;
(2) assign scores to the studies based on these characteristics;
(3) assign weights to these scores for aggregating scores into unidimensional
measures of applicability and quality.
Criteria for Ranking based on Applicability
Applicability refers to the relationship between values elicited in the primary groundwater
valuation studies and benefit estimates necessary for application to the analysis of revised CAFO
regulations. EPA's criteria for evaluation of applicability included comparison of the following
characteristics of studies with likely CAFO situations:
• location (urban, rural, etc.);
• water supply/groundwater use (percentage on wells);
• type of contaminants (scenario involved nitrate contamination of groundwater);
• source of contaminants (scenario involved conditions similar to those relevant
for CAFOs);
• value estimates are for the correct theoretical construct (e.g., total willingness
to pay for reducing groundwater contamination from nitrates).
Criteria for Ranking based on Quality
Analysis of study quality was based on evaluation of the validity and reliability of the value
estimates derived in the primary groundwater valuation research. Most of the 11 identified studies
involved stated preference elicitation using survey methods. Based on professional experience as
to what constitutes a valid and reliable stated preference valuation study, EPA identified
characteristics of these studies that indicate reliability and validity. Criteria for evaluation of study
quality included:
7C-2
-------
whether the study was published or peer reviewed; >
whether the survey implementation met professional standards; ,
i
how many respondents there were and what the response rate was; i
l
whether and how the groundwater baseline was characterized and what change
was presented in the groundwater scenario; ,
whether the credibility of scenario change was assessed;
what valuation method was used and whether it was appropriate for eliciting
the intended value measures; '
(
l
the type and duration of payment vehicle;
whether appropriate empirical estimation was undertaken; j
i
whether expected explanatory variables were found to be significant.
7C-3
-------
-------
REDUCED CONTAMINATION OF ANIMAL WATER SUPPLIES
CHAPTER 8
8.1 INTRODUCTION ;
• . i
A safe water supply is essential to the production of healthy livestock and poultry. Water
supplies contaminated with pollutants such as nitrates, pathogens, organic materials, and suspended
solids can adversely affect livestock health and productivity. According to the U.S. Department of
Agriculture's (USDA) Agricultural Research Service, livestock disease costs society;over $17.5
billion dollars each year (U.S. Department of Agriculture, 2002). .
Nitrate poisoning and pathogen-related illness are among the most common livestock
diseases. In high concentrations, nitrate can be a health hazard to livestock. Nitrate poisoning is
most common in ruminants (e.g., cows and sheep). Affected animals experience insufficient oxygen
in the blood stream, which can lead to decreased growth and, in some cases, death.1 A number of
enteric (i.e., intestinal) pathogens may also be present in manure and can cause disease in livestock,
including Coccidiosis, Cryptosporidium, Giardia, E. coli, Salmonella, Campylobacter, andListeria.2
Pathogen-related effects can include diarrhea, lowered milk production, decreased growth rates, and
death (»ao et al,, 1993; Pell, 1994).3 i
1 State agricultural extension publications indicate that levels in excess of 100 mg/1 nitrate-
nitrogen may be harmful to cattle, particularly in combination with high nitrate feed (Hutchinson;
Grant, 1993; Cassel, 1989).
2 According to a University of Nebraska-Lincoln study, fecal coliform concentrations should
be kept under 1 colony forming unit (CPU) per 100 ml of water to protect calves, and under 10 CPU
per 100 ml to protect mature cattle. Similarly, fecal streptococcus should be kept under 3 CPU per
100 ml of water to protect calves, and under 30 CPU per 100 ml to protect mature cattle (Grant,
1993). . I .
3 Public and animal health agencies are also becoming increasingly concemejd about the
occurrence of Salmonella typhimurium (definitive type [DT] or phage type) 104, which is resistant
to at least five antimicrobics: ampicillin, chloramphenicol, streptomycin, sulfonamides, and
tetracycline. , • -.
i
8-1 ',''''
-------
The most common route of disease transmission is through fecal contact. For instance, large
herds or flocks of animals • are almost certain to produce .known pathogens in their manure
(Kuczynska and Shelton, 1999). AFOs that apply manure to on-site land may thus increase the
incidence of disease by contaminating livestock watering sources.4 Other CAFOs close to these
source operations may also receive contaminated water and experience livestock illness and
mortality.5
This chapter examines the impact of changes in manure management practices on animal
health. Specifically, the analysis quantifies potential reductions in beef and dairy cattle nitrate
poisoning and pathogen-related mortality resulting from the improved on-site manure application
practices required by the revised CAFO rule.6
8.2 ANALYTIC APPROACH
To evaluate the impact of on-site manure application on animal health, EPA estimates beef
and dairy cattle mortality attributable to nitrates and enteric pathogens present in groundwater
livestock watering sources.7 This analysis estimates the number of animals at risk from waterborne
diseases and determines their baseline and anticipated change in mortality. EPA then monetizes the
change in mortality by calculating the cost to replace the cattle. The sections below describe the
approach in more detail.
4 The survival and transport of pathogens in groundwater is dependent on a number of factors
related to the characteristics of the water and soil. Pathogens generally survive longer in waters
where organic matter is readily available because the organic matter provides both substrate and
nutrients for the organisms (Fallon and Perri, 1996). These conditions are generally present when
manure is applied to agricultural lands.
5 See Pumphrey and Haines, 2002 for a discussion of nitrate poisoning and pathogen-related
disease exposure and incidences via groundwater contamination.
6 In this analysis, EPA does not quantify impacts on other livestock sectors (e.g., swine).
Based on a review of available literature on these sectors, EPA found limited on-site land application
of manure and nominal projected benefits or insufficient data to estimate monetary benefits.
7 For this analysis, EPA includes heifers and veal calves in the beef cattle sector.
8-2
-------
8.2.1 Number of Cattle Affected ;
.... ' i
In this analysis, EPA examines the number of cattle at Large CAFOs that are covered under
the effluent guideline and NPDES permit portions of the final rule.8 EPA employs data on the
number of animal units at these operations reported by the U.S. Department of Agriculture (Kellogg,
2002). EPA then multiplies these estimates by the number of cattle per animal unit (1.0 for beef
cattle and 0.7 for dairy cattle) to estimate the average number of cattle at the large CAFOs. This
approach generates estimates of over 11,873,000 beef cattle and over 2,352,000 dairy cattle at Large
CAFOs. ' ;
r
Because not all CAFOs use groundwater for livestock watering and not all livestock watering
sources are considered to be contaminated by pathogens or nitrates, EPA must scale the above
number of cattle by estimates of the contamination risk. Exhibit 8^1 summarizes these scaling
factors. Based on a USDA survey of water sources at farms with more than 1,000 cattle, 82.9 percent
of livestock watering sources are wells, and approximately 13 percent of those wells exceed
recommended nitrate levels of 100 ppm (U.S. Department of Agriculture, 2000). In addition,
because other sources of nitrate.can contaminate well water, EPA assumes that only 50 percent of
nitrate contamination results from land application of manure. ;
In a 1984 report, EPA found that 19.8 percent of individual rural water supplies contained
fecal coliform in excess of 1 colony forming unit (CPU) per 100 ml of water (Francis et al., 1984).
Because these supplies often also serve as the source of water for livestock, the analysis ujses this rate
as a proxy for the rate at which water supplies for livestock are contaminated. For purposes of this
analysis, EPA assumes that 100 percent of pathogen contamination results from land application of
manure. ;
Exhibit 8-1 j
EXPOSURE SCALING FACTORS j .
Percent of CAFOs using groundwater wells
Percent of wells contaminated
Percent attributable to manure management
Nitrate
82.9%'
13.0%2
50%
Pathogens
82.9%' ;
19.8%3 !
100% 1
Notes: :
' Based on U.S. Department of Agriculture, 2000. ;
1 EPA assumes wells with nitrate concentrations greater than 100 ppm to be contaminated. \
3 EPA assumes wells with greater than 1 CPU per 100 ml of water to be contaminated.
8 The change in standards will also affect nitrogen and pathogen loads from Medium CAFOs,
but an analysis of these impacts was not available when this report was submitted for publication.
8-3 • ;
-------
Based on these scaling factors, EPA estimates that contaminated groundwater exposes almost
640,000 beef cattle and 127,000 dairy cattle to nitrate poisoning, and approximately 1,949,000 beef
cattle and 386,000 dairy cattle to enteric pathogens. Based on a five-year herd replacement cycle,
EPA estimates that 20 percent of the exposed cattle are calves.
8.2.2 Baseline Cattle Mortality
Exhibit 8-2 summarizes the nitrate poisoning and pathogen-related mortality rates for beef
and dairy cattle. EPA applies these mortality rates to the number of exposed cattle to estimate the
number of cattle expected to die absent the regulations. Exhibit 8-3 provides these baseline mortality
estimates.
Exhibit 8-2
NITRATE POISONING AND PATHOGEN-RELATED MORTALITY RATES BY
LIVESTOCK SECTOR
Health Impact
Nitrate Poisoning
Pathogens
Sector
Beef
Dairy
Beef
Dairy
Mature Cattle
0.00075
0.00035
0.00243
0.00593
Calves
0.00036
0.00015
0.0078
0.0321
Source: U.S. Department of Agriculture, 1997 a.
Exhibit 8-3
BASELINE ESTIMATED CATTLE LOSSES PER YEAR AT LARGE CAFOs
BY CONTAMINANT AND LIVESTOCK SECTOR
Health Impact
Nitrate Poisoning
Pathogens
Total
Beef
Mature Cattle
384
3,789
4,173
Calves
46
3,040
3,086
Dairy
Mature Cattle
35
1,832
1,867
Calves
4
2,479
2,483
Note: Totals may not sum due to rounding.
8-4
-------
8.2.3 Predicated Change in Cattle Mortality
'.•".. ' i
The benefits of improved animal health resulting from this rule are based solely,on changes
in on-site manure application practices and the resulting impact on the quality of on-site groundwater
livestock watering sources. As such, this analysis employs two regulatory scenarios based upon
anticipated nitrate and pathogen loading reductions that would result from:
« on-site manure application at a nitrogen-based limiting nutrient rate; arid
» on-site manure application at a phosphorus-based limiting nutrient rate;
Using USD A'GLEAMS model data, Exhibit 8-4 summarizes the expected change in edge-of-field
subsurface nitrate and pathogen loadings. '
To estimate the reduction in animal mortality that would result from this rule, EPA scales the
baseline mortality estimates by the percentage change in nitrate and pathogen loadings. '\ Due to the
lack of appropriate dose-response curves, the analysis assumes that the relationship between
reductions in pollutant loadings and associated mortality is linear. For example, an; 87 percent
reduction in edge-of-field subsurface pathogen loadings is assumed to result in an!87 percent
reduction in pathogen-related mortality for the cattle currently at risk. ;
Exhibit 8-4
ESTIMATED CHANGES IN NITRATE AND PATHOGEN LOADINGS BY
SECTOR AND LAND APPLICATION SCENARIO
Land
Application
Scenario
Nitrogen-based
Phosphorus-based
Sector
Beef
Dairy
Beef
Dairy
Nitrates
87.4%
77.3%
90.6%
82.7%
Pathogens
(Fecal Coliform and
Fecal Streptococcus)
57<5%
693%
67.'4%
72.'5%
Source: USDA GLEAMS model. !
8-5
-------
As shown in Exhibit 8-5, EPA estimates that nitrogen-based application rates would reduce
annual beef and dairy cattle and calf mortality from nitrate poisoning and pathogens by 7,315 animals.
Phosphorus-based application rates would reduce annual beef and dairy cattle and calf mortality from
nitrate poisoning and pathogens by an estimated 8,154 animals.
Exhibit 8-5
ANNUAL REDUCTION IN CATTLE MORTALITY AT LARGE CAFOs
BY LAND APPLICATION SCENARIO AND SECTOR
Land Application
Scenario
Nitrogen-based
Phosphorous-based
Beef
Mature
Cattle
2,512
2,903
Calves
1,787
2,092
Dairy
Mature
Cattle
1,296
1,358
Calves
1,720
1,801
TOTAL
Mature
Cattle
3,808
4,261
Calves
3,507
3,893
Note: Totals may not sum due to rounding.
8.2.4 Valuation
To determine the monetary benefit of reduced animal mortality that would result from changes
in manure land application rates, EPA values the respective reductions in animal mortality based upon
estimated animal replacement costs.9 The available literature suggests that the replacement cost for
the average beef or dairy cow is approximately $ 1,100 (1997 $), while the replacement cost for a day-
old calf is approximately $50 (U.S. Department of Agriculture, 1997b). This analysis uses inflation-
adjusted replacement cost values of approximately $1,185 and $54 for mature cattle and calves,
respectively (2001 $).10
9 Review of available literature reported by USD A revealed little information on the total cost
of livestock mortality, such as pre-death animal healthcare costs and mortality management. The
anticipated mortality reductions are also not expected to have market-level impacts. As a result,
benefit estimates are limited to reduced animal replacement costs.
10 EPA applies the Gross Domestic Product deflator to adjust the replacement cost values to
2001 dollars.
8-6
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8.3 RESULTS
Exhibit 8-6 summarizes the results of the above analysis. Phosphorus-based application rates,
which represent the proposed standard, would reduce annual cattle mortality from nitrate poisoning
and pathogens at large CAFOs by 4,261 mature cattle and 3,893 calves. Using a replacement value
of $1,185 for mature cattle and $54 for day-old calves, the annual monetary benefit would equal
approximately $5.3 million. Similarly, the alternative nitrogen-based standard would reduce annual
cattle mortalities at large CAFOs by 3,808 mature cattle and 3,507 calves. Based on the same
replacement values, the annual monetary benefit of reduced beef and dairy cattle mortality under this
standard would be approximately $4.7 million. :
Exhibit 8-6 . i • .
ANNUAL MONETARY BENEFIT OF REDUCED CATTLE MORTALITY AT LARGE CAFOs
BY LAND APPLICATION SCENARIO AND SECTOR
(2001 $, thousands) •
Land Application Scenario
Nitrogen-based
Phosphorus-based
Beef
$3,073
$3,553
Dairy
$1,629
$1,706
TOTAL
$4,702
$5,259
Note: Totals may not sum due to rounding. '
8.4 LIMITATIONS AND CAVEATS
EPA's analysis of reduced cattle mortality benefits from the revised CAFO regulations is
subject to several significant uncertainties. These limitations include the following. :
• This analysis does not examine potential reduced animal mortality at
medium-sized CAFOs regulate.d under the effluent guideline and NPEJES
permit portions of this rule. Additionally, insufficient information exists to
estimate potential reduced nitrate poisoning and pathogen-related mortality
in other livestock sectors. Consequently, the analysis fails to consider
potential benefits at these additional operations and sectors. !
• This analysis examines the benefits of avoided mortality only and does jnot
consider the benefits of avoided livestock and poultry morbidity from
waterborne pathogens or excessive nitrate consumption. As a result, EPA
considers neither slower animal growth rates nor the costs associated with
disease prevention (e.g. antibiotics) or treatment. i
3-7
-------
The lack of pathogen dose-response functions for cattle requires EPA to
assume that percent reductions in pathogen loadings result in similar
reductions in beef and dairy cattle mortality. This assumption may be
inaccurate. For instance, it would predict the elimination of all mortality due
to gastrointestinal illness at farms with contaminated groundwater
contamination if all manure land applications were eliminated. The direction
and magnitude of the bias related to this assumption, however, is unclear.
8.5 REFERENCES
Cassel, E. Kirm. 1989. Water Quality for Dairy Cattle. University of Maryland College of Agriculture
and Natural Resources.
Fallen A. and K. Perri. 1996. Pathogen Survival and Transport in Groundwater; Groundwater
Pollution Primer. Civil Engineering Department, Virginia Polytechnic Institute.
Francis, J.D. et al. 1984. National Statistical Assessment of Rural Water Conditions: Technical
Summary, prepared for the Office of Drinking Water, U.S. Environmental Protection Agency.
EPA 570/09-84-004.
Grant, R. 1993. Water Quality Requirements for Dairy Cattle. Cooperative Extension, Institute of
Agriculture and Natural Resources, University of Nebraska - Lincoln.
Hutchinson, D., Ph.D. Undated. Water Quality Guidelines. Montana State University, Bozeman:
MSU Beef Update.
Kellogg, R. 2002. "Profile of Farms with Livestock in the United States: A Statistical Summary."
USDA, NRCS.
Kuczynska, E. and D.R. Shelton. 1999. "Method for detection and enumeration of Cryptosporidium
parvum oocysts in feces, manures, and soils." Appl. Environ. Microbiol. 65: 2820-2826.
Pell, A. 1997. "Manure and Microbes: Public and Animal Health Problems?" J. Dairy Science. 80:
2673-2681.
Pumphrey, B. and J. Haines, 2002. Estimated Reductions in Beef and Dairy Mortality from Nitrate
Poisoning and Gastrointestinal Illness Resulting from Improved Manure Land Application
Practices at Large and Medium CAFOs. U.S. Environmental Protection Agency.
U.S. Department of Agriculture. March 1997a. Cattle and Calves Death Loss 1995. APHIS/NASS.
Washington, DC.
8-8
-------
United States Department of Agriculture. 1997b. Johne's disease on U.S. dairy operations. NAHMS
dairy '96/APHIS. Washington, DC. |
U.S. Department of Agriculture. 2002. Agriculture Research Service Animal Health National
Program(103). Available at http://www.nps.ars.usda.gov/programs/programs.
htm?npnumber=103&docid=820. i
Xiao, L.H., R.P. Herd, andD.M. Rings. 1993. Concurrent infection of Giardia and Cryptosporidium
on two farms with calf diarrhea. Vet. Parasitol. 51:41-48. :
8-9
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POTENTIAL BENEFITS OF REDUCED
EUTROPHICATION OF U.S. ESTUARIES
CHAPTER 9
9.1 INTRODUCTION
In its 1999 National Estuarine Eutrophication Assessment, the National Oceanic and
Atmospheric Administration (NOAA) identified more than half of the 138 U.S. estuaries studied as
either moderately or highly eutrophic. Eutrophication occurs when the addition pf nitrogen,
phosphorus, and other nutrients to a body of water stimulates the growth of algae. While this is a
natural process, it is accelerated when human activity elevates loadings of nutrients above naturally
occurring levels. Significant sources of excess nutrients include point source discharges (e.g.,
municipal wastewater treatment facilities), agricultural and urban runoff, and the deposition of
atmospheric pollutants. CAFOs are a potential contributing factor.
Eutrophication degrades water quality in a variety of ways, including:
*• reducing the amount of light that penetrates the water's surface, with
subsequent loss of submerged aquatic vegetation;
*• increasing the incidence of nuisance or toxic algae blooms; and
>- increasing the quantity of decaying organic matter in the aquatic environment,
which in turn draws down the concentration of oxygen dissolved in the water.
These water quality impacts result in loss of habitat, fish kills, and offensive odors, and thus
adversely affect social welfare. According to NOAA: i
The implications are serious and affect not only the natural resources but also the
economy and human health. The resource uses most frequently reported as being
Impaired were commercial fishing and shellfish harvesting. Recreational fishing,
swimming, and boating, all of which contribute to tourism in coastal areas, were 'also
reported as impaired to some degree. The reported risks to human health include the
9-1
-------
consumption of tainted shellfish as well as direct skin contact or the
inhalation/ingestion of water during an active bloom of toxic algae.
The revised CAFO regulations will reduce nutrient loadings to estuaries nationwide, thus
reducing eutrophication and producing economic benefits. While the models and economic studies
necessary to adequately measure these benefits are largely unavailable, this chapter presents, for nine
selected estuaries, estimates of the impact of the final rule on nutrient loadings.1 In addition, the
chapter presents a case study of the economic benefits associated with reduced nutrient loadings to
an estuary. The example focuses on improved recreational fishing opportunities in North Carolina's
Albemarle and Pamlico Sounds. While the information presented is not comprehensive, it is
indicative of the potential benefits of the final rule in reducing the eutrophication of U.S. estuaries.
9.2 ANALYSIS OF CHANGES IN NUTRIENT
LOADINGS TO SELECTED ESTUARIES
9.2.1 Estuaries Analyzed
EPA's estimate of the impact of the final rule on nutrient loadings focuses on the following
estuaries: Albermarle Sound; Cape Fear River; Delaware Inland Bays; Lower Laguna Madre;
Matagorda Bay; New River; Pamlico Sound; Suwannee River; and Upper Laguna Madre. EPA
selected these estuaries based on information in the NOAA report that identified each of them as
adversely influenced by pollution from animal feeding operations.
9.2.2 Analytic Approach
EPA employs NWPCAM to characterize pollutant loadings to each estuary, both under
baseline conditions and following implementation of the final rule (Bondelid, 2002).2 The analysis
involves three steps:
>• Step 1: Identify RFSLite "terminal" reaches that end at coastlines -Based .
on information provided in the RFSLite data table, EPA identifies the reach
of each stream network that is furthest downstream.
1 These benefits are not captured in Chapter 4's analysis of surface water quality benefits
because (1) the National Water Pollution Control Assessment Model (NWPCAM) is primarily an
inland river and stream model, and (2) the benefit transfer values based on the Carson and Mitchell
(1993) willingness to pay (WTP) estimates only apply to changes in freshwater quality.
2 For a more detailed discussion of NWPCAM, see Chapter 4.
9-2
-------
Step 2: Overlay the RFSLite terminal reaches from Step 1 onto NOAA 's
Coastal Assessment Framework (CAP) - Thfe CAP contains polygons in <3IS
format that identify each major estuarine system in the U.S. The estuaries
identified for analysis by EPA are a subset of CAF's master list. CAF's
coverage is at a less detailed scale than the RF3 GIS coverages, so [the
RFSLite endpoints do not precisely align with the CAP polygons. The
downstream endpoints of the terminal reaches identified in Step 1 are linked
to the specific estuaries by "buffering" the CAP polygon boundaries, which
in effect connects terminal reaches that are reasonably close to the GAP
polygons. RFSLite terminal reaches that are within the buffered boundary or
fall within the polygon itself are then associated with the respective estuarine
CAP polygon. This process generates a list of the RFSLite terminal reaches
that discharge into each of the estuaries analyzed.
Step 3: Produce pollutant loadings estimates for AFO/CAFO Baseline and
Final Rule Scenarios - Once the list of RFSLite reaches associated with each
estuary is developed, EPA relies on N WPC AM to estimate pollutant loadings
to the estuaries from each terminal reach.
It is important to note that the analysis is limited to the impact of revised standards on Large
CAFOs, The revised standards will also affect loadings of nutrients from Medium CAFOs, but the
analysis of these impacts was not available when this report was submitted for publication.
9.2.3 Results
i
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Exhibit 9-1 presents EP A's findings, including results of the analysis for both the phosphorus-
based lamd application standard incorporated into the final rule and the nitrogen-based alternative
standard, which EPA considered but did not select. As the exhibit shows, total loadings of
phosphorus under the phosphorus-based standard are estimated to fall by 4.3 percent,; while total
loadings of nitrogen are estimated to fall by 0.4 percent. Under the nitrogen-based standard, the
estimated reductions in phosphorus and nitrogen loadings are 2.1 percent and 0.1 percent,
respectively. Under both standards, the estimated change in loadings varies from estuary to estuary,
with the greatest reduction in loadings predicted for the Suwannee River estuary.
9.2.4 Limitations and Caveats |
For the reasons discussed below, EPA's approach tends to under-estimate the total loadings
of nutrients to estuaries and the reduction in loadings likely to result under the final rule.
i" The analysis ignores loadings (and reductions in loadings) from non-RFSLite
terminal reaches that empty into the estuaries of interest.
9-3
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Some portions of the estuaries ;of interest are part of the RFSLite netwbrk.
Because EPA's estimates of loadings to each estuary are based on loadings at
the terminus of the RF3Lite network, they incorporate a degree of pollutant
decay ("loss") that does not actually occur until after pollutants have entered
the estuary.
The analysis is likely to underestimate loadings associated with! the
atmospheric deposition of nutrients (especially nitrogen) from AFOs/CAFOs.
While atmospheric deposition is an implicit component of NWPCA\M's
estimates of nonpoint source loadings, these estimates are based; on
observations from the 1980's, when atmospheric loadings from AFOs/CAFOs
were likely much lower than they are today.
These caveats clearly affect EPA's estimates of total pollutant loadings, but their effect on EPA's
estimate of the change in loadings following implementation of the final rule is less obvious. EPA's
estimates of marginal changes in pollutant loadings are dependent upon the percentage of total
loadings that are related to AFOs/CAFOs. As a hypothetical example, suppose that the baseline
scenario reflects 100 pounds of total loadings, 30 pounds of which are from AFOs/CAFOs. If the
reduction in AFO/CAFO loadings attributable to the final rule is 20 percent, the loadings change is
0.2 times 30, or 6 pounds. This 6 pounds represents an overall reduction in loadings of 6 percent,
as opposed to the 20 percent reduction from AFOs/CAFOs. Therefore, systematic underestimation
of the proportion of total loadings from AFOs/CAFOs — as is suggested by the third caveat above
- will lead to an underestimate of the final rule's impact on total loadings. :
In addition to the caveats listed above, we note again that the analysis is limited to the impact
of the revised CAFO standards on loadings from Large CAFOs. Excluding effects on Medium
CAFOs from the analysis further contributes to underestimation of the final rule's impacts on total
nutrient loadings. "
9.3 CASE STUDY: ALBEMARLE AND PAMLICO SOUNDS
9.3.1 Introduction and Summary of Analytic Approach !
To illustrate the potential economic benefits of the anticipated reduction in nutrient loadings
to estuaries, EPA has evaluated the impact of the revised CAFO regulations on recreational fishing
opportunities in North Carolina's Albemarle and Pamlico Sounds (Van Houtven and Somjner, 2002).
The case study uses the approach described above to estimate annual nitrogen and phosphorus
loadings (tons/year) from 17 "terminal" reaches to the Albemarle-Pamlico Sounds (AP'S) Estuary;
the analysis relies on NWPCAM to characterize pollutant loadings both under baseline conditions
and following implementation of the final rule. To evaluate the economic benefits associated with
reduced nutrient loads to the APS Estuary, the case study employs a benefit transfer approach. This
9-5
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approach adapts value estimates from three previously conducted recreation-based studies, applying
the adapted values to estimate recreational fishing benefits. Although the results of the analysis
cannot be easily extrapolated to the rest of the country or to other benefit categories, they highlight
the potential importance of improved water quality in U.S. estuaries.
The discussion that follows summarizes the studies employed in the benefit transfer analysis,
highlighting key differences and similarities in their methods and findings. It then describes the
selection of appropriate value estimates from these studies and the adaptation of these values to
estimate the benefits of the CAFO rule.
9.3.2 Summary of Relevant Studies
The Albemarle-Pamlico case study relies on economic value estimates obtained from three
studies conducted by researchers at North Carolina State University:
> Kaoru, Yoshiaki. 1995. "Measuring Marine Recreation Benefits of Water
Quality Improvements by the Nested Random Utility Model." Resource and
Energy Economics 17(2): 119-36.
»• Kaoru, Y., V. Kerry Smith and Jin Long Liu. 1995. "Using Random Utility
Models to Estimate the Recreational Value of Estuarine Resources." Amer.
J. Agric. Econ. 77:141-151.
*• Smith, V. Kerry and Raymond B. Palmquist. 1988. "The Value of
Recreational Fishing on the Albemarle and Pamhco Estuaries." U.S.
Environmental Protection Agency. January.
These studies are based on common data sets. Specifically, they use recreation data obtained from
a 1981-82 intercept survey of recreational fishermen that was conducted at 35 boat ramps or marinas
within the APS Estuary (Kaoru, 1995; Kaoru, et al., 1995; Smith and Palmquist, 1988). The studies
also employ common estimates of upstream point and nonpoint source nutrient loads to the APS
Estuary. These data, which reflect conditions at approximately the same time the recreational
activity survey was conducted, were acquired from NOAA's National Coastal Pollutant Discharge
Inventory (NCPDI).
Exhibit 9-2 summarizes the key characteristics and findings of the three studies. As the
exhibit indicates, the Smith and Palmquist study provides estimates of the benefits of a reduction in
phosphorus loads; the studies by Kaoru and Kaoru et al. provide estimates of the benefits of reducing
nitrogen loads to the APS Estuary. The studies are described in more detail below.
9-6
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9.3.2.1
Smith and Palmquist (1988)
The primary objective of the Smith and Palmquist study was to investigate recreational
fishing activity within the APS Estuary. The study employed two separate single-site travel cost
models to estimate the demand for two major regional destinations ("composite sites"): the Pamlico
Sound and Outer Banks areas. The Pamlico Sound region consisted of eight primary boat launching
sites, while the Outer Banks region contained 11 sites.
Both regional demand estimates used the same explanatory variables, including reported
catch rates. For the Pamlico Sound region, a single demand function was estimated, based on a
sample of 108 survey respondents (i.e., n = 108) visiting one of the eight launch sites. The Outer
Banks analysis estimated two separate demand functions. The first included the full sample of
survey respondents visiting one of the 11 launch sites (n = 252). The second focused on a subset of
this sample, defined as individuals residing within 200 miles of a site (n = 150).
Smith and Palmquist first estimated the demand and value of trips under the nutrient loading
conditions that existed at the tune of the survey. A separate regression model was used to estimate
the relationship between phosphorus loadings and catch rates at the sites. Based on this relationship,
the study predicted changes in catch rates and the resulting shift in trip demand due to changes in
loadings. The changes in consumer surplus resulting from the estimated demand shifts were used
to estimate the value of improved environmental conditions. The main improvement of interest with
respect to the AFO/CAFO final rule is a 25 percent reduction in average phosphorus loadings to the
APS Estuary. For the full sample and the sub-sample model, the Outer Banks analysis yielded
benefit estimates of $60.06 and $20.61 (1981 dollars) per person-trip, respectively. The Pamlico
Sound model estimated a value of $2.46 for the same reduction in phosphorus loads.
9.3.2.2
Kaoru et al. (1995)
Kaoru et al. used a random utility model (RUM) to investigate the demand for recreational
fishing in the APS Estuary and estimate the value of improving water quality. Like the Smith and
Palmquist study, Kaoru et al. used estimates of the impact of different pollutant loadings on catch
rates to link water quality changes to total demand for recreational fishing trips. This linkage
involved a two-step modeling procedure. First, a household production function (HPF) was
estimated to predict expected catch rates for individuals based on variables such as equipment used,
effort exerted, and the physical characteristics of the fishing site, including pollutant loadings. Kaoru
et al. then used the HPF model to predict the impact of a 36 percent reduction in nitrogen loadings
on expected catch rates. The changes in predicted catch rates were then incorporated into a site
choice model using information from 612 boat fishing parties at 35 boat launching sites throughout
the APS region. RUM models were estimated at three distinct levels of site aggregation.
Aggregated site alternatives were created by grouping launch sites together based on location and
other characteristics. This aggregation allowed the RUM to be estimated for a 35-site scenario, a 23-
site scenario, and an 11-site scenario.
9-8
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As Exhibit 9-2 shows, Kaoru et al. estimated separate values for each level of site
aggregation (35, 23, 11) and for two specifications of the opportunity cost of time (OCT): the full
wage rate and one-third the wage rate: This modeling approach produced six estimates of the
economic benefit of a 36 percent reduction in nitrogen loadings. The estimated values |range from
$0,76 to$6.52 (1982 dollars) per person-trip. j
9.3.2.3
Kaoru (1995)
The Kaoru study used a three-level nested RUM to estimate the value of water quality
improvements in the APS Estuary. The 35 boat launching sites located in the APS Estuary were
grouped into five subregions, based on location and other characteristics. The study investigated
recreational fishing demand within these subregions using a nested model. The nested model
approach breaks the recreational fishing decision into three stages: a decision on the duration of the
trip (1,2,3, or more than 3 days), a decision on which of the five regions to visit, and a decision on
which of the individual sites within the region to visit. The model estimation process was based on
547 observations from the fishing database. The study investigated the impact that different
pollutant loadings and catch rates had on visitors' trip decisions, and the value that ^individuals
placed on these differences. The impact of nitrogen and phosphorus loadings was Specifically
investigated in the second stage of the decision process (Regional Choice). '
The regression analysis yielded coefficients with unanticipated signs for some parameters.
For example, the analysis produced a positive coefficient for phosphorus loadings, suggesting that
increases in phosphorus levels would increase the number of trips to a region. To address this
unexpected outcome, the author reported values for pollutant reductions in two ways;. First, the
values associated with loading reductions that have the anticipated signs are reported, followed by
the estimated values including both anticipated and unanticipated coefficient estimates. A 25 percent
reduction in nitrogen loadings for the entire APS Estuary resulted in a benefit estimate of $4.70
(1982 dollars) per person- trip. When the positive coefficient estimates on phosphorus are included
in the benefit measures, a 25 percent reduction in both nitrogen and phosphorus resulted; in a benefit
estimate of $2.45 per person-trip.
In contrast to the other two studies, the values cited above were estimated assuming no
relationship between pollutant loadings and catch rates. When a 25 percent increase in catch rates
was assumed to occur in conjunction with 25 percent loadings reductions, the benefit estimates
increased slightly (to $4.88 and $2.63, respectively). :
9.3.3 Evaluation and Selection of Value Estimates
As the summaries above indicate, the studies examined calculate the value of a reduction in
pollutant loadings using similar estimation procedures; nevertheless, there are important differences
in both methods and results. These differences warrant careful consideration in selecting the most
9-9
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appropriate values to be used in a benefit transfer procedure. Below we discuss these differences,
many of which are also highlighted in Exhibit 9-2.
9.3.3.1
Reductions in Phosphorus Loadings
The study conducted by Smith and Palmquist estimated, per person-trip, the economic
welfare gains associated with a 25 percent reduction in phosphorus loadings to the APS Estuary.
The values listed in Exhibit 9-2 represent those generated from the Outer Banks full sample, the
Outer Banks sub-sample (those residing within 200 miles of a site), and the Pamlico Region sample
(Values 1.1,1.2, and 1.3 respectively). These values span a wide range - from $60.06 per person-
trip for the full Outer Banks model to $2.46 for the Pamlico model.
The second study that estimated values for reductions in phosphorus loadings is Kaoru
(1995). Unfortunately, this study estimated the effects of (1) reducing both nitrogen and phosphorus
loadings (Value 3.2) and (2) only reducing nitrogen loadings (Value 3.1); therefore, it is difficult to
isolate the effect of changes in phosphorus loadings alone. More importantly, the regression analysis
in this study produced unexpected (positive) signs on the coefficients forphosphorus loadings. This
suggests that reductions in phosphorus loadings decreased recreational benefits, which is
implausible. For this reason in particular, the Kaoru (1995) estimates for changes in phosphorus
loadings are excluded from consideration for this benefit transfer.
9.3.3.2
Reductions in Nitrogen Loadings
Both Kaoru et al. (1995) and Kaoru (1995) used RUMs to estimate, per person-trip, the
economic welfare gains associated with reductions in phosphorus loadings to the APS Estuary.
Nonetheless, the studies differ significantly on the following points.
>• Magnitude of pollutant reduction— Both studies estimate the benefits of
a uniform percentage reduction in nitrogen loadings from all coastal counties
adjacentto the APS Estuary. Kaoru etal. (1995) value a 36 percent reduction
in loadings (through its effect on predicted catch rates and site choice), while
Kaoru (1995) values a 25 percent reduction (through its effect on regional site
choice).
»• Site definition — The Kaoru et al. (1995) study presents six different values
for a 36 percent reduction in nitrogen loadings - two for each of three models
that vary with respect to the level of site aggregation. Based on a formal
specification test, the authors conclude that their 35-site model is the most
defensible; Exhibit 9-2 presents the results for this model as Values 2.1 and
2.2. The Kaoru (1995) study presents a single value for a 25 percent
9-10
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9.3.3.3
reduction in nitrogen loadings. This value is also based on a 35-site model.
Exhibit 9-2 presents the results for this model as Value 3.1. ;
Calculation of travel costs - As Exhibit 9-2 shows, travel costs are
calculated in the same way for both studies, with one exception. Kaoru ejt al.
(1995) specify two alternatives for the opportunity cost of time. One
calculation uses the full wage rate, the other one-third of this rate.r In
contrast, the Kaoru study is based exclusively on an analysis that sets the
opportunity cost of time equal to the full wage rate. >
i
Number of observations - Both studies rely on the same basic data set;
however, the Kaoru et al. (1995) study employs a total of 612 observations,
while the analysis presented in Kaoru (1995) is based on 547 observations.
Selection of Value Estimates
Based on the information above, the analysis retains the following values for| the benefit
transfer process: ;
>• For reductions in phosphorus loadings, Value 1.1 and Value 1.3 from Smith
and Palmquist (1988). Each value is for a distinct subregion of the APS
Estuary, and both values are derived from models that were based on the; full
sample of intercept survey respondents. . The distinctly higher benefit
suggested by Value 1.1 ($60.06 per person-trip for the Outer Banks Site)
raises some doubts about its validity, but not enough at this stage to exclude
it from consideration. ;
*• For reductions in nitrogen loadings, Value 2.1 and Value 2.2 from Kaoru et
al. (1995), and Value 3.1 from Kaoru (1995). Each of these values is based
on a 35-site model, which Kaoru et al. found superior to other specifications.
9.3.4 Value Conversion for Benefit Transfer '<
i
For benefit transfer purposes, it is necessary to express the values selected above on a
consistent basis. This entails: :
i
*• applying the Consumer Price Index (CPI) to update all values to 2001 dollars;
and
9-11
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>• deriving benefits values for unit changes in pollutant loads (i.e., a value for
each one percent reduction in the quantity of nitrogen or phosphorus entering
the estuary).
The latter adjustment is accomplished by dividing the value obtained from the literature by the
percentage reduction in pollutant loads associated with that value. Thus, for example, a benefit of
$2.50 per person-trip for a 25 percent reduction in nitrogen loads would equate to a benefit of $0.10
per person-trip for each percentage reduction.
A further adjustment is necessary to convert the values obtained from the literature to units
that are compatible with NWPCAM's estimates of the changes in nutrient loads attributable to the
final CAFO rule. NWPCAM estimates pollutant loads and changes in such loads in tons per year.
According to Kaoru (1995), the average nitrogen load to the APS Estuary at the time the study was
conducted was 1,741 tons per bordering county per year; for phosphorus, the average load was 260
tons per county per year. With 13 North Carolina counties bordering the APS Estuary, these values
translate to a total of 22,633 tons of nitrogen and 3,380 tons of phosphorus loadings per year.
With these conversions, the values become:
>• Value 1.1 - $0.147 per trip per Outer Banks fisher per ton reduction in
phosphorus load per year;
> Value 1.3 - $0.0060 per trip per Pamlico fisher per ton reduction in
phosphorus load per year;
> Value 2.1 - $0.0015 per trip per APS Estuary boat fisher per ton reduction in
nitrogen load per year;
»• Value 2.2 - $0.0009 per trip/per APS Estuary boat fisher/per ton reduction
in nitrogen load per year; and
f Value 3.1 - $0.0015 per trip per APS Estuary boat fisher per ton reduction in
nitrogen load per year.
9.3.5 Benefit Transfer Calculation
To estimate the total annual recreational fishing benefits of the final CAFO rule for the APS
Estuary, it is necessary to combine the per-unit value estimates described above and the estimates
of changes in pollutant loadings generated by NWPCAM with information on historic visitation rates
to the APS Estuary. Specifically, total benefits can be calculated by the following formula:
9-12
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where
= V
the total annual recreational fishing benefits of reducing pollutant i under the
final rule (dollars) :
the annual per trip value per unit reduction of pollutant i (dollars per person-
trip per ton per year) .: - '
the change in loadings for pollutant i under the final rule (tons per year)
the total number of annual fishing trips to the APS Estuary (person-trips per
year) !
The calculation relies on 2001 visitation rates for recreational fishers in the APS Estuary, as
provided by the Marine Fisheries Statistics Survey (MRFSS). This database contains information
on the number, type and destination of recreational fishers for several coastal regions; across the
United States. The analysis disaggregated the MRFSS data from the regional and state level to
include only trips to the APS Estuary, yielding an estimate of nearly 940,000 person-trips per year;
boating fishers account for over seventy percent of these trips. ;
In calculating benefits, the analysis employed several additional assumptions regarding
appropriate unit value estimates (V;). Specifically: ;
*• For nitrogen reductions, the unit value estimates obtained from the literature
are based on a survey of boat fishers. The analysis assumes that these unit
value estimates also apply to non-boat fishers. ;
»• For phosphorus reductions, separate unit value estimates are available [for
Outer Banks and Pamlico Sound fishers (boat and non-boat fishers
combined); however, MRFSS does not provide visitation rates for the Chjiter
Banks, hi addition, the Outer Banks analysis represents a very specific
population and produces surprisingly high values. In light of these
limitations, the analysis of the benefits of phosphorus reductions is based
solely on the unit value estimate developed for Pamlico fishers (Value 1.3).
This approach assumes that this value applies to all recreational fishers in [the
APS Estuary. ;
9.3.6 Results
Exhibit 9-3 reports the results of the benefit transfer calculations, presenting estimates of the
total annual recreational fishing benefits for anticipated reductions in nitrogen and phosphorus
loadings under both the phosphorus-based land application standard incorporated into the final
9-13
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CAFO rule and the alternative nitrogen-based application standard, which EPA considered but did
not select.3 Based on the NWPCAM analysis, annual nitrogen loadings to the APS Estuary under
the phosphorus-based standard are estimated to decrease 32.9 (short) tons per year, while annual
phosphorus loadings are estimated to decrease 22.9 tons per year. The annual benefits attributable
to the anticipated reduction in nitrogen loadings range from $28 thousand to $47 thousand,
depending upon the unit value estimate employed. The benefits associated with the anticipated
reduction in phosphorus loadings are estimated at approximately $129 thousand per year. In total,
the annual recreational fishing benefits for the anticipated reductions in nitrogen and phosphorus
loadings range from $158 thousand to $177 thousand.
Exhibit 9-3
ESTIMATED ANNUAL RECREATIONAL FISHING BENEFITS IN THE APS ESTUARY DUE TO
NUTRIENT LOADING REDUCTIONS1
(2001 dollars)
Pollutant
Nitrogen
Phosphorus
Annual
Trips
939,020
939,020
Baseline
Loadings
(tons/year)
7,320.9
580.7
Value of
Reduction
($/ton/trip)
0.0009
to
0.0015
0.0060
Total Benefit
Phosphorus-Based
Standard
Loading
Reduction
(tons/year)
32.9
22.9
Economic
Benefit
($/year)
$28,487
to
$47,478
$129,142
$157,629 to $176,621 .
Nitrogen-Based
Standard
Loading
Reduction
(tons/year)
7.8
8.5
Economic
Benefit
(S/year)
$6,715
to
$11,192
$47,594
$54,309 to $58,786
1 The analysis accounts for changes in the regulations governing Large CAFOs only. The impact of revised
standards for Medium CAFOs is not considered.
Under the nitrogen-based standard, the estimated benefits are lower. Annual nitrogen
loadings to the APS Estuary under this standard are estimated to decrease 7.8 tons per year, while
annual phosphorus loadings are estimated to decrease 8.5 tons per year. The annual benefits
attributable to the anticipated reduction in nitrogen loadings range from $7 thousand to $11
thousand, depending upon the unit value estimate employed. The benefits associated with the
anticipated reduction in phosphorus loadings are estimated at approximately $48 thousand per year.
3 As noted previously, the analysis of changes in nutrient loadings is limited to the impact
of the revised standards on Large CAFOs. The revised standards will also affect loadings of
nutrients from Medium CAFOs, but the analysis of these impacts was not available when this report
was submitted for publication.
9-14
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.In total, the annual recreational fishing benefits for the anticipated reductions in nitrogen and
phosphorus loadings range from $54 thousand to $59 thousand. :
9.3.7 Limitations and Caveats
Although the annual benefit estimates presented in Exhibit 9-3 are not large, it is important
to emphasize that these values only apply to recreational fishing in the APS Estuary. They do not
capture benefits for other recreational and non-recreational uses of the estuary, nor do they capture
potential non-use values. . ':
In addition, the analysis described above is subject to uncertainties and has required a number
of simplifying assumptions, each of which may lead to over- or under-estimation of benefits. In
particular:
> The value estimates are based on fishing activity data that are over two
, decades old. The analysis assumes that the benefits of water quality changes
have remained constant (in real terms) over this period.
«• The original value estimates were based on pollutant loadings data from
NOAA for the late 1970s and were estimated for rather large changes (25i-36
percent reductions) in these loadings. The analysis assumes that similar
percent reductions in the NOAA and NWPCAM estimates produce similar
total loadings reduction estimates (in tons per year), and that per-trip benefits
vary linearly with respect to loading reductions.
»• The value estimates obtained from the literature were based on percentage
reductions in nutrients that were uniform across the APS Estuary, whereas the
reductions associated with the CAFO .regulations are likely to be non-
uniform. The analysis assumes that average per trip benefits do not vary with
respect to the spatial distribution of the loadings reductions. . ;
>• The analysis assumes that unit value estimates for reductions in nitrogen
loadings are the same for both boat and non-boat fishers, and that unit value
; estimates for reductions in phosphorus loadings are the same for fishers in
Pamlico Sound and other parts of the APS Estuary.
Finally, the analysis is limited to the impact of the revised CAFO standards on loadings from
Large CAFOs. Excluding effects on Medium CAFOs from the analysis is a source of downward
(negative) bias in the estimated economic benefits of the final rule. ' '• '
9-15
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9.4 REFERENCES
Bondelid, Tim. 2002. "Methodology for Estimating NWPCAM Loadings and Changes in Loadings
to Estuaries." Draft. RTI International. September 11.
Carson, Richard, and Robert Mitchell. 1993. "The Value of Clean Water: The Public's Willingness
to Pay for Boatable, Fishable, Swimmable Water Quality." Water Resources Research
29(7):2445-2454.
Kaoru, Yoshiaki. 1995. "Measuring Marine Recreation Benefits of Water Quality Improvements
by the Nested Random Utility Model." Resource and Energy Economics 17(2): 119-36.
Kaoru, Y., V. Kerry Smith and Jin Long Liu. 1995. "Using Random Utility Models to Estimate the
Recreational Value of Estuarine Resources." Amer. J. Agric. Econ. 77: 141-151.
Smith, V. Kerry and Raymond B. Palmquist. 1988. "The Value of Recreational Fishing on the
Albemarle and Pamlico Estuaries." U.S. Environmental Protection Agency. January.
Van Houtven, George and Allan Sommer. 2002. Recreational Fishing Benefits: A Case Study of
Reductions in Nutrient Loads to the Albemarle-Pamlico Sounds Estuary. Final Report.
Prepared for Linda Chappell, U.S. Environmental Protection Agency, Office of Water by
Research Triangle Institute, Center for Economics Research. December 11.
9-16
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IMPROVEMENTS IN WATER QUALITY AND
REDUCED DRINKING WATER TREATMENT COSTS
CHAPTER 10
10.1 INTRODUCTION \ • '
Total suspended solids (TSS) entering surface waters from AFOs can cause many problems
for stream health and aquatic life. High sediment concentrations can also hinder effective drinking
water treatment by interfering with coagulation, filtration, and disinfection processes.; Treatment
costs can rise as a result. Since more than 11,000 public drinking water systems throughout the
United States rely on surface waters as a primary source, these costs can be substantial.
In this analysis, EPA utilizes the National Water Pollution Control Assessment Model
(NWPCAM) to predict the impact of revisions to the CAFO standards on the ambient concentration
of TSS in the source waters of public water supply systems. To measure the value of reductions in
TSS concentrations, EPA estimates the extent to which lower TSS concentrations' reduce the
operation and maintenance (O&M) costs associated with the conventional treatment technique of
gravity filtration. The following sections present the analytic approach, results of the analysis, and
associated limitations and caveats. :
10.2 ANALYTIC APPROACH !
EPA's approach to this analysis comprises three steps:
• Identification of public drinking water systems and associated source waters
that are potentially affected by discharges from AFOs/CAFOs;
i
• Linkage of source waters to TSS watershed concentrations projected by
NWPCAM under baseline conditions and under the revised CAFO standards;
and !
!
» Estimation of reductions in drinking water treatment costs. ;
10-1
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This three-step approach is explained in more detail below.
10.2.1 Identification of Public Drinking Water Systems
There are approximately 170,000 public water systems (relying on surface water and
groundwater as a source) in the United States, as reported to EPA by the States for the fiscal year
ending September 30, 2000 (U.S. EPA, 2000a). Of these systems, 11,403 are Community Water
Systems (CWSs) that rely on surface water to serve 178.1 million people.1 The water supplies of
many of these CWSs may be adversely affected by discharges from AFOs/C AFOs. For this analysis,
EPA employs two Agency databases to identify CWSs, the streams that serve as their water supplies,
the populations they serve, and the operating status of each CWS: (1) the Water Supply Database
(WSDB) (U.S. EPA, 2000b) and (2) the Safe Drinking Water Information System (SDWIS) (U.S.
EPA,2000a).
WSDB, also known as the Drinking Water Supply File, was developed by EPA in 1980 to
identify the locations of public water utilities (i.e., CWSs), their intakes, and sources of water
supplies (surface water or groundwater) across the United States. It contains information on
approximately 7,500 public water utilities. Of these, 5,783 are dependent upon surface waters to
serve the public and are linked to specific watersheds and geographic areas in EPA's Reach
File.2'3 While no longer an EPA maintained database and limited in the number of water utilities
1 CWSs supply water to the same population year-round.
2 The Reach File is a series of national hydrologic databases that uniquely identify and
interconnect the stream segments or "reaches" that comprise the nation's surface water drainage
system. First created in 1982, four versions of the Reach File currently exist (RFI, RF2, RF3, and
NHD), each with increasing resolution of digital hydrography data. Each stream segment is
identified by a unique reach code. RFI forms the geographic foundation for the Water Supply
Database (WSDB); RF3 for NWPCAM. ,
3 Watersheds are identified based on an 8-digit hydrologic unit code (cataloging unit), a
national standard watershed identifier defined by the United States Geological Survey (USGS). The
Reach File uses these codes as part of every reach number, which permits the NWPCAM results to
be analyzed on a watershed basis.
10-2
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it reports, WSDB is currently the only hydrologically linked database of drinking water utilities.4
This link is essential to integrating the rest of the data with TSS stream concentrations projected by
NWPCAM. ;
Since some of the information in WSDB is out-of-date, EPA obtains information on each
water system's service population and operating status from SDWIS. SDWIS was first developed
in 1997 and now serves as OW's major database for storing and tracking compliance and monitoring
information on the nation's drinking water systems. The database was not designed to serve as a
primary source of locational data and water utilities are not currently hydrologically linked to a
geographic area or stream reach. Updating the locational information obtained from WSDB with
available information from SDWIS ensures inclusion of the most current and readily available
information in the analysis. For this analysis, production capacities for each water utility are
estimated based on the population each water utility serves and a 1995 per capita water usage of 192
gallons per day (U.S. Bureau of the Census, 2001).5
10.2.2 Application of TSS Concentrations and Water System Data
EPA estimates reduced drinking water treatment costs based on proj ected reductions in TSS
stream concentrations.6 EPA links the site-specific water system data from WSDB and SDWIS with
watershed-specific TSS concentrations proj ected by NWPCAM, under baseline conditions and under
the revised CAFO standards. The analysis considers both the phosphorus-based manure application
standard incorporated into the final rule and the alternative nitrogen-based standard, which the
Agency considered but did not select. EPA calculates a median TSS concentration at the baseline
and under the revised standards for each of the 2,003 watersheds (comprised of a total of 577,068
reach segments) covered by NWPCAM. The median concentrations are applied to each of the public
water utilities located within the watershed. TSS watershed concentrations and complete water
utility information (i.e., population served) are available for 5,509 of the 5,783 previously identified
public water utilities that rely on surface waters to supply the public with water. ;
4 USGS and EPA have completed the development of the National Hydrography Dataset
(NHD), a database that will provide a Common framework for interrelating data contained in many
EPA environmental water systems, including domestic water supplies. EPA is currently working
on improving and verifying the geographic coordinates of drinking water intakes. Once jthis process
is completed, identification of water systems and their water sources will be more comprehensive
and readily available for modeling applications. '
''This number includes commercial use of water.
6 The analysis of changes in TSS concentrations is limited to the impact of the revised
standards on Large CAFOs. The change in standards will also affect TSS loads from Medium
CAFOs., but an analysis of these impacts was not available when this report was submitted for
publication. ; .
10-3 '
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10.2.3 Estimation of Drinking Water Treatment Costs
EPA utilizes the Water Treatment Estimation Routine (WaTER), developed in a cooperative
effort between the U.S. Department of the Interior, Bureau of Reclamation, and the National Institute
of Standards and Technology, to estimate reduced drinking water treatment costs based on projected
reductions in TSS stream concentrations (U.S. Bureau of Reclamation, 1999).
WaTER was developed by the Bureau of Reclamation to assist small communities in
addressing their water quality problems and subsequently improving their drinking water quality.
Using production capacity and raw water composition (e.g., TSS stream concentrations), WaTER
calculates dose rates and cost estimates (construction and annual O&M) for 15 standard water
treatment processes. Cost estimates are derived independently for each selected process. The
program employs cost indices as established by the Engineering News Record, Bureau of Labor
Statistics, and the Producer Price Index, and derives cost data from Estimating Water Treatment
Costs (U.S. EPA, 1979) and Estimating Costs for Treatment Plant Construction (Qasim et al., 1992).
EPA assumes the conventional treatment technique of gravity filtration in estimating the
Deduced O&M costs for TSS removal. There are two components to gravity filtration: the
backwashing system and the gravity filter structure. O&M costs are based on the area of the filter
bed (applicable range 13-2600m2) as determined by the system flow rate (production capacity) and
TSS concentration. Default design values are as follows:
• wash cycle - 24 hours;
• TSS density - 35 grams per liter;
• media depth - 1 meter; and
maximum media capacity - 110 L-TSS/m3 (Degremont, 1991).
Major O&M costs include materials, energy, and labor. The unit cost estimates and cost index
values (March 2001) used for updating the 1979 EPA process costs are:
Electricity Cost ($/kWhr ) - 0.0796;
ENR Labor Rate for Skilled Labor ($/hr) - 32.60; and
ENR Materials Index - 2115.65.
10-4
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These values were obtained from the Engineering News Record (ENR, 2001) and the U.S.
Department of Energy (U.S. DOE, 2001). Off-site disposal costs and pretreatment costs, as well as
construction costs, are not included in EPA's estimates. Cost saving estimates are based on the
difference in O&M costs predicted between baseline conditions and conditions under the final rule.
10.3 RESULTS
Exhibit 10-1 summarizes the estimated annual benefits associated with improvements in
surface water quality (i.e., TSS concentrations) and reduced drinking water treatment costs. The
exhibit presents results for both the phosphorus-based manure application standard incorporated into
the final rule and for the alternative nitrogen-based standard, which the Agency considered but did
not select. The results are based on the analysis of 5,509 public drinking water systems located
throughout the contiguous United States (i.e.,48 states and the District of Columbia are represented).
The average production capacity for the water systems is 3.5 million gallons per day (1VIGD), with
capacities ranging from 0.001 MOD to 614 MOD.7 !
Exhibit 10-1
ESTIMATED 'ANNUAL BENEFITS OF REDUCED DRINKING WATER TREATMENT COSTS1-2
(2001$) [
Regialatory
Option
Phosphorus-
Based
Standard
Nitrogen-Based
Standard
Average
Production
Capacity
3.5 MOD
(0.001 to 6 14)
3.5 MOD
(0.001 to 614)
Average TSS
Reduction
(mg/L)
0.181
0.132
Average Water
System Benefit
(per intake)
$111
$69
Total National
Benefit
i
(millions)
$l.ljto$1.7.
j
$0.7 to $1.0
1 The analysis accounts for changes in the regulation of Large CAFOs only. The impact of revised standards for
Medium CAFOs is not considered.
2 Based on analysis of 5,509 public drinking water systems extrapolated to 1 1,403 public CWSs on a national level
TSS concentration data for the watersheds, as simulated by NWPCAM under baseline
conditions and the revised CAFO standards, were provided by EPA in December, 2002 (U.S. EPA,
2002). Under the phosphorus-based standard, reductions in TSS stream concentrations averaged
7 The average production capacity for the 11,403 CWSs is estimated to be 3 MOD, based on
a total service population of 178.1 million (U.S. EPA, 2000a) and per capita water usage in 1995 of
192 gallons per day (U.S. Bureau of the Census, 2001).
10-5
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0.181 mg/L, with reductions in TSS concentrations occurring in the water supply of 1,595 water
systems. Of the remaining 3,914 water systems, 2,423 showed no change in TSS concentrations.
The average benefit per water system for all 5,509 public drinking water systems was $111. Results
were extrapolated to the national level based on the approximately 11,403 public CWSs nationwide
that rely on surface waters as their primary source of water. Total national benefits for the
phosphorus-based standard are estimated to range from $1.1 million to $ 1.7 million per year.8 Under
the nitrogen-based standard, reductions in TSS stream concentrations averaged 0.132 mg/L and
occurred in the water supply of 1,401 water systems. Of the remaining 4,108 water systems, 2,472
showed no change in TSS concentrations. The average benefit per water system was $69. Estimated
national benefits under this option range from $0.7 million to $1.0 million per year.
10.4 LIMITATIONS AND CAVEATS
The analysis of improvements in water quality, as it relates to reduced drinking water
treatment costs, is subject to a number of uncertainties and assumptions that may lead to a potential
under- or over-estimation of the benefits. Major limitations and assumptions are presented below:
The analysis is based on a limited number of public water utilities (5,509).
These public water utilities are assumed to be representative of public water
utilities nationwide.
• The total population served by a public water utility was divided equally
amongst the surface water intakes, where possible, for those utilities with
multiple intakes.
The default wash cycle of 24 hours is adjusted to between 8 to 96 hours
(inclusive) (McGregor, 2001), when necessary, to maintain the area of the
filter between the applicable range of 13-2600 m2, as specified by WaTER.
The wash cycle range is based on the economy of plant performance with
wash cycles of less than 8 hours and on the risk of taste and odor problems
with wash cycles greater than 96 hours. Benefits were assumed to be zero for
those water utilities with wash cycles outside of the range (approximately 400
utilities).
The cost estimates projected by WaTER are considered accurate within a
+30% to -15% range and are based on average input values and default
treatment design values. More accurate cost estimates can be determined
given site-specific data.
8 A range of benefits was estimated due to the uncertainties associated with the WaTER
model.
10-6
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The analysis assumes only the conventional treatment technique of gravity
filtration in estimating reduced O&M costs for TSS removal. Costs
associated with pretreatment and sludge disposal are not included. The cost
savings associated with these components of the water treatment process may
exceed those estimated for the gravity filtration element. ;
la addition, the analysis is limited to the impact of the revised CAFO standards on pollutant
loadings from Large CAFOs. Excluding effects on Medium CAFOs from the analysis is a source
of downward (negative) bias in the estimated economic benefits of the final rule. |
10.5 REFERENCES
Degremont. 1991. Water Treatment Handbook. June 1991.
ENR (Engineering News Record). 2001. Accessed March 5, 2001. http://www.enr.com.
McGregor, S. 2001. "Know Your Filters." Accessed September 2002. http://www.awwoa.org.au.
Qasim, S.R., S.W. Lim, E.M. Motley and K.G. Heung. 1992. "Estimating Costs for Treatment Plant
Construction." Journal of American Water Works Association, pp. 57-62, August 1992.
U.S. Bureau of the Census. 2001. 2001 Statistical Abstract of the United States. U.S. Department
of the Interior. Washington, D.C. Accessed November 2002. http://www.census.gov.
U.S. Bureau of Reclamation. 1999. Water Treatment Estimation Routine (WaTER). Denver,
Colorado. U.S. Department of the Interior. August 1999. Accessed September 2002.
http://www.usbr.gov/water/desal.html.
f - •
U.S. DOE (Department of Energy). 2001. Accessed November 2002. http://www.eia.doe.gov,..
U.S. EPA (U.S. Environmental Protection Agency). 1979. Estimating Water Treatment Costs. EPA-
600/2-79-162a-d. August 1979. ;
f
U.S. EPA (U.S. Environmental Protection Agency). 2000a. Safe Drinking Water Information System
(SDWIS). Office of Groundwater and Drinking Water. Accessed September 2002.
. www.epa.gov/safewater/pws/factoids.html.
U.S. EPA (U.S. Environmental Protection Agency). 2000b. Water Supply Database:, Office of
Water. Downloaded February 2000.
10-7
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U S EPA (U.S. Environmental Protection Agency). 2002. National Water Pollution Control
Assessment Model (NWPCAM) - Total Suspended Solids (TSS) Concentrations. Office of
Water, Engineering and Analysis Division. December 2002.
10-8
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INTEGRATION OF RESULTS
CHAPTER 11
11.1 INTRODUCTION
This chapter summarizes EPA's estimates of the benefits associated with the revisions to the
NPDES provisions and Effluent Limitation Guidelines (ELGs) pertaining to CAFOs. It first
describes the Agency's approach to aggregating the results of the studies described in Chapters 4
through 10. It then describes EPA's approach to discounting future benefits and presents the
aggregated benefits of the final rule, both in a single present value and as an annualized benefits
stream. Finally, the chapter discusses the key limitations of the analysis and the implications of these
limitations in characterizing the benefits of the revised CAFO standards.
11.2 INTEGRATION OF ANALYTIC RESULTS
To develop an integrated assessment of the benefits of the final rule, EPA simply adds the
results of the analyses presented in Chapters 4 through 10. To the extent that these analyses address
similar benefits, this approach may lead to double-counting and overestimation of benefits. In this
case, however, EPA has determined that the potential for double-counting is small. Most of the
analyses—the NWPCAM analysis of the benefits of improved surface water quality, the, evaluation
of potential improvements in commercial shell fishing opportunities, the assessment of .potential
reductions in the contamination of private wells, the evaluation of animal health benefits, the
analysis of improved recreational opportunities in estuaries, and the assessment of ^savings in
treatment costs, for public water supply systems—examine different water resources and/Or different
uses of those resources. Thus, the benefits estimated in these analyses are clearly additive. The only
possible source of double-counting lies in integrating the results of the NWPCAM analysis with
EPA's evaluation of the benefits attributable to reducing the frequency and magnitude offish kills.
••• :• ' • - . '
The extent to which the NWPCAM analysis and the fish kills analysis may double-count
benefits is unclear, but unlikely to be significant. Both analyses address changes in the quality of
11-1
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rivers, lakes, and streams.1 In addition, at least some of the benefits of reducing the incidence offish
kills stem from the associated improvement in recreational fishing opportunities, a beneficial use
which the NWPCAM analysis considers. Thus, some double-counting is possible. The NWPCAM
analysis, however, is based upon modeling of surface water quality under steady state conditions;
the analysis is not likely to capture all of the impacts of revised CAFO standards on circumstances
(e.g., the overflow of a lagoon under severe storm conditions) that may lead to fish kills. This
consideration suggests that at least some, if not all, of the benefits estimated in the fish kills analysis
are incremental to those estimated in the NWPCAM analysis.
From a practical standpoint, the implications of any double-counting between the NWPCAM
analysis and the fish kills analysis are minimal. At most, the estimated annual benefits of reducing
the incidence of fish kills amount to a small percentage of the annual benefits estimated in the
NWPCAM analysis. Thus, EPA has concluded that its approach to integrating the findings of the
underlying analyses does not result in any significant degree of double-counting.
11.3 PRESENT VALUE OF BENEFITS
The results of the analyses in Chapters 4 through 10 are expressed as annual benefits streams.
To calculate the present value of these benefits at the time new regulations are implemented, EPA
employs three alternative real discount rates: three, five, and seven percent. The seven percent
discount rate represents the real rate of return on private investments and is consistent with the rate
mandated by the Office of Management Budget for analysis of proposed regulations. The three
percent discount rate reflects the social rate of time preference for consumption of goods and
services, and is consistent with the rate recommended by many economists for analysis of
environmental benefits. The five percent discount rate represents the mid-point of the three to seven
percent range.
In calculating the present value of benefits, EPA assumes an infinite time frame; i.e., as long
as the regulations remain in effect the associated benefits will be enjoyed in perpetuity. As a
practical matter, this approach is equivalent to assuming that the regulations will remain in effect for
several generations, since the present value of benefits beyond this point approaches zero; however,
it avoids the need to arbitrarily specify a period of time over which the regulations are assumed to
remain in effect, and allows EPA to represent fully the present value of the benefits estimated.
Appendix 11-A provides additional detail on the calculation of present values.
Exhibit 11-1 presents the results of the present value calculations for each of the benefit
categories addressed in EP A's analysis, and for the final rule overall. The exhibit provides estimates
for both the phosphorus- and nitrogen-based standards. As the exhibit shows, aggregate benefits
under the phosphorus-based standard that the Agency selected range from approximately $2.2 billion
1 The data upon which the fish kills analysis is based include fish kill incidents below the
head of tide. The NWPCAM analysis extends only to freshwater resources.
11-2
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(assuming a discount rate of seven percent and employing the low-end of the underlying benefit
estimates) to $11.8 billion (assuming a discount rate of three percent and employing the high-end
of the underlying estimates). Under the nitrogen-based standard, which the Agency considered but
did not select, aggregate benefits range from $2.0 billion to $8.0 billion. Within categories, the
benefit estimates are lowest using the seven percent discount rate and highest using the three percent
discount rate, reflecting the impact of alternative discounting assumptions on the presjent value of
future benefits. :
11.4 ANNUALIZED BENEFITS ESTIMATES
In addition to calculating the present value of estimated benefits, EPA has developed an
estimate of the annualized benefits attributable to the final rule; these annualized values reflect the
constant flow of benefits overtime that would generate the associated present, value. Appendix 11 -B
provides additional detail on the calculation of annualized benefits.
EPA assumes that benefits related to most water quality improvements • will begin
immediately after the revised regulations are implemented (i.e., because loadings will immediately
decrease), and that these benefits will be constant from year-to-year. For these benefit categories,
annualized benefits are equivalent to annual benefits, regardless of the discount rate erhployed. In
the case of private well contamination, however, EPA assumes an uneven annual stream of benefits.
As a result, EP A's estimates of the annualized benefits of reduced private well contamination depend
upon the discount rate employed.
Exhibit 11-2 presents EPA's estimate of annualized benefits for each benefit category, and
aggregates these estimates across benefit categories. The exhibit provides estimates for both the
phosphorus- and nitrogen-based standards. As the exhibit shows, aggregate benefits under the
phosphorus-based standard promulgated by EPA range from approximately $204 million per year
to $355 million per year. Benefits under the alternate nitrogen-based standard, Which EPA
considered but did not select, range from approximately $141 million to $240 million annually.
Again, note that variation in discount rates affects only the annualized benefits asscjciated with
reduced contamination of private wells; other annualized benefits remain constant regardless of the
discount rate employed. i
11-3
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11.5 LIMITATIONS OF THE ANALYSIS AND
IMPLICATIONS FOR CHARACTERIZING BENEFITS
The results presented above are based on the analyses presented in Chapters 4 through 10,
and are subject to the specific uncertainties and limitations that are discussed in detail in each of
these chapters. Beyond these limitations, however, it is important to note that EPA's analysis does
not attempt to comprehensively identify and value all potential environmental changes associated
with proposed revisions to the CAFO regulations. Instead, the Agency focuses on specific
identifiable and measurable benefits. The impacts of the regulatory proposal likely include
additional benefits not addressed in these analyses, such as unproved recreational opportunities in
near-coastal waters beyond those analyzed in Chapter 9; improvements in commercial fishing;
improvements in near-stream activities; and non-water related benefits, such as potential reductions
in odor from waste management areas. In light of these limitations, EPA believes that the benefits
quantified in this report represent a conservative estimate of the total benefits of the revised CAFO
standards.
11-6
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Appendix 11-A
CALCULATION OF PRESENT VALUES
The present value (P V) of a benefit (5) to be received t years from now is determined by the
following equation: i • -
= Bt/(\+r)' \ •
where r represents the annual discount rate. Thus, the present value of an annual stream of benefits
from Year 1 through Year n is calculated as follows: !
When B, is constant - i.e., when benefits (B) each year are the same - and n approaches infinity, the
equation above can be simplified to: '
PV = B/r .
EPA employs the above equation to calculate present values for all categories of benefits that
are assumed to remain constant from Year 1 onward; i.e., for all categories except reduced
contamination of private wells. In the latter case, benefits are assumed to increase in a linear fashion
until Year 27, and men to remain constant. Thus, the value in Year 27 ( F27) of the constant, infinite
stream of benefits (B) expected to accrue from that year forward is calculated as:
hi calculating the present value of reduced contamination of private wells, EPA sets the value of B27
equal to that of V21. The present value of benefits is then determined using the following equation:
11A-1
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Appendix 11-B
CALCULATION OF ANNUALIZED BENEFITS
The constant annual benefit A that, over a period of n years, equals the estimated present
value (PV) of benefits is determined by the following equation:
A =PV(r) /(!-[! /(I +r)"])
where r represents the annual discount rate. As n approaches infinity, this equation simplifies to:
- -A = PV(r)
EPA uses the equation above to calculate the annualized benefits reported in this analysis.
11B-1
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