WETLAND COMPENSATION COSTS IN EPA REGION IV—THE SOUTHEAST Dennis M. King, Ph.D. and Curtis C. Eohlen, Ph.D. University of Maryland System, Center for Environmental and Estuarine Studies, Chesapeake Biological Laboratory P.O. Box 38, Solomons, Maryland 20688 April 1, 1994 University of Maryland, CEES Technical Report UMCEES-CBL-94-049 April 1994. Prepared under Cooperative Agreement Number CR818-227 with the U.S. EPA, Office of Policy Analysis with support from . „ EPA Region IV (Atlanta) and Region IX (San Francisco). EPA'230-R-96-003 ------- Southeast Region Compensation Costs INTRODUCTION . Regional Climate, Ecology, and Wetlands The southeastern United • States—the states of Alabama, Florida Georgia, Kentucky, Mississippi, North Carolina South Carolina and ^oeui&ia, j.^ jf j. j. _j__j_^^i . , ., ViirrVioci- natural abundance VjGWl ftlCl/ JUX. V-4-U«-»-«•--•— j , J. 1. • Tennessee—includes some of the states with the highest natural abundance Tennessee—incmues SUHLC w*. u.«- ^-.^..^ ..- - 0 of wetlands in the nation. Florida, with the extensive wetlands of the Everglades ecosystem, as well as hydric hammocks, coastal mangroves salt- marshes and riverine cypress-tupelo swamps, is estimated to have been 54% wetland; a* the time of European settlement. Adjacent Georgia and Alabama were about 18% and 23% wetlands respectively. . The region receives abundant rainfall distributed throughout the year. Some seasonally of precipitation is found throughout the region, with win- terStorms and summer thunderstorms providing somewhat increased ram- - fa 1 n Sorida, however, precipitation is heavily concentrated in the summer months Temperatures vary according to elevation and proximity to the wean from cold-temperate in the northwestern mountains to subtropical in south Florida. Seasonal temperature fluctuations are greatest in the north, de- c?easinV to the south and east. A general excess of annual precipitation over ex'apSranspiration ensures that isolated wetlands are common wherever ge- oloSc or pedogenic processes have produced local topographic lows or where groundLwater reaches the surface, as at the bashes of slopes and adjacent to streams . of the ion is dominated by low mountains^lnland, with extensive sedimentary and marine deposits toward the coasts. The low, flacoasS Plain sediments provide ideal areas for the development of exten- sive wetlands, both tidal and non-tidal. A general lack of ^graphic relief means that there is little hydraulic gradient, and water takes a long time to mn off the land. Low gradient coastal streams and rivers have extensive- loodplains that supporttwo of the most widespread and recognizable wet- and types in theregion-the cypress-tupelo and bottomland hardwood oreStsyLow coastal relief also facilitates the extension of tidal in luences many miles inland, increasing wetland development many miles from the S Tidal wetland development has also been facilitated by widespread barrier islands along the coast. The sheltered lagoons inland of the islands provide excellent conditions for tidal wetland development. Florida contains more than its expected share of endemic and rare The sub-tropical climate of southern Florida makes it the, most outpostP of many tropical taxa, while the biogeographic soaon providedby the state's peninsular shape encouraged evolution of- endeiSc taxa to accommodate local conditions: The survival of many of these taxaTnto the twentieth century undoubtedly owes much^to the state s extensive wetlands, which increased the state's inaccessibility in the days ------- Southeast Region Compensation Cost< . . • . 2 ' before air conditioners, mosquito control, and highways. Other states in the region are not unusually endowed with endemics or rare species, although the region includes the headwaters of several •important river systems, and may represent a center of endemism for several freshwater taxa-. Wetland Losses ; Historic wetland losses throughout much" of the region have been' near 50%, about typical for the nation, as a whole (Alabama 50%, Florida 46%, Mississippi 50%, North Carolina'49%,-and Tennessee 59%). In Tennessee, wetland losses have been somewhat greater.' Eighty-one percent of the , wetlands of the state had been lost by the mid-1980s (Dahl 1990), Losses in Georgia and South Carolina have been somewhat smaller than elsewhere, with losses in South Carolina of 27% and in Georgia of 23%. Wetland losses of the region have occurred as a result of a complex mix of agricultural development, coastal dredging, urban and suburban develop- ment, and industrial use. Disruption of coastal wetlands began in colonial times, especially around urban centers where direct conversion of wetlands- to urban land and indirect destruction of wetlands.via sedimentation and hy- • drologic alterations were common. Emergent marshes near urban centers were .undoubtedly among the first to be used for grazing and other agricul- tural purposes. Extensive areas of eastern saltmarsh were diked in the nineteenth century for rice agriculture; however, the end of the civil war and the decline of the plantation culture and slave economy lead to an abandonment,of much of the rice land, and reversion of many of these areas to wildlands similar to the original tidal marshes (Wiegert and Freeman 1990; Odum et al. 1984). Many wetland forests that harbored populations of valu- able timber trees like the Atlantic white cedar were cut over early in the re- gion's history, significantly altering species composition, but conversion of wetland to non-wetland because of forestry practices was uncommon. Wetland losses in Tlorida follow a similar .pattern to losses elsewhere in the region, except that a higher proportion of the state's wetland losses track Florida's twentieth century emergence as a retirement haven and vaca- tion destination. During the nineteenth century, much of the state was inaccessible; too wet even for most agricultural uses, and difficult to drain. Large scale hydrologic modifications in south Florida began late in the nineteenth century. Broader, government-sponsored reclamation efforts in south Florida began in 1905 when Governor Broward pushed 'for expanded state efforts to convert wetland for agriculture. Federal involvement in flood control efforts expanded in 1930, and again in 1948, and continued until the early 1980s, when concern for the environmental consequences of the extensive hydrologic changes began to affect management of the Everglades ecosystem (Light and Dineen 1994). In addition to the direct wetland losses caused by- these large-scale hydrologic modifications, each modification also triggered" rapid development as previously unsuitable lands"became drier, less ------- I -i Southeast Region Compensation Costs .['•.-. , 1 t i prone to floods, or easier to drain. With rapid development of the Florida landscape came equally rapid destruction of the wetlands. Between the mid- 1970s and 1980s (well after many of South Florida's water management structures were completed), approximately 1.5% of Florida's remaining wetlands were lost, primarily to agriculture and urban expansion (Prayer and Hefner 1991). Regional Economic Conditions Economic growth in the Southeast has been uneven. Some regions notably the Atlanta region and much of Florida have enjoyed rapid growth and robust economies (Forrestal 1993). Elsewhere, and by some measures for the region as a whole, economic performance has been poor. Poverty is rela- tively widespread, and disposable incomes low in much..of the region. On the other hand, the region was quick to respond to the current nationwide . economic expansion, with job growth faster than ;that found in the nation as a whole in the later parts of 1992. That performance is expected to continue. While locally important, defense is not a mainstay of the regional economy, and thus long-term repercussions of defense cutbacks should be mild. Strength in timber, furniture, and appliance industries should help the regional economy grow in response to robust housing markets nationwide triggered by low mortgage interest rates'. • This economic growth can be expected to lead to increases in,wetland impacts. Birth rates in the region are below national averages, but population growth through the 1980s was above national average in the At antic states flMC SC GA PL) and at or below the national average for^the gulf and inland states (KY, TN, AL, MS) (U.S. Department of Commerce 1992). This suggests that the Atlantic coastal states have been attracting immigrants from other parts of the country and around the world. New residents need housing, pub- lic services, additional roads, and shopping facilities. In the process of provid- ' ing the growing population with these needs, wetlands will be affected. ANALYSIS OF REGION-SPECIFIC DATA I . L • • Methods i , The analysis of regional wetland creation, restoration, and enhancement costs was based on a larger nationwide study with supplemental data collected and analyzed-specifically for EPA Region IX. In this section we describe the method used to develop national cost estimates and the differences between these national jestimates and those in bi A Region IX The nationwide cost estimates are statistically more robust than regional cost estimates. For most management and policy purposes even within the region, cost estimates for wetland creation, restoration, and enhancement projects should be based on the nationwide numbers with appropriate adjustments to account for regional economic and ecological conditions. j ------- Southeast Region Compensation Costs • 4 : In the' nation-wide study cost estimates for approximately 1,000 historical wetland creation, restoration, and enhancement projects were examined, including records of projects carried out in 44 states over the past 25 years. These historical estimates (hereafter the "secondary database") were obtained from a wide range of secondary sources, including published and unpublished reports, information presented in the trade press, and in-house databases made available by federal and state agencies and at private nonprofit organizations. , - • , Because of the high variability in project cost estimates in the secondary database and the lack of detailed project descriptions available for a majority of these historical, cost records, only a limited understanding of' national or regional project costs could be developed on the basis1 of the secondary data alone. We therefore supplemented these records/with cost estimates based on detailed engineering and cost profiles developed for a smaller set of projects. Cost estimates for 90 wetland creation and restoration projects from 10 states (the "primary database") were developed using detailed engineering cost-accounting descriptions of known wetland, creation and restoration projects developed in collaboration with subcontracted wetland restoration experts from around the country and within the region. Whereas the site selection and project design characteristics for the 1,000 projects in the secondary database were unknown,, the siting and project design characteristics and engineering and cost profiles for the 90 cases in the primary database were known in detail. For more information on the engineering profiles and cost-accounting methods used to develop the primary database, see the related papers by King and Bohlen (1994a and 1994b). All cost estimates in both the primary and secondary databases were standardized in 1993 dollars prior before being analyzed. Costs per acre data were highly skewed so, for statistical reasons, our analyses were based .on Log10 transformed data. We used a standard statistical technique called an analysis of covariance (ANCOVA) to develop equations that indicate how project costs change as project size changes and to prbduce estimates of per 'acre project cost adjusted for project size. Reported results, except where otherwise noted, are based on hypothesis tests with p<0.05. There was also an extremely uneven distribution of cases within and among project categories. Freshwater emergent wetland creation projects . were abundant in our sample, for example, while projects to restore beds of submerged aquatic plants were rare. This pattern, which reflects both the frequency with which specific wetland types are restored or created nationwide, and the vagaries of data collection, limits the types of 'statistical cost comparisons that are possible. The results presented here reflect the most complete analyses, possible with the existing databases.* ------- Southeast Region Compensation Costs Nationwide Background . • Wetland creation and restoration projects in the primary database were separated into eight project categories for analysis. These categories include: (1) Aquatic Beds, consisting of tidal or nontidal communities of perma- nently or nearly permanently submerged plants; (2) Complex Projects, incorporating three or mor^. wetland types; (3) Freshwater Mixed Projects, consisting of nUjdal projects in which both woody and emergent vegetation are produced; (4) Freshwater Forested Projects, establishing trees or shrubs in nontidal wetlands; i (5) Freshwater Emergent Projects, establishing emergent vegetation in nontidal wetlands; , (6) Tidal Freshwater Wetland Projects, often consisting of mixed emergent and woody vegetation; (7) Saltnuirsh Projects and other marine or estuarine projects, establishing wetlands dominated by emergent vegetation; and (8) Mangrove Projects, establishing 'mangrove communities. Cost Per Acre! (In t993 $; excludes land costs) $300.0 -r $250.0 • I S200.0 - UJ Wetland Type Figure 1. Point estimates and ranges of .project costs from the primary database for specific project categories. ------- Southeast Region Compensation Costs ' . , ... 6 Differences in the costs of restoring different types of wetlands are not large relative to the differences in costs within any one wetland category. This reflects the enormous differences in the site and project design characteristics within project categories and frequent similarities among-the tasks required to restore wetlands in different categories. Median, mean, minimum, and maximum per acre creation and restoration costs for the eight categories of wetland projects just described and for agricultural conversion projects (from the secondary database) are shown in Figure 1. Table 1 displays summary "cost statistics by wetland category based on the results of the nationwide study (primary data, except for agricultural conversion .data). Similar, detailed breakdowns of project costs from within the region itself are potentially misleading because of small sample sizes. National-regional'comparisons are given below. The table also includes cost' breakdowns by preconstruction, construction and postconstruction tasks, and by input category (labor, materials, equipment and other). Region-specific differences discussed elsewhere in this report will effect some of these values- Table 1. Cost Estimates and Cost Allocation (excludes land cost) From the National Study. Project Type ' . . • Aquatic Bed Complex ,FW Mixed FW Forest* FW Emerg. Tidal FW Salt Marsh Man- grove Agric. Conv** Project Costs (Thousands) '* - • • Average Minimum Maximum Median Sample Size $19.5 18.3 21.7 18.6 3 $56.7 4.3 258.8 24.8 8 $25.3 1.4 " 65.8 • 23.4 10 $77.9 0.9 248.4 42.7 19 $48.7 . 1.7 170.6 35.2 28 $42.0 0.6 92.6 32.9 3 $18.1 1.0 43.6 10.2 9 $18.0: 2.1 42.8 13.6 4 $1.0 0.005' 20.8 0.5 - 494. Breakdown by Tasks: , . •. ' ' Preconstruction Construction Pos tcons true tion 17% 63 20 10% 74 16 5% 78- ' 17 9% 74 18 13% ' 58 28 9% 87. 4 . 16% 73 ll 13% 66 21 0% 100 ' 0 Breakdown by Input Category: '. Labor Materials Equipment Other 58% 8 • ' 34 0 , ,50% 23 14 14 74% 10 16 0 5,1-% 30 18 '2- 63% 26' 9 1 . 31% 54 ' 14 1 • 52% 27 20 2 51% 21 28 0 45%. 0 55 0 High end of range involves researching and restoring hydrology and planting; low end involves restoring hydrology only. ' Agricultural Conversion data are derived from the secondary data. Cost breakdowns for agricultural conversions are based on a project consisting of hydrologic modification without planting or formal plan development. ' ------- Southeast Region Compensation Costs Primary Data . nmikcts from the southeastern Our primary databas « ""^SS y * r°om Florida (18), with even grove restorations. An analysis of determine whether wetland cre- Data from the Southeast dif- the country LlXllC-J'^-'-'^JL , • rt\ (excluding agricultural conversions). Primary Data: Southeast vsi Other Regions 1,000,000 100,000 Other (o) Size (acre) Figure 1. Primary data-Southeast. Secondary Data ' Fiftv-one of the 397 projects m our cultural conversions) were from ° Georgia, or Florida (17, 14, from Alabama, (6 proje.cts), North ject). Of those, most (33) ^ 100 1000 database (excluding agri- were from Mississippi, / with the remainder d Tennessee (1 pro- o ,ec enhancement restoration project. We from this ------- Southeast Region Compensation Costs °. Projects from the southeast typically are slightly larger than projects from other regions of the country (Kruskal-Wallis test, Z = 2.10201, p= 0.0356). We carried out an analysis of covariance to determine whether projects • from the southeast were more or less expensive than projects from elsewhere in the country (ANCOVA Table in Appendix A). Projects from the Southeast are typically less expensive than projects elsewhere, in the country by approx- imately a factor of three (3.26). That is, wetland projects from the Southeast in our Secondary database are (on average) less than one-third as expensive as . projects from other parts of the country. This conclusion is remarkably simi- lar to the conclusions we drew from our Primary data, where regional pro- jects were slightly less than a third as expensive as nationally. , Secondary Data: Southeast vs. Other Regions 10,000,000 j 1,000,000 - g 100,000 - ¥ 3 10,000 - o5 o Other (o) 0.001 0.01 100 1000 Size (acre) Figure 2. Secondary data—Southeast. DISCUSSION , For at least the past twenty years, the southeastern United States has been the national center for innovation in the field of wetland creation and restoration. Projects to create,, modify, and restore many different types of wet- land have been carried out in the region. Thus it is difficult to identify one or a few "typical" wetland projects. The wide variety of'restoration and creation projects, include projects to produce or restore cypress-tupelo swamps, bot- tomland hardwood forests, freshwater tidal wetlands, saltmarshes, and man- groves. As the technology of wetland management continues to improve the range of wetland types being created and restored in the region is likely to continue to increase. Indeed, some of the most ambitious wetland creation ------- Southeast Region Compensation Costs '. ; . and restoration projects ever attempted anywhere in the world are now get- ting underway in the Kissimmee-Okechobee-Everglades ecosystem. Most of the states in the southeast have substantial percentages of their land area in wetland (AL 1.1.5%, FL 29.5%, GA 14.1%, MS 13.3%, NC 16.9%, SC •>3 4%). The two landlocked states, however, do not (TN 2.9%, and KY 1.2%). Thus on an a priori basis, one might expect that, with continued population arowth and economic development, impacts to wetland will be most signifi- cant in the coastal states where economic growth is expected to be strongest, and where remaining wetlands are most widespread. Demand for wetland mitigation, triggered by those impacts, will thus continue to be highest in the coastal states, especially those along the Atlantic coast. If the region follows the pattern seen in most of the eastern United. States mitigation needs will be greatest for forested wetlands, especially those supporting flood-tolerant hardwoods. Demand for mitigation of riparian wet- lands including cypress-tupelo swamps and mangroves will probably also be substantial, as construction of roads, .utility lines, and other linear projects re- sult in additional losses to riparian communities. Continued development ot coastal areas will drive ongoing needs for mitigation of tidal wetlands, especially saltmarshes. Reconversion of agricultural lands to wetland has been less common in the Southeast than in the upper Midwest, where interest in providing breeding habitat for waterfowl has focused national attention. Nonetheless, opportunities for agricultural conversions exist, and have been exploited in : the past Whether such projects become more common in the future will , depend on development of appropriate incentives for landowner in- volvement. Opportunities for enhancement of forested wetlands may also ex- ist if appropriate enhancement techniques and landowner incentives can be developed to induce involvement by forest products industries. Opportunities for inexpensive wetland projects should be greatest in states with a long history of agriculture and forestry where most current pop- ulation growth is concentrated in a few major metropolitan areas. Historic wetland losses in Kentucky of over 80%, with a relatively .high ^portion (45 5%) of the state's land in active agriculture and relatively little (4./ /oj ot it developed (U.S. Department of Commerce 1992), suggest that restoration opportunities should be available there. While the coastal states have had somewhat lower wetland losses on a percentage basis, the total area ot con- verted wetlands is substantial, and restoration opportunities are widespread, especially on the coastal plain. ' j . General construction costs throughout the southeast are below the national average because of relatively low regional labor costs (Smil: and Waier 1991). Even in the most rapidly growing areas of the southeast (Atlanta and northern Florida), labor costs for construction projects are 15%, or more below the national average. In some southeastern cities, labor costs are less than two-thirds of the national average. Wetland creation and restoration ------- 10 Southeast Region Compensation Costs - • > _ • - efforts are tabor-intensive P^s^^^^2otl« Sw na±X 2S4^MS^^^^ 1 n%-20% below the national average. fu0 crmth hydrotogy vegetation, and wildlife found m the region. ------- Southeast Region Compensation Costs 11 BIBLIOGRAPHY i1 ppp Executive 1993- Studies, Horn Point MD. 178Q/ t 198o's. U.S. Service, Wa5Mngton, Urban Affairs, U.S. Senate, , Federal Reserve BuHetin, May Wetlands: Status and Trends, Summary of Wetland P01nt, MO. d. 0/den. De,ray Beach FL: St. R. S. Means Co. ^ statistical" Abstract of the United States U S Department of Commerce. Lyy*. 1992. Lanham, MD: Bernan Press. Saltmarshes of the Southeast Wiegert, R. G. and B. J J^^^^u ll^artment of the Interior, ------- Southeast, Region Compensation Costs 12 APPENDIX A: ANALYSIS OF CO VARIANCE TABLES '• v The following analysis of covariance tables provide statistical details for the conclusions presented in the main text. All analyses were performed on Iog10-transformed data. The tables show partial sums of square and F ratios, testing the hypothesis that the particular source of variation is associated with more of the variability in cost among projects than can be accounted for by chance. Table A.I. Analysis of Covariance Based on the Primary Data Comparing Southeastern Wetland Projects and Projects from other Regions of the Country. ANCOVA Table ^•M^MMM Source Mean Square 37.0243 9.3560 13.7319 7.5576 1.9098 2.8030 7.5576 3.8196 2.8030 Log(Size) Project Type Region 10.9833 16.7383 27 7216 Parameter Estimates Least Sq Mean 43 (20 SE) 11 (OSE) 34 (5SE) 0.06929 0.15439 0.09070 Creation Enhanced No estimable interaction terms were statistically significant, so the] Note: Table A 2 Analysis of Covariance Based on the Secondary Data Comparing Southeastern Wetland Projects and Projects from other Regions of the Country. Model Error 2 394 396 52.09404 203.59401 255.68806 26.0470 0.5167 50.4068 0.0000 Parameter Estimates ------- ------- |