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

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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

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 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

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                                              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

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 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.*

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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.

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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.      '

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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

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 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

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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

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                                                              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.

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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,

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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



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