COST OF CLEAN WATER
Volume II
COST EFFECTIVENESS
AND
CLEAN WATER
ENVIRONMENTAL PROTECTION AGENCY
WATER QUALITY OFFICE
MARCH 1671
-------
COST OF CLEAN WATER
VOLUME 11
COST EFFECTIVENESS
AND
CLEAN WATER
ENVIORNMENTAL PROTECTION AGENCY
WATER QUALITY OFFICE
MARCH 1971
-------
For sale by the Superintendent of Documents, U.S. Government Printing Office
Washington, D.C, 20402 - Price $1.25
Stock Number 5501-0059
-------
ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D. C. 20460
OFFICE OF THE
ADMINISTRATOR
Honorable Spiro T. Agnew
President of the Senate
Washington, D. C. 20510
Dear Mr. President:
I am transmitting to the Congress the fourth annual report on
the national requirements and costs of v.'ater pollution control as
required under Section 26(a) of the Federal Water Pollution Control
Act, as amended.
Our current estimate of investment requirements for municipal
treatment works is $12 billion as reflected in the legislative
proposal transmitted last month.
Volume I of the report, Municipal Investment Needs, describes the
analyses and surveys v,'hich were undertaken in arriving at this estimate
of investment needs. The results of these studies led to a request
for a $6 billion Federal program, $2 billion in each of the Fiscal
Years 1972-1974 to meet total investment goals of $12 billion.
The several analyses of investment requirements made over time, by
contacts v/ith communities, construction grant project reporting systems
and statistical models, showed a substantial variability in the
investment needs as reported over time by individual States and
municipalities. The reasons for variability include changes in treatment
requirements imnosed by water quality standards, imoacts of inflation
in the construction sector, construction schedule changes, refinement
of individual plant cost estimates as construction nears, and
community expectations with respect to magnitude and direction of
Federal and State assistance programs.
The size, complexity and dynamic nature of the municipal investment
in waste treatment systems prevent the development of fixed long term
estimates and point instead toward a need for periodic reappraisal. It
is also abundantly clear that reappraisals must make adequate provisions
for Incorporating new solutions to waste problems rather than
continuing commitment to out-dated plans or technologies.
Our analyses this year, as in previous years, have addressed the
issues of cost-effectiveness, industrial utilization of municipal
facilities and sev/erage service charges. There is no doubt that a
massive investment program is needed, but the absolute magnitude of
the investment reouired to produce a given set of waste reduction
-------
effects will vary depending upon the allocation of resources to
projects and the^degree of cost-effectiveness with v/hich investments
are made.
Volume II, Cost-Effectiveness and Clean Hater addresses several
of the issues associated with planning, design and operating
inefficiencies. While construction sector inflation and changing
requirements will operate to increase costs, there is convincing
evidence that substantial savings in investment requirements can result
from cost-effective planning of municipal waste systems. This
has been clearly demonstrated through our experience in reviewing
community waste treatment proposals. He are working to influence such
decisions through our administration of the Federal grant program.
The results of user charge and cost analyses lead us to believe
that a high order of municipal utility management counlcd v.'ith an
adequate user charge system could lead to self-sufficient utility
based municipal systems freeing them from dependence on 'Federally
dominated categorical grant nrcgrams. In addition, such user charge
systems should encourage industries to reduce their vastes.
Our recent legislative nroposal, the regulations promulgated on
July 2, 1970, directed toward Manning requirements, and new planning
guidelines published on January 29, 1971, direct themselves to the
significant nuestions of self-sufficiency and cost-effectiveness.
Further intensive efforts in this important area are underv/ay in the
Environmental Protection Agency.
The Administration has taken action to control the impact of
sectoral inflation in the construction industry. As pointed out
in the current report, past construction sector inflation has
served to raise investment needs. These actions, coupled with
cost-effective investment planning, can he expected to increase
productivity of the waste facilities dollar.
In the broader scone of water quality management, v/e must not
ignore the problems posed by waste sources other than municipal
sources and which are in many cases infinitely more complex to solve.
Volume II therefore includes an initial assessment of the relative
cost-effectiveness of investments in terms of these several problem
areas. These analyses provide a point of departure for developing
and implementing cost-effective abatement of water pollution across
-------
its many sources. This approach is part of the environmental Protection
Agency's effort to develop more effective integrated approaches to
environmental management.
Sincerely yours,
William D. Ruckelshaus
Administrator
Enclosure
-------
ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D. C. 20460
OFFICE OF THE
ADMINISTRATOR
Honorable Carl B. Albert
Speaker of the House of
Representatives
Washington, D. C. 20515
Dear Mr. Speaker:
I am transmitting to the Congress the fourth annual report on
the national requirements and costs of water pollution control as
required under Section 26(a) of the Federal Water Pollution Control
Act, as amended.
Our current estimate of investment requirements for municipal
treatment works Is $12 billion as reflected in the legislative
proposal transmitted last month.
Volume I of the report, Municipal Investment Needs, describes the
analyses and surveys which were undertaken in arriving at this estimate
of investment needs. The results of these studies led to a request
for a $6 billion Federal program, $2 billion in each of the Fiscal
Years 1972-1974 to meet total.investment goals of $12 billion.
The several analyses of investment requirements made over time, by
contacts with conmmlties, construction grant project reporting systems
and statistical models, showed a substantial variability in the
investment needs as reported over time by individual States and
municipalities. The reasons for variability include changes in treatment
requirements Imposed by water quality standards, impacts of inflation
in the construction sector, construction schedule changes, refinement
of individual plant cost estimates as construction nears, and
community expectations with respect to magnitude and direction of
Federal and State assistance orograms.
The size, complexity and dynamic nature of the municipal investment
in waste treatment systems prevent the development of fixed long term
estimates and point Instead toward a need for periodic reappraisal. It
is also abundantly clear that reappraisals must make adequate provisions
for Incorporating new solutions to waste problems rather than
continuing commitment to out-dated plans or technologies.
Our analyses this year, as in previous years, have addressed the
issues of cost-effectiveness, industrial utilization of municipal
facilities and sewerage service charges. There is no doubt that a
massive Investment program is needed, but the absolute magnitude of
the investment required to produce a given set of waste reduction
-------
effects will vary depending upon the allocation of resources to
projects and the degree of cost-effectiveness with which investments
are made.
Volume II, Cost-Effectiveness and_C1ean Uater. addresses several
of the issues associated with planning, design and operating
inefficiencies. While construction sector inflation and changing
requirements will operate to increase costs, there is convincing
evidence that substantial savings in investment requirementspcan result
from cost-effective planning of municipal waste systems. This
has been clearly demonstrated through our experience in reviewing
community waste treatment proposals. We are working to influence such
decisions through our administration of the Federal grant program.
The results of user charge and cost analyses lead us to believe
that a high order of municipal utility management coupled within
adequate user charge system could lead to self-sufficient utility
based municipal systems freeing them from dependence on Federally
dominated categorical grant programs. In addition, such user charge
systems should encourage industries to reduce their wastes.
Our recent legislative proposal, the regulations promulgated on
July 2, 1970, directed toward planning requirements, and new planning
guidelines published on January 29, 1971, direct themselves to the
significant questions of self-sufficiency and cost-effectiveness.
Further intensive efforts in this important area are underway in the
Environmental Protection Agency.
The Administration has taken action to control the impact of
sectoral inflation in the construction industry. As pointed out
in the current report, past construction sector inflation has
served to raise investment needs. These actions, coupled with
cost-effective investment planning, can be expected to increase
productivity of the waste facilities dollar.
In the broader scope of water quality management, we must not
ignore the problems posed by waste sources other than municipal
sources and which are in many cases infinitely more complex to solve.
Volume II therefore includes an initial assessment of the relative
cost-effectiveness of investments in terms of these several problem
areas. These analyses provide a point of departure for developing
and implementing cost-effective abatement of water pollution across
-------
its many sources. This approach is part of the Environmental Protection
Agency's effort to develop more effective integrated approaches to
environmental management.
Sincerely yours,
0
William D. Ruckelshaus
Administrator
Enclosure
-------
VOLUME II
CONTENTS
Introduction 1
Investment 1n 1970 and the National Goal 3
The Capitalization of Waste Treatment Facilities 13
Trend of Waste Discharges 25
Prevalence and Sources of Water Pollution 45
Diseconomies In Public Waste Management Facilities 67
Operation and Maintenance Costs 87
Planning Decisions and Institutional Behavior 103
Appendix A - Survey Questionnaire Study of Water
Pollution Abatement Costs 121
LIST OF TABLES
1. The Investment Picture, 1969 and 1970 4
2. Individual States' Assessment of Five Year
Capital Requirements 1969 and 1970 5
3. Fluctuations In State Estimates of Capital
Needs June 1970 and December 1970 6
4. Industrial Investment 1n Air and Water Pollution
Control 8
XI
-------
LIST OF TABLES (Cont.)
5. Components of National Sewered Waste Discharge, 1968 12
6. Distribution of Municipal Waste Treatment Techniques,
1962 and 1968 13
7. Estimated Investment for Waste Treatment Works,
1952-1968 15
8. Federal Construction Grants Related to Public
Construction Activity 19
9. Annual Value of Federally Assisted Waste Treatment
Works Construction 21
10. Effective Rate of Recapitalization, 1962-1968 23
11. Estimated Increase in Gross Production of BOD5,
1957-1968 29
12. Estimated Increase in Phosphorus Discharged as
Municipal Sewage 34
13. Projected Interaction of Technological Limits
and Existing Rates of Waste Increases 36
14. Components of Change in Production of Two
Major Pollutants 39
15. Net Shift — In Terms of 1962 Population Served —
In Waste Treatment Plant Size and Type 1962-1968 43
16. Disposition of Increases in Two Major Pollutants
1964-1968 44
17. Aspects of Regional Sewage Services, 1968 54
18. Generalized Prevalence of Pollution, 1970 56
19. Prime Causes Stream Pollution, All Second Order
Watersheds 59
20. Prime Causes of Stream Pollution, by Extent of
Pollution 62
21. Relative Growth of Population and Sewer Service,
1962-1968 68
XII
-------
LIST OF TABLES (Cont.)
22. Calculated Increase in Sanitary Waste Discharge
Directly Attributable to Accelerated Sewering -
Northeastern States, 1962-1968 70
23. Regional Distribution of Utilization Rates, 1968 74
24. Shifts in Utilization of Waste Treatment Capacity,
1962-1968 76
25. Utilization of Metropolitan and Non-Metropolitan
Waste Treatment Capacity, 1968 78
26. Capital Penalties of Under-Utilization 80
27. Distribution of Waste Treatment Investments,
1962-1968 82
28. Estimated Operating and Maintenance Cost Penalties
for Plants Operating at Less Than Full Capacity 97
29. Incidence of Operating and Maintenance Costs
Penalties by Utilization Classes, 1968
-------
LIST OF FIGURES (Cont.)
7. Unit Cost Curves for Trickling Filter Plants 91
8. Illustration of a Penalty Cost for Activated
Sludge Plants 93
9. Unit Costs and Utilization of Capacity 94
10. Replacement Value of Treatment Plant Capacity
in 1962 and 1968 in $Billions 100
11. Unit Cost Curves for Design Capacities
XIV
-------
COST EFFECTIVENESS AND CLEAN MATER
INTRODUCTION
This 1s the fourth 1n a series of reports to the Congress that have
been prepared 1n compliance with Section 26(a) of the Federal Water
Pollution Control Act, as amended, that directs that the Administrator
of the Environmental Protection Administration "make. . .a comprehensive
analysis of the national requirements for and the cost of treating
municipal, Industrial, and other effluents to attain. . .water quality
standards. . .established pursuant to this Act or applicable State law.
Previous studies have examined the total amount and the distribution
of waste treatment requirements for public agencies and for industry,
and have considered, to the extent that information and programs
were developed, the kinds and costs of controls that might be directed
at non-sewered pollutants.
The data which have been presented and analyzed in the previous reports
have been addressed to normative rates of investment on a national
basis, although last year's report began to investigate regional
differences 1n costs. Data available then as well as new data provid-
ed the Agency by States in the past year show wide disparities in unit
prices. Indicated per capita investment requirements reported by the
States for municipal waste treatment over the next five years range
from almost $500 to less than $10.
Over the last decade, the nation has almost doubled Its waste treatment
capitalization and will double it again in the next five years. Yet
the public hears little of accomplishment, and, quite the contrary is
often led to believe that little has been done to control sewered
wastes.
An immutable tendency seems to be that as Federal financial
assistance and investment increases, physfcal plant expands; and as
physical plant expands, the volume of capital needs involving Federal
financial assistance also expands. The more we invest, the more
we seem to need to invest. The reasons for and effects of factors
causing this are discussed in Volume I.
But it 1s also possible that much of the capital need flows from
institutional inefficiencies at all levels of government, that some of
the Increase in costs of pollution abatement could be controlled by
more efficient utilization of capital, and that more rapid progress
1n pollution abatement could be achieved by alternative investment
arrangements.
-------
This volume of the report, then, considers the question of efficiency,
directing its attention to: 1) the distribution of investments
as compared to the distribution of polluting activities and the
location of water oollution: 2) the results of municipal and industrial
waste treatment investments made over the life of the Federal construction
grant program, in terms of reduction of oxygen demand and nutrients in
sewage; 3) avoidable increase in local operating, maintenance, financing,
and overhead costs of waste treatment; and 4) the questionable strategy
of making use of investment capital essentially to forestall some future
needs, and at the same time permitting the persistence of existing treat-
ment system deficiencies.
-------
INVESTMENT IN 1970 AMD THE NATIONAL GOAL
A significant change in the conduct of water pollution control programs
took place in 1970, when the Federal Government established a distinct
objective for proarams in support of public waste treatment. The program
was intended to "orovide every community that needs it with secondary
waste treatment, and also special additional treatment in areas of special
need. . .M. From this objective, to be met in a five-year period, can be
inferred the attainment of a condition in which required investments for
waste treatment and related purposes (i.e., projects entitled to Federal
assistance under Public Law 34-660) would be no greater in any year than
the amount of the requirements generated in that year. On the basis of
exhaustive analysis involving two parallel studies that employed widely
different methods—macroeconomic projection of the interaction of demand
constituents on the one hand, inventorying of locally determined construc-
tion requirements on the other—it was determined that no less than
$2 billion a year of investment must be elicited over the five years 1970
to 1974 if the goal were to be attained. Descriptions of these analyses
were transmitted to the Congress in the March, 1970 report, The Economics
of Clean Hater. That report emphasized that the amount of necessary
expenditure was not fixed, hut rather was a consequence of a series
of functions, including price level changes, technological mixes,
resource availability, and—most significant of all—the annual rate
of investment.
As indicated in Volume I, during the course of the year 1970 it became
obvious that several conditions were acting to upset the resolution of
the proposed $10 billion investment program. These include more stringent
treatment requirements, improved perception of needs, refinements of
estimates and construction sector inflation.
At the same time and in spite of the availability of expanded Federal
and State financial assistance, investment in 1970 did not achieve the
$2 billion annual level thought to be required to sustain progress toward
the nrovisional five year goal of complete availability of waste treatment
services compatible with water quality standards. By the end of 1970,
over $3 billion of Federally assisted works were under construction, and
about $1.2 billion worth of Federally assisted projects v/ere begun
during the year—up from $365 million in 1969. But neither value could
be considered sufficient to sustain progress toward the targeted goal.
Table I shows a comparison of actual events in 1970 with those of 1969.
-------
TABLE I
The Investment Picture 1969 and 1970
(Minion Dollars)
Works under Construction
New Starts
Completions
Host of the States seem to be recognizing the impact of these events
on their own circumstances. Each State was requested during June 1970
to estimate on a point by point basis the desirable level of capital-
ization of waste treatment works for the four fiscal years 1971 through
1974 as described in Volume I.
Faced with a similar request in 1969, the States had estimated a total
need for $10.2 billion of investment capital over five years. In June
1970, they expressed a collective need for $12.2 billion—but in four
years, (cf. Table 3). A more recent survey taken as of December 1970
shows a total need of $12.6 billion. The December estimates are shown
in Table 3.
A careful State-by-State review of the data summarized in Tables 2 and
3 suggests that there may be a significant amount of uncertainty involved
in local estimates of needs. In the course of a single year, ten States1
estimates of need increased by 100% or more, in spite of investment
occurring in the year. Granted that the scheduling of particular
large projects will have a significant effect on the distribution of
requirements in any period, it seems unlikely that one State in five
would suddenly feel the need to initiate projects of such significant
magnitude in a single year. Rather, it would appear that there were
either real changes in conditions, or that much of what was required
in 1969 was simply overlooked in that year.
On the brighter side, sixteen States provided capital estimates that
suggest,that they have reduced their backlog of needed works during
1970. Fewer dollars will be required, if their estimates are good, to
improve and maintain their public waste handling systems in the four
years 1971 to 1974 than in the five years 1970 to 1974. In addition,
nine States held their own, in the sense that their projected levels
-------
TABLE 2
INDIVIDUAL STATES' ASSESSMENTS OF
CAPITAL REQUIREMENTS,
1969 and 1970
Location
Indicated FY 1971-4 Needs
{Millions $Per-Capita*
California
Idaho
Nevada
Oregon
Washington
Pacific Coast
Iowa
Minnesota
Missouri
Montana
Nebraska
North Dakota
South Dakota
Wyomi ng
Northern Plains
Ari zona
Arkansas
Colorado
Kansas
New Mexico
Oklahoma
Texas
Utah
Southern Plains
Alabama
Florida
Georgia
Kentucky
Louisiana
Mississippi
North Carolina
South Carolina
Tennessee
Virginia
Southeas t
Delaware
District of
Columbia
Illinois
Indiana
Maryland
Mi chi gan
Ohio
West Virginia
Wisconsin
Central
Connecti cut
Maine
Massachusetts
New Hampshire
New Jersey
New York
Pennsylvania
Rhode Island
Vermont
Northeast
Alaska
Guam
Hawaii
Puerto Rico
Virgin Islands
Non-Contiguous
922.79
11.44
57.86
104.65
214.74
1311.48
66.77
161.67
327.10
15.67
74.70
7.55
17.25
1.80
672.51
78.75
30.50
45.10
61.80
10.60
78.80
573.70
33.67
912.92
45.45
457.10
177.62
94.59
162.00
42.96
122.02
58.29
138.08
220.70
1518.81
63.20
380.50
695.27
151.17
247.68
690.69
442.32
49.87
139.88
2860.58
231 .60
137.90
470.40
163.15
1187.60
1859.80
567.07
43.30
41.20
4702.02
35.89
14.23
82.55
61.95
16.56
211.18
47.81
16.27
128.87
52.12
65.55
50.96
24.07
44.33
70.72
22.62
51.91
12.04
26.30
5.71
45.51
47.36
15.36
22.08
26.95
10.54
31.27
52.26
32.56
38.81
12.77
74.31
38.88
29.38
43.48
18.33
23.82
21.88
34.74
48.03
38.04
118.35
470.33
63.26
29.87
65.98
79.04
41.78
27.67
33.14
61.52
78.16
141 .29
86.01
232.41
167.43
102.88
48.35
47.37
96.94
97.25
130.97
18.97
105.84
22.75
44.76
43.12
Indicated FY 1970-4 Needs
$Millions $Per-Capita*
U.S. TOTAL
12189.48
60.62
651.8
0.5
28.6
135.0
160.0
975.9
33.3
136.3
390.0
13.5
62.0
22.0
27.0
12.0
696.1
86.0
33.0
133.0
61.0
9.9
65.3
525.0
11.7
924.9
35.0
200.0
150.0
62.6
140.0
40.0
69.3
75.0
105.5
151.0
1028.4
28.0
355.0
437.2
152.6
236.9
253.7
432.5
44.3
243.7
2183.9
280.5
140.9
438.0
138.0
880.0
1900.1
432.0
51.5
70.0
4331.0
12.0
6.2
14.4
28.9
15.4
76.9
10217.1
33.77
0.71
63.97
67.23
48.84
37.92
12.00
37.37
84.32
19.48
43.09
35.09
41.16
38.10
47.11
51.71
16.62
65.10
26.60
9.84
25.91
47.83
11.32
39.32
9.39
32.52
32.84
19.44
37.57
17.06
13.53
28.15
26.54
32.86
28.61
52.43
438.81
39.78
30.15
63.11
29.03
40.85
24.58
57.74
46.97
94.67
144.36
80.09
196.58
124.07
105.11
36.83
56.35
164.71
89.58
43.80
8.27
18.46
10.61
41.62
18.68
50.81
% Change in
Net Change Annual Per-Capita
$Millions $Per-Capita* Needs
+271.0
+ 10.9
+ 29.3
- 30.4
+ 54.7
+335.5
+ 33.5
+ 25.4
- 62.9
+ 2.2
+ 12.7
- 14.5
- 9.8
- 10.2
- 23.6
7.3
2.5
87.9
0.8
0.7
13.5
48.7
22.0
12.0
+ 10.5
+257.1
+ 27.6
+ 32.0
+ 22.0
+ 3.0
+ 52.7
- 16.7
+ 32.6
+ 69.7
+490.5
+ 35.2
+ 25,5
+258.1
- 1.4
+ 10.8
+437.0
+ 9.8
+ 5.6
-103.8
676.8
- 48.9
- 3.0
+ 32.4
+ 25.2
+307.6
- 40.3
+135.1
- 8.2
- 28.8
+371.1
+ 23.9
+ 8.0
+ 68.2
+ 33.1
+ 1.2
+134.4
+1972.4
+14.04
+15.56
+65.17
-15.11
+16.71
+13.04
+12.07
+ 6.96
-13.60
+ 3.17
+ 8.83
-23.05
-14.86
-32.38
- 1.60
- 4.36
- 1.26
-43.03
+ .35
+ .70
+ 5.36
+ 4.44
+21.25
- .51
+ 2.94
+41.80
+ 6.05
+ 9.93
+ 5.90
+ 1.26
+10.29
- 6.27
+ 8.20
+15.17
+13.64
+65.92
+31.52
+23.48
-.28
+ 2.87
+50.00
+ .93
+ 3.09
-24.60
14.55
-16.50
- 3.07
+ 5.92
+35.83
+43.37
- 2.23
+11.52
- 8.97
-67.76
+ 7.68
+87.19
+10.71
+87.37
+12.14
+ 3.14
+32.65
+ 9.81
m
27643!
152%
-3%
50%
68%
48%
5%
45%
51%
-572
-20%
-81%
21%
14%
16%
-58%
27%
34%
51%
37%
260%
23%
70%
186%
48%
89%
45%
34%
120%
-3%
64%
83%
66%
182%
34%
99%
24%
31%
240%
28%
41%
-28%
64%
3%
22%
34%
48%
69%
22%
64%
5%
-26%
36%
274%
187%
617%
168%
34%
189%
49%
* U. S. Bureau of Census Estimate of 1968 Population
-------
TABLE 3
Fluctuations in State Estimates of Capital Needs
June 1970 and Decenber 1970
(Million Dollars)
Location
Meeds Increase >755!
Montana
New Mexico
Minnesota
Meeds Increase 50-74,92
Iowa
Ohio
Illinois
Puerto Rico
Needs Increase 25-49.9%
Mary!and
Arkansas
Wisconsin
Virginia
Idaho
Needs Increase 10-24.9%
Kentucky
Indi ana
Michigan
Maine
North Dakota
New Jersey
Needs Increase 5.1-9.9%
Pennsylvania
Colorado
Needs Change *S%
West Virginia
North Carolina
Washington
Connecticut
South Carolina
Delaware
Florida
Needs Decrease 5.1-10%
Wyoming
New York
Vermont
District of Columbia
Needs Decrease 10.1-25%
Massachusetts
Oklahoma
Virgin Islands
Rhode Island
Kansas
New Hampshire
Missouri
Louisiana
Nevada
California
Mississippi
Alaska
South Dakota
Oregon
Needs Decrease > 25.}%
Texas
Guam
Utah
Nebraska
Ari zona
Tennessee
Hawaii
Alabama
Georgia
U. S. TOTALS
June 1970
15.67
10.60
161.67
66.77
442.32
695.27
61.95
Z47.68
30.50
139.88
220.70
11.44
94.59
151.17
690.69
137.90
7.55
1187.60
567.07
45.10
49.87
122.02
214.74
231.60
58.29
63.20
457.10
1.80
1859.80
41.20
380.50
470.40
78.80
16.56
43.30
61.80
163.15
327.10
162.00
57.86
922.79
42.96
35.89
17.25
104.65
573.70
14.23
33.67
74.70
78.75
138.08
82.55
45.45
177.62
12,189.48
6
Indicated FY 1971-4 Needs
December 1970
31.4
19.6
295.2
111.9
733.5
1043.6
93.0
349.7
42.0
190.8
280.1
14.5
117.0
174.8
788.8
157.4
8.4
1309.7
616.4
47.4
51.4
125.3
216.3
229.5
57.6
62.0
444.2
1.7
1721.0
38.0
347.2
422.6
69.8
14.6
37.7
52.7
137.8
268.2
132.7
47.2
737.5
34.1
28,1
13.5
78.6
398.7
9.7
22.6
49.0
51.0
88.9
50.8
27.0
74.0
12,565.2
% Change
100.4
84.9
82.6
67.6
65.8
50.1
50.1
41.2
37.7
36.4
26.9
26.7
23.7
15.6
14.2
14.1
11.3
10.2
8.7
5.1
3.1
2.7
0.7
-0.9
-l.Z
-1.9
-2.8
-5.6
-7.5
-7.8
-8.8
-10.2
-11.4
-n.fi
-12.9
-14.7
-15.5
-18.0
-18.1
-18.4
-20.1
-20.6
-21.7
-21.8
-24.9
-30.5
-31.8
-32.9
-34.4
-36.2
-35.6
-38.5
-40.6
^58.3
3.1
-------
of expenditures did not increase more than indicated by the impact of
1970 inflation—9.8%, given the normal mix of transmission and treat-
ment plant investment. Twenty-five of the fifty-four States (i.e.,
fifty States, plus the District of Columbia, Guam, Puerto Rico, and
the Virgin Islands) reduced or maintained the backlog of needed works,
while twenty-nine indicated that backlogs increased during 1970.
Due to the changeable nature of the State-by-State estimates made in
1969 and 1970 it seems reasonable to conclude that the $12.6 billion
estimate in Table 3 does not represent a fixed estimate of investment
need. As discussed in following chapters.it anpears that cost effective
opportunities exist which, if carefully implemented, could result in
substantial overall savings for the nation. These chapters describe
various practices and policies which affect cost. It is also clear from
these estimatestshowing a $2.4 billion increase over the 1969 estimate,
that annual investment vrill have to be accelerated above the $2 billion
level deemed necessary in last years report.
As in previous years, estimates of industrial capital expenditures
were available only from sources outside of government. Perhaps the
best of these is the McGraw-Hill survey, conducted annually as a portion
of that service's quarterly capital spending survey. The report's
results—which do not distinguish between air and water pollution
control investments—are contained in Table 4.
There are sone interesting features hidden in the data. First,actual
investments reported for 1968 are somewhat above the investments
previously reported for that year. Presumably, the deviation results
from the process of extranolatinq from a differently constituted
sample. Though.not a significant difference (7.2% for the manufacturing
sector), the fact of difference indicates some of the difficulties
involved in dealing with these very slippery data. Second, actual
investments reported for 1969 are 15% higher than planned for that
year—almost an exact reversal of the previous year, v/hen outlays
did not meet initial intentions. Perhaps the easing of the capital
spending boom eliminated delivery and construction bottlenecks —
or perhaps the differences are attributable to sampling variability.
While the McGraw-Hill survey provides no information with respect to
the distribution of expenditures for air pollution control vs. water
pollution control, another source, the National Industrial Conference
Board, does make that distinction. Unfortunately, the NICB's most
recent survey was for the year 1968, and so is of less immediate
interest than the McGraw-Hill report. It nay be considered significant,
however, that the NICS data corroborate a steady upward trend in total
industrial investment for environmental pollution control. They also
-------
Table 4
INDUSTRIAL INVESTMENT IN
AIR AND WATER POLLUTION CONTROL
MCGRAW-HILL SURVEY
Millions of Dollars
Iron & Steel
Non-ferrous metal
Machinery
Transportation Eqt.
Stone, Clay & Glass
Other Durables
Chemical
Pulp & Paper
Rubber
Petroleum
Textiles
Food & Pdts.
Other nondurabies
Manufacturing
Total
Electric & Gas
Utilities
Mining
*Normalized
Water
Component
48%
NA
60%
t. 20&
ss 40%
NA
48%
65%
50%
48%
75%
55%
NA
1967
130
43
46
76
48
45
92
94
102
7
42
53
1968
119
15
113
54
40
68
109
82
K>
170
9
23
20
1969
179
41
83
92
63
172
140
143
9
260
10
58
31
1970( Planned)
199
84
149
120
95
163
226
184
20
205
23
91
57
50%
NA
NA
785
215
66
832
244
56
1281
285
105
1614
544
126
*Based on series of NICB Surveys and not » part of the McGraw-Hill
Report
8
-------
suggest that a steadily decreasing share of that investment goes Into
water pollution abatement facilities. From 55fl in 1962, water's share
dropped to 50% of manufacturing outlays 1n 1968; and some of the
larger and more significant Industrial components--primary metals,
petroleum, and chemicals--now would seem to devote less than half of
their pollution control Investment to water pollution purposes.
Whether the phenomenon is due to a more stringently enforced set of
air pollution regulations or to a wore fully available set of wastewater
treatment controlsiit is impossible to say, given our limited existing
knowledge of industrial waste treatment facilities and investment.
It is expected that the recently initiated National Industrial Waste
Inventory will improve our base of knowledge in the industrial sector.
The next report in this clean water series should be able to provide
an assessment of the progress made toward control of industrial vastes.
In addition to the data which will become available through the
inventory, the study being conducted for the Environmental Protection
Agency, Water Quality Office by the National Industrial Conference
Board will provide investment information on industrial waste treatment
facilities in place and planned for the future. This report should be
completed during the middle of calendar year 1971.
-------
THE CAPITALIZATION OF WASTE TREATMENT FACILITIES
Situation
Aggregate daily waste production and discharge, in terns of five day
biochemical oxygen demand (BOD-), are estimated to have a configuration
approximately like that shown in Table 5. f'ean waste production is
estimated to be over 120 million pounds per day, and mean discharge
45 to 50 million pounds per day, thirty percent reaching water through
the outfalls of public systems in standard metropolitan statistical
areas, five percent occurring through the discharges of communities
outside SMSA's, sixty-five percent occurring through separately
discharging factories. Over-all effectiveness of v/aste treatment
is estimated to amount to greater than sixty percent reduction of
BOD, or very close to seventy percent of theoretical limits for
conventional waste treatment; and reduction of oxygen demand of
sanitary sewage approaches 65%. (cf. Table 6.)
Those relationships represent a substantial, though generally unrecog-
nized, accomplishment of the American economy. Consider the situation.
When World War II ended, less than 75 million Americans v;ere orovided
with sewer services, compared to 140 million today. And of those
75 million, roughly 30 irinicn--pr forty nercent--"ere discharging raw
wastes. Industrial waste treatment simply did not exist in 1545,
except as provided by light industry attached to sewers in communities
that happened to supply waste treatment. While we, have no information
on either the distribution of waste treatment techniques or the volume
of industrial v/aste, it is not unreasonable to assume that no more
than half of municipal waste treatment capacity represented secondary
treatment .and the professional judgement of the neriori included the
assessment that industrial wastes were as great in volume as domestic
(probably a considerable underestimate, in the light of later know-
ledge). Using such crude estimates, the aggregate level of BOD
reduction could have been little more than 16% to 33% of domestic
waste strength, and nothing for an equal volume of industrial wastes.
Between 1945 and 1968, then, the economy increased the relative
effectiveness of its waste treatment fourfold, in the face nf an
expansion of waste production that may have amounted to as much as
390% of the 1945 level. Certainly that investment program must stand
beside highway construction and physical expansion of educational
facilities as an accomplishment, though the latter phenomena have
received a great deal of attention, while the expansion of waste
treatment has gone almost unnoticed. (Here, however, the discussion
relates only to the significant magnitude of construction works.
As shall be discussed later, this same significance does not carry over
to change in pollutants discharged to the nation's waters.)
11
-------
IVJ
Waste Source
TABLE 5
COMPONENTS OF NATIONAL SEWERED
WASTE DISCHARGE. 1968
Nil11on pounds BODc / DAY
Metropolitan population
Non-me tropol 1 tan popul a ti on
Separately discharging
industries*
Industries discharging through
metropolitan plants
Industries discharging through
non-metropolitan plants
TOTAL
(Industrial Total)
(Population Total)
(Through metropolitan plants)
(Through non-metropolitan plants)
Produced
17.9
5.3
80.0
18.2
0.7
12$. 1
98.9
23.2
36.1
6.0
Percent of
Total
Produced
14.7
4.3
65.5
14.9
0.6
100.0
81.0
19.0
29.6
4.9
Discharged
6.4
1.8
30.7
7.2
0.4
4f.1
38.3
8.2
13.6
2.2
Percent of
Total
Discharged
13.9
3.9
66.6
15.6
0.9
109.0
83.1
1.8
29.5
4.8
Percent
Reduced by
Treatment
64.3
66.0
61.6
60.7
42.9
€2.2
61.3
64.6
62.3
63.3
*Assumes 300 day average operating year
-------
TABLE 6
DISTRIBUTION OF MUNICIPAL WASTE TREATMENT
TECHNIQUES, 1962 and 1968
Technique
Imhoff or Septic Tanks
Primary Treatment
Chemical Treatimnt
Lagoons
Biological Filters
Activated Sludge
Extended Aeration
Other Secondary
Land Disposal
Int. Sand Filters
Tertiary Treatment
Total Treatment Systems
Untreated Discharge
Total Sewer Systems 1962
Mean BOD
Removal
30%
37%
60%
83*
8U
87%
88%
85%
99%
95%
94%
1962 - 67.3%
1968 - 64.6%
0%
- 58.1%
Plants
1,592
1 ,088
M
1,402
3,540
798
155
.132
266
342
0
9,399
2,068
11,467
1962
1000 's Indicated*
Served Removal
3,173.7
30,052.0
7,408.5
2,265.4
23,282.4
33,276.3
406.2
529.9
1,220.0
505.2
0
102,119.6
16,233.9
118,353.9
952,1
11,119.2
4,445.1
1,880.3
18,858.7
28,950.4
357.5
450.4
1,207.8
479.9
0
68,701.4
0
68,701.4
Plants
1,179
1,212
75
3,471
3,813
1,312
801
197
128
247
10
12,445
1,402
13,847
1968
1000 'S
Served
2,864.4
34.112.6
5,857.7
6,142.9
29,618.2
38,560.9
2,704.7
7,886.4
412.7
331.9
325.5
128,817.8
10,176.0
138,993.8
Indicated*
Removal
859.3
12,621.7
3,514.6
5,098.6
23,990.7
33.548.0
2,380.1
6,703.4
408.6
315.3
306.0
89,746.4
0
89,746.4
1968 - 64.6%
*Populat1on ftrved X mean removal * Indicated gross removal of BOD, in population equivalents (6 P.E. =
1 Ib. of 800$) and for domestic wastes only
-------
Much of the expansion of waste treatment services has taken place
fairly recently. Between 1945 and 1949 incremental waste treatment
service reached only 2 million persons, and public works activities
of all types were slow paced during the Korean War. But from 1952 to
the present, outlays for construction of waste treatment plants and
related works have increased in almost every year, (cf. The_Cpst_of
Clean Water and Its Economic Impact, U.S.D.I., January 1969, Tables
4,5). In sum, that investment is estimated to have exceeded $16
billion at this writing.
The general dimensions of the investment, through 1968, are summarized
by source in Table 7. Some of the obvious aspects of the current
investment picture cone into clear relief when arrayed in this form:
1) The major burden of investment has been borne by public
aaencies, and particularly by those located in standard metropolitan
statistical areas where almost 70% of U. S. population is concentrated.
2) A significant portion of the higher investment by the public
sector may be ascribed to the necessity of transmitting wastes to and
from treatment plants. The network of interceptor sewers, pumping
stations, and outfalls required in connection with the waste treat-
ment process accounts for 707> of investment in metropolitan areas, and
almost 25% in non-metropolitan urban areas anci in rural communities.
3) Unit investments vary sharply between retropeTitan, non-
metropolitan, and industrial waste sources. The pattern follows
closely the relative volume of wastes from the three sources, in that
the more signficiant the waste-producing category, the less must be
invested to achieve a given degree of treatment effectiveness, since--
as Table 5 indicates—the aggregate degree of treatment is estimated
to be approximately the same for rcetropolitan areas, non-metropolitan
areas, and for industry. Those relationships are largely determined
by some basic condition sets that have been examined at length in
earlier reports in this series. (See The Economics of Clean Water,
U.S.D.I., FWQA March 1970.)
a) The relative efficiency, in terms of unit cost of
removal, displayed by metropolitan area and industrial '.-/aste treat-
ment systems arises in part from the obvious economies of scale
available to them. Concentrated wasteloads, either expressed as
number of people available within the reach of a given treatment
plant, or in terms of the volume of wastes of a given factory, reduce
fixed costs per unit.
b) Industry, in particular, may enjoy scale advantages, in
that the smaller manufacturing unit within the reach of a public
system usually Has the option of connecting to that system when the
14
-------
TABLE 7
ESTIMATED INVESTMENT FOR WASTE TREATMENT WORKS
1952-1968*
Source of Investment
Aggregate Investment
1. Million of Dollars
Public Agencies in SMSA's
Public Agencies, Non-SMSA
Manufacturing Plants (estimate)
TOTAL
8,549.3
1,953.7
3,619.8
14,122.8
2. Dollars Per LB. of 1968 BOD5
Removal
Public Agencies in SMSA's
Public Agencies, Non-SMSA
Manufacturing Plants
Total
336.59
465.17
73.42
179.00
3. Dollars Per LB. of 1968 BOD5
Removal, Excluding Trans-
mission
Public Agencies in SMSA's
Public Agencies, Non-SMSA
Manufacturing Plants
TOTAL
102.40
338.60
73.42
96.52
* Excludes Collecting Sewers
15
-------
cost of separate treatment appears to be greater than that of joint
treatment. In Increasing measure, the same mechanism is being uti-
lized by metropolitan area communities. The decision to install
separate treatment or to cooperate vith one's neighbors becomes
available to a community where population is sufficiently concen-
trated in a given area; and the lack of such options forces the
outlying community (or factory) to provide treatment at a relatively
high cost.
c) The higher transmission costs characteristic of metro-
politan areas are an obvious consequence, indeed, the precondition, of
lower treatment costs. Use of larger waste treatment plants requires
transmission of wastes over longer distances or in greater volumes.
d) Industry, viewed in the aggregate, not only enjoys the
advantage of choice of technology and location, but combines with it
low relative unit transmission cost. Proprietary treatment plants
are almost invariably located at the factory site, so that sewering to
the treatment plant is apt to cost little more than for untreated
disposal. And when industry has the use of a public system available
to it, it tends to occur within a format of developed waste trans-
mission service, so that it may cost no more to transport the v/astes
of a factory to the plant site than it does a single household.
e) The apparent unit investment advantage enjoyed by indus-
try is exaggerated by an accident of time. Where a substantial portion
of the nation's stock of public waste treatment works dates back to the
nineteen-thirties, and a few units are even older, waste treatment had
only begun to be a factor in industrial planning by the late ninteen-
fifties. Essentially all of the industrial treatment projects that
have been undertaken over the last decade are first generation faci-
lities. In contrast, a very significant part of public capital
spending has had to be devoted to replacement and improvement of
existing facilities. Expenditures of substantial sums that result in
no Incremental waste reduction lend the appearance of high relative
cost to public works as compared to industrial ones, but the disparity
may be expected to disappear progressively over the course of the next
decade, as American industry becomes involved in the replacement and
improvement process.
The Influence of Federal Construction Grants
The expansion of waste treatment services over the last decade and a
half is hardly conceivable without the Intervention of Federal monies.
Per-cap1ta investment has doubled since enactment of Federal grants,
and with time, the amount and the proportion of total public spending
16
-------
provided by Federal government has increased steadily. In consequence
of the availability of the Federal funds, not only the prevalence of
waste treatment but the nature of its application has changed. Inter-
jection of large sums would appear have worked a qualitative as well
as a quantitative change in the conduct of public waste handling
services; and the scale of the problem-solving effort has enlarged so
much as to effectuate a transformation of its character.
Rapid extension of sewer services* cooperative utilization of facili-
ties by groups of cormunities, long-distance transmission lines,
public treatment of industrial wastes, and the development of area-wide
sanitary authorities may all, in some measure , be considered to be
correlates of Federal investment. For with the availability of
Federal assistance there has come an enlarged sense of the scope of
the water pollution problem, and a more aggressive and imaginative
public approach to the problem.
But much of the force of Federal financial assistance still remains
to be felt. Amendment of Public Law 660 has resulted in a progres-
sively larger Federal share of the total cost of v/aste handling
nrojects, and has elicited additional matching funds from State govern-
ment. It is possible to argue that these funds are entirely responsible
for expansion in public v/aste handling practices over the last decade;
for while total public investment for waste treatment advanced from
$350 million on 1956 to well over a billion dollars in 1970, local
government's share of the capital has remained fairly constant at
about $300 to $400 million a year*. Federal monies—including claims
on still unappropriated funds available under the reimbursement pro-
visions of PL 669—and those of State governments are essentially
responsible for expansion.
Even given the situation that local expenditures for waste handling
services are relatively constant, so that higher Federal and State
outlays translate without a multiplier into new projects and ulti-
mately into new works, the massive interjection of Federal monies
currently being experienced in the niarket for waste handling facilities
Correlation of total value of PL-660 eligible contracts, Federal
Grants, and volume of local government bond financing indicates a
$302.7 million local government annual spending base (standard devi-
ation $65 million) during the life of the Federal Assistance program,
17
-------
is sufficient to work an enormous alteration not only on the scale of
water pollution control, but in its very substance. Appropriations
for waste treatment plant construction grants in 1970 amounted to
almost two-thirds of cumulative Federal appropriations for the purpose
to that time, and exceeded the level of cumulative cash outlays (made
in the form of progress payments) during the entire fourteen year life
of the assistance program. Further, California, Oregon, Kansas, Ohio,
and Illinois followed the lead of other States and initiated or imple-
mented State fund-matching programs to enable them to take full
advantage of the enlarged availability of Federal capital. As described
later, even a $200 million level of Federal funds has been absorbed
into the economy only with the accompanying appearance of some very
inefficient resource allocations; and there is some question as to the
utility of a good portion of the expenditures made to date. The develop-
ment of mechanisms to effectively utilize larger amounts of Federal
funding will pose one of the significant public policy problems of the
1970's.
Another aspect of the impact of Federal construction grants on muni-
cipal pollution abatement capabilities makes it difficult to anticipate
effects. The funds are devoted to major public works, that are usually
among the most costly and the largest capital facilities operated by
local government. As one would anticipate, significant lags are
involved in their installation. The mean time lapse between the award
of a Federal construction grant and the initiation of construction is
15 to 18 months, and an even longer period is devoted to actual con-
struction. Those lags are responsible for the growing gap between
Federal grant awards and actual disbursements. Time elapsed between
the initiation of a project and its completion tends to be increased
by the Federal allocation formula, which establishes each State's
initial entitlement to grant assistance on the basis of copulation
and income. In the past, there have consistently been States that
could not allocate a year's full entitlement to funds in the samp year;
and the small list of States whose needs were not sufficient to take
up allocations at a $100 to $200 million level will unquestionably
expand at the much higher assistance levels proposed for the nineteen-
seventies.
Tine lags interfere, too, with our ability to gage the effect of
Federal construction assistance. In the early years of the nrant
program, dollar amount limitations and specific reservation of a
significant segment of Federal funds for the use of small connum'ties
sharply reduced the reach of assistance. In general, application of
Federal funds v;as limited to rather simple engineering nrojects vhose
scale end co^nlexity seldom involved extended periods of construction.
In consequence, little rx>re than half of the value of waste treatment
projects undertaken in the first years of the Federal program in-
volved Federal assistance, and mean construction time for those that
18
-------
TABLE 8
FEDERAL CONSTRUCTION GRANTS RELATED
TO PUBLIC CONSTRUCTION ACTIVITY
Millions of Dollars
Fed'l
Year
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
TOTALS
Total value
of Contracts
351
389
349
359
449
545
679
514
522
553
597
652
865E
6824
Fed'] Grant
Appropriations
50
45
45
46
46
80
90
90
93
121
153
203
214
1276
Fed'l Grant
Awards
38
48
46
49
45
66
93
85
84
120
134
194
203
1205
Federal
Disbursements
1
17
36
40
44
42
52
66
70
81
84
122
135
790
Apptns .
Basis
14.3
T7.6
12.9
12.8
10.2
14.7
13.3
17.5
17.8
21.9
25.6
31.1
24.7
18.7
Awards
Basis
10.8
12.3
13.2
13.7
10.0
12.1
13.7
16.5
16.1
21.7
22.5
29.8
23.5
17.7
-------
did was about tv/o years. But with larger amounts of Federal qrant
appropriations the dollar amount limitations v/ere removed entirely,
and the effective force of the fixed value reservation for use of
small communities was dissipated. Since 1966, almost every municipal
waste treatment project has involved PL 660 funds; and over the last
three years, the value of Federally assisted new starts has exceeded
the value of total contract awards—an anomally produced by the
reimbursement provision of PL 660, as well as by time lapsed between
the award of a contract and the start of construction. In the future,
it is probably safe to assume that as long as Federal construction
assistance is available, no community will begin a'waste treatment
project without the assurance of Federal grants.
With the expansion of the scale of projects for which Federal funding
has become available, the time to completion of such projects has
steadily extended. The 1968 conditions evaluated at some length in
this report include the effects, on average, of construction projects
begun in 1966. The much greater rate of activity initiated in 1970
will not be translated into average effects until 1973 or 1974.
Considering the entire life of the Federal program of assistance for
construction of waste treatment works, about half of the value of all
construction projects initiated between 1957 and the end of October
1970 had actually been completed, (cf. Table 9. Adjusting for
inflation makes some difference, since the amount of resources expended
has increased as their purchasing pov/nr has declined; but even with
the adjustment, almost 40% of the total value of projects undertaken
with the assistance of PL 660 grants represented works still under
construction in the third quarter of 1970.)
Capital Overhead
One sometimes receives the impression, from popular commentary on the
water quality situation, that great volumes of untreated municipal
sewage are being discharged into the nation's waters, and that these
are a significant source of water pollution. In point of fact, only
seven percent of the sewered population of the U. S. was discharging
raw wastes in 1968; and the figure is probably closer to five percent
today. Moreover, both treated and untreated municipal wastes are
currently estimated to be responsible for little more than 2Q% of
stream pollution, as discussed in a later section of the report.
It would be a mistake to infer from those relationships that capital
requirements are subsiding. While there is definite room to complete
the provision of waste treatment service, to upgrade the level of
waste treatment effectiveness, and to accomodate expansion require-
ments, there is also a need to service the very considerable capital
20
-------
TABLE 9
ANNUAL VALUE OF FEDERALLY ASSISTED
WASTE TREATMENT WORKS CONSTRUCTION
Value of Federally Assisted Projects
Mi
Calendar
Year New Starts
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
165
184
173
203
248
291
449
443
365
490
397
765
937
1135**
11 ions of Dollars
Completions
5
65
142
166
172
160
193
402
340
398
265
194
375
158**
Under Const.
@Year End
160
279
310
348
423
554
811
843
868
960
1091
1662
2224
3201**
Cumulative
Completions
as a %
Starts*
2.9
20.1
40.6
52.1
56.5
56.2
52.7
60.8
65.4
68.0
67.9
60.1
56.4
49 . 2**
Lag in
Months ,
Starts=
Completions*
-
-
27
23
21
22
26
24
34
34
37
43
46
48**
Cumulative 6164
3035
* Federally Assisted projects only
** 10 months, January 1970 through October 1970
21
-------
base already in existence. That overhead demand on capital has for
some years been the prime features of public waste treatment invest-
ments. Yet it has generally been overlooked.
At the levels of capitalization of the nineteen-sixties, recapital-
ization projects absorbed irost of the waste treatment investment made
by public agencies. That—though in lesser measure than the fact that
municipal waste management is directed to only a part of the total
water pollution problem—is a reason that public expectations have
been disappointed. To deal with the complexities of public wastewater
management, it must be recognized that most of the necessary capital
base~already exists, that iis very existence creates a significant
demand for capital services, and that great damage can result if we
allow the existing system to deteriorate.
The dimensions of the overhead demand for replacement capital have
been quantified. Replacement values of waste treatment plants in
place in 1962 and 1963 were calculated, giving full weight to scalincj
and technological differences, in terms of constant (1957-59) dollars;
and the values were compared to constant dollar investment over the
period. Approximately $2.1 billion of investment in waste treatment
works (interceptor sewers, outfalls, and pumping stations are excluded
from the analysis) produced only $780 million worth of additional
Physical capital. The difference between the Investment amount and
the caoital increment nay bo considered to constitute the value of
recapitalization of existing wor!;s that took place over the period.
As presented in Table 10, where recapitalization or depreciation is
expressed as the difference between the annual rate of investment and
the annual rate of expansion of the capital base, recapitalization
demand ainounted to 4.4% of replacement value of fixed capital over the
period. If depreciation is calculated on the basis of the average
rate of depreciation of a inoving capital stock, the rate amounted to
4.13 a year. Both values are very close to the design norm of 4% a
year utilized by the sanitary engineering profession. That general
agreement would seem to provide some confidence about the magnitude
of waste treatment plant recapitalization requirements for any given
capital stock, if one assumes that relative shortage of available
capital did not constrain recapitalization expenditures to something
below an optimum rate. On that matter there can be no assurance until
the aggregate level of investment moves distinctly upward, to allow
some scrutiny of the distribution of investments in a more generously
funded condition set.
It may be noted that while the national rate of depreciation is very
close to the 4% norm, there is distinct regional variation. Two
factors may be considered to be operative. The age composition of
22
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TABLE 10
EFFECTIVE RATE OF
RECAPITALIZATION, 1962-1968
(WASTE TREATMENT PLANTS ONLY)
Millions of 1957-59 Dollars
Annual Rate
ro
u>
Region 1962
Pacific Coast
Northern Plains
Southern Plains
Southeast
Central
Northeast
Capital
364.8
297.5
503.2
507.7
698.3
566.4
1962-68
Investment 1968 Capital
185.2
210.0
177.3
383.3
502.4
589.4
474.3
363.0
594.0
710.0
869.9
725.8
Indicated
Investment Capitalization Depreciation
6.Q%
8.0%
4.4%
8.2%
8.1%
10.9%
3.8%
2.2%
2.4%
4.9%
3.2%
3.6%
2.2%
5.8%
2.0%
3.3%
4.9%
7.3%
u. s.
2938.3
2056.5
3719.9
3.5%
4.'
-------
waste treatment plants varies from area to area; and the higher the
average age, the greater the effective rate of depreciation. The
other consideration is something of a mathematical fluke. Replacement
value of plants at either period was calculated on the basis of national
average costs, and so should conform closely to the national distribution
of investment in facilities. There are, however, extreme variations
in design and construction efficiency from region to region, (cf. The
Economics of Clean Water, U.S.D.I., FUQA, March 1970, pp. 40-52.)
Without exception, the higher than average depreciation rates occur in
high cost regions, the lower than average depreciation rates occur in
the low cost regions. Thus when the analysis moves from the national
total to a region, what is presented as depreciation or recapitalization
is a compound of recapitalization and efficiency differentials that
apply in the construction activity. In part, comparisinn of the 7.3%
indicated depreciation rate for the Northeast with the 2.2% rate of
the Pacific Coast weighs the fact that it costs considerably more to
build a v/aste treatment plant in New York than to build a similar plant
in California.
24
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TREND OF WASTE DISCHARGES
One possible measure of the effectiveness of State and Federal water
pollution control programs and expenditures is a comparison of the
amounts of sewered waste materials flowing into waterbodies over time.
It must be recognized that the test is by no means a satisfactory one—
too many elements other than collected wastes bear upon the Quality of
water. Such a comparison, however, does have considerable validity as a
measurement of capital efficiency, in that the primary emphasis of the
nation's water pollution control efforts has been to increase the degree
of treatment of collectable wastewaters; and that activity has been very
nearly the exclusive avenue for investment of funds intended to serve
water quality purposes.
Unfortunately, there is no set of records to provide such a comparison
on a macropconomic basis. It is possible, however, to synthesize the
information by calculating estimated waste production and discharge at
different periods.
Performance of the calculations for two significant waste constituents,
biochemical oxygen demand and dissolved phosphorus, at three points
in time is scarcely,reassuring. The estimates indicate that the
gross oxygen demand of wastes discharged in 1968 was almost unchanged
from—and probably slightly larger than—the level of 1957; and that
in the same period, the total pounds of phosphorus discharged with
domestic sewage had more than doubled. Almost $15 billion of public
and private monies were invested in v;aste handling facilities during
that period—and as a consequence of that investment, annual operating
charges increased by about $300 million.
Biochemical Oxygen Demand
Five day biochemical oxygen demand (BODrj) is probably the most useful
general indicator of the strength of organic wastes. It is the
measure of the amount of oxygen utilized in a fixed oeriod of time and
at a fixed temperature by the biological processes involved in the
stablization of organic matter. In itself it provides a very useful
measurement of the strength of organic wastes or the amount of organic
material present in a stream at any point in time. It is also an
extremely useful indicator of the general quality of a waterbody, in
that it has a loose and varying but largely dependable sort of assoc-
iation with other water quality measurements. It most cases v/e can
assume that a stream with a high concentration of BODq is apt to
be marked by some lowering of concentrations of dissolved oxygen,
a significant chemical oxygen demand, and elevated levels of
bacterial presence. For this reason—and because there are standardized,
generally accepted tests for BOD—it is the most widely used
25
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means of expressing, in almost shorthand fashion, the general
quality of waterj and it is accepted by sanitary engineers if not
ecologists as a surrogate for other parameters in broad descriptions
of waste characteristics or of stream quality. However useful this
measure is in describing overall quality, one cannot in actual fact
rely solely on it in specific cases of pollution. It does not compre-
hend such significant pollutants as mercury, pesticides, and other
toxic and hazardous substances.
Because of its well established position as the prime measurenent of
waste strength, BOD reduction is the standard indicator of waste treat-
ment plant efficiency, and the municipal v/aste inventories provide an
excellent guide to the oxygen demand of public wastes; but it must be
admitted that the estimates of industrial production and discharge of
BOD present in the tables that follow are gross aporoximations. The
technique employed to calculate production of BOD by manufactures
involved the application of the ratio of the 19F4 to the 1957 and the
1968 Federal Reserve Board Indices of nhysical production for various
industrial sectors to annual waste reproduction calculated for the same
industrial sectors in 1964. (The base data are summarized in
Table II-2, p. 63 of The Cost of Clean Hater, USDI; Washington, D. C.,
January, 1968.) The principal problem v/ith the method—given the
validity of the industrial production indices and the calculated base
year wasteloads--is the assumption of a constant viaste to output ratio.
the assumption is crude, but the fact is that there is not sufficient
information to attempt modification. (A variety of recent events
indicate that more adequate industrial waste information will be
available to the Environmental Protection Agency in the coming year.
Results of a questionnaire survey conducted for the Agency by the
National Industrial Conference Board will be forthcoming in the next
months. The survey is designed to provide information on current and
expected waste control practices and expenditures. The questionnaire
is reproduced as Appendix A.
(In the late 1970, approval was gained to initiate an industrial v/aste
inventory, on a national basis. A preliminary mailing of 250 ques-
tionnaires has been made to develop base information on anticipated
response rates and completeness of data.
(Activities related to implementing the Permit Program under the 1899,
Refuse Act (33 U.S.C. 407) as called for by the President in Executive
Order 11574, December 25, 1970, will shed further light on the in-
dustrial situation. Contracts for industry studies of those industrial
sectors generating over three fourths of the total volume of wastes
discharged directly by industry have been let. These contracts will
produce guideline data on the most prevalent methods of industrial
waste reduction as well as assessing the best waste reduction available
with current technology.
26
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The permit applications themselves will provide an unequalled and
hitherto unavailable source of information on the magnitude, distri-
bution and remedial needs of the industrial community.
(These coordinated efforts should essentially provide a quantum increase
in useful information for assessing and evaluating all aspects, both
physical and economic, of the industrial pollution abatement problem.)
Gross production of BOD is only a portion of the picture.
Pollution results from the strength and nature of wastes that are
ultimately discharged. From the estimates of waste production we must
deduct that portion of the polluting materials that is reduced by treat-
ment. The gross effectiveness of industrial waste treatment was
calculated from the ratio of investment capital in place to total
estimated capital requirements for each industrial sector. (Estimated
capital requirements for 1964 and 1957 were assumed to be equal to the
1968 capital requirement,* modified by a factor equal to the production
index for the given year divided by the 1968 production index. Capital
in place in 1957 and 1964 was derived by deducting from the 1968 cal-
culated replacement value, reported annual capital inputs,after
subtracting four percent of each year's capital in place—the four percent
figure intended to eliminate replacement/depreciation expenditures
to arrive at a value for net capital.) Treatment effectiveness, then,
is expressed in terms of the proportion of the optimum capital supply
available in aggregated industrial sectors at points, in time. The
optimum capital supply, by a loose interpretation of the definition
established by the guidelines used to adopt interstate water quality
standards, is that which is required to achieve 85% reduction of BOD5.
Adjustment of the industrial waste load to account for that portion
of industrial wastes that is sewered to public waste treatment
facilities probably imparts a slight downward bias to the calculated
degree of BOD reduction, because there is no accounting—from either
municipal or industrial sources—of the sectoral distribution of the
industries discharging to public facilities. It is possible to
estimate with some degree of precision just how much industrial waste
is handled by public facilities, but not what industries develop those
wastes. To produce a comprehensive BOD model, then, it is necessary
to work at the aggregate level, deducting from the total industrial
load that portion which can be assigned to municipal or other public
sources. Possible distortion in attributed efficiency of the self
treating component occurs because the capital effectiveness of the
treatment dollar varies between industries, due to scale factors and
differences in waste composition. The distribution of total wastes
* As developed in THE COST OF CLEAN WATER
27
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and of costs is, however, so strongly influenced by a few industries
(pulp and paper, organic chemicals, oil refining) that average costs
are in effect little more than the average costs that apply to the
preponderant group of industries. The sensitivity of over-all
efficiency to the sectoral incidence of use of public facilities is, then ,
probably very slight. The 61% aggregate BOD5 reduction efficiency
calculated to apply to independently discharging factories in 1968
changes little more than 2.5% in either direction when one calculates
the effect of consigning either the most capital-efficient block of
industries or the least capital-efficient group entirely to the
segment of plants making use pf public facilities.
Determination of the discharges of public waste handling systems
involves much less uncertainty than do attempts to estimate the same
values for industry. The Municipal Waste Inventory, provides us with
a knowledge of the number, kind, size, and served population of waste
treatment plants, as well as the number and service population of sewer
systems without waste treatment service. A couple of thousand invest-
igations of waste treatment plant operations provide a solid grasp of
the range of waste loadings and the range of efficiencies associated
with treatment plants of various sizes and types. By applying
appropriate loading and reduction rates to the reported stock of waste
handling systems, the order of magnitude of the wastes that pass through
the nation's system of public sewers can be ascertained with consider-
able confidence.
If the validity of the data can be accepted, the largest problem in
framing an estimate of publicly discharged wastes is distinguishing
between domestic and industrial sources that are served by the same
set of facilities. While modern data imply strongly that the rule
of thumb which holds that the characteristic relationship of one
hundred gallons of water and one-sixth of a pound of BOD per person
overstates the "normal" domestic wasteloading, the latter value has
been adopted in assessing the total domestic wasteload. The relationship
has been accepted so generally and so long that its use has the great
merit of reducing possible objections. And in view of the uncertainty
associated with estimating the gross volume of factory wastes, a slight
understatement of their proportionate share of the use of public
systems does not seem to offer a problem of relative moment.
The sets of products of the various calculations are presented in
Table 11.
While the details and the precision of the listed values may be
subject to considerable suspicion, there is little reason to doubt the
general validity of the relationships or the order of magnitude of the
values. The story that they tell is not reassuring one for those
concerned with environmental protection.
28
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TABLE 11
ESTIMATED INCREASE IN GROSS PRODUCTION OF
BOD5, 1957-68
Millions of Pounds of BOD5 Per Year
Increase
Waste Source
Food Processing
Textile Mill Products
Paper & Allied Products
Chemical & Allied Products
Petroleum & Coal
Rubber & Plastics
Primary Metals
Machinery
Transportation Equipment
All Other
Manufacturing Total
Sewered Population
TOTAL
Annual Rate
Reduced by Treatment
Annual Rate
Discharged
Annual Rate
Aggregate Treatment
Efficiency
1957
3400
660
4300
5500
410
20
350
100
50
300
15,090
5,700
20,790
8,090
12,700
39%
1964
4300
890
5900
9700
500
40
480
130
120
390
22,460
7,600
30,060
14,090
15,970
47%
1968
4600
1100
7800
14200
550
60
550
180
160
470
29,670
8,500
38,170
24,610
13,560
64%
1957-64
900
230
1600
4200
90
20
130
30
70
90
7370
2100
9470
5.4%
6000
8.2%
3270
5.9%
21%
1964-68
300
210
1900
4500
50
20
70
50
40
80
7220
900
8120
6.2%
10,520
15.0%
-2410
-4.2%
36%
Ratio of Domestic
to Industrial BOD
1:2.6 1:2.9 1:3.5 1:3.9 1:8.0
29
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Tne gross biochemical oxygen demand generated in the collectable
wastes of economic activities almost doubled between 1957 and 1968.
Within the period, the process took place at an accelerating rate-
increase in waste production for the four years 1964 to 1968 almost
matched the total increase that took place in the seven previous
years.
Manufacturing activities—paced by production of chemicals and chemical
products, estimated by 1968 to account for more than a third of total
BOD production—far outweighed domestic activities as waste sources
in 1957, and steadily increased their lead with the passage of time.
That rapid growth of industrial wastes traces not only to the raw
increase in industrial production that occured during the period, but
to its composition. The economy of the U. S. has been marked not only
by a voracious absolute demand for more goods, but by a relative
preference for goods whose production involves a substantial wasting
of organic materials to water.
Countering the increase in volume of organic wastes has required an
enormous expansion of the prevalence and intensity of waste treatment.
While total wastes, as measured by 8005, almost doubled in the period
under consideration, the amount of reduction of oxygen demand through
the application of waste treatment is calculated to have tripled.
Overall, then, there appears to have been only a slight increase in
the oxygen demand exerted on the nation's water resources as a result
of the discharge of collected wastes. And since 1964, the rate of
change in the oxygen demand of waste discharges has been strongly
negative.
Nutrient Phosphorus
Streams, lakes, estuaries and their beds are in many instances producing
rooted and floating flora in such profusion that they cause nuisances or
profound alteration in aquatic ecology. The condition clearly relates
to some significant set of changes in the circumstances that govern the
life processes of aquatic organisms. But since many conditions have
changed, there is no certainty as to what the critical productive
mechanism may be. Increased clarity of waters as a result of sediment
control and reduction of wastewater solids results in increased light
penetration, clearly favorable to vegetable productivity. Escalation
of the gross volume of materials discharged to water adds to the avail-
ability of all of the elements that nourish life forms. Heightened
temperature—a result not only of heated waste discharges but of stream
impoundment and reduction of streamflow—accelerates the life cycle
processes of growth and decay. And there are known to have been sub-
stantial increases in the discharge to water of specific nutrient
materials critical to the life forms involved.
30
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Explanations and control efforts, however, have been directed
increasingly toward the relative availability of a single nutrient
element, phosphorus. Underlying the attention to phosphorus are a set
of probabilities derived from the law of the minimum. The hypothesis
is supported by evaluation of production factors bearing upon the
relative availability of phosphorus in water, by observations drawn
from knowledge of the characteristics of treated wastewater, and by
controlled laboratory demonstrations. It would seem probable that
phosphorus is, indeed,a key to problems posed by extremes in aquatic
productivity.
In the context of a shift in all, or many, of the factors that affect
biological productivity in water, investigators have attempted to
deduce the most likely avenue for control by use of observations based
upon the law of the minimum--a logical principle that holds that where
more than one condition must be satisfied in order to produce a given
event, that condition which is least abundant with reference to demand
requirements will determine the magnitude of the consequent event.
In the case of algae and other water plants, the conditions required
for development are the presence of energy in the form of sunlight and
a supply of nutrient materials, principally carbon, nitrogen, and
phosphorus in the approximate relationship (for algae) of 106:16:1.
(Other nutrient elements are required in trace amounts, but the
insignificant quantities involved defeat any possibility for effective
biological controls.) Because algae can normally satisfy carbon require-
ments from carbon dioxide in the atmosphere and from the natural
carbonate in water, efforts to control aquatic production settled very
early upon nitrogen and phosphorus. Recognition of the fact that
blue-green algae, and perhaps other types as well, can also draw nitrogen
from the atmosphere, led to the conclusion.that attempts to control growth
solely by limiting availability of dissolved nitrogen in water would
also be of little purpose. By process of elimination, then, attention
has come to focus on phosphorus; and observations about the gross
availability and the form of dissolved phosphorus strengthen the
probability that it is the route to controlling the increased pro-
ductivity problem.
There is no question that the gross increase in waterborne wastes has
resulted in a significant increase in total amounts of dissolved forms
of carbon, nitrogen, and phosphorus. But because of atmospheric
availability of the others, only phosphorus can be considered to have
experienced an increase in usable supply from waste discharges. Further,
the relative availability of phosphorus to biota has been supplemented
by the extension of secondary waste treatment.
The relationship between the prevalence of secondary waste treatment
and relative availability of phosphorus is well understood, but often
ignored because of its embarrassing conflict with other water pollution
control requirements and prevailing strategies of water pollution
31
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control. Conventional waste treatment reduces the quantity of
phosphorus dissolved in wastewater. But the average relationship of
carbon to nitrogen and phosphorus utilization by the bacterial organisms
that accomplish conventional waste treatment permits only a fraction
of the nitrogen and phosphorus of sewage to be incorporated into sewage
sludges; so that the major portions of these wastewater constituents
remain in the discharged effluent. Furthermore, while biologic treatment
reduces fractionally the amounts of nitrogen and phosphorus in sewage,
it also stabilizes them, so that they are contained in the effluent in
a form immediately available to fertilize growth. In the case of an
untreated waste, or one subjected to only primary treatment, the dis-
charged effluent also contains nutrient materials but in a organic
composition, so that they become available to algae only as natural
decomposition occurs.
The whole process has been accelerated by another factor, the replace-
ment of soap by phosphorus-based synthetic detergents. Where
human metabolic processes are variously estimated to result in the
wasting of from less than a pound to about a pound and a half of phos-
phorus per person per year, average phosphorus loadings in municipal
wastewaters during the late nineteen-sixties were consistently found
to be equal to about four pounds per person per year. Most of the
difference has been attributed to the sewering of used detergents.
To heighten problems of phosphorus availability, a significant change
in detergent formulations was accomplished during the early nineteen
sixties. Previously, detergents had demonstrated a distressing
tendency to resist decomposition in either waste treatment plants or
in the natural environment. Due to the slow stabilization of the
compounds, foaming and discoloration became evident in many streams
as consumption of detergents increased. Steps to abate that water pol-
lution problem contributed to the creation of the problem of excessive
productivity. The detergent^mdustry was able to develop formulations
that suffered no reduction in cleansing power, but broke down readily in
waste treatment plants. That stabilization made the phosphatic con-
stituents of wasted detergents available as aquatic nutrients. To add
to the dimensions of the problem, "soft" or "biodegradable" detergents
typically contain significantly more phosphorus per pound than the
" hard" formulations that they replaced.
Such, in very general terms, are the qualitative dimensions of the
matter as they are defined by what has come to be the conventional
wisdom. Its quantitative aspects are not so readily manipulated.
Evaluations must rely on limited samples, general acceptance of some
provisional relationships, and some functional derivations. Those
circumstances mean that only order of magnitude accuracy can be claimed
for the following analysis. It is unlikely, however, that greater pre-
cision would serve any useful purpose in this report. Remedial actions
must take place in the context of conditions that apply in discrete
river basins. At the level of macroeconomic overview, consideration of
32
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relative magnitudes over time would seem to provide a sufficient and
credible level of detail.
Table 12 presents such a generalized description. While it must be
emphasized that unit values for phosphorus content represent fairly
arbitrary choices from ranges of cited values for influent and effluent
wastewaters, the calculated net per-capita discharge of 3.3 pounds per
year agrees generally with the value of 3.5 pounds per-capita per year
estimated by the International Joint Commission in its report on Lake
Erie and with values reported by the Committee on Government Operations
in its report Phosphates in Detergents and the Eutrophication of
America's Waters. Estimated reduction of pfiosphorus by waste treat-
ment processes is a particularly uncertain element of the system.
Reductions are generally expressed in the literature in percentage
terms, and the number of citations is depressingly slim—over half of
the reported values from which the tabular data were deduced came from
one survey in the State of Texas. The logic of the values presented
depends on the concept that phosphorus reduction is a function of
biochemical oxygen demand reduction, in that utilization of phosphorus
is dependent on the degree of stabilization of dissolved organics in
wastewater. The amount of phosphorus utilized in decompostion processes
is largely dependent on the total quantity of organic matter stabilized
rather than the amount of available phosphorus, given that phosphorus
is available in amounts equal to or greater than nutrient requirements,
so that percentage expression is considered to be an inappropriate
means of gaging relative effectiveness in phosphorus reduction.
(Complete elimination of dissolved phosphorus in domestic sewage is
theoretically feasible at the point that concentrations in influent
wastewaters are equal to nutrient requirements of bacteria).
There can be no doubt that industrial utilization of detergents as
well as direct processing of phosphate and phosphorus products adds
to nutrient availability, but there is simply not enough information
to even attempt to make an estimate of quantities. Natural sources--
decomposition products, resuspension of bottom muds, leaching—as well
as mining and agriculture add to the gross quantity of phosphorus
transported in water. To a considerable extent, however, these sources
are reduced in their ability to produce excessive growth by the propen-
sity of phosphorus to be adsorbed by soils. So contained, phosphorus
can be released to the water column through decomposition of rooted
bottom plants. For these reasons, remedial attention has been devoted
largely to phosphorus in sanitary sewage.
Sources of Waste Increases
Biochemical oxygen demanding materials and nutrient phosphorus are only
two of the scores of possible pollutants with which the economy must
deal. They have been selected for quantification and discussion because
they are most amenable to generalized analysis, and because they serve to
illustrate principal features of existing control programs. But it
33
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TABLE 12
ESTIMATED INCREASE IN PHOSPHORUS DISCHARGED
AS MUNICIPAL SEWAGE
1957 1964 1968
Sewered Population (Millions of Persons) 98.4 119.6 139.7
Per-capita Phosphorus Production,
Pounds:
a) From metabolic process 1.0 1.0 1.0
b) From consumption of Detergents 2.0 3.0 3.3
Total Sewered Phosphorus (Million pounds
in year) 295.2 478.4 600.7
Less Phosphorus Incorporated in Sewage
Sludge:
a) Primary treatment @ .5 Ibs.
per capita (million pounds in
year) (12.9) (20.4) (21.8)
b) Secondary treatment @ ].3 Ibs.
per capita (million pounds in
year) (63.6) (81.3) (111.8)
Total Discharged Phosphorus (Million Pounds
in Year)
218.7 376.7 467.1
34
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should not be inferred that they are the only significant causes of
pollution. Rather, they are convenient indicators of the dimensions
of pollutant production and of the relative magnitude of pollutant
sources. And while a broad group of pollutants and activities remains
outside of the reach of current technology, traditional sewered sources
of pollution such as solids, bacteria and BOD should be receding before
the application of waste treatment.
But even in their cases, there may be doubts about our ability to
maintain existing relationships between the rate of increase in waste
generation and the rate of expansion in effectiveness of waste treat-
ment. If the same processes were to continue into the future at the
rates that obtained between 1957 and 1968, at some point in 1974-5 we
would have reached the approximate threshold of waste treatment effec-
tiveness that is attainable with conventional technology—85% to 90%
BOD reduction. From that point forward, residual waste strength might
be expected to add in full measure to the polluting pressures exerted
on the national water resource; and in the 1980's that steadily
increasing waste!oad would again attain, then proceed to exceed, the
peak levels of 1963 or 1964. (See Table 13). These considerations
are not presented as a prediction, but only as a projection of the
circumstances that will come into play in the future if substantial
structural changes are not affected in ecological postures. Of course,
current conventional waste treatment technology is in no way an
ultimate barrier. Advanced water treatment techniques are available
being refined, and coming into increasing uses. But technological
shifts in water treatment tend to occur as series of step functions;
and each translation to a higher step would seem to at least double
the aggregate cost of treatment. Moreover—and perhaps most
significant—waste treatment, regardless of its cost, is not an
absolute good. There are secondary effects, not always foreseeable or
beneficial, when one tampers with the quality of water in order to
produce obviously desirable purposes.
The tentative conclusion that waste treatment is no more than a
convenient point of departure for any meaningful strategy of water
pollution control is reinforced by examination of the sources of recent
increase of pollutants. Underlying the growth of available biochemical
oxygen demand and of phosphorus are basic economic forces. To counter
the polluting effects of fundamental features of twentieth century.
technology and social organization would seem to call for fundamental
remedies.
35
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TABLE 13
PROJECTED INTERACTION OF TECHNOLOGICAL LIMITS
AND EXISTING RATES OF WASTE INCREASES
Million Pounds of BOD Per-Year
Year
1968
1972
1974
1975
1976
1980
1984
1988
1992
Produced
38,170
47,560
53,120
56,150
59,260
73,840
92,000
114,630
143,290
Reduced by Treatment
At 85% At 90%
24,610
36,915
45,220
47,730 50,535
50,370 53,330
62,760 66,460
78,200 82.800
97,440 103,170
121,790 128,960
Discharged
At 85% At 90%
13,560
10,645
7,900
8,420 5,615
8,890 5,930
11,080 7,380
13,800 9,200
17,190 11,460
21,500 14,330
36
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Total Increase:
Between 1964 and 1968, the population of the U. S. was estimated to
have increased from 191.4 million persons to 199.9 million persons,
about 4.4$ or just under 1.1% per year. During the same period,
estimated annual production of biochemical oxygen demand advanced by
a total of 8.1 billion pounds, or 27%, six times as fast as population,
compounding at a 6.1% annual rate. And while the increase in the
phosphorus content of sanitary sewage was not so great in absolute
amount, an estimated 122 million pounds over the four years, it was
equal in relative terms, rising almost 26%, an annual rate of increase
of 5.9%.
Population Increase:
Population increase is, of course, related to the increase in production
of pollutants, but it can by no means account for major part of the
growth. If expansion of sewered domestic wastes had been directly
proportionate to population growth, the rise in BOD of sanitary sewage
would have amounted to 330 million pounds between 1964 and 1968, and
the increase in the phosphorus component of sanitary sewage would have
been limited to 23 million pounds. Expansion of industrial output to
accommodate increased population at precisely the level and compostion
of per-capita consumption of 1964 would have added about 990 million
pounds a year to BOD production by 1964. Pure growth of population,
then, can be assigned the-responsibility for no more than 16.3% of the
gross expansion of BOD production and 19.1% of the incremental phosphorus
production took place over the four year period.
Expansion of Sewer Service:
The effects of population increase on production of water-borne
pollutants were heightened by a pronounced expansion of sewer service.
Where population grew at 1.1% annual rate, sewered population increased
at a 2.8% annual rate, so that an incremental 570 million pounds a
year of BOD and 33 million pounds of phosphorus had become available
through the expansion of sewer .services by 1968. The application of
conventional sanitary engineering in the form of expansion of sewer
service offset about half of the gain in reduction of BOD of sanitary
sewage that was effectuated by increasing the prevalence and intensity
of waste treatment during the period. It caused a net loss in the
degree of phosphorus control, in that incremental phosphorus reduction--
not a significant feature of conventional waste treatment—was well
under the volume of phosphorus in the water-borne sewage produced by
net expansion of sewering. Seven percent of the total increase in
BOD and 27% of the growth of phosphorus in domestic sewage between
1964 and 1968 can be traced to extension of sewer services in excess
of the rate required to match population growth.
37
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Gross Increase in Consumption:
The lion's share of responsibility for rise in production of pollutants
must go to the gross improvement and the distribution of per-capita
production and consumption of goods that took place during the four
years. Almost 77% of incremental BOD production and 53% of the in-
creased discharge of phosphorus to sewers can be traced to the amount
and composition of rising consumption of goods by Americans. Signifi-
cantly, much of that production can not be considered to have improved
the real economic well being of consumers. Twenty-three percent of
the total increase in BOD occurred as a result, of the growth of pulp
and paper output, where more elaborate packaging has provided much of
the impetus for growth. Similarly, no less than 55/« of the larger
output of BOD arose from chemicals production; and an indeterminate
but large portion of that increase must be ascribed to expanding use
of various disposable products. In the same general way, an estimated
42 million pounds of sewered phosphorus can be ascribed to increased
utilization of phosphorus in detergent formulations—an increase in
unit use that was again reinforced after 1968 with the appearance of
phosphorus-rich "enzyme" pre-soaks and detergent compounds.
Disposition of Waste Increases
The more than 8 billion nounds of biochemical oxygen demand that were
added to the annual waste production of the American economy between
1964 and 1968 represented not only an enormous potential to pollute
water, but a significant materials handling problem. Eight billion
pounds of BOD, given mean concentrations, implies the discharge of more
than 4 trillion gallons of v/astewater annually, well over 13 billion
gallons per day. Quite apart from the matter of abating the polluting
effects of materials carried in wastewater, the very volume of the
water being discharged under conditions of unrestrained growth of
wastes creates a source of continuous pressure on capital. For every
dollar that was invested by public agencies for waste treatment, more
than $1.75 had to be invested in waste transmission facilities—for
metropolitan areas it was $2.37—and 75<£ was invested for collecting
sevfers. In reviewing the situation, one cannot help hut wonder if the
exiaent pressures posed by the need to simply drain away the wastes of
our cities are not so great that they divert a significant amount of
the resources intended for water pollution control for purposes of
simple v/aste disposal.
In terns of relative strength, manufacturing was responsible for almost
90% of the increase in BOD that occurred in the period. However,
manufacturing outfalls are estimated to account for under 70% of the
increase in ultimate volume of waste discharges. An amount of industrial
waste equal to over 20% of the increase in industrial waste production
was consigned to public facilities, so that for every incremental pound
38
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TABLE 14
COMPONENTS OF CHANGE IN PRODUCTION
OF TWO MAJOR POLLUTANTS
1964 TO 1968
Change
Total Increase in BOD
From people
From Industrial production
Sources of Increase in BOD
Population growth
Net expansion of sewer service
Production to accommodate
population growth
Increased per-capita consumption
Total Increase in Phosphorus
Population growth
Net expansion of sewer service
Increased per-capita consumption
Millions
of Pounds
+8110
+ 900
+7210
+ 330
+ 570
+ 990
+6220
+122.3
+ 23.4
+ 33.5
+ 65.4
1964-68
Annual
Rate
+6.1%
+2.8%
+7.2%
+1.1%
+1.7%
+1.2%
+6.3%
+5.9%
+1.1%
+1.7%
+3.3%
39
-------
of BOD entering public waste handling systems from domestic sources
in 1964-68, about one and three quarters additional pounds from
manufacturing plants is estimated to have also been accepted.
That broader exercise of public authority over the waste discharges of
industry unquestionably played a large part in the ability of the
economy to reduce total strength of waste discharges. Where an estimated
8 billion additional pounds of BOD were produced in 1968 as compared to
1964, the ultimate strength of wastes discharged was about 2.4 billion
pounds less. And though 90% of the incremental wastes were generated
by factories, 30% of incremental net removal is estimated to have
occurred in public waste treatment plants.
That trend can be very closely traced through the size distribution of
the stock of waste treatment plants over time. There is a distinct
and well documented relationship (See figure 1) between the size of a
waste treatment plant and the per-capita volume and strength of the
waste that enters it. Given the fairly homogenous set of social
preferences and of product distributions in the U. S., it is unlikely
that the relationships trace to different consumption patterns between
residents of large and small towns. (Moreover, in the U.S. today the
small town with a waste treatment plant is slightly more likely to
be a suburb—and thus essentially urban in consumption pattern—than
it is a rural place.) The assumption upon which the quantification of
publicly treated industrial wastes is based is that increase of
per-capita loadings that accompanies an increase in size of plant can
be attributed to the discharge of industrial wastes. And while it is
true that some rise in hydraulic loadings occurs when increase in size
and area add to the probability of infiltration, it should be noted
that per-capita area and infiltration probabably tend to decline with
population. Even more significant is the fact that increase in waste
strength (BOD per-capita) takes place on a far more sharply sloped
curve than that for per-capita flow. Given the higher, average concen-
tration of industrial wastes, one would expect precisely that sort of
relationship between per-capita BOD and water volume in any situation
marked by a significant amount of industrial waste discharge.
Some of the major outlines of the recent public investment program for
waste treatment works are well understood, but the significance of
larger plants is often neglected. Over the last decade and a half
there has been a constant reduction in population discharging untreated
sewage, a steady rise in the degree of sewage treatment, and a rapid
growth of the proportion of the population that maintains sewer service.
Less obvious, but equally well documented, is the fact that all of these
converging lines of public activity have been accompanied by a steady
increase in the size of waste treatment works. That increase in size
implies a growing propensity by public agencies to assert control over
the treatment of industrial wastes.
40
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RELATIONSHIP OF TREATMENT PLANT
SIZE TO PER- CAPITA WASTE LOADING
Figure 1
.30
oz
Ou
i-J
CC
LT>
G3
00
.20
.10
.1
.25
RULE OF THUMB i
NORMAL
i i t i t i i
i » i i i j
BODR PER CAPITA /'
\ x
YX
i i r I I i i i
I 1 1 1 1 1 1 1
300
FlOW PER CAPITA
1.0
10.0
200
to
-o
m
=D
C-5
100
\ 1 1 1 1 1 1
100.0
PLANT SIZE. AVERAGE DAILY FLOW, IN MILLION GALLONS
-------
Increase in average size of waste treatment plant was distributed
fairly broadly through the economy, and is not a mere function of
population growth. The average population served by a waste treatment
plant has been declining as a result of emphasis on facilities for
small rural and suburban towns. At least 70% of the new waste treat-
ment plants coming into operation between 1962 and 1968 were in towns
of 10,000 persons or less (the maximum normal service population for
a million gallon per day waste treatment plant), and at least 28% of the
new plants were located in towns of less than 1,000 persons. As a
result, average population per plant dropped from 10,860 to 10,350.
Yet 90% of the incrementally served population was connected to
plants of more than a million gallons per day—50% of them by plants
larger than 10 million gallons per day.
On the basis of the assumption that larger plants correlate positively
with presence of industrial wastes, the general dimensions of the trend
toward more treatment of industrial wastes by public facilities that
provide a steadily rising degree of treatment is traced in Table 15.
It should be noted that the tendency to larger plants is by no means
uniformly distributed through the U.S. There are distinct regional
differences in per-capita loading of waste treatment plants of all
sizes, and so, one assumes, in propensities to treat industrial wastes
in public facilities. While the distinction in per-capita loading
between regions of the nation is far more pronounced than is the
distinction for size, and while Figure 1 represents a composite for the
U.S., so that its application to any place is apt to result in
distortion, all parts of the nation show evidences of the trend to
larger plants and broader service.
The result of the expanding prevalence and intensity of public waste
treatment services, and what we can infer from sample-based reporting
of industrial waste treatment expansion, has been a sufficient
improvement in the application of waste treatment to compensate for the
net increase in biochemical oxygen demand that has occurred since
1964, and to eliminate much of the net growth of BOD discharges that
occurred between 1957 and 1964 as well.
But the failure of broad gauge waste treatment strategy that is
unaccompanied by efforts to reduce or eliminate sources of polluting
wastes leaps into sharp prominence when attention is turned from BOD
to phosphorus. In that area of water pollution control—municipal
waste handling—where knowledge is greatest, where the reach of controls
exceeds all others, where government and the public interest are
involved directly and not as an external regulating force, estimated
growth of phosphorus discharged after treatment was almost equal to
increase in phosphorus discharged to sewers. A marginal reduction in
the percentage of discharged phosphorus was achieved by the increased
relative prevalence of secondary—as opposed to primary—waste treat-
ment. But on the basis of imputed removal effectiveness,-we must
conclude that three of every four additional pounds of phosphorus
that entered sewers between 1964 and 1968 were discharged directly to
water. (CF. Table 16.)
42
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TABLE 15
NET SHIFT-IN TERMS OF 1962 POPULATION
SERVED—IN WASTE TREATMENT PLANT SIZE AND TYPE,
1962-68
Change in Population Served as a Percent of 1962 Sewered Population
Capacity,
Million
Gallons
Per Day
PrimaryIntermediate Secondary Greater Than TOTAL
Treat- Treatment Treatment Secondary
ment & Lagoons Treatment
Unknown
0.5
0.5 - .999
1.00- 4.99
5.00- 9.99
10.00-49.99
50.00-99.99
100.0
-1.7
-0.2
0.2
0.8
0.6
1.0
2.0
0.9
0.5
1.3
0.4
0.9
0.1
-0.6
0.7
-1.0
TOTAL
3.6
2.3
0.9
0.6
0.4
3.6
2.4
4.8
3.2
4.8
20.7
-0.2
-0.1
-1.0
0.1
0.3
-0.3
-0.5
-0.5
1.6
0.9
5.2
3.1
5.5
5.6
4.7
26.1
43
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TABLE 16
DISPOSITION OF INCREASES IN TWO MAOOR POLLUTANTS
1964-68
Change, 1964-68
Millions of Annual
Pounds Rate
Disposition of Net Increase in BOD
Public sewers, populations
Public sewers, factory connections
Separately discharging factories
Net Discharge of BOD
From public systems
From separately discharging factories
+ 900
+1570
+5640
-2410
- 610
-1800
+2.8%
+8.4%
+6.9%
-4.3%
-3.3%
-4.6%
Net Increase in Phosphorus +122.3 +5.9%
44
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PREVALENCE AND SOURCES OF WATER POLLUTION
Background
The proposed substantial expansion of Federal grants for construction
of waste treatment works places the nation at the threshold of an
enormous investment program. Current plans call for at least a 50%
expansion within the next five years of the value of waste treatment
capital put in place during the twentieth century.
Paradoxically, this massive spending program is being undertaken at a
time when only about five percent of the sewered population of the
nation is not served by waste treatment, and when the degree of waste
reduction accomplished by treatment is greater than it has ever been
before for the population of the U. S.
There is little question that the money can be spent. Indeed, public
comment on the question of funding tends to be directed exclusively to
the possibility of deficiencies in the proposed level of spending. And
if the public's tendency to question the adequacy of municipal waste
treatment funding may be thought to arise more from an awareness of
water pollution problems and from urgency with respect to their abate-
ment than from knowledge of the causes of pollution or the status of
municipal waste treatment, it is sophisticated analysis of the rate
of growth of waste loadings, the shift of industrial waste treatment
responsibilities to the public sector, the pressures of upgrading and
replacement, and the effects of inflation and technological modification
that is responsible for the enlarged investment targets.
There is some question, however, whether the money will be spent
effectively. And here the record of the-past is not reassuring. The
data indicate that cost-effectiveness may be low in the conduct of
public waste disposal services,Without significant changes in existing
practice, there is slim hope that the rate of environmental improve-
ment will be proportionate to the rate of spending.
Evaluation of programs to abate water pollution on the basis of cost-
effectiveness is scarcely possible without first determining the
prevalence and causes of water pollution. Prior to the enactment of
water quality standards, such determinations were literally impos-
sible, and the definition of a state of pollution was little more than
a subjective exercise. While different persons could bring to the
exercise varying degrees of knowledge and experience, no one person or
group could claim more than self-constituted authority. Amendment of
the Federal Water Quality Act in 1966, and the establishment of water
quality standards pursuant to the Act, has completely changed that
45
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situation. At this time it is possible to take water samples at any
point on an interstate water body and, on the basis of a comparison
of laboratory determinations with legal definitions specific to that
reach of that water body, determine that a state of pollution does or
does not exist with respect to a given water quality parameter. Current
intra-state standards and, if passed, legislation extending Federal
standards to navigable, ground and contiguous zone waters provide almost
universal objective evaluation standards. Armed with those legal defi-
nitions, it is possible to speak with considerable confidence on the
current prevalence of water pollution. The Federal Water Quality
Administration* attempted in the summer of 1970, for the first time in
the history of the nation, to make just such an assessment for all waters
of the nation. Field offices in the nine FWQA Regions estimated
the percentage of the stream miles in each of the 233 second order
watersheds in the contiguous I). S. ( in addition to Alaska, Hawaii,
Puerto Rico, Guam, the Virgin Islands, and American Samoa) that could
be said to be polluted. Pollution was defined very strictly as a
demonstrable and recurrent breach of any of the physical or chemical
criteria applying to waterbodies, and not merely as violation of
regulatory requirements imposed upon waste dischargers. In addition,
for each watershed the assessors estimated the relative weight of eight
general classes of activity in causing pollution.
Water pollution may take so many forms that experience and judgement
are essential in making determinations. A few years ago, for example,
few even considered the possibility that mercury might be a signi-
ficant pollutant': the element is so scarce and so expensive that its
wasting was considered to be highly improbable. There was, then, no
known pollution of water by mercury so long as nobody looked for
mercury. And any of the natural elements in any of their inconceiv-
ably large number of compounds—including living ones—may pollute
when present in excessive concentrations. The task of identification
is an enormous one, and it is possible that the assessment fails to
include the effects of obscure or unexpected pollutants.
Given these difficulties, it is impossible at this time to produce any
objective comparative index of pollution which takes account of the
multi-dimensional factors vihich cause pollution. At this point, assess-
can be made with fair assurance with respect to one dimension of a
* Now the Water Quality Office, Environmental Protection Agency under
provisions of Reorganization Plan No. 3, 12-2-70.
46
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multi-dimensional problem. It can be said that water pollution from
a specific pollutant does or does not exist for specific places in
waterbodies at a given point in time. But there is no universal pro-
cedure for relating to the statement of prevalence either time or
intensity in a completely general way. It can for example, be said
that a river is more polluted or less polluted than it was five years
ago if the concern is with adverse effects of the same pollutant.
Similarly, comparisons may be made between Stream A and Stream B if
the measure of concern is common. But the quantitative measure of the
change in the state of pollution if the types of polluting substances
are varying is undefined. How,*after all, does one weigh a one part
per million improvement in the dissolved oxygen concentration of the
Delaware River in August against a fifty percent increase in annual
production of blue-green algae in Lake Erie? Can one possibly set a
five part per million reduction in the fluoride level of Idaho's
Portneuf River against a two degree average temperature increase in
Maryland's Anacostia River and say that the aggregate water quality
of the nation is better or worse?
Another point deserves to be made about the water quality assessement
that is summarized here. It is obviously impossible to provide suf-
ficient data over a sufficient period of time to define in precise,
quantitative terms what the quality of the nation's waters may be at
any time. Rich as the U. S. is, its economy does not have the
resources to conduct such an undertaking. What exist are samples of
water quality made at different points and different times. In many
cases fixed location testing stations provide recurrent data. In other
cases, particular water quality monitoring campaigns have produced
background data at a single point, or series of points, on a single
occasion or at intervals. On the basis of such data, knowledge of
streamflow, and other influences on quality, the assessors have extra-
polated judgements. They are, like most scientific generalities,
quasi-objective status reports and not actual measurements. The
assessors, then, are critical elements of the assessment. The eval-
uations considered were prepared by men who are, by training and by
inclination, attuned to the probability of pollution. The jobs they
perform, the experiences they have accumulated, their status, the
whole complex of conditions that has given them a particular view of
the world, incline them to pessimism. If they err, it is likely to be
in the direction of overstatement. These reservations are expressed
not to cast doubts on the assessment—it is, after all, a compendium
of the judgements of the best qualified professionals—but to indicate
the volatile nature of the pollution phenomenon and to provide possible
explanations of what may seem to be anomolies.
47
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A Regional Base For Comparisons
The assessment of the prevalence of pollution prepared by Regional
Offices finds that almost a third of U. S. stream miles are character-
istically polluted. (CF Figure 2.) Half or more of the total stream
miles of over 2055 of all second order drainage systems* in the U. S.
have ben assessed to be polluted. In almost 50% of our watersheds,
2Q% to 50$ of total stream miles are considered to be polluted. Less
than 10% of U. S. second order drainage systems were characterized by
the assessors to be unpolluted or moderately polluted.
There are distinct regional differences in the prevalence and ostensible
causes of pollution. The most general statement of the distinction is
that States lying west of the Mississippi River appear to have rela-
tively more miles of polluted stream than do States that lie east of
the Mississippi. The fact is entirely consistent with our understanding
of the causes of water pollution, the effects of which are magnified by
low natural streamf1ows. Much of the Western U. S. is arid, and that
underlying deficiency in the quantity of water makes the task of insur-
ing adequate quality more difficult than in the humid Hast.
But the distinction between East and West does not adequately charac-
terize the variety of the American water pollution condition.
Comparative analysis reauiros somewhat finer distinctions. For
analytical purposes, then, a set of regional groupings are proposed
here to distinguish groups of States characterized by similar climatic
and hydrologic circumstances, and also by obvious consistencies in
economic specialization, demoqraphic trends, and water pollution
control strategies. Six broad groupings are proposed, three lying
east of the Mississippi River, three west of the Mississippi, (See
Figure 3.)
The Pacific Coast States (Washington, Idaho, Oregon, California,
and Nevada) combine moderate, hunrid climates in a thin, densely
populated coastal corridor with an arid, sparsely settled eastern
plateau that occupies most of the land area. Population growth
exceeds that of the other five broad regions; and a distinctly larger
portion of the area's population is concentrated in standard metro-
politan statistical areas than in the other regions. A very high
* The nations river systems are geogranhically classified for purposes
of hydrologic description. There are major basins which encompass the
waters of the coterminous U. S. These are further subdivided into 233
sub-basins. It is to these that the term "second order" drainage systems
apply. They are shown in Figure 4.
48
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Figure 2
SECOND ORDER DRAINAGE SYSTEMS
CLASSIFIED BY PREVALENCE
OF WATER POLLUTION
50
40
30
20
10
0-5 5-15 1525 25-35 35-45 45-55 55-65 65-75 75-85 85-95 =»95
% OF MILES POLLUTED -*•
49
-------
Figure 3
REGIONAL CONFIGURATIONS
, -
(
-------
percentage of the total population has sewer connections. Waste
treatment is almost universal; but the prevalence of secondary waste
treatment is relatively low.
The Northern Plains States (Montana, North Dakota, Minnesota, Wyoming,
South Dakota, Nebraska, Iowa, Missouri) constitute the most sparsely
populated of the regional groupings; and in spite of the presence of
three metropolitan areas having populations well over a million persons
each (St. Louis, Kansas City, Minneapolis-St. Paul), very close to
half of the total population is non-metropolitan. Population growth
is slower than in the other regions, as is the rate of increase in
sewering. A substantial portion of the total population was without
waste treatment in 1968, at least as compared to the other western
regions; though that relative deficiency has been considerably reduced
with the completion of the major St. Louis waste treatment plant and
the extension of its services to outlying areas. (Over 800,000 persons
were discharging raw waste in the St. Louis SMSA in 1968.)
Southern Plains States (Utah, Colorado, Kansas, Arizona, New Mexico,
Oklahoma, Arkansas, and Texas) make up the most arid of the six regions,
the one with the highest incidence of sewering, and the highest appli-
cations of waste treatment. Although recent population growth has
occurred at a rate no greater than the nation's, population of the 38
SMSA's has increased at a rate equivalent to that of southeastern
SMSA's, and little lower than that of those of the Pacific Coast. A
relatively large, but declining, non-metropolitan population component
is responsible for the apparent low rate of population growth. Because
water is scarce, attention to it is imperative; thus the region not
only stands first in incidence of sewering, but leads by a considerable
margin in the application of waste treatment at the secondary and
higher levels.
The Central States (Wisconsin, Michigan, Illinois, Indiana, Ohio, West
Virginia, Mary land-District of Columbia, and Delaware) comprise the
most industrialized of the groups of States, are very densely populated
compared to the Southeastern or any of the Western groups of States,
and are growing in population at just about the same rate as the nation.
A large proportion of the metropolitan population is sewered, but a
surprisingly small proportion of the non-metropolitan population
receives sewer service. Virtually all of the sewered population
receives waste treatment; and the incidence of secondary treatment
is considerably higher than for the nation as a whole.
The Northeast (New York, Vermont, New Hampshire, Maine, Massachusetts,
Connecticut, Rhode Island, Pennsylvania, and New Jersey) is the most
populous of the six regions, and the smallest in area. Prevalence of
51
-------
sewering is well above the national average for both metropolitan and
non-metropolitan communities; but in spite of the incidence of sewering
and its highly concentrated population, application of waste treatment
in the Northeast lags the rest of the nation. Almost 12% of the sewered
population was without waste treatment in 1968; and those 4.5 million
persons constituted 45% of all persons estimated to be discharging
untreated sanitary sewage that year (as compared to the region's 24.4%
of U. S. population). Relative intensity of treatment, too, is dis-
tinctly below the national average, with almost half of the sewered
population provided with less than secondary waste treatment, as
compared to a little over a third on a national basis.
Southeastern States (Kentucky, Virginia, Tennessee, North Carolina,
Mississippi, Alabama, Georgia, South Carolina, Louisiana, and Florida)
are the most rural in composition of the six groups of States, but
stand second only to the Pacific Coast in rate of population growth.
Incidence of sewering is lowest among the six regions, though the rate
of expansion of sewer services exceeds that of the other areas east of
the Mississippi. The region led all others in relative discharge of
untreated sewage in 1968, due in large part to the substantial segment
of the sewered population of some of its principal metropolitan areas
that was not provided with waste treatment services. (Charleston, S. C.
120,000; Columbia, S. C. 99,000; Jackson, Miss. 130,000; Memphis, Tenn.
522,000; Montgomery, Ala. 164,000; New Orleans, La. 542,000; Savannah,
Ga. 124,000; Shreveport, La. 234,000.)* In fact, the metropolitan
population without waste treatment of these States exceeded by a con-
siderable amount the combined total for all persons west of the
Mississippi plus the central States.
Prevalence of Water Pollution
A substantial portion of American waterways is characterized by FWQA
assessors to be persistently polluted. Of 233 second order drainage
systems in the forty-eight contiguous States, FWQA could define only 19
in which no greater than 5% of stream miles were continually or recur-
rently in violation of established physical, chemical, or bacteriological
criteria—and 16 of those 19 are found in one area, the region distin-
guished here as the Southeast. Even with the relatively low prevalence
of pollution in the Southeastern U. S., we find that the median and
* Sewage treatment plants are presently under construction or planned
for in these communities.
52
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NATIONAL WATER QUALITY ASSESSMENT:
PREVALENCE OF POLLUTION IN SECOND ORDER DRAINAGE SYSTEMS
NATIONAL WATER
QUALITY ASSESSMENT
mfC PnMiwlly Pollnted(?5«.arijmmtal
E«teosmly Polliteil(20-49.9?ijt[OTjiild
Locally Minted {10-19.9% stream mite)
I 1 Slightly Mtnri(
-------
en
TABLE 17
ASPECTS OF REGIONAL SEWAGE SERVICES
1968
1.
2.
3.
U.S.
Population, 1968
Total (MiHions) 198.0
Annual Increase,
1962-68 (Percent)
Percent Metropolitan
Sewering, 1968
Percent of SMSA pop.
Percent of Non-SMSA
Percent Annual Increase,
1962-68 SMSA
Percent Annual Increase,
1962-68 Non-SMSA
1968 Waste Treatment
Percent Untreated Discharge
Percent Primary Treatment
Percent Intermediate &
Lagoons
Percent Secondary
Treatment
Percent Greater than
Secondary Treatment
1.2
68.6
79.5
45.9
2.7
2.9
7.3
26.6
8.6
56.7
0..7
Pacific
Coast
25.7
2.1
83.6
85.1
53.8
5.4
2.5
0.7
46.0
7.5
44.7
1.6
Northern
Plains
14.8
0.4
53.4
72.4
48.6
1.1
1.6
13.2
22.6
16.7
43.7
3.7
Southern
Plains
23.5
1.2
59.6
84.7
59.8
4.6
3.3
2.0
4.6
12.8
80.1
0.5
South
East
39.9
1.4
46.4
59.9
37.4
2.4
3.3
15.0
24.5
7.7
52.4
0,6
Central
45.7
K3
74.8
82.3
36.2
1.8
1.2
1.9
22.7
6.0
69.0
0.2
North
East
48.3
0.8
82.4
82.9
58.7
1.5
4.2
11.9
33.5
8.6
45.4
0.5
-------
modal incidence of pollution for the nation occurs at over 30% of stream
miles (cf. Table 18). More than a third of total stream miles are
defined to be polluted in every region of the U. S. except the Southeast.
The incidence of pollution, as it is defined by the FWQA national asses-
ment, fits none of the accepted patterns of cause. The conventional
wisdom offers no ready explanations for the phenomenon. The fact that
the Northeastern States have the highest indicated prevalance of pollu-
tion is almost comforting, in that it fits all of the preconceptions.
The area is characterized by large and highly concentrated population,
massive manufacturing capacity, a relative deficiency in waste treatment.
The region should, according to the conventional scenario, have a great
number of polluted stream miles. But the Northern Plains States stand
second to the Northeast in the average prevalance of pollution, and
exceed the Northeast in the relative number of watersheds in the most
polluted category, reactions become more than a little uncomfortable.
That the sparsely populated Dakotas, almost completely unindustrialized,
where every small town has its secondary waste treatment plant, should
have relatively more polluted stream miles than New York State is un-
settling. And to find that the nation's best water quality—in terms of
compliance with water quality standards—is to be found in the region
with the lowest incidence of waste treatment does additional violence
to any complacency about the direction of existing pollution abatement
programs.
Not even the most ancient of our conceptions of sources of water
quality degradation, deficiency of streamflow, holds up entirely.
While eastern streams, in total, are judged to be less extensively
polluted than western streams, the better showing traces entirely
to the waters of the Southeastern States. Pacific Coast States provide
a consistently better record of compliance with water quality standards
than either the Central or the Northeastern States; and even the most
arid of the six regions, the Southern Plains, compares quite favorably
with the Northeast and not unfavorably with the Central States.
We are left, then, with only a single certainty. A very large portion
of all U. S. waters consistently demonstrates quality characteristics
that violate established criteria. These violations occur in densely
populated and sparsely populated areas, in humid and arid climates, in
industrialized, in agricultural, and in forested regions, and apparently
without reference to either the prevalance or the intensity of waste
treatment. The lack of a pattern makes it impossible to judge whether
conditions are improving or deteriorating; but the consistency of the
pattern of pollution suggests that there may be inefficiencies in
current approaches to pollution abatement.
55
-------
tn
TABLE 18
GENERALIZED PREVALENCE
OF POLLUTION, 19.70
Percent of Watersheds In Pollution Status
Region Percent of
Stream Miles
Polluted
Pacific Coast
Northern Plains
Southern Plains
Southeast
Central
Northeast
E. of Mississippi R.
W. of Mississippi R.
U. S.
33.9
40.0
38.8
23.3
36.6
43.9
31.6
35.5
32.6
Predominantly
Polluted I/
14.8
37.5
27,3
14,3
23,2
36.1
23,0
24.1
23.7
Extensively
Polluted 2_/
59.3
33.3
51.5
41.1
51.8
55,6
48.7
47.1
48.5
Locally
Polluted 3_/
22.2
25,0
18.2
16.1
21.4
5.6
15.5
20.7
17.7
Slightly
Polluted 4-7
3.7
4.2
6.1
28.6
3.6
2.8
12.8
4.6
9.9
]_/ Predominantly Polluted : >_ - 50% of Stream Miles Polluted
2_/ Extensively Polluted: 20 - 49.9% of Stream Miles Polluted
3_/ Locally Polluted: 10 - 19.9% of Stream Miles Polluted
4/ Slightly Polluted: < 10% of Stream Miles Polluted
-------
Causes of Water Pollution
The apparently erratic geographic distribution of water pollution may
36 explained in part by a review of apparent causes. The national
assessment of the prevalence of water pollution included an evaluation
for each second order watershed of the indicated causes of pollution,
in terms of relative weight.
Causes of pollution were classified according to their association with
categories of human activity. Natural causes of poor water quality
^ere not considered, on the basis that water quality standards are, at
least in theory, developed in terms of water uses that are possible
within the framework of natural conditions. Recognized sources of
pollution for the assessment were eight:
1) Municipal Wastes include all wastes that are collected and
transmitted through community systems of sanitary sewers. Both
commercial and domestic sanitary wastes, and the wastes discharged
by manufacturing plants to public sewer systems, fall into the category.
2) Other Urban Wastes include the waterborne residues of urban
activity that do not routinely enter the system of sanitary sewers.
Direct runoff from urban areas, overflows and bypasses of waste treat-
ment plants caused by combined storm and sanitary sewers, and the
unassimilated drainage of septic tanks comprise the major elements
of the category.
3) Industrial Wastes include the separately discharged wastes of
manufacturing. Both process waters and manufacturers' cooling waters
fall under this heading.
4) Electrical generating was defined to include the discharge of
heated cooling waters of thermal power generating stations, the presence
of radioactivity from nuclear fueled power plants, and the particulate
fallout and acidity associated with fossil fueled power plants. In
several watersheds, however, the disruption of the natural hyrologic
regimen associated with generation of hydroelectric power was included
by assessors under this category rather than the general category of
"other" which was intended to include all water management activities.
5) Agriculture, as a source of water pollution, includes the
effects of runoff on siltation of streams, organic and nutrient
loadings originating with livestock, concentrations of pesticides
and herbicides from the runoff of agricultural lands, and salinity
that occurs with leaching and evapotranspiration in the irrigation
process.
57
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6) Mining's effects en water quality include siltation from
scarred lands, acid drainage from reaction of water with exposed
mineral seams, and pumping of brine deposits.
7) Spills, which receive a great deal of attention because of
their often catastrophic nature, include the deposit in water of any
polluting or toxic material as the result of accident.
8) Other sources of water pollution are, obviously, unlimited in
concept, since they include any human event or activity not considered
under one of the other seven categories of polluting activity. In
practice, however, the "other" category resolves into three principal
classes: water management in the highly regulated streams of the
west, the promotion of sedimentation by construction, and the effects
of transportation—principally navigation—including stream dredging.
The use of the eight categories of polluting practices is valuable for
analytical purposes and for program formulation, but the real world
distinction among pollution's causes are not nearly so distinct as the
employment of the specific categories would imply. In practice, water
pollution can rarely be traced to a single cause. In most cases, all
eight forms of activity occur in the same watershed—and several of
them may be found at approximately the same stream point. Distinguish-
ing their relative impact, then, is very largely a matter of judgment
and study.
The indicated causes of pollution, it must be stressed, do not consti-
tute as reliable an assessment as that of the prevalence of pollution.
Judgment as to the occurrence or absence of pollution requires extra-
polation between measured points in space and in time. In the case
of causes, it requires a rather fine distinction among simultaneous
occurrences, a weighting of the relative significance of inter-related
conditions.
As in the case of the prevalence of pollution, this study's procedure
includes no effort to revalue the judgments of the assessors. All
data have been accepted as they were given, on the basis that the
experienced judgment of the men on the scene must in most cases be
better than that of the analyst removed from the event.
On the other hand, it must be recognized that there is something that
is essentially specious about any effort to quantify the relative
contribution to water pollution of various activities. The distinc-
tions are simply too fine and interdependent for accuracy. For this
reason, the analytical method has attempted to further separate the
various influences on water quality into distinguishable prime causes
and all other.
58
-------
PRIME CAUSES OF
STREAM POLLUTION, ALL
SECOND ORDER
WATERSHEDS
Percent of Stream Pollution Attributed to Prime Causes
en
Prime Causes, In
Descending Rank
Industrial Wastes
Municipal
Agriculture
Other
Mining
Other Urban Wastes
Power Generation
Spills
U. S.
23.7
21.8
11.2
3.7
2.8
0.9
0.4
0.1
Pacific
Coast
12.7
13.0
19.1
11.8
2.4
-
1.5
_
Northern
Plains
21.0
15.6
28.8
0.6
2.6
-
-
_
Southern
Plains
9.2
14.2
27.6
16.6
12.6
0.1
-
_
Southeast
34.7
21 .2
1.3
1 .7
0.3
0.7
0.6
-
Central
21.5
28.5
5.8
0.4
4.9
1 .9
0.6
0.2
Northeast
33.5
27.1
0.5
-
2.6
1.3
0.1
-
Total Prime Causes 64.6
60.5
68.6
70.3
60.5
63.8
65.1
-------
The selection principle was simple enough. In every watershed the
assessors indicated that from five to eight of the categories of
activity added to pollution of water. The analytical procedure was
to select the smallest number of those causes that could be added
together to account for at least 50% of the indicated pollution. These
were then considered to be prime causes for that watershed. There is
no difference in the aggregate between the categories of activity that
are considered to be prime causes of pollution and those that are
considered to be contributory causes. The distinction was made
separately for each second order watershed. In most instances, one
or two causes were thought to account for half or more of the polluting
effects. For all watersheds, the mean number of prime causes was 1.8,
and the proportion of pollution attributable to them was greater than
65%---;ndicating that, in general, the major indicated cause of pollution
in any instance is substantially more significant than other causes.
Comparative significance of prime causes was assigned, within regions
as well as for the nation as a whole, in terms of index numbers based
on stream miles and degree of pollution, ([percent prevalence of pollutior
multiplied by stream miles multiplied by percent pollution attributed
to a prime cause] divided by [the sum of percent prevalence of pollution
multiplied by stream miles] = percent of pollution attributed to a prime
cause.) Again, the procedure is by no means precise, but by limiting
the analysis to prime causes, it is hoped that uncertainty attribute!
to background conditions is reduced, so that we distinguish the more
obvious (and thus, hopefully, better founded) portions of the assessment.
The array of pollution sources reveals sharp differences in their
impacts. Municipal and industrial wastes are evaluated to be the
majority sources of pollution (cf. Table 19), and to be of approxi-
mately equal impact on a national basis. Industrial wastes emerge as
the principal source of pollution in two regions, municipal wastes in
one. In total, industrial wastes are indicated to be a fractionally
greater cause of pollution; but the values are so impressionistic that
the difference can scarcely be considered real .much less significant.
The parity accorded the two kinds of wastes by the assessors is unex-
pected, in view of greater quantity of industrial waste and the
slightly higher estimated treatment efficiency in the public sector.
(Surprising, too, is the fact that the one region in which municipal
wastes are considered to be the leading cause of violations of stream
criteria is the Central States, the most industrialized of the six
regions.) One must presume that the relative importance assumed by
municipal wastes strongly reflects frequent violation of bacterio-
logical standards and increased fertility of water attributed to
phosphorus discharges. Other possible explanations include the
60
-------
diffusion of municipal waste sources--significant to an assesment
based on prevalence rather than intensity of pollution, concentration
on traditional sanitary interests, and difficulty in measuring effects
of some of the more obscure industrial wastes.
Agriculture, standing third nationally as a source of water pollution,
is considered to be the leading cause in each of the three western
regions—and by a distinct margin over either municipal or industrial
wastes in each case.
Mining and "other" sources of pollution each receive some consideration
as prime sources of water pollution, with mining's contributory effect
noted in all six regions, "other" sources largely restricted to the
Pacific Coast and Southern Plains.
"Other urban wastes," power generation, and spills tended to be rele-
gated by the assessors to the category of secondary or subsidiary
sources of pollution. Their combined contribution, as prime sources,
amounts to less than 1.5^ of the total; and each tends to occur only
in particular, scattered instances. While this might be expected in
the case of spills, which occur mainly as accident, and so only in an
actuarial or probabilistic sense in any listing of causes of recurrent
pollution, one receives the distinct impression that the polluting
effects of power generation and of unsewered urban drainage may well
have been overlooked in many instances as a result of concentration on
the obvious. Certainly the technical literature is full of examples
of adverse water quality impacts from these sources.
The full range of differences between east and west becomes sharply
evident when attention is shifted to the comparative contribution of
the several categories of activities to stream pollution under varying
degrees of prevalence, (cf. Table 20).
While the polluting influence of agriculture tends to remain constant
over the various degree of pollution categories in the west, and the
relative influence of municipal wastes declines with increased pre-
valence of pollution, the exact opposite is true in the east. At least
two explanations come readily to mind. On the one hand, there is a
distinctly lower incidence of waste treatment east of the Mississippi,
together with a much larger total population. So it is entirely con-
ceivable that some of the polluting effects of agriculture are masked
by the overriding influence of municipal (and industrial) wastes. On
the other hand, western agriculture is vastly different in the aggre-
gate from that of the east. It is more extensive, characterized by
larger land units, row crops, and highly mechanized operations. It
tends to be more wasteful in its use of soils in order to make fuller
use of its larger capital inputs. (Thus, for example, a study of
61
-------
en
ro
TABLE 20
PRIME CAUSES OF STREAM
POLLUTION, BY EXTENT OF
POLLUTION
Percent of Pollution Attributed to Prime Causes
Prime Causes and
(Rank)
Industrial Wastes
East of Miss.
West of Miss.
Municipal Wastes
East of Miss .
West of Miss.
Agriculture
East of
West of
Other
East of
West of
Mining
East of
West of
Other Urban
East of
West of
Miss.
Miss .
Miss.
Miss.
Miss .
Miss.
Wastes
Miss.
Miss .
Power Generation
East of Miss.
West of Miss.
Spills
East of
West of
Miss.
Miss.
R.
R.
R.
R.
R.
R.
R.
R.
R.
R.
R.
R.
R.
R.
R.
R.
(1)
(1)
(2)
(2)
(2)
(3)
(3)
It!
(5!
(4)
(5)
(3)
(5)
(6
(5)
(7)
(7)
(6)
(6)
(8)
(8)
(8)
All
Streams
23.7
28.9
14.6
21.8
26.0
14.4
11.2
2.9
25.8
3.7
0.6
9.3
2.8
2.9
2.5
0.9
1.4
0.4
0.5
0.4
0.1
0.1
Predominantly
Polluted
24.9
31.0
14.8
23.
26.
17.
10.
1.
25
3.
8.
3.
3.
1.
1.
1.
0.
0.
_
2
5
8
5
4
.5
1
2
0
9
5
0
6
3
6
Extensively
Polluted
24
28
15
19
25
9
110
3
26
4
1
11
2
2
3
0
1
0
0
0
0
0
.0
.3
.7
.6
.0
.9
.8
.0
.5
.6
.2
.4
.3
.2
.0
.9
.4
.6
.4
.9
,1
.2
Locally
Polluted
14
19
8
23
29
15
18
14
25
3
1
5
2
6
0
0
.9
.6
.4
.7
.4
.7
.9
.0
.7
.2
.3
.7
.5
.0
.2
.4
-
-
Slightly
jol luted
20.8
18.2
12.4
27.2
34.5
34.3
5.5
5.4
19.1
0.4
4.8
5.8
7.1
9.5
-
0.9
1.2
-
-------
sedimentation in the Palouse River Basin of Washington and Idaho found,
over a period of years, a much tighter correlation of silt loadings to
fertilizer sales than to streamflow or precipitation. As farmers
found it cheaper to synthesize new soils with chemical fertilizers
than to preserve them, farming practices apparently altered in a
fashion that promoted erosion.) There is relatively less forest and
pasture cover to hold western agricultural land. A large portion of
the cultivation of the west is an irrigated agriculture, in which water
represents a planned resource input, increasing opportunities for
hydraulic displacement of soils, depleting streams, and enhancing
salinity. Western agricultural practices relating to livestock, too,
are inherently more pollutional, in that feeding operations that con-
centrate large numbers of animals in a limited space have become an
integral part of the industry. Such feed lots produce point sources
of wastes that, under some conditions, equal the polluting effects of
major metropolitan areas.
Other obvious distinctions relate to the influence of mining and
•'other urban wastes." Mining, as a prime source of pollution in the
east, seems to exercise some of its effects in the watersheds where
pollution is most prevalent, as do "other urban wastes." The reverse
is true in the west, where mining would seem to be a source of localized
pockets of pollution rather than a basin-wide influence. The differences
probably trace to the character of the industry. Eastern coal mining
is an essential part of the industrial base, with population and manu-
facturing centers located near the coal fields. The petroleum and
heavy metals extraction of the west tend to be isolated; and the nature
of the mining process and of soils tends to produce environmental impacts
that are less extensive as well as less apt to be reinforced by other
activities. In the category of "other urban wastes," precipitation
patterns and a smaller scale of metropolitan units may limit relative
pollution effects in the west, as may the lesser incidence of combined
storm and sanitary sewers.
Perhaps the most dramatic of the differences between east and west is
hidden in the undifferentiated category "other." The role of water
management in arid areas is seldom considered in connection with water
pollution; but the modification of streamflows that can vary from
complete interruption of flow during the storage period to flooding
rushes when storage reservoirs are filled, when the irrigation season
is underway, or with peak generation of hydroelectricity, creates, an
environment that is inimical to maintenance of water quality standards.
In the more extensively polluted watersheds of the Pacific Coast and
the Southern Plains, the category is given a weight that is roughly
equal to that of municipal wastes as a cause of pollution.
63
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The value of the assessment in resource allocation decisions as dis-
cussed next is significant. Because this was the first such assessment
attempted, there may well be reservations as to the precision of its
results; but it does provide a new and enlightening view of the entire
water pollution picture. Future activities in this area will be
designed to reduce the imprecision and reservations to enhance the
utility of this form of assessment.
Pollution Causes and Resource Allocation
Having established, in an admittedly subjective manner, the relative
significance of major categories of polluting activities, the way is
open to consider current resource allocation procedures that affect
water pollution control. The task is by no means an easy one. Reliable
data are simply not available for most of the eight kinds of activities
known to cause water pollution, so that one is forced to make do
with order of magnitude statements.
Industrial wastes, which account for almost 80% of sewered oxygen
demand and for 3&% of estimated stream pollution, have been the source
of about half a billion dollars a year of investment and several
hundreds of mi 11 ions a year of operating costs over the last three
years. Current taroets call for investment to be increased to over $600
million a year.
Municipal, wastes, which account for a little over 20* of s ewe ret1
oxygen demand and are" presumed to be the principal source of nutrient
phosphorus, are estimated to be responsible for a third of all stream
pollution. Investments, about a billion dollars a year over the last
three years, will step up significantly as a result of increased Federal
financial assistance. Onerating costs, that currently approach S300
million a year, should come close to half a billion by the middle of
the current decade. A very minor part of the added financial burden
will be directed toward alleviating the nutrient problem, believed to
be the principal mechanism by which sanitary sewage causes water
pollution today.
AgricuUure, estimated to cause almost 20% of all stream pol-
lution, makes almost no direct investment for oollution control
nurposes. Costs of remedial procedures--including erosion control,
limitation of use of some pesticides, locational practices for feed
64
-------
lots and dairies—may amount to several tens of millions of dollars
each year, with the benefits experienced in such areas as nuisance
alleviation, increased productivity, and land resettlement alter-
natives as much as in water pollution control.
Other activities producing pollution— water management practices,
construction, navigation, and recreation—are estimated to cause
slightly more than 6% of stream pollution, most of it west of the
Mississippi. Again, control measures can amount to no more than
tens of millions, occurring principally in the form of higher
construction costs.
Mining is estimated to account for about 5%. of stream pollution,
concentrated largely in the Appalachian coal mining region. The
petroleum industry has indicated that its expenditures for pollution
control consequences of production exceed $100 million a year. While
no estimates of costs have been presented for other mining sectors,
it is considered improbable that their total would approach half of
that claimed for petroleum extraction.
Other urban wastes, estimated to account for a little over 1% of
stream pollution, are approached almost entirely as a function of the
system of storm and sanitary sewers that currently sustains an annual
investment of about $600 million. It is uncertain to what extent the
sewering program serves to alleviate water pollution due to urban
drainage—indeed, there is some concern that the net effect of such
programs is negative with respect to water quality.
Power generation is estimated to be directly responsible for less
than 1% of stream pollution. Current investment in cooling water
recycling facilities by the steam power industry is in the area of
$200 million a year. Air pollution control investments are approxi-
mately equal; and these have collateral water pollution control
benefits in some cases, a function of reduction in fallout of parti-
cipate matter.
Spills are accorded responsibility for almost no recurrent water
pollution, though intermittent spill damages have proved in some
cases to be locally catastrophic. It is impossible to estimate costs
of spill control measures, both because procedures are undefined in
some cases, and because controls tend to be an inextricable part of
the—largely industrial—production system that results in spills.
It is a crude sort of balance sheet drawn up here, but it does indicate
that there may be distortion in the way resources are allocated for
65
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water pollution control. Sewered wastes have been estimated in these
pages to account for more than two-thirds of stream pollution. They
also receive almost all of the accountable expenditures for pollution
control--very close to $3 billion a year—with the amount certain to
rise sharply over the next few years. Other kinds of polluting activ-
ities receive about $300 million of accountable expenditures by the
petroleum extraction and steam power generating industries, and possibly
several tens of millions from a variety of other interests. Polluting
effects, estimated to be twice as great for sewered wastes as for other
kinds of polluting activities, are countered by an allocation process
that devotes almost ten times as much for sewered wastes as for the
other procedures that may cause water pollution.
On the other hand, one cannot make the off-hand judgment that control
of sewered wastes is overfunded relative to other categories of
pollution control. There is so tenuous a grasp of control possibili-
ties for unsewered pollutants that we do not know what control measures
are possible in many cases, much less what is necessary or practical.
Relative prices, then, will have to be taken into account, together
with pollution reduction potential in making determinations of the
aggregate effectiveness of v/ater pollution control allocations. Current
relationships could conceivably be optimal.
The fact that we do not know the optimum relationships is enough,
however, to indicate that the nation is devoting an insufficient amount
of attention to the relative seriousness of pollution resulting from
sources other than sewered wastes.
66
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DISECONOMIES IN PUBLIC WASTE MANAGEMENT ACTIVITIES
Although the preceding discussion suggests the possibility that the
allocation processes that assign resources to remedy water pollution
are flawed by excessive concentration on sewered wastes» the fact is
currently impossible to determine. So exclusive has been the thrust
of water pollution control in the one direction, that there is only
general and impressionistic basis for suggesting that other pollution-
producing economic activities are neglected. No basis for comparing
any distribution of resources with a theoretical optimum at any level
of national expenditure can be developed as long as determinations have
not been made regarding the cost, desirability and degree of control
for non-sewered pollution sources. On the other hand, it is possible
to determine generally what economic loss, on a national basis, ensues
from suboptimal allocation of resources within the category of sewered
wastes and treatment for those wastes. (That is not to say that defini-
tion of diseconomies offers any prospect of reducing their dimensions.
For the most part, the economic losses stem either from uncertainty or
from institutional constructs so strongly rooted that their elimination
might involve a higher cost than that of the diseconomy they create.)
From an economic standpoint, though perhaps not from a regulatory one,
there are continuous and substantial losses that ensue from two sources;
promotion of sewering, and overdesign of facilities, may be viewed
as institutionalized allocational impediments to totally cost effective
investment.
Promotion -of Sewering
Diseconomies that stem from unnecessarily accelerated sewer connections
are significant. While a direct measurement of their amount would
require costly and extensive surveys, their general dimensions can be
determined by reference to relative growth of U.S. population and of
sewered population, (cf Table 21.)
Bureau of Census estimates indicate that between 1962 and 1968 national
population increased by roughly 14 million persons. Estimates of
sewered population compiled by State health and vfater pollution control
agencies indicate that in the same period sewered nonulation increased
some 20 million persons, almost half again as much in gross numbers,
more than twice as fast in terms of rate of increase.
67
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TABLE 21
RELATIVE GROWTH OF
POPULATION AND SEWER SERVICE
1962-1968
1962
Region
Pacific Coast, Metro
Other
N. Plains, Metro
Other
S. Plains, Metro
Other
S. East, Metro
Other
Central , Metro
Other
N. East, Metro
Other
TOTAL Metro
TOTAL Other
U.S.
Population, 1000 's F
Total
18,246
4,547
7,343
7,092
12,191*
9,784
15,986
20,665
31 ,190
11,218
37,373
8,538
122,328
61,845
184,173
Sewered :
13,333
1,959
5,361
3,038
9,062
4,679
9,596
6,565
24,905
3,857
30,180
3,950
92,437
24,049
116,486
'ercent W8 Population. 1000 's"
Jewered Total Sewered
73.1
43.1
73.0
42.8
74.3
47.8
60.0
31.8
79.9
34.4
80.8
46.3
75.6
38.9
63.3
21,519
4,217
7,903
6,879
14,016
9,506
18,505
21,418
34.187
11,503
39,743
8,605
135,873
62,127
198,000
18,322
2,269
5,720
3,342
11,877
5,682
11,080
8,020
28,132
4,162
32,934
5,051
108,065
28,526
136,591
'ercent
Sewered
85.1
53.8
72.4
48.6
84.7
59.8
59.9
37.4
82.3
36.2
82.9
58.7
79.5
45.9
69.0
Annual Rate
of Change
2.8*
5.4%
-1.1%
2.5%
1.2%
1.1%
-0.4%
1.6%
2.4%
4.6%
-0.5%
3.3%
2.5%
2.4%
0.6%
3.3%
1.5%
1.8%
0.4%
1.2%
1.0%
1.5%
0.1%
4.2%
1.8%
2.7%
0.1%
2.9%
1.2%
2.7%
68
-------
While there is no dirnct relationship between rate of population growth
and a desirable rate of sewer connections, since local population
density and soil conditions are the basic factors that dictate use of
sewers rather than individual septic tank systems, there should be
some underlying correspondence of the two rates. But both the higher
over all rate of growth of sewering and the disproportionate growth
of sewering in rural and non-metropolitan urban areas lead to the
inference that sewering is being extended far beyond any circumstances
dictated by physical need. At a time when the non-metropolitan popu-
lation of the U.S. increased by some 300,000 persons, sewer service
to the population component added some 4.5 million persons; and even
in the areas west of the Mississippi, where non-metropolitan population
was declining, non-metropolitan sewered population increased by some
1.6 million.
The critical point to be made here is that sewering, considered in an
environmental sense, is one of the prices paid for our urban condition.
To the point that the assimilative capacity of_ soils j[s_ not exceeded,
T isTinfinitely preferable to use ground disposal urocedures. They
have the great virtue of recycling the materials so disposed, both by
replenishing water tables and by converting and utilizing organic and
inorganic waste matter in natural life processes of decay and growth.
Their secondary merit is more germane to this discussion. Water reaching
watercourses after passage through the filtering and decomposition
processes afforded by soil is far ourer--nrovided that soil loading
rates are not exceeded—than any waste treatment process short of
distillation could make them. The effect of sewering is to transfer
conditions of soil pollution or groundwator pollution to surface waters.
To make that transfer where sewage loadings are not so great as to
threaten soil or groundwater pollution is to create surface water
pollution.
Yet there is a tendency to regard sewering as a progressive and sani-
tary process in all cases, and as a general rule to discourage and
impede the alternative of ground disposal, f'any State health depart-
ments actively promote sewer installations, as do Federal programs.
Sewering beyond the level dictated by environmental considerations,
then, must be conceded to be a polluting influence, with the influence
exercised in surface waters. That pollutional impact is reinforced by
the fact that local resources diverted to sewer installation may be
denied to necessary waste treatment works. The situation is a
universal one, but its effects are most noticeable in the Northeast.
69
-------
TABLE 22
CALCULATED INCREASE IN SANITARY WASTE DISCHARGE
DIRECTLY ATTRIBUTABLE TO ACCELERATED SEWERING -
NORTHEASTERN STATES, 1962-1968
Thousand Population Equivalents of-BOD
Metropolitan Other
1962 Sewered Population 30,179,6 3950.3
Mean Waste Reduction* .697 .674
Daily Waste Discharge, 1962 9,144.4 1287.8
'Normal'Sewering, 1962-68 1841.0 23.7
Additional Sewering, 1962-68 913.3 1076.9
Mean 1968 Waste Reduction* .679 .621
Daily Waste Discharge, 1968 10,571.8 1914.3
Increase, 1962-68 1,427.4 626.5
Directly Attributable to 293.2 408.1
Accelerated Sewering
* .35 PP + .85 Pc
"p
where Pp = sewered population with primary treatment
Ps = sewered population with secondary treatment
P = total sewered population
70
-------
In that region, where untreated sanitary waste discharges are massively
concentrated, water pollution abatement has been retarded significantly
by the allocation of resources to the sewering of rural communities.
The effects—not adjusted for overloading of waste treatment plants or
public treatment of industrial wastes—are demonstrated in Table 22,
which depicts a significant increase in oxygen demand of both total
sanitary wasteload and of discharged sanitary wastes occurring
between 1962 and 1968 as a result of a substantial sewered population
increment beyond that indicated by population growth alone, and a
related decline in the intensity of waste treatment.
Over-capitalization of Treatment Works
A recent newspaper story carried a two column photograph with the
following caption:
Control Panel Inspected
. . . inspects a control panel at the $2 million . . .
sewage plant expected to go into operation ... by the
end of the year. The plant, under construction since a
year ago last summer, is expected to handle three million
gallons of waste a day. It is being built simultaneously
with a $1 million expansion of the . . . plant. The facilities
have been designed to serve a population of 100,000, four
times the present . . . population.
One senses in the intent face of the inspecting technician who has
been photographed a certain efficient satisfaction with the bank of
controls and recording instruments; and the flat, no-nonsense jour-
nalistic prose of the caption has only a faint hint of civic pride
in the new facilities. There is no indication that anyone is, or
should be, disturbed at the thought of spending $3 million to construct
facilities that, when completed, will be 75% unused, at financing the
unutilized capacity at about 6% a year, or at assuming excess annual
operating costs of approximately $15,000 per million gallons a day of
sewage throughput. These things are, apparently, taken for granted.
And the situation cited is by no means unique—more than 7% of the
municipal waste treatment plants in the U.S. are scaled to accommodate
four or more times their current loading. (Such plants account,
however, for only 4.4% of gross capacity, due to the tendency for
over-design to occur principally with smaller plants in smaller
communities.) (cf Table 23.)
-------
The conventional explanation for installing multiples of currently
needed capacity is that they are intended to provide for future growth.
And in the case cited, the community is part of an SMSA that has
experienced extraordinary population growth since World War II, thus a
considerable amount of spare capacity might be a good idea.
However—if the city should continue to grow in population at the
very high rate (2.8% a year) experienced from 1940 through 1970, it
would take 50 years to fully utilize its current capacity. Should its
population growth expand to that of the total SMSA over the last 20
years (3.8% a year), it would be using up its excess in only 37.5
years. And if population expansion should really skyrocket to the
over all rate of the county, in which it is located (5% a year),
only 28.5 years would be required to get 100% utilization of a set of
facilities built to serve over a 'normal1 operating span of 25 years.
In defense of the communities like the one cited, it should be noted
that overdesign of waste treatment plants is not generally considered
to be an abuse. To the contrary, standard design practice calls
for the construction of facilities that are scaled to some "prudent"
multiple of the existing loading rate, both to provide against loading
surges and to have them available for larger future needs. The procedure
makes such obvious good sense that there should be no need to call
attention to it.
But there is room for disquiet when one takes into account the fact
that fully a quarter of metropolitan area waste treatment plant
capacity is less than half utilized, and that for non-metropolitan
communities, over thirty percent of total waste treatment plant
capacity is utilized at less than half of design rating. When one
excludes the one sixth of all waste treatment plants that are over-
loaded, the mean utilization rate for publicly operated plants in the
U.S. is found to be just under 63%--almost two-fifths of the total
capacity of plants of every vintage, then, is simply unused. Worse,
in terms of aggregated probabilities, much of it will never be used.
The formal useful life of a waste treatment plant is 25 years. At
the rate of population growth that applied during the 1950's only the
fastest growing classes of communities could make full use of the
capacity of a plant designed to serve twice its initial loading (cf.
Figure 5). The rate of population growth has been declining without
interruption since 1957; and during the 1960's it sank to 70% of the
rate for the previous decade. Under those circumstances, one would
anticipate that the margin of excess capacity would decline. Instead,
it has been rising.
72
-------
METRO-SUBURBAN
METRO TOTAL
METRO-CITY
URBAN TOTAL
OTHER URBAN
RURAL: 1000-2500
RURAL:-10QO
U.S. TOTAL
RELATIVE POPULATION GROWTH EXPECTATIONS
BY CLASS OF COMMUNITY BASED ON 1950-60
ANNUAL RATE OF INCREASE
YEARS TO
DOUBLE
18
38
70
87
100
00
00
42
FIGURE 5
-------
TABLE 23
REGIONAL DISTRIBUTION
OF UTILIZATION RATES
1968
Regi on
Pacific Coast, Total
Metropolitan
Other
Northern Plains
Metropolitan
Other
Southern Plains
Metropolitan
Other
Southeast
Metropolitan
Other
Central
Metropolitan
Other
Northeast
Metropolitan
Other
>100%
4.1
2.7
13.5
16.9
22.3
5.4
11.1
10.6
12.3
13.0
14.0
11.7
28.5
32.8
15.6
16.4
14.3
29.4
80-100%
23.7
25.4
12.5
12.5
10.6
16.5
21.6
21.9
20.7
11.7
9.0
15.7
27.7
29.2
22.2
26.3
27.8
17.4
Percent of Capacity
67-79.9?!
7.8
7.6
9.2
18.9
17.8
21.4
17.8
19.3
13.8
22.7
24.7
19.7
16.0
18.7
15.4
20.9
22.7
9.8
in Utilization
50-66.9%
18.0
18.5
14.6
22.7
21.4
25.5
17.4
15.0
24.1
25.9
29.5
20.8
13.2
10.3
23.9
22.5
22.7
21.3
Categorfes
25-49.9%
40.5
42.3
28.6
21.9
20.5
24.8
26.6
27.8
23.5
20.8
17.0
26.2
11.0
8.7
19.7
9.5
8.3
16.6
<25%
5.9
3.5
21.6
7.1
7.3
6.5
5.4
5.3
5.7
5.9
5.6
5.9
1.6
1.2
3.2
4.4
4.3
5.5
u. s.
12.7
23.0
17.0
18.9
20.7
4.4
-------
In the period 1962-1968, the average daily loading of public waste
treatment plants increased some 4.1 billion gallons. Total available
waste treatment capacity increased 6.9 billion gallons, fcf. Table 24.
The table is based on the roughly 50% of all waste treatment plants
for which both design'capacity and average daily loading were reported
in the respective Municipal Waste Inventories. The sample was scaled
to an approximate total on the basis that the distribution of capacity
to loading for all plants was similar to that for reported plants in
the metropolitan and non-metropolitan categories within each region.)
Thus for every two gallons of added sewage, more than three gallons of
added capacity was installed. The relationship can, perhaps, best be
viewed by a simple comparison of annual rates of expansion. Between
1962 and 1968:
Population provided with sewer services increased 2.7% a year;
Waste treatment plant hydraulic loadings increased 3.2% a year;
Waste treatment plant capacity increased 4.0% a year;
Idle waste treatment plant capacity increased 6.1% a year.
That set of numbers does not adequately reflect a significant feature
of the idle capacity phenomenon. To fully appreciate the force of the
trend that is apparently in effect, one must take into consideration
the fact that 76% of all of the plants in operation in 1968 were also
in operation in 1962, and that much of the growth of loadings occurred
in such plants. Incremental idle capacity, as reported, is offset to
some extent by the takeup of idle capacity in plants already in place.
In logic, the total amount of excess capacity should begin to decline
as a result of progressive utilization at some indeterminate point
when the total stock of available capacity exceeds 50% of the required
stock. Whatever that point may be, we have not reached it. Unused
capacity as a percentage of total capacity and of utilized capacity
continues to grow.
There are distinct and obvious penalties inherent in this situation.
The cost of the construction project is increased materially—-though
not proportionately—by overbuilding, as are the costs of operating
and financing the project. Assuming the substitutability of uninvested
capital in one place for another, and a generally fixed level of
funding, overbuilding at one set of points at the same time that un-
treated waste discharges and overloaded waste treatment plants occur
at other points contributes to the persistence of pollutional con-
ditions. Up to 80% of the cost of construction is now borne by Federal
and State governments. The amount of such assistance that is used to
75
-------
TABLE 24
SHIFTS IN UTILIZATION OF WASTE TREATMENT
CAPACITY 1962-68
MILLION GALLONS PER DAY
Region
1. Metropolitan Areas
Pacific Coast
Northern Plains
Southern Plains
Southeast
Central
Northeast
Metropolitan Totals
% Shift
2. Non Metropolitan
Pacific Coast
Northern Plains
Southern Plains
Southeast
Central
Northeast
Non-Metropolitan
Totals
% Shift
U.S. Totals
% Shift
Net Overloading
1962
61.4
85.8
77.5
75.1
1034.1
624.7
1958.6
51.4
82.0
33.7
46.5
52.8
66.4
332.8
2291.4
1968
20.0
61.6
59.7
107.8
1821.4
124.2
2194.7
36.5
48.5
43.4
52.3
55.6
134.4
307.7
2565.4
Shift
-41.4
-24.2
-17.8
+32.7
+787.3
-500.5
+236.1
+12. 1%
-14.9
-33.5
+ 9.7
+ 5.8
+ 2.8
+68.0
+37.9
+11.4%
+274.0
+12.0%
Utilized Capacity
1962
2148
999
860
921
4243
4243
13,415
438
572
452
679
696
492
3303
16,719
.3
.4
.4
.1
.0
.7
.9
,2
.3
.2
.2
.3
.7
.9
.8
1968
2409
1479
1211
1350
6021
4041
16,513
481
580
561
1015
906
771
4317
20,803
.6
.7
.0
.2
.6
.5
.6
.7
.5
.7
.2
.9
.1
.1
.7
Shift
+261.3
+480.3
+350 .6
+429.1
+1778.6
-202.2
+3097.7
+23.1%
+43.5
+ 8.2
+136.5
+336 .0
+210.6
+278.4
+1013.2
+ 30.7%
+4110.9
+ 24.6
Idle Capacity
1962
881.0
213.7
399.2
410.5
1102.8
1017.9
3965.1
237.6
243.8
228.0
350.4
398.1
157.3
1615,2
5580.3
1968
1628.9
771.8
662.8
683.9
961.4
1526.6
6175.4
377.8
351.5
293.2
562.0
402.2
258.1
2244.8
8420.2
Shift
+747.9
+498.1
+323.6
+273.4
-141.4
+508.7
2210.3
+55.7%
+140.2
+107.7
+ 65
+211.6
+ 4.1
+100.8
+629.6
+39 .0%
+2839.9
+ 50.9%
-------
capitalize idle capacity when it might be alloted for productive
purposes can under conditions of resource scarcity only be considered
to contribute to the persistence of pollution, since, unlike local
funds, it is potentially available for a number of other projects.
The effect of that mi sal location is most evident when one considers
the fact that both overloading and idle capacity increased between
1962 and 1968; and that if only 10% of the surplus capacity installed
during the period had gone instead to points of more immediate need,
reported overloading of waste treatment plants could have been eliminated,
(cf. Table 24.) Finally* capacity in place limits the flexibility
of a community in adjusting to changing conditions including improvements
in technology and requires regular capital expenditures to sustain
operating efficiency. Such overhead penalties are an inescapable
result of any capital investment. The effect of surplus capacity is
to add unnecessarily to the overhead burden and to tie the owners to a
less manageable fixed cost base.
The tendency to overbuild is a general one; though it seems to be most
strongly in force in the Pacific Coast States, where almost 24% of
total idle capacity was located in 1968. With the exception of the
Southern Plains region, the relative prevalence of idle capacity is
greatest in non-metropolitan areas. Though the 1962-68 trend was for
greater relative growth of surplus capacity in metropolitan than in
non-metropolitan areas, the 1962 surplus in non-metropolitan areas was
great enough that the proportion of capacity utilized at less than
half design rating in 1968 remained greater in non-metropolitan
communities in most of the Nation. Thus the excess, ostensibly in-
stalled largely to provide for future growth of service, tended to be
located where growth is less pronounced, (cf. Table 25.)
Dollar Costs of Idle Capacity and Sewer Promotion
It is probably safe to assume that the major costs of misallocating
funds to purposes that have a low marginal utility—specifically,
adding to the stock of idle waste treatment capital and sewering
portions of communities that do not require sewering--are borne by
the environment. Continued pollution of water is the prime price that
the economy pays for directing investments into projects that offer a
low return relative to other, more directly profitable, purposes.
But if environmental costs are of great, if unmeasurable, magnitude,
dollar costs are by no means inconsequential. And they can be esti-
mated. Another section of this report will examine the impact of excess
77
-------
TABLE 25
UTILIZATION OF METROPOLITAN AND
NON-METROPOLITAN WASTE TREATMENT CAPACITY
J968
VJ
00
1 . Metropol i tan Areas
Utilization
Rate
Overloaded
80-100%
67-79.9%
50-66.9%
25-49.92!
<25%
TOTAL
TOTAL - excluding
overloaded plants
Overloaded
80-100%
67-79.9%
50-66.9%
25-49.9%
25%
No. of
Plants
502
593
384
526
550
262
2817*
2315
710
904
761
1030
1012
287
Million
Capacity
2200.2
3300.9
2384.4
2457.4
2730.2
498.3
13,571.4
11,371.2
2
599.0
671.7
563.8
813.4
857.2
271.3
Gallons/Day
Utilization
3701 .4
2953.5
1717.9
1412.7
1099.1
59.8
10,944.4
7,243.0
Percent
Plants
17.8
21.1
13.6
18.7
19.5
9.3
82.2
of Total
Capacity
16.2
24.3
17.6
18.1
20.1
3.7
83.8
Mean
Utilization Rates
168.2%
89.5%
72.1%
57.5%
40.3%
12.0%
80.6%
63.7%
. Non-metropolitan Areas
781.4
600.4
409.3
471.4
388.9
40.9
15.1
19.2
16.2
21.9
21.5
6.1
15.0
18.0
15.1
21.8
22.9
7.3
139.8%
89.4%
72.6%
58.0%
45.4%
15.1%
TOTAL 4704** 3736.4 2692.2
TOTAL - excluding
overloaded plants 3994 3177.4 1910.8
84.9
85.0
72.1%
60.1%
*of 4294 total plants
**of 8069 total plants
-------
capacity on local operating cost structures. At this point it is
concerned with the amount of the diversion of capital to relatively
unproductive excess capacity and sewerage expansion.
Dollar value penalties of idle capacity have been calculated for both
1962 and 1968 by means of an uncomplicated, mechanical evaluation
process.
The Municipal Waste Inventory for each year was scanned, State by
State, with a digital computer. Wherever both design capacity and
actual daily loading were recorded, the cost of building a plant of
the given design size and general description (activated sludge,
primary, trickling filter, oxidation pond) was calculated by the com-
puter on the basis of the size to unit cost relationships developed
by Robert L. Michel in Construction Costs of Municipal Wastewater
Treatment Plants (U.S.D.I., FWQA, Washington, D.C., September 17, 1969).
Where actual daily loading was less than 80% of rated capacity, the
cost of the same type of plant, sized at 125% of average daily loading
(80% operating rate) was also calculated. The differences between
the two sets of values were summed, and the regional sums were scaled
to include all plants on the basis of the assumption that the distri-
bution of capacity was similar for all plants and for reported plants.
Values are presented in Table 26 as the "under utilization-penalty".
Penalties are assessed in terms of national average prices, a moderate
(25%) allowance for growth of demand, and they include full consider-
ation of the economies of scale that exist in the cost to size
relationships observed for waste treatment plant construction. In
total, the dollar value penalty associated with plants operated at
less than 80% of rated capacity in 1968 was $670 million, or 18% of
the total value of public waste treatment plants.
Perhaps more significant than the total amount of the penalty is its
trend. As noted earlier in terms of hydraulic capacity, the amount
of capital incorporated in idle facilities increased substantially
between 1962 and 1968. ($180 million in constant dollars, probably
$205 million in value of actual dollar cost of construction projects,
$260 million in 1970 replacement value.)
The calculated value of the incremental capital sunk into idle capacity
between 1962 and 1968 does not, however, present the full amount of
the penalty. Incremental idle capacity amounted to $180 million worth
of waste treatment works. But the principal purpose of overbuilding
is to provide for future growth, and in the aggregate the nation
replaced every unit of idle capacity taken up by the growth process
79
-------
TABLE 26
CAPITAL PENALTIES
OF UNDER-UTILIZATION
oo
o
Pacific Coast
Northern Plains
Southern Plains
Southeast
Central
Northeast
U. S.
Capital
in Place
364.8
297.5
503.2
507.7
689.3
566.8
2938.3
Millions of 1957-5$ Dollars
1962
Under-
utilization %
Penalty
81.
43.
86.
96.
108.
74.
490.
5
2
4
9
2
3
5
23.3
14.5
17.2
19.1
15.7
13.1
16.7
Capi tal
in Place
474.3
346.0
594. -0
710.0
869.9
725.8
3719.9
1968
Incremental
Investment
Under- Capital
utilization % in Place
Penalty
109
80
104
145
114
115
670
.9
.1
.9
.5
.5
.5
.4
23.3
23.2
17.7
20.5
13.2
15.9
18.0
109.5
48.5
90.8
202.3
180.6
159.0
781.6
Under-
utilization
Penalty
28.5
36.9
18.5
48.6
6.2
41.2
179.8*
%
26.0
76.0
20.4
24.0
3.6
25.9
23.0
* actual cost, 1962-1968, based on average prices and construction rates in period, $205 million.
-------
and added to it. Thus the total 1962-68 investment for unused capacity
is distributed throughout the $670 million worth of idle capacity, and
is not restricted to the $180 million increment. Put another way, in
terms of the total economy, surplus capacity available in 1962 proved,
on balance, to be totally useless to the nation over the next six
years.
Given available information with respect to investment between 1962
and 1968, changes in the physical stock of capital, changes in the
number of users of waste treatment facilities, and changes in the
hydraulic loading of waste treatment plants, it is possible to assign
the approximate distribution of the nation's capital investment between
1962 and 1968 to several broad categories of activity. The distribution,
for the nation and for regional groupings of States, is presented in
Table 27.
Total investment, in constant dollars, amounted to just over $2 billion
for waste treatment plant construction, expansion, upgrading, replace-
ment, and major modifications. (A significantly larger sum was
invested in interceptor sewers, outfalls, pumping stations, and
collection sewers. Such investments are not taken into account in this
analysis.)
Recapitalization of existing facilities absorbed the lion's share of
investment during the period, (cf. discussion pp. 13-25.) The fact
is unexceptionable, given the high prevalence of waste treatment in
1962. The significance of the high capital overhead imposed by the
size of the capital base is that less than 40% of capital made avail-
able for waste treatment plant construction during the period could
be utilized to increase the aggregate level of control of wastes.
Given the level of investment and of depreciation, a low marginal
return was the best that the nation could anticipate, making the
relative impact of any misallocation far more severe.
The attempt to quantify the marginal utility of the investment in
terms of the various uses to which capital was applied involves
analysis of reported growth in hydraulic loading of waste treatment
plants and of population served by waste treatment plants. The total
replacement value of waste treatment plants was calculated to have
increased some $780 million, of which $180 million represented a net
addition to idle capacity. To the utilized $600 million worth of
facilities we can assign a series of functions, based on shifts in
population connections and hydraulic loadings. (The assignments are
81
-------
CO
CSJ
Purpose
Total Investment
Recapitalization
Treat Untreated
Wastes (!)
1 Normal' Growth
of Sewering (2)
'Promoted1 Growth
of Sewering (3)
Incremental Industrial
Wastes (4)
Relief of Overloading
(5)
Additions to Excess
Capacity
TABLE 27
DISTRIBUTION OF
WASTE TREATMENT INVESTMENTS
1962 - 68
Millions of 1957 - 59 Dollars, By Region
% of
Total
100.0
62.0
4.4
8.5
9.7
6.0
0.6
8.7
PACIFIC
COAST
185.2
75.7
12.9
53.3
64.9
-62.8
12.8
28.5
NORTHERN
PLAINS
210.1
161.6
4.6
0.7
2.1
1.3
3.0
36.9
SOUTHERN
PLAINS
177.3
86.4
3.4
14.9
45.0
9.6
-0.6
18.5
SOUTHEAST
383.3
181.0
36.9
30.6
32.8
60.1
-6.7
48.6
CENTRAL
502.4
330.8
10.9
31.3
8.4
214.8
-100.1
6.2
NORTHEAST
589.4
439.4
22.8
43.6
45,7
-98.7
104.4
41.2
U.S.
2056.5
1274.9
91.5
171.4
198.9
124.3
12.8
179.8
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less precise than that for idle capacity, since they depend on pro-
portional techniques and do not scale factors into account.)
Reducing the number of sewered persons discharging raw wastes accounted
for 4.4% of total investment between 1962 and 1968, and 11.7% of the
capital available after recapitalization demand had been satisfied.
Sixty-five percent of this kind of investment occured in the ^Southeast
and the Northeast, where the bulk of the nation's population "without
treatment was concentrated through the period.
Providing treatment to meet demands presented by growth of sewer
services accounted for 18.2% of total investment, 47% of investment
available to extend treatment services. On the basis of the assump-
tion that normal growth of sewer services should be proportional to
growth of population,* more than half of this investment component was
applied in the area of promoted or unnecessary sewering. Of the total
amount of capital available for marginal extension of waste treatment,
25.4% was diverted to the purpose.
Increased treatment of industrial wastes exercised a claim on 6% of
total capital investment, 20.7% of the net investment available after
the recapitalization. The value attributable to incremental industrial
demand for waste treatment services would have been much greater,
except that there was a negative shift in demand in two regions, the
Pacific Coast and the Northeast.
(That shift should not be construed to conflict with the tendency of
factories to utilize public systems, in view of the method. Industrial
waste loadings were deduced from per-capita discharge attributed to
the sewered population, with loadings in excess of 100 gallons per
capita per day assigned to industrial sources. Two quite logical
explanations of the apparent decline in industrial usage come readily
to mind. The nature of industrial specialization was changing in
each region, moving away—in a relative sense—from heavy industry
and first stage processing toward higher processing stages, fabrica-
tion, and low waste industries. The impact of that development is
*The assumption accounts in part for concentration factors by
recognizing the differential growth rates of metropolitan and non-
metropolitan communities. That accounting was reinforced in
computation by the constraint that in no case could growth be
negative—after all, one can not move sewers from place to place.
83
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borne out by the fact that decline in reported per-capita discharge
was limited to metropolitan areas in either region; non-metropolitan
wastes per-capita continued to increase, suggesting the effects of
connection of decentralized agricultural processing and pulp and
paper production. Further, both areas have a fairly long history of
public treatment of industrial wastes, at least as compared to the
Southern Plains and the Central States. One of the characteristic
features of municipal finance during the nineteen-sixties was esta-
blishment of user charges for public utility and other services,
including sewer services. Industrial waste discharges are known to
be highly variable and controllable; and the use of sewer service fees
provides an incentive to industrial management to limit the volume of
its discharges. So that, where industrial use of public systems had
become established prior to initiation of fee systems or to the in-
crease in fees required in many cases to finance system improvement or
expansion, a reduction in gross volume of industrial discharge might
be expected, even where the number of industrial connections was
increasing.)
Reduction of the incidence of overloaded waste treatment plants had
almost no net impact on aggregate capitalization, due to a sharp in-
crease in overloading in the Central States. Overloading declined
markedly in the Northeast, and in a relative sense on the Pacific
Coast, where little was reported in 1962; and it remained fairly
constant in other areas. Individual expansion projects unquestionably
reduced overloadings of many waste treatment plants during the period,
but we deal here with net effects. And those expansion projects were
apparently offset in the aggregate by the other factors evaluated—
population growth, sewer promotion, industrial wastes. On a national
basis, meaningful reduction of overloading occurred only with reduc-
tion of industrial waste discharges in two regions. There is a
suggestion in the fact that the factors that govern the increase of
waste loadings are to some meaningful extent unpredictable. If
uncertainty does, in fact, play such a large part in distribution of
growth processes, should not the strategy of installing significant
84
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amounts of excess capacity to support growth be subject to greater
question?*
* A note on method: the relationships discussed above were determined
by use of the following formulae. Each formula is keyed to a
numerical notation on Table 27.
(1) (R? - R8) 100 . I
C
where I = Constant dollar investment excluding value attri-
buted to recapitalization and idle capacity
R2 = Sewered population without treatment in 1962
RQ - Sewered population without treatment in 1968
100 = Gallons per capita per day, the norm for domestic
wastes
C = Increase in gallons per day of sewage throughput
between 1962 and 1968
(2) [(P2G) - P2] 100 . I
C
where P2 = Sewered population in 1962
6 = Appropriate growth factor, based on U. S. Bureau of
Census population estimates, for metropolitan and
non-metropolitan components of each regional group-
ing, subject to the constraint that P2.G may not be
negative
85
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(3) 100 P8 - [(P2 . G) - P2J TOO . I
_
where Pg = Sewered population in 1968
(4) C - 100 (P8 - P2) . I
(5) 0 ~
where Og = Net hydraulic overloading in 1968
02 = Net hydraulic overloading in 1962
86
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OPERATION AND MAINTENANCE COSTS
Background
Operation and maintenance costs of waste treatment plans consist of
expenditures for operators and technicians, power, chemicals and
niscellaneous supplies. A previous volume in this series documented
the magnitude of operations and maintenance costs! The Cost of Clean
Hater and Its Economic Impact, Volume I, FUQA, U. S. Department of the
Interior, 1969. Furthermore, it was reported then that there has been
a failure to appreciate the magnitude of this cost and rather to con-
centrate on plant investment. Further statistical analyses summarized
here, indicate that annual operating and maintenance expenditures have
been somewhat underestimated in previous reports. The revised estimates
are that in 1962 operating and maintenance costs totalled $135.7 million
(1962=100) and that in 1968 the total was $230.0 million (in 1962
dollars), a 23.8 percent increase. The objective of this chapter is:
to reevaluate the method of measuring these costs: to recalculate the
total amount of annual n&M costs; and to evaluate the relationship
betv;een the size of the treatment plant, the degree of utilization of
the plant, and the resulting costs of operating and maintenance.
Annual operation and maintenance (OSM) expenditures should be con-
sidered as a short run cost rather than a long run cost. Traditional
methods of estimating O&M costs have assumed that these costs vrere of
a long run nature, the approach used in this chapter assumes that O&M
costs are short run, the basic difference being that the plant size is
fixed in the short run while in the long run it is allowed to vary.
This method of estimating 0£fi costs provides an O&M cost curve for each
olant size category. Thus the O&M cost for treatment plants of
different sizes within the U.S. can be estimated. Also» this approach
provides a framework for evaluating the excess cost incurred for
constructing a plant that has a larger capacity (size) than is needed
at a given time.
The 1969 Cost of Clean Hater report also discussed factors tending to
lead to an increase in operating costs on a national aggregate basis
not the least significant of these are the pressures for improved
operational efficiency. This analysis does not address an optimum level
of operation and maintenance expenditures
However, in the face of a significant total increase
in this area, the inefficient use of operation and maintenance expendi-
tures beconies more critical. The section therefore concerns itself with
oore efficient allocation of such funds within the context of a growing
expenditure.
Determinants of Operating and Maintenance Costs
A number of factors influence the level of operating and maintenance
costs of a sewaqe treatment olant.. First, as th« f.V?
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becomes higher for a given concentration of v/astes in the influent,
operating and maintenance costs vrill increase.
Second, the operating and maintenance costs vary with the type of
treatment and the waste characteristics to which applied. Techno-
logical characteristics differ anong treatment types which, in turn,
will lead to corresponding differences in costs for different rates
of flow, quality of effluent, and geographical characteristics. For
example, for 85 percent BOD removal at an averaoe flow rate of 15
million gallons per day (MOD) v.'ith a highly concentrated influent,
an activated sludge process may prove to he less expensive to operate
than a standard rate trickling filter, but at a considerably lower
flow rate with a less concentrated influent, the standard rate filter
would probably prove to cost less to operate and maintain than an
activated sludge process. Within a given category of treatment, no
simple ordering of process types by operating and maintenance costs is
possible, but given the full characteristics of the v/aste treatment
needs of a community, one type of treatment will generally yield the
minimum attainable level of operating costs consistent with a desired
effluent quality. Population density and the mix of industrial activi-
ties are two rather obvious features that partially determine both the
hydraulic loading and vaste concentration demands on a treatment plant
and, thus, partially determine the level of operating and maintenance
costs of the plant,
Third, the location and geographical characteristics of a community
will, in oart, determine the level of operating and maintenance costs
that the community will experience subsequent to the installation of
a waste treatment plant. Among the locational factors influencing
operating costs are the prices of power and personnel and the general
level of prices facing the community. Climatic conditions affecting
operating costs include thermal patterns and the frequency, duration,
amount and intensity of precipitation. Topographic characteristics
can sometimes affect treatnent plant costs, particularly pumping
and transmission costs. Ascertaining the specific impact of these
locational and geographical factors on the costs of operating and
maintaining a treatment plant is beyond the scooe of this study, but
it is necessary to recognize that they ire part of the complex of
determinants affecting the levels of operating and and maintenance costs,
Finally, an additional determinant of a treatment plant's operating
and maintenance costs which has not generally received attention is the
interaction between the design capacity of the plant and the actual
rate of capacity utilization of the plant. The design capacity of a
plant can be identified as the rate of flow that the plant can treat,
at a desired degree of v/aste removal. It is also the rate which is
expected to yield the lowest unit costs of operation and maintenance.
For an operating plant of given design capacity, v/ith the exception
of some stabilization ponds, certain costs are necessarily incurred.
A minimum amount of personnel is required for operation, maintenance
and surveillance. To not maintain minimum numbers of personnel is to
risk plant breakdown and to sacrifice quality of effluent. In order
-------
that chemical treatments have their intended effects on influent,
certain minimal chemical feed rates depend not only on the actual flow
into the plant but also on the volume and surface area of the tanks in
the plant. Even at the lowest rates of capacity utilization, a minimum
level of power consumption is necessary for the treatment plant to be
operative. All of these minimum technological requirements imply that
a treatment plant will incur a necessary minimum level of operating
and maintenance costs, and these costs are a direct function of the
design capacity of the plant. Such costs are referred to as overhead
costs.
Overhead costs increase as the design capacity of a treatment plant
increases, other things being equal. A bigger plant simply requires
larger minimum amounts of personnel, chemicals, and power. Up to a
point in the neighborhood of design capacity, then, for a treatment
plant of a given type and design capacity, unit operating and maintenance
costs should decline with increased plant utilization. As utilization
increases from lower rates toward 100% of design capacity, the overhead
costs are spread over a greater average daily flow and input units
become more effective. Conversely, unit operating and maintenance costs
should rise as the rate of capacity utilization declines below design
capacity. This cost behavior is illustrated in Figure 6 and 7 by
the statistically estimated cost functions for primary treatment and
trickling filter treatment plants of 2.5 and 10 MGD design capacity.
In the range of zero to fifty percent of capacity, unit costs decline
rapidly and begin to level off thereafter and the unit cost curve for
the larger plant lies above that of the smaller plant, in the ranges
depicted, reflecting cost differences between design capacities.
Thus, it is clear that in addition to the degree of wastewater treat-
nent, treatment plant technology, and the hydraulic and geographical
characteristics of a community, the design capacity of a community's
treatment plant, together with the actual rate at which the capacity
is utilized, will have a significant bearing on the level of operating
and maintenance costs that a community wiM experience. This last
factor is important not only for the purposes of understanding the
underlying determinants of operating and maintenance costs, but also
provides, in part, a basis for assessing and evaluating the economic
consequences of over-capacity in sewage treatment plants in the
United States.
The Concept of a Penalty Cost
From an earlier disucssion in this volume, it is apparent that under-
utilization of capacity is the rule in the operation of sewage
treatment plants in the United States. Taking eighty percent utiliza-
tion of plant as benchmark for effective capacity utilization, it can
be seen from Table 25 that in 1968 (the most recent year for which
data are available) 61.1 percent of the plants in metropolitan areas
89
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35
30
CX3
s
20
10
UNIT COST CURVES FOR PRIMARY PLANTS
2.5 AND 10.0 DESIGN CAPACITY
FIGURE 6
2.5 MGDDESIGN
100 MGD DESIGN
3 4
5 6
8 9 10
AVERAGE DAILY FLOW (M.G.D)
-------
UNIT COST CURVES FOR TRICKLING FILTER PLANTS-
2.5 AND 10.0 DESIGN CAPACITY
35
30
5* 20
si
10
2.5 MGD DESIGN
10.0 MGD'OESIGN
FIGURE 7
8 9 10
AVERAGE DAILY FLOW (MGD)
-------
and 65.7 percent of the plants in non-metropolitan areas are operating
at less than the eighty percent rate--82.2 percent of the metropolitan
plants and 84.6 percent of the non-metropolitan plants operated below
stated design capacities. It is of interest for this cost effectiveness
study to attempt to assess the economic consequences of the prevalence
of underutilization of treatment plant capacity, and to inquire as to
the possible reasons for the prevalence of underutilization.
A conmunity incurs a pecuniary penalty in at least two ways by operating
its treatment plant at rates below full utilization or, equivalently,
by possessing a treatment plant with a design capacity in considerable
excess of its current needs. First, by operating a plant at less
than full utilization a conmunity is incurring a penalty in that lower
costs could be achieved for the same average daily flow and treatment
effectiveness by operating a plant of smaller scale. That is, had a
community with excess treatment plant capacity built a plant of a design
capacity in line with their actual needs, then the community would be
experiencing lower operating and maintenance costs than it is currently
experiencing. This is because of the effects of the interaction between
design capacity and actual flow discussed in the previous section.
Though it is generally true that lower unit operating and maintenance
costs obtain with a larger plant rather than a smaller plant when
operated in the neighborhood of design capacity, it is not usually the
case that for a given rate of flow a large plant operating considerably
below design capacity will have lower unit operating and maintenance
costs than a smaller plant operating close to design capacity.
An example of the operating and maintenance penalty cause by under-
utilization of treatment plant capacity is illustrated in Figure 7 by
statistically estimated cost curves for the activated sludge process.
In this example both the 2.5 and 10.0 MGD design capacity plants are
processing an average daily flow of 2.0 MGD. The larger plant requires
unit operating and maintenance expense of $39,400 (1962=100) but the
smaller plant's annual unit operating and maintenance expense is $20,600
(1962=100). The difference between these two figures multiplied by the
average daily flow is the total penalty cost, which amounts to $37,600
(1962=100) for the year and is illustrated by the shaded area in
Figure 8. Though the data do not allow a precise definition of cost
curves through the entire range of utilization, there are unquestion-
ably financial penalties for overloading, as indicated by the calculated
extension of the curves presented in Figure 9.
The second type of penalty associated with overbuilding is the interest
which must be paid on the difference in capital costs between a
community's relatively oversized treatment facility and a treatment
plant with a design capacity closer to the community's actual needs.
This type of penalty cost can be computed in a manner similar to the
computation of the operating and maintenance cost penalty: estimates
of the construction costs of the two sizes of plants are made and an
92
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eo H.
oZ)
10
ILLUSTRATION OF A PENALTY COST
FOR ACTIVATED SLUDGE PLANTS
FIGURE
8 9 10
AVERAGE DAILY FLOW (MGO)
-------
UNIT COSTS AND UTILIZATION OF CAPACITY
70
60
50
40
30
20
10
FIGURE
TRICKLING FILTERS
\ 2.5-DESIGN
.5
1.0
1.5
UTILIZATION RATE
2.0
-------
appropriate rate of interest is applied to the differences in costs;
in order to determine the community's interest burden, a factor
measuring the community's share of the financing is applied.
Adding the operating and maintenance cost penalty and the interest
change penalty provides an estimate of a community's annual out-of-
pocket expenses attributable to building a treatment plant with a
capacity in excess of the community's needs. Although the under-
utilization penalty incurred by one community may not appear large
when viewed for a single year, the aggregate value of all such penalties
may be of a considerable magnitude; and the cumulative value of the
community's penalties over time may prove to be of some significance.
Thus, the next step in this study of cost effectiveness will be to
utilize existing data to make estimates for the United States of the
monetary penalty associated with the existence of excess capacity in
sewage treatment plants.
Penalty Costs for Overcapacity
Absolute precision in estimating the costs of treatment plant over-
capacity is unattainable for at least three reasons: First, actual
operating and maintenance cost data are collected for only a rela-
tively small number of plants; second, to derive the operating and
maintenance costs that a community would obtain if it had a treatment
plant with a design capacity in line with its actual needs would
require detailed knowledge of the design characteristics of this
hypothetical plant - this point also applies to the computation of the
interest charge penalty-and third, no universally acceptable definition
of full capacity utilization is available. In spite of these obstacles
to precision, estimates of the costs of overcapacity can be obtained
through the use of statistical procedures.
Through the use of data on operating and maintenance cost, average
daily flow, and stated design capacity for a representative sample
of treatment plants, operating and maintenance cost functions for
various plant technologies have been statistically estimated. These
cost relationships explicity include the interaction between average
daily flow and design capacity as determinants of unit operating and
maintenance costs. These relationships provide estimates of the unit
operating and maintenance costs for a plant with stated average daily
flow, design capacity, and plant technology which are statistically
"best". Examples of the cost functions are illustrated in Figures 6
and 7 in the previous section.
In addition to providing an estimate of a plant's operating and
maintenance costs, given its reported average daily flow and design
capacity, the cost functions allow an estimate to be made of the
operating and maintenance costs that an underutilized plant could
achieve at its reported average daily flow, but with a plant of
95
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design capacity more in line with its actual needs. The difference
between the former and latter quantities is an estimate of the
operating and maintenance cost penalty incurred by the underutilized
plant in question. Estimates of the operating and maintenance cost
penalties for the entire United States for the years 1962 and 1968
have been derived for treatment plants having needed data reported in
the 1962 and 1968 municipal waste inventories. These figures were
adjusted by an appropriate scaling factor to account for plants not
having necessary data reported in the inventory.
By a procedure analogous to the one described above, interest charge
penalties caused by overbuilding of treatment plants have been
estimated. Statistical investigations of capital cost functions for
treatment plants which have been made make it possible to estimate the
cost of building a given plant with a given average daily flow and the
cost of building a plant designed to operate at a rate closer to full
utilization. The difference between the former and latter magnitudes
is an estimate of the total construction cost penalty caused by over-
building. Multiplication of this aggregate figure by an average rate
of interest will indicate roughly the total interest burden caused by
overbuilding.
In Table 28 estimated operating and maintenance cost penalties, by
regions and for the nation, are reported. Eighty percent has been
taken as the benchmark of full utilization; that is, the operating
and maintenance cost penalties have been calculated only to the degree
that treatment plants were operating at less than eighty percent of
their design capacity. The estimate for the entire United States is
not large in magnitude for either 1962 or 1968: for 1962 the amount
of annual operating and maintenance costs that could have been saved
by building plants that could serve communities' needs at a rate of
utilization of eighty percent is just under $14 million (1962=100) and
the analagous figure for 1968 is just over $19 million (1962=100). On
a per capita basis, the estimated operating and maintenance cost
penalty for 1968 amounts to roughly 22 cents per person served per
year.
Though the magnitudes of the operating and maintenance cost penalties
are slight, both in absolute and per capita terms, it should be noted
that these penalties amounted to 14.1 and 15.0 percent of the operating
and maintenance costs of underutilized plants in 1962 and 1968,
respectively. That is, underutilized plants, on average, could have
reduced operating and maintenance costs by 15 percent in 1968 by having
built plants in line with their actual treatment needs. The possible
cost savings by utilization categories are reported in Table 29. The
incidence and relative magnitude of operating and maintenance cost
penalties are notable. As can be seen in this table, the relative
penalty increases as capacity utilization decreases, increasing from
4.4 percent for a range of utilization between 60 and 80 percent up to
96
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TABLE 28
ESTIMATED OPERATING AND MAINTENANCE COST PENALTIES
FOR PLANTS OPERATING AT LESS THAN FULL CAPACITY
($ Millions^ 1962=100)
Pacific Coas~t
Northern Plains
Southern Plains
Southeast
Central
Northeast
U. S.
1962
$ Percent
Millions of
Penalty Total
O&M
3.04 14.4
.99 12.6
1.70 16.1
2.58 17.1
3.12 14.0
2.35 11.3
13.76 14.1
1968
$ Percent
Millions
Penalty
3.69
1.99
2.14
3.78
3.43
4.31
19.33
of
Total
O&M
17.5
13.1
16.3
15.4
13.0
15.3
15.0
Annual
Rate
of
Increase
3.3%
12.3%
3.9%
6.6%
1.6%
10.7%
5.8%
97
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TABLE 29
INCIDENCE OF OPERATING AND MAINTENANCE COSTS
PENALTIES BY UTILIZATION CLASSES, 1968
(Utilization defined as average daily flow/design capacity)
Utilization
Range
0 - .2
.2 - .4
.4 - .6
.6 - .8
Penalty as a
percentage of
O&M costs
59.8
32.8
14.6
4.4
Share of total
penalty
21.6
31.5
33.8
13.4
Percentage of all
plants 5.6
15.1
24.3
24.0
Percentage of
underutilized
plants
8.2
22.1
35.7
33.9
98
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59.8 percent for the range zero to 20 percent. At around 60 percent
capacity utilization, the cost penalty begins to become marginal, being
equal to about ten percent of total operating and maintenance costs.
With regard to the incidence of cost penalties, plants working at less
than 40 percent of capacity account for 53.1 percent of the total
penalty costs but only account for 20.7 percent of all plants. Thus,
though the total monetary burden stemming from operating and mainten-
ance cost penalties is not massive, it is generally not in a community's
interest to build treatment plant capacity far in excess of its needs.
The other source of additonal costs to a community that arises from
the existence of excess capacity is the additional interest that must
be paid for the construction of excess capacity. In Figure 10 it can
be seen that the estimated replacement value (rather than original
cost) of treatment plant capacity, exclusive of land, interceptors,
and outfalls, was $2.94 billion and $3.72 billion (1957-59=100)
in 1962 and 1968, respectively. Of these totals, $490 million and
$670 million went into excess capacity, using 80% as the full
utilization benchmark. These latter amounts are represented by the
shaded areas in Figure 10.
In order to estimate precisely the interest burden for communities
with excess capacity, interest rates paid by communities and the
communities' share of construction costs are necessary. For purposes
of this analysis such precision did not seem warranted in view of the
difficulty in assembling these data. Consequently, the total interest
penalties have been calculated for a range of reasonable values for
1968, and are presented in Table 30. As can be seen in this table, the
values range from $10.8 million to $25.1 million. On a per capita basis
these estimates work out roughly to a range of $.12 to $.29 per person
served per year. Thus, as in the case of operating and maintenance
costs, the total and per capita interest costs incurred by overbuilding
are of a rather small magnitude.
In spite of the small size of the estimated penalties it is worthwhile
comparing them for 1962 and 1968 to discern any trends. First, it
should be noted that excess capacity has been increasing between
1962 and 1968: 23% of non-replacement investment has gone into excess
capacity (see Table 26) and the construction excess depicted in
Figure 10 has increased from 16.7% to 18.0%. Second, operating and
maintenance cost penalties relative to total operating and maintenance
costs increased from 14% to 15% between 1962 and 1968. It appears,
then, that there has been no tendency for the practice of overbuilding
and its consequent costs to decrease. It is expected that total
expenditures from all sources for treatment plant plant construction
will continue to increase substantially over the next several years.
Because excess capacity in public investments is indicative of a
misallocation of resources, an examination of the possible causes for
overbuilding in treatment plant construction should prove helpful in
planning for the future growth of waste treatment facilities.
99
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FIGURE 10
Replacement value of treatment plant capacity in 1962 and 1968
in $ billions (1957-59=100)
1962
^T/7f7///
2.94
1968
3.72
100
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TABLE 30
INTEREST PENALTIES IN $ MILLIONS (1962=100) for 1968
Interest Rates
.03 .04 .05
Community share
.5 10.8 14.3 17.9
.6 12.9 17.2 21.5
.7 15.1 20.1 25.11
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PLANMI-IC DECISIONS AUD INSTITUTIONAL BEHAVIOR
Background
Under a system of pure competition, economists postulate, the firm (or
other economic unit) acts accordinn to a sot of desirable conditions.
In the absence of non-market constraints, the firm vrill continue to
produce up to the point vhere the cost of producing an additional unit
of output—marginal cost—is equal to the average cost vrhich, in turn,
eouals the price cf the product. This pricing am! sizing rule provides
a minimal or least, cost solution for the firm vorHng under these
conditions.
In the public sector—including the construction of waste treatment
facilities—the allocation nrocess is not guided by a market nechanism
and relationships at the mp.rgin do not constrain decisions. Rather,
institutional arrangements of a non-niarket nature determine the amount
of goods and/or services to be produced and the price to be charged.
The size of pollution abatement facilities is dependent noon myriad
factors—population crojections, v/aste projections, engineers' design
rules, regulatory innnsitions, local aspirations and financial resources
(including State and Federal grants). The pricing mechanism depends
on an eoually complex mixture of factors, ranging from the amount of
wastes produced to assessed value of property.
The absence of an internally operating allocation scheme places the
responsibility for maintaining ontimal sizing and nricing rules v/ithin
the controlling institutions. The institutional configuration should
not ignore the principles of efficient and optimal resource allocation.
Instead, it must first attempt to recognize how the institution affects
the pattern of resource allocation, and when this pattern deviates
from some predetermined cntimum the allocation design should be altered.
The institutions that bear directly u^on production decisions in the
area of municipal waste handling include local government and the
balance of local interest groups that determine its direction, local
financial conditions as modified by Federal and State financial
assistance, State regulatory boards, and the design-construction
industry.
The explanation for the prevalence of waste handling diseconomies may
be found in the fact that among these institutions, only one is so
structured as to include economic efficiency among the values that go
into the formulation of an optimum solution of a waste handling problem;
103
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and often this is manifested as a disinclination to finance waste
facilities at all in the absence of legalistic incentives. Local
finances are constrained by basic scarcity in the direction of efficient
use of resources. None of the other institutional forces has any
incentive to maximize investment utility.
State regulatory agencies, in general, have taken the position that
waste treatment is a good and desirable thing; and that, all other
things being equal, the more effective the treatment, the better the
situation. Federal regulatory philosophy has generally concurred in,
and sometimes run ahead of, the State attitude. The optimum solution
for regulators, then, is one which includes the widest application of
the highest degree of waste treatment.
The local government and the constituencies that give it legitimacy
are often severely hampered in the decision process by lack of knowledge.
Waste handling matters tend to assume complex technical configurations
that are beyond the range of knowledge of the normal municipal agencies.
Except in the case of the largest cities or consolidated metropolitan
sanitary districts, local government's decision role tends to be
limited to "sewer or don't sewer, treat or don't treat." Once a
decision is made,and most often it is a forced decision stemming from
Federal or State action, it is the prisoner of the regulatory agencies
of higher levels of government and of its own consultants. Moreover—as
we shall see—even the definition of its own financial self interest
is altered by the administration of State and Federal grants.
The major thrust of this study has been to identify the pattern of the
resource allocation process existent in the construction of pollution
abatement facilities—in particular the construction of waste treat-
ment and transmission facilities. Chapter II of this report describes
the recognizable increase in the amount of sewering and treatment that
occurred in the period 1945-1968. The incentive effect of Federal
grants in achieving this dramatic upswing in construction activity is
well documented. This section will analyze the allocation effect that
controlling institutions have on investment in pollution abatement.
Federal Grants
Chapters V and VI of this study demonstrated that the capacity expansion
(sizing) of treatment facilities was not optimal, except in terms of
the postulated objectives of regulatory agencies and the construction
industry. Excess capacity has been detected in a large number of
plants, while in many cases under-capacity exists. The opportunity
costs or penalties of excess capacity on a national basis have also
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been calculated. The circumstance to be analyzed in this section is
the effect that Federal grants have had on the magnitude of this
opportunity cost. Although this section considers only the relation-
ship of Federal grants to excess capacity penalties, from a resource
allocation standpoint, those plants with under-capacity are just as
relevant. Because these under-sized plants not only incur an economic
penalty, namely, higher average costs, they also produce an environ-
mental penalty caused by lower removal efficiencies. Adequate
information is not available at the present to estimate such penalties.
Therefore, the analysis and conclusions drawn from this analysis may
be considered to be biased to the low side because of the exclusion.
Since the passage of Public Law 84-660 in 1956, Federal grants have
been continually increasing. Federal grants, and where existent,
matching State grants have been a major impetus to communities to
increase waste treatment construction activity. While increased invest-
ment activity, on the surface, demonstrates progress in the construction
of waste facilities, the excess capacity prevalent in investment dilutes
the effectiveness of the dollars expended. Therefore, in order to
identify the effective impact of grants, the relationship between
grants and excess capacity must be isolated.
Before this relationship can be analyzed, the fiscal environment in
which grants are allocated must be understood. If expenditure levels
for local government services increase at a rate equivalent to the
post-1945 experience—and there is good evidence they will increase--
while local revenue patterns, which are already extended, do not change,
then local governments will be faced with increasing deficits. This
fiscal pressure facing local governments has been acknowledged by the
President in his statements on "Fiscal Federalism." Grants from
Federal and State governments have become the prime methods of filling
these gaps.
Pollution abatement programs are one reason for increased local expen-
ditures. Public Law 84-660 was designed to alleviate some of the
fiscal pressures created by this demand. This program specifically
designates that certain types of local government expenditures for
pollution abatement—projects related to treatment plants, interceptors
and outfalls--are eligible to receive grant monies. Discussions in
other parts of this report have pointed out that expenditures for those
projects constitute only a portion of the funds needed for total water
pollution abatement programs. Aside from determining the nature of
expenditure to be supported, the grant component of Public Law 84-660
as amended has a prescribed life span, being scheduled to terminate
in 1971. It would appear that a community faced with an increased
demand for abatement facilities that is constrained by local fiscal
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pressures would seek grant aid. If the existence of the grant program
is uncertain over the long run, and the investment categories are
specified, then construction of excess capacity in the eligible
categories is likely.
Another statutory element of the grant program that is likely to cause
excess capacity is the allocation formula. The allocation formula of
the existing program is based on a combination of State per capita
income and population. If the needs for funds within a given State
are not related to these allocation criteria, then over or under
funding for the State may occur. Those States with an excess of alloted
funds are likely to allocate the money on a less competitive basis
than States near or below the level of funding where supply of funds
equal demand. V
Excess capacity incentive effects of grants can be approximated by
comparing investment trends, grant allocations and changes in excess
capacity. The comparison will be made for the 1962-68 period. Earlier
chapters estimated the opportunity cost due to excess capacity for
both 1962 and 1968. While Federal construction grants have been made
since 1957, the opportunity cost calculations for this earlier period
are not available. The opportunity cost for plants operating at 80%
or less of capacity in 1962 was 490 million dollars, while the
opportunity cost for 1968 was calculated at 670 million dollars. One
would expect the opportunity cost for 1962-68 to decrease in view of
the high prevalence of treatment in 1962--as communities with excess
capacity absorbed that capacity through a process of natural population
and industrial growth. In fact, the amount of excess capacity became
larger.
Aside from the penalties derived from excess capital costs, there is a
related higher operation and maintenance cost for plants with excess
capacity. Chapter VI developed and documented the concept that size,
independent of the degree of utilization, does not necessarily produce
economies of scale. Plants with excess capacity have higher unit
operation and maintenance costs than smaller plants that are fully
utilized. Where excess capacity is constructed, due to the availability
of a Federal grant or other cause, the community will be faced with
higher operation and maintenance costs. Similarly, if a community has
Review of Financing the Section 8 Construction Program, Federal
Water Quality Administration, U. S. Department of the Interior,
Office of Survey and Review, October 1970.
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excess capital it will be paying interest on the excess capital invest-
ment. As interest rates rise such costs will constitute higher
penalties. The operation and maintenance costs penalty together with
the interest penalty constitute an annual penalty which, when cumulated,
might offset the Federal fiscal aid provided for the capital expendi-
tures. It should also be noted that grants are not allocated for
operation and maintenance and interest payments. Therefore, the grant
might initially help the capital investment position of the local entity,
but distort its long run operating budget by causing communities to
operate on the higher portion of their average cost curve.
Aside from the effect of encouraging communities to operate on an
inefficient level of average cost, excess capacity constructed from
grant outlays constitutes an opportunity cost for the larger economic
community. This opportunity loss nay be viewed either from a fiscal
or an expenditure view. From the expenditure side, grant monies that
go to communities with excess capacity are potentially diverting money
from communities which need capacity in conditions of resource scarcity
which have indeed prevailed with respect to Federal grant funds. Rhen
viewed fiscally, those communities which are constructing excess
capacity with the help of Federal and State aid are able to finance
this excess at the expense of citizens located outside the boundaries
of the community in question. If a majority of the expense is financed
by means external to the local entity, then the community's financial
share of the facility is lessened. Thus, the average out of pocket
fixed cost to the community is lessened by the grant financing.
Both economic losses—the opportunity costs and higher average variable
costs—are demonstrated in the following example.
Consider a community of 8,500 persons that decides to build a waste
treatment plant. The community's immediate need (and allowing for some
short term growth) is for a 1 million gallon per day secondary waste
treatment plant (high rate trickling filter, for the sake of example),
that will have a useful life of 25 years and can be financed serially
at 6% in a situation marked by 25% State and 50% Federal matching
grants. Under these conditions, annual costs will be:
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(1) depreciation (capital cost)
operation and maintenance
interest
Total
of that, the community's share will be:
(2) depreciation
operation and maintenance
interest
Total
$21,000
15,500
15,800
$52,300 (Assuming national
average prices in
1962 dollars)
$ 5,250
15,500
3,950
$24,700
If, instead of a 1 million gallon per day plant, the community decides
to construct a 2.5 million gallon per day plant, then annual cost will
be:
(3) depreciation
operation and maintenance
interest
Total
of which the community's share will be:
(4) depreciation
operation and maintenance
interest
Total
$37,200
20,500
27,900
$85,600 or 64% more;
$ 9,300
20,500
7,000
$36,800 or 49% more.
Regardless of the design size, the community will only have an immediate
need for 1 million gallons of capacity per day, thus any capacity in
excess of the needed capacity will be idle, at least initially. By
obtaining grants, the community is capable of increasing the design
capacity of the plant by 150% while the capital cost (depreciation)
obligation increases by 64%. While the average fixed costs on a total
cost basis is higher, Item 3 the average fixed cost incurred by the
community out of pocket is lower, Item 4, and the difference in average
fixed cost is charged against revenue sources extraneous to the
community. When variable costs enter the analysis—and operation and
maintenance—the financial picture is not as advantageous for the
community. Total costs to the community increase by 50%, indicating
that the capital cost advantage is more than cancelled by the increase
in other costs.
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The example is highly simplified, and the analysis is static;
nevertheless, it does demonstrate the losses possible from a construc-
tion program that is structured without efficiency constructs.
In sum, the structure of the Federal waste treatment plant construction
program does affect the allocation process of treatment plant
construction. Both the specific categories eligible for funding and
the temporal limitations of the program have created incentives that
may be construed to modify capacity expansion practices. To the
extent that this has occurred, the grants act counter to the basic
concepts of efficient resource allocation. Either a more flexible or
a more closely constrained program might encourage cities to define
their system needs more accurately, and might enable cities to direct
expenditures to meet these needs. Essentially, the design of the grant
system must take into consideration the allocative effect of institu-
tional constraints. This realization will be important for the
duration of the construction grant program for waste facilities and for
related future programs.
Local Governments
Policy and programs instituted on a Federal level which affect local
and State governments must consider the behavior of the governmental
units. The water quality program is determined on a national level,
but the main participants in the program are the local entities. Thus
a better understanding of the modus operandiof this level of government
is essential to an effective program.
While a discussion of local government activity seems logical and while
its importance seems obvious, there has been little organized research
and analysis on the subject. Rather, this crucial phase of program
analysis is often left to vague impressions of the analyst and/or
decision-maker on the Federal level. Based on these particular
impressions generalized rules of local behavior are postulated; and
programs are formulated on the strength of the postulates. This section
does not attempt to be a definitive work on the behavior of State and
local government, a subject that needs to be researched further.
Rather, it presents some hypotheses about local behavior and its effect
on efficient allocation of resources.
A number of interesting hypotheses have been proposed by John M.
Richardson, Jr. and Howard Maier of Case Western University.* Their
J. M. Richardson and H. Maier, "Incongruem. uu«i3, Politics and the
Pollution of Lake Erie," a paper delivered at the Fourth Annual Midwest
Student Seminar on Urban and Regional Research, Northwestern University,
April 24-25, 1970
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research, based on a study of local governments surrounding Lake Erie,
concludes that we have the engineering answer for most sewage problems.
However, the optimum solution may not be implemented because of
important intervening political factors. Examples of such political
factors abound and form the core of the following hypotheses.
(1) Each local governmental organization has as its chief goals:
(a) continuation of its existence; (b) if possible, an increase in its
power. Local governments oftert exist which are responsible for only
one part of pollution abatement. Responsibility often overlaps. Such
fragmented structures will carefully guard their existing functions,
for should these functions be assumed by another governmental unit,
their raison d1 etre would disappear. While continuing to perform its
distinctive functions, each local unit—at the same time—competes with
other local structures for new functions being delegated to the local
level. Such behavior is modified by a desire to maintain the unit's
political autonomy and its relative importance vis-a-vis other local
units. Maintenance of one's organization and the increase, where
possible, of one's power constitute only one element of a situation in
which local goals may conflict with a "best solution" to a given
problem.
(2) Local government goals may conflict with the goal of a least cost
clean environment because of the rol-e played by personal goals in the
decision process. Richardson studied a pollution problem having only
two viable alternatives: a regional solution and a local solution. In
his case study, the desire to represent community attitudes favored the
local treatment approach. The goal of community protection was also
seen by the local Mayor and city council as best served by the local
treatment alternative. Clearly the decision-making process is not that
simple. Goals may be congruent or conflicting, and their interrelation-
ships greatly affect the policy outcome.
It is a general hypothesis of organization theory that a decision
making unit having two or more conflicting goals will be most influenced
by the more operational goal. And the more operational goal of the
local government official may be assumed to be the one which satisfies
the above hypotheses. Maintenance of political power or increased
political gain, when in conflict with a goal to achieve a clean environ-
ment using a least cost solution, will dominate. Thus the priorities
of those organizations supporting a least cost goal may often be in
conflict with those of local government.
Further, if two goals are nearly equally operational, Richardson
hypothesizes the dominance of the salient one for the decision-maker
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For example, a local official's immediate political goals would dictate
the choice of a continuing pollution problem rather than the choice
of raising taxes significantly for a new treatment plant. For the
ecologist, the options would presumably be reversed. Richardson and
others point out that the local politican is not an ecologist; he is,
rather, a person who identifies with his organization and whose goals
are highly operational where the organization is concerned. In short,
his predominant concern is with maintaining the existence of the
organization and, where possible, with increasing its power.
The process of preserving the environment must operate within the
political milieu described briefly above. The precepts of regionalism,
systems, and comprehensiveness must contend with political impediments
characteristic of government at all levels. In terms of resource
allocation on a national scale, local behavior patterns add another
dimension to the institutional constraints preventing the concepts of
marginality from working. In the previous section the possible distor-
tion caused by Federal activity was described. Because of constraints
inherent in the grant allocation mechanism, misallocations occur and
economic efficiency is hampered. Local government behavior also may
prevent the optimum solution from being employed.
That optimum solution can be described in a theoretical way by taking
the economic concepts of marginal ity which apply to the single firm,
and extending the principles to the operation of the market having
many firms. In theory, each firm (city) should be able to define the
average and marginal costs of its treatment facilities. The market
than combines these costs curves and derives a market share rule—which
can be interpreted as a sizing or capacity expansion criteria—and a
pricing rule. At a market level the marginality rules form the basis
upon which these other rules are determined. The optimum solutions
described by such a system are often thwarted by non-economic decisions
The least costly solutions, the comprehensive systems approaches, are
usually not implemented.
The relationship between economic efficiency concepts and political
decision making and its effect on the problem of capacity expansion
will be translated into more real terms and illustrated by means of
case study.
On a single conrnunity basis, in which the community has no neighbors,
the capacity expansion problem involves an estimation of population
growth, behavior of cost functions, (e.g., a recognition of economies
of scale) operating cost levels, and decisions concerning uncertainty.
Ill
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When regional concepts are introduced, the number of technical variables
to be considered multiplies. Regionalism involves a new set of cost
functions. The trade-offs between components of the system become
greater; e.g., shall more interceptors be constructed, requiring more
pumping but permitting a larger treatment plant to be constructed? Or
is the plant of sufficient size so that unit costs actually increase
as the plant size increases? There are technical bottlenecks which
cause modal points in the definition of cost curves; at these points,
either economies or diseconomies of scale occur. Technically it is
feasible to estimate what the modal points are, and to make comparisons
of the mix of alternatives. The environmental field has not been slow
in adopting the kinds of systems analysis tools that were used so
successfully in the space program. But once the cost functions are
identified, the system is identified, and the market shares estimated,
this allocation process breaks down and institutional constraints
domi nate.
Richardson and Maier demonstrate such a breakdown in implementation
A city must increase the size of its treatment plant. Because the
plant operates at full capacity or more, the city officials contemplated
joining the system of the major city in the metropolitan area, which
has developed a regional plan for the metropolitan area. As negotia-
tions for a cooperating agreement began, the desire to preserve
autonomy also began to grow. The mayor and council were faced with
a dilemma: the existing plant site was limited—reached a point of
diseconomies of scale—and cooperation with major city was undesirable
to some local values. In the situation, local autonomy proved, rather
than technological effectiveness or economic efficiency, to be the
determining decision factor. A large number of case studies demonstrat-
ing the conclusion that institutional values of a non-economic—or even
uneconomic—nature are critical could be repeated. Nor is local
autonomy alone in producing sub-optimum problem solving. Health depart-
ment rigidity, uninformed rate-making, established client relationships
with engineering firms, industrial management's influence on local
government—a host of organizational and sociological constructs stand
between the technocrat's dream of efficiency and the real world of
political decisions. This may be desirable for non-economic reasons
but the costs should be assessed and the decision made on an informed
rational basis.
Local Finance
A community's share of treatment plant construction cost is often met
by issuing "bonds. The issuance of bonds, though, must often be approved
by the electorate of a community; and this necessary but desirable
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process can create problems for the efficient allocation of resources
to water pollution control and abatement. Specifically, problems
associated with local bond financing can induce municipal officials
to build waste treatment facilities in considerable excess of their
current and near-term needs, to reduce the occasions when they must
go before the voters.
Alternative methods of dealing with treatment plant design uncertainty
can be categorized into two broad strategies. First, a community can
build a capacity which is far in excess of current needs, and as a
consequence be reasonably assured that additions will not be needed
for quite a number of years. Second, a community can build capacity
to meet increases in waste treatment demands as these demands occur.
The first strategy requires an initially large issuance of local debt,
but with the anticipation of little or no subsequent issuance for a
considerable length of time. The second strategy requires a lesser
initial capital expenditure, but subsequent expenditures must be
incurred at relatively frequent intervals. Several structural
features of local finance tend to lead municipal officials to favor
the first strategy over the second, because a number of problems are
created by frequent bond issues for the same activity. Among those
problems are: possible voter rejection because of frequent reappear-
ance of proposals for the same purpose, the fixed costs associated
with marketing a bond issue, and current uncertainty about future
interest rates and inflations
Frequent reappearance of bond issues for the same program may make
local voters suspicious of the program. Voters may feel that the
program has been misrepresented in the past if the same bond issue
reappears frequently and, consequently, may be led to seriously question
the necessity of yet a further funding of the same program. Also,
repetition of the same kind of bond issue may lead voters to assume
that the program has not been conducted in the most effective manner
in the past and that ineffectiveness should not be, in a sense, reward-
ed. To the extent that a significant number of members of the local
electorate react in these fashions to a frequently repeated issue,
local officials must weigh the risks of voter rejection of a frequently
presented bond issue against the risks of rejection of one large bond
issue. With respect to treatment plant construction, then, these
considerations can lead local officials to opt for the strategy of
overbuilding rather than adding increments to capacity to meet demand
as it occurs.
After a bond issue is authorized by an electorate, the sale of the
bonds must be effected. The sale is not a costless transaction.
Rather, market information must be obtained and brokerage fees must be
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paid. Part of these costs are independent of the amount of the issue.
The more frequently a community markets a bond issue, the more often
these necessary transaction costs will be incurred. The implication of
this feature of the financial markets for treatment plant construction
bond issues may prove to be cheaper to administer than the alternative
of marketing bond issues at more frequent intervals.
It is a well-established economic phenomenon that inflation creates
the expectation of further inflation, along with an attendant antici-
pation of higher interest rates. Such expectations, in turn, lead to
an acceleration in the purchase of durable goods and structures. Local
officials are not exempt from this syndrome of inflation. With regard
to treatment plants, an inflationary situation may induce a "big push"
attitude: construct as large a plant as possible within political and
financial limits before prices and interest rates rise further.
Thus, a number of problems associated with local bond finance lead to
a bias toward overbuilding treatment plant capacity in many communities.
But treatment plant overbuilding is just one of the many consequences
attributable to the maladroitness of local finance in coping with ever
increasing demands for public services.
Economies of Scale
Every published investigation of the relationship between treatment
plant construction costs and design capacity has indicated that
economies of scale in treatment plant construction exist. That is, as
the design size of the plant increases, unit construction costs
decline. These studies indicate that, over the valid size ranges, a
10% increase in design capacity will lead to an increase in unit
construction cost in the range of six to eight percent, depending on
the type of plant. V It would appear, then, that for a given target
treatment flow that it is less costly to build one plant rather than
two or more plants to accommodate this flow. However, in assessing the
potential economies in an actual system design, the costs of interceptors
required to convey the wastes to a single plant must be considered. In
addition, if existing facilities with remaining usefulness are to be
scrapped in the process of moving to a large single plant, the salvage
value of that facility must also be included in the analysis to reach a
true cost effective solution.
*/ See P.M. Berthouex and L.B. Pollowski, "Design Capacities to
Accommodate Forecast Uncertainties," Journal of the Sanitary
Engineering Division, Vol. 96, No. SA5, October 1970, pp. 1191. It
should be noted that the costs exclude the costs of interceptors,
outfalls, and land acquisition.
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Previous studies of operating and maintenance costs for treatment have
tended to substantiate the belief that there are economies of scale
in treatment plant operation. The usual practice in these investiga-
tions is to statistically fit a relationship between annual unit
operating and maintenance costs and average daily flow or design
capacity (but not both) for a sample of treatment plants. Generally,
the results indicate that unit operating and maintenance costs decline
as the rate of flow increases.
In hopes of achieving the greatest economies possible, many communities
have built treatment plants and/or added treatment plant capacity in
considerable excess not only of their initial needs but also of their
needs over the near future, say five to ten years. On the one hand,
construction costs per unit of flow, and, thus, interest payments,
should decrease with plant size. On the other hand, based on past
investigations, community officials might expect to attain lower unit
operating and maintenance costs with increasing plant capacity.
Reinforcing the strategy of overbuilding is the apparent assurance of
being able to meet the additional treatment needs caused by an
increase in population growth. Thus, for reasons of economy and
uncertainty it would appear that the practice of overbuilding treat-
ment plant capacity rests on substantial economic and engineering
grounds.
Upon closer investigation, however, the economic foundations for the
practice of overbuilding are, in part, illusory and if not properly
assessed will entail higher effective unit construction costs and
operating costs than would be the case if the alternative strategy of
building and adding treatment plant capacity in accordance with current
and near-term needs was followed. First, lower construction and
interest costs per unit of flow can only be achieved if a treatment
plant is actually operating near or at its design capacity, (cf Figure
11) Chronic operation at less than full utilization will result in
higher construction and interest costs per unit treated than would be
the case with a smaller plant. Second, similar considerations apply
to the proposition that lower unit operating and maintenance costs
will necessarily be achieved with larger plant sizes. From the
discussion in a previous chapter, it is clear that lower unit operating
and maintenance costs may not be achieved with a plant capacity in
considerable excess of actual needs. In fact, it is generally the case
that for any given actual flow that can be accommodated, operating and
maintenance costs will be higher for a larger plant than for a smaller
plant. Economies of scale in operation will be attained only if a
treatment plant is operated near its intended capacity.
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70
- 60
50
«i 40
30
20
10
T COST CURVES FOR DESIGN CAPACITIES
of. 5,1.0,2.5,5.0,and 10.0 MGO
ACTIVATED SLUDGE
FIGURE 11
1 2
5 6
7 8 g
AVERAGE DAILY FLOW(M.G.Q.)
id
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Finally, to build an overdesigned treatment plant in order to meet
possible unexpected increases in demand is a one-sided strategy that
ignores the full range of alternatives. The possibility that future
demand might exceed forecasted demand arises because of the confidence
with which the forecast is held. However, if a forecast is not held
with certainty, then it is generally the case that future demand can
fall short of the forecast with about the same probability as rising
above the forecast. What, then, are the alternative design strategies
when demand forecasts are not held with certainty? On the one hand,
a plant can be built to accommodate treatment needs in excess of current-
ly forecasted needs. However, if actual future demand is not above
forecasted demand, then the community incurs higher construction,
operating, and interest costs on both a total and per-unit basis than
would be the case if a smaller plant had been built. On the other
hand, a plant can be built to meet current and short-range needs, say
five to ten years, and the community can build increments to treatment
plant capacity to meet additional needs as they occur. A potential
loss is associated with this latter strategy, though; namely, if
future demand is higher than forecasted, then the economies of scale
associated with a larger plant have been foregone. Under uncertainty,
which of these two general strategies should be pursued? A recent
study has indicated that the strategy of overbuilding treatment plant
capacity in order to meet unexpected increases in future treatment
needs is generally imprudent. */ The rationale behind this finding
is that, generally, the expected loss from building incrementally to
meet short-term needs stemming from the potentially foregone economies
of scale is less than the expected loss from overbuilding stemming
from the potential higher costs of construction and operation.
Thus, economies of scale and safety margins are not, in and of
themselves, sufficient economic justifications for overbuilding treat-
ment plant capacity. Only if a community is expected to operate its
treatment facility near full capacity within the near future, say
five to seven years, will the potential cost savings be realized. In
general, a strategy of building capacity to meet current and near-term
needs will yield lower costs of construction and operation than the
strategy of overbuilding.
Peak Loading
A community's hydraulic characteristics must be incorporated into the
design characteristics of its treatment plant in order to attain
*/ Ibid, pp. 1195-1206
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target degrees of treatment. The expected peak load is one of the
most important characteristics that must be considered in meeting
design efficiencies of a plant on a continual basis. Peak loads can be
met by a combination of three basic methods: varying detention times
and recirculation rates, use of flow equalization devices or tanks to
smooth the flow of influent and permit processing at non-peak periods,
and building sufficient operating capacity to handle peak loads as
they occur.
If it is the case that anticipated peak loads are met primarily by
building sufficient capacity to meet them as they occur, then this
practice will contribute to the prevalence of stated excess capacity.
To illustrate, suppose that two communities plan to treat the same
average daily flow, say one million gallons per day, but that the
first community has an average peak at a daily rate of 1.2 million
gallons and the second has a peak of 2.0 million gallons. If these
peaks are met solely by building capacity to handle them, then the
first community will build a plant with a smaller design capacity than
will the second community. Consequently, the first community's plant
will have a higher calculated utilization rate (actual flow/design
flow) than the second community's plant. From this example it can be
seen that if it is common design practice to build enough treatment
plant capacity to meet peak loads as they occur, then it might be
expected that observed lower rates of utilization are associated with
higher peak loads.
The validity of this partial explanation for the prevalence of excess
capacity can be statistically tested by computing the correlation
between the rate of capacity utilization and a measure of peak loadtng.
A negative correlation between these two variables is expected if the
practice of using excess capacity in order to meet peak loads is
prevalent. The rate of utilization is measured by the ratio of actual
average daily flow to design capacity and peak loading is measured by
the ratio of peak load to average daily flow.
The statistical results are reported in Table 31. As can be seen by
inspection of the first row of this table, the correlation between
peak loading and utilization rates is negative but low (a value of -1.0
denotes perfect negative correlation, 0 is perfect non-correlation,
and 1.0 is perfect positive correlation). Each correlation is, however,
significantly negative (i.e., significantly below zero) by the usual
tests of statistical significance. In the second row of the table the
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TABLE 31
Treatment Type
Correlation
Coefficient
Percent of
Variation
Explained
Average
Utilization Rate
Average of Peak
Load/Average
Daily Flow
Number of Plants
in Sample
Primary
-.221
4.9
.62
3.55
158
Activated
Sludge
-.292
8.6
.67
2.75
77
High -Rate
Trickling
Filter
-.224
5.0
.64
2.85
159
Standard-Rate
Trickling
Filter
-.290
8.4
.66
4.18
77
Stabilization
Ponds
-.188
3.5
.67
2.25
41
Table 31, 'Statistical Relationships between capacity utilization and the ratio of peak load to
average daily flow.
-------
percentages of variation between plants in capacity utilization attri-
butable to variation between plants in peak loadings are reported. The
percentage of explained variation ranges from a low of 3.5 percent for
stabilization ponds to a maximum of only 8.6 percent for the activated
sludge process. In other words, less than nine percent of variation
in utilization rate can be accounted for by peak loading, and so
justifiable on an engineering basis. The remaining 90-odd percent, is
attributable to factors other than peak loading.
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THE KiSKCONFERENCE BOARD
IHCOIPQtjtltO
845 THIRD AVENUE. NEW YORK. N.Y. 10023
APPENDIX A
Budget Bureau No. 42-S69006
Approval Expires Dec. 31, 1970
SURVEY QUESTIONNAIRE
STUDY OF WATER POLLUTION ABATEMENT COSTS
General Directions
A separate report should be prepared for each plant. It is necessary to know these data for each plant so as to
relate the production and financial data to the wastewater abatement cost data when making cost burden and
incentive analyses.
A plant is defined as the total facilities and operations at one location. Whether a few or many products are
made at this location, it still should be considered one plant. This excludes facilities restricted entirely to such
operations as warehousing and storage, research and development, and sales offices.
In the preparation of this survey questionnaire, care was taken to request information, wherever possible, in
terms identical to those utilized in various reports to the Bureau of the Census. This was done to provide a
recognized standard for some of the information requested and to permit the respondent to provide
information similar to that which has been compiled for other reports.
Please report for calendar year 1969 unless otherwise specified. If this is not possible, specify the reporting
period for which data are provided.^
Please return the completed form to Leonard Lund, National Industrial Conference Board, 845 Third Avenue, New York, New
York 10022. Do not indicate your name or company on this form. The Code Number on this page identifies you to The
Conference Board. No personal or corporate identification will appear in any report based on this survey without your explicit
authorization.
© 1970 NATIONAL INDUSTRIAL CONFERENCE BOARD, Inc.
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ITEM 1. PRODUCT INFORMATION
(a) Principal productjs) of this plant
(Describe by using categories defined in the Standard Industrial Classification Manual, e.g., "Chemicals
and Allied Products," "Industrial Gases," "Food and Kindred Products, Fluid Milk," "Transportation
Equipment, Motor Vehicles," or similar descriptive phrases.)
(b) Standard Industrial Classification Code(s). (If known)
(4 digit code(s) )
ITEM 2. NUMBER OF EMPLOYEES
\al Production Workers —Workers (up through
the working foreman level) engaged in fabri
eating, processing, assembling, inspecting, re-
ceiving, packing, warehousing, shipping (but
not delivering), maintenance, repair, janitor-
ial, watchman services, product development,
auxiliary production for plant's own use
(e.g., powerplant), recordkeeping, and other
ctoseiy associated services. Exclude propri-
etors and partners.
Ib) AH Other Emptoyees-Nonproduction per-
sonnel, including those engaged in the fol-
lowing activities: supervision above working
foreman level, sales (including driver sales-
men), sates delivery Uruck drivers and help-
ers), advertising, credit, collection, installa-
tion and servicing of own products, clerical
dfid routine office functions, executive, pur-
chasing, finance, legal, personnel (incl. caf-
eteria, etc.), professional and technical. Ex-
clude proprietors and partners.
(c) Total number of employees (sum of lines
a and b)
Number of production employees
during typical month
Number of all other employees
during typical month
ITEM 3. PAYROLLS
Enter the total (before deductions) of wages,
salaries, bonuses, commissions, and other remun-
erations paid in 1969 to "Production Workers,"
and "All Other Employees," as defined in Item 2
above
a) Production workers' wages
b) All other employees'
salaries and wages
c) TOTAL PAYROLL
(Sum of Lines a and b)
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ITEM 4. PRODUCTION COSTS
(a) What were the costs of materials, fuels, electricity and contract work put into production in 1969?
S
Note: The figures reported should represent the total cost of
materials, supplies, semi-finished goods, fuels, etc., actually
consumed or put into production as in reports to the Census
Bureau.
If your records do not show the an.Dunts actually consumed
or put into production, the reported figures may be derived
from purchase and other records.
(b) What were the depreciation charges in 1969? S
ITEM 5. VALUE OF SHIPMENTS
What was the value of products shipped in 1969? S_
ITEM 6. VALUE AND AGE OF FIXED ASSETS
in order to obtain an estimate of the value and age of the plant and equipment, please answer the
following:
(a) What was the gross investment in plant and equipment as of December 31, 19697 S
(b) What was the book value (gross investment minus straight line depreciation) of plant and equipment'
S .
(c) Was the plant built within the last five years? Yes D No H
(d) Was the capacity of this plant expanded significantly (more than 50°o) within the pjst five
years? Yes D No D
(e) Was more than 50% of the production equipment in this plant installed or significantly modified within
the past five years? Yes D No D
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ITEM 7. CAPITAL EXPENDITURES FOR ABATEMENT FACILITIES
fa) Please estimate the capital expenditures for the purpose of water pollution abatement at this plant for
each year of the period 1965-1969. Report separately the amounts spent for rep/acement and
modernization of existing facilities and the amounts spent for new faciliries including expansion.
Mote: Report only those expenditures made for the purpose
of pollution abatement. If improvements have been made in
the production process which provide an incidental benefit in
the abatement of pollution do not include the expenditure for
that improvement.
Replacement and modernization New facilities Total
Year of existing facilities includingexpansion Expenditure
1965 S S $
1966 S S S
1967 S $ S
1968 $ S $.
1969 S $ $_
Total (1965-1969) S S $_
(b) For which of the following types of water pollution abatement measures were most of the capital
expenditures made at this plant during 1965-1969? (If the investment falls primarily in one category, check
that box; if it is divided among several, check all appropriate boxes for which expenditures were more than
20°0 of total.)
Manufacturing changes to reduce water pollution Q
Wastewater treatment D
Water cooling (See Note below) D
Other (please specify) D
Note: Water cooling done primarily to reduce the quantity o1
intake water needed for production purposes is not
considered pollution abatement. Cooling for the purpose of
preventing the discharge of heated water to a river, lake,
stream, or estuary, is considered pollution abatement.
(cl If this plant currently has no water pollution abatement facilities, does it plan to build any? Yes D No D
If yes, when? Next year D In five years D After that D
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ITEM 8. PLANNED CAPITAL APPROPRIATIONS FOR POLLUTION ABATEMENT FACILITIES
Please report:
(a) Capital appropriation for abatement facilities
for 1970 $
(b) Number of years in which to be spent
(c) For which type of measures: (see 7b)
Manufacturing process changes d
Wastewater treatment D
Water cooling (see Note 7b) D
Other (specify) D
Please report:
(d) Total future capital requirements, including
1970, to meet present water quality standards
$
(e) Number of years in which to be spent
(f) For which type of measures: (see 7b)
Manufacturing process changes D
Wastewater treatment D
Water cooling (see Note 7b) D
Other (specify) D
ITEM 9. WATER POLLUTION ABATEMENT MEASURES
Using the accompanying chart of abatement measures (Attachment I), please indicate the code numbers of
those measures already in place in this plant, and in the order in which applied. In the event that wastewaters
from more than one source within the plant are combined for treatment in a common facility (e.g., process
and sanitary wastewaters} please indicate this by showing which sources are combined.
Wastewater Source
Manufacturing process.
Abatement Measure
Code Numbers
Sanitary
Cooling (see Note 7b) . .
Other — (please specify)
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ITEM 10. VOLUME AND CHARACTERISTICS OF DISCHARGED WASTEWATERS
(a) Average daily volume of discharged wastewater by source:
(Report typical discharges in million gallons per operating day.)
Source
Discharged Directly
Treated Untreated
Discharged to
Public Sewer
Treated Untreated
Other manner of
disposal (specify)
Treated Untreated
Manufacturing Process
Sanitary
Cooling
(see? Note 7b)
Other (specify)
Total
mgd
rngd mgd
mgd
mgd mgd
(b) Wastewater constituents discharged directly by source: (Report in pounds per day. PH units deqrees
Fahrenheit) '
Source
Manufacturing
Process
Sanitary
Cooling (see
Note 7b)
Other (Please
specify)
TOTAL
Biochemical Oxygen Chemical Oxygen Suspended
Demand (Five Day) Demand Solids
Temperature Other (Please
Rise specify)
(c) Please describe any seasonal aspects of production that may affect the quantity of wastewater discharged.
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ITEM 11. EXPENDITURES FOR OPERATION AND MAINTENANCE
OF WATER POLLUTION ABATEMENT FACILITIES
(a) Annual expenditures for operating and maintaining existing water pollution abatement facilities.
1968 $ 1969 $ .
(b) Estimate of annual expenditures for operating and maintaining abatement facilities upon completion of
construction noted in ITEM 8d. $ :
(c) Estimate of number of employees engaged in operating and maintaining pollution abatement facilities in
1969. '
(Equivalent full-time manpower)
ITEM 12. USE OF PUBLIC SEWER SYSTEMS
(a) Is there a public sewer system available for use by this plant? Yes D No D
(b) If yes, does this plant discharge wastewater into public sewer? Yes D No D
If answer to (b) is Yes:
(c) What was annual payment by this plant to
municipality or other authority for sewer
service, excluding property tax? $
(d) What was basis of payment? (Check all
relevant boxes)
Water use D
Waste strength D
Over-strength surcharges D
Other (Specify) D
If answer to (b) is No:
(e) If plant does not, does this plant plan to use
public sewer in the future? Yes
(f) If yes, when? Next year? D
No D
In five years?
Later?
D
D
(g) If yes, what kind of wastewater will be
discharged? Please check.
All wastewater
Manufacturing process only
Sanitary only
D
D
D
Manufacturing process and sanitary D
Cooling (see Note 7b) D
Other (specify) D
ITEM 13. OTHER CONTRIBUTIONS TO FINANCING OF PUBLIC SEWER SYSTEM
(a) What payments were made to a local government unit for sewer service in the form of property taxes or
assessments? $
(b) What, if anything, has been contributed to the capital cost of constructing a new public wastewater
treatment facility or expanding of an existing facility in cooperation with a municipality or other public
authority in addition to amounts reported above? $
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ITEM 14. GENERAL OBSERVATIONS
We would appreciate any observations which you would care to make regarding features of the
operation or location of this plant that you feel would make for special problems in wastewater
treatment; and any comment you may wish to make concerning this questionnaire or the use of the
data provided. If any costs have been incurred or are anticipated because of plant relocation or process
change primarily influenced by water pollution abatement requirements, please describe their nature and
costs in this section.
ITEM 15.
Name and title of person to be contacted in the event that additional correspondence or information
may be required.
Name_
Title
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ft U. S. GOVERNMENT PRINTING OFFICE : 1971 O - 424-782
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