Interim Economic Guidance for Water Quality Standards http //www epa gov/OST/ocor
United States
Environmental Protection ... .f*°. **"
Agency Mail Code 4303
SUMMARY
Interim Economic Guidance for Water Quality
Standards:Workbook
Fact Sheet
Interim Economic Guidance for Water Quality Standards: Workbook
FACT SHEET
(February 1997; EPA-823-F-97-002 )
This workbook will help State and Indian tribes' environmental protection agencies understand economic
factors and the types of tests that can be used to determine: 1) if the designated use of a water body
cannot be attained, 2) if a variance to an individual discharger can be granted, or 3) if degradation of high
quality water is warranted. The measures and tests contained in this guidance are standard economic
analytical tools.
This guidance, including the various screening levels and measures presented, is designed to be
implemented as reference points and used as guides by the States and Regions The measures outlined in
the guidance are not intended to be applied as absolute decision points. States may use other
economically defensible approaches in lieu of those suggested in .this interim guidance. This guidance is
designed for use in the water quality standards program and does not represent Agency guidance outside
of that program.
BACKGROUND:
Economic factors may be considered at several different points in the water quality standards program.
The water quality standards regulation provides for such consideration in the following areas:
• Section 131.10—Designation of Uses (also applies to variances)
o (gX6) Controls more stringent than those required by Sections 301(b) and 306 of this Act
would result in substantial and widespread economic and social impact.
• Section 131.12-Antidegradation
o (aX2)...allowing lower water quality is necessary to accommodate important economic or
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social development in the areas in which the waters are located.
Since publication of the water quality standards regulation in 1983 we have produced extensive guidance
on the interpretation and application of the various regulatory requirements None of this guidance,
however, dealt extensively with the economic considerations
This guidance workbook is intended to fill that gap. It is anticipated that the guidance will be revised
from time to time to reflect State and Regional experience in its application. For example we intend to
add case studies as appendices to the guidance to reflect real-world experiences in its application In
addition, the Agency is considering revising the water quality regulation. If revisions to the regulation are
made with respect to economic considerations, the applicable guidance will be revised accordingly.
However, it is likely to be at least 3 years before any revisions to the regulation are finally promulgated
and no way of aniticipting whether any changes will be made in the economic provisions
This guidance is presented to assist States and EPA Regional Offices, along with other interested parties,
in understanding the economic factors that i y be considered, and the types of tests that ij be used to
determine: (1) if a designated use cannot be attained, (2) if a variance to an individual discharger can be
granted, or (3) if degradation of high-quality water is warranted.
The regulatory requirement that must be met is that attaining a designated use or obtaining a variance
would result in substantial and widespread economic and social impacts. The regulatory requirement for
antidegradation is that it must be shown that lower water quality is necessary to accommodate important
social and economic development. This guidance provides a framework for making these determinations
The measures and tests suggested in this guidance are standard economic analytical tools, but the States
are free to provide other kinds of analysis to support their position. The guidance does provide
information on the kinds and types of analysis that are appropriate and how the information can be
assembled in order to make a decision. It is not an exhaustive description of all appropriate economic
analysis. Additional information and tests may be necessary and/or desirable in certain circumstances.
The economic impacts to be considered are those that result from treatment beyond that required by
technology-based regulations. All economic analyses of water quality standards should address only the
cost of improving the water to meet water quality standards or tt cost of maintaining water quality in
high-quality waters.
Although EPA is responsible for approving a State’s water quality standards, the State is responsible for
interpreting the circumstances of each case and determining where there are substantial and widespread
economic and social impacts, or where important economic and social development would be
inappropriately precluded.
Various drafts of this guidance were reviewed by EPA headquarters and regional offices, States, and
other organizations. State and Regional staff should feel free to contact the Economic and Statistical
Analysis Branch in the Office of Science and Technology for advice and assistance regarding this
guidance or related concerns. We would appreciate receiving feeback from the users of this guidance so
that it can be improved as necessary. As with all guidance related to the water quality standards program,
this document is considered to be part of the Water quality Standards Handbook--Second Edition .
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Interim Economic Guidance for Water Quality
Standards: Workbook
(March 1995; EPA-823-B-95-002)
To download the entire document, choose the format you want to download
to your PC. For Windows extract the files by selecting “guide.exe” for the
PDF format or “guidel.exe” for the WordPerfect format. In DOS extract the
files by typing “guide.exe” for the PDF format or “guidel.exe” for the
WordPerfect format. The fifty files will automatically unzip in the directory
containing the .exe file.
The complete workbook in PDF format (607 Kb)
The complete workbook in WordPerfect 6.1 (341 Kb)
This workbook may be downloaded in either WordPerfect 6.1 or PDF
format. Following the description of the chapter, the file for the chapter and
all the documents associated with the chapter are listed in PDF and
WordPerfect 6.1 formats. To download individual figures, chapters, exhibits,
worksheets, etc. select the file and save it to your PC.
A free Adobe Acrobat reader, which is necessary for reading PDF
documents, may be downloaded from Adobe’s web site .
TABLE OF CONTENTS
1. INTRODUCTION
o 1.1 Designated Uses, Variances, and Antidegradation
o 1.2 Pollution Sources
o 1.3 Substantial Impacts
o 1.4 Widespread Impacts
o 1.5 Antidegradation
o 1 6 Organization of the Rest of the Workbook
IPDF format
IWordPerfect format
Chapter 1
Chapter 1
Figure 1.1
Figure 1.1
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2 EVALUATING SUBSTANTIAL IMPACTS: PUBLIC SECTOR ENTITIES
o 2.1 Verify Project Costs and Calculate the Annual Cost of the Pollution Control Project
o 2.2 Calculate Total Annualized Pollution Control Costs Per Household
o 2.3 Calculate and Evaluate the Municipal Preliminary Screener Value
o 2.4. Apply Secondary Test
o 2.5 Assess Where the Community Falls in the Substantial Impacts Matrix
JPDF format WordPerfect format
Chapter 2 Chapter 2
Figure 2 1 Figure 2.1
Worksheet A Worksheet A
Worksheet B Worksheet B
Worksheet C Worksheet C
Worksheet C Option A Worksheet C Option A
Worksheet D Worksheet D
Worksheet E Worksheet E
Worksheet F Worksheet F
Table 21 Table 2.1
Table2.2 Ta ’ble2,2
3. EVALUATING SUBSTANTIAL IMPACTS: PRIVATE-SECTOR ENTEILES
o 3.1 Verify Project Costs and Calculate the Annual Cost of the Pollution Control Project
• 3.1 a Verify Project Costs
• 3.1.b Calculate the Annual Costs of the Pollution Control Project
o 3 2 Financial Impact Analysis
o 3.3 Interpreting the Results
IPDF format I WordPerfect format
Chapter 3 Chapter 3
Figure3.1 Figure3.1
Worksheet 0 Worksheet G
Worksheet H Worksheet H
Worksheet I Worksheet I
Exhibit3.1 Exhibit3.1
Worksheet J Worksheet J
Exhibit 3,2 Exhibit 3,2
Exhibit 3.3 Exhibit 3,3
Worksheet K Worksheet K
Exhibit 3.4 Exhibit 3.4
Exhibit 3.5 Exhibit 3 5
Worksheet L Worksheet L
Exhibit 3.6 Exhibit 3.6
Exhibit 3,7 Exhibit 3 7
4. DETERMINATION OF WIDESPREAD IMPACTS
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o 4 1 Define Relevant Geographical Area
o 4.2 Determine Whether Impacts are Widespread Public-Sector Entities
o 4 3 Determine Whether Impacts are Widespread: Private-Sector Entities
o 4 4 Estimate Multiplier Effect -
o 4 5 Economic Benefits of Clean Water
o 4 6 Summary of Financial Capability and Determination of Whether Impacts are Substantial
and Widespread
IPDF format IWordPerfect format
Chapter 4
Chapter 4
Worksheet M
Worksheet M
Worksheet N
Table 41
Worksheet N
Table 41
5 ANTIDEGRADATION: ROLE OF ECONOMIC ANALYSIS
o 5 1 Verif ,i Project Costs and Calculate the Annual Cost of the Pollution Control Project
o 5.2 Financial Analysis to Determine if Lower .Water Quality is NecessaryH
o 5.3 Determine if Economic and Social Development would be Important
o 5 4 Summary
• APPENDIX A: Data Resources and Reference Materials
• APPENDIX B: Table of Annualization Factors
• APPENDIX C: Conceptual Measures of Economic Benefits
IPDF format - IwordPerfect format
Chapter 5
Figure 5 1
Chapter 5
Figure 5.1
Worksheet 0
Worksheet 0
Worksheet P
Worksheet P
Worksheet 0
Worksheet 0 Option A
Worksheet 0
Worksheet 0 Option A
Worksheet R
Worksheet S
Worksheet R
Worksheet S
Worksheet I
Worksheet .1
Worksheet U
Worksheet U
Table5.l
Table5.1
Table 5.2
Table 5.2
Worksheet V
Worksheet V
Worksheet W
Worksheet W
Worksheet X
Worksheet X
Worksheet Y
Worksheet Z
Worksheet Y
Worksheet Z
Worksheet AA
Worksheet AA
Worksheet AB
Worksheet AB
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Appendix A Appendix A
Appendix B
Appendix B
Appendix C
Appendix C I
• WORKSHEETS: A through AB
These are the same worksheets available above in the chapter listings
0 Worksheet A
Pollution Control Project Summary Information
IPDF format
WordPerfect format
Iworksheet A
Iworksheet A
o Worksheet B
Calculation of Total Annualized Project Costs
PDF format
IwordPerfect format
Iworksheet B
Iworksheet B
o Worksheet C
Calculation of Total Annual Pollution Control Costs Per Household
I PDF format
IwordPerfect format
IWorksheet C
Iworksheet C
o Worksheet C: Option A- Calculation of Total Annual Pollution Control Costs Per Household
Based on Flow
IPDF format
IWordPerfect format
IWorksheet CA
IWorksheet CA
o Worksheet D
Municipal Preliminary Screener
IPDF format
WordPerfect format
I Worksheet D
I Worksheet D
o Worksheet E
Data Used in the Secondary Test
IPDF format
IwordPerfec t format
Worksheet E
JWorksheet E
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0 Worksheet F
Calculating The Secondary Score
IPDF format
WordPerfect format
Worksheet F
Jworksheet F
o WorksheetG
Calculation of Total Annualized Project Costs
JPDF format
WordPerfect format
lWorksheet C
IWorksheet G
o Worksheet H
Calculation of Earnings Before Taxes With and Without Pollution Control Project Costs
IPDF format
IWordPerfect format
Iworksheet H
tWorksheet H
o Worksheet I
Calculation of Profit Rates With and Without Pollution Control Project Costs
IPDF format
WordPerfect format
I Worksheet I
Worksheet I
a Worksheet J- Calculation of The Current Ratio
IPDF format
Wordperfect format
I Worksheet J
Worksheet J
0 Worksheet K- Calculation of Beaver’s Ratio
IPDF format
Iwordperfect format
IWorksheet K
IWorksheet K
0 Worksheet L- Debt to Equity Ratio
IPDF format
JWordPerfect format
Worksheet L
IWorksheet L
o Worksheet M- Qualitative Description of Estimated change in Socioeconomic Indicators due
to Pollution Control Costs
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PDF format
WordPerfect
format
Worksheet M
!Worksheet M
o Worksheet N- Factors to Consider in Making a Determination of Widespread Social and
Economic Impacts
IPDF format IWordPerfect format
( Worksheet N Iworksheet N
0 Worksheet 0- Pollution Control Project Summary Information
o Worksheet P-
o Worksheet Q-
JPDF format
JWordPerfect format
J Worksheet 0
Iworksheet 0
Public-Sector Pollut
ion Control Calculation of Total Annualized Project Costs
IWordPerfect format
IWorksheet P
PDF format
Iworksheet P
Calculation of Total
IPDF format
Annual Pollution Control Costs Per House
I WordPerfect format
IWorksheet 0
Iworksheet 0
o Worksheet Q Option A- Calculation
Household Based on Flow
IPDF format
I Worksheet OA
of Total Annual Pollution Control Costs Per
IWordPerfect format
Iworkshe*t OA
0 Worksheet R- Private-Sector Development Calculation of Total Annualized Project Costs
0 Worksheet S-
IPDF format WordPerfect format
Worksheet R Worksheet R
Municipal Preliminary Screener
IPDF format WordPerfect format
Worksheet S Worksheet S
0 Worksheet T- Data Used in the Secondary Test
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IPDF
format
fwordPerfect format
Iwor
ksheet T
Worksheet T
IPDF format
WordPerfect format
I Worksheet Y
Worksheet Y
IPDF format
WordPerfect format
Worksheet Z
Iworksheet z
o Worksheet AA- Public-Sector Development Qualitative Description of Estimated Change in
Socioeconomic Indicators due to Pollution Control Costs
IPDF format I WordPerfect format
Worksheet AA Worksheet AA
o Worksheet AB- Private-Sector Development Factors to Consider in Making a Determination
of Widespread Social and Economic Impacts
o Worksheet U- Calculating The Secondary Score
IPDF format I WordPerfect format
[ Worksheet U Iworksheet U
o Worksheet V- Calculation of Earnings Before Taxes
IPDF format JWordPerfect format
IWorksheet V JWorksheet V
o Worksheet W- Calculation of Profit Rates
PDF format WordPerfect format
IWorksheet W Worksheet W
o Worksheet X- Calculation of The Current Ratio
IPDF format IwordPerfect format
IWorksheet X IWorksheet X
o Worksheet Y- Calculation of Beaver’s Ratio
0 Worksheet Z- Debt to Equity Ratio
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I PDF
format
JWordPerfec
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Iwor
ksheet AB
IWorksheet
AB
Return to the Top of the Workbook
Fact Sheet
Additional Information
If you have any questions or if you would like additional information, you may contact George Denning
(202-260-7374) or via e-mail: denning.george epamail epa gov
Last Updated January 28, 1997
0 W -GEWERAL epamaiI. epa.gov
URL: http //www. epa.gov/OST/econ/index.h mI
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