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Economic AnalysisEconomic Analysis

Steven BlumSteven Blum

Alan T. MonjiAlan T. MonjiEnvironmental ScientistEnvironmental Scientist

Region 9Region 9

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OverviewOverview Legal requirements to consider economicsLegal requirements to consider economics Basin Planning and economic considerationsBasin Planning and economic considerations Estimating cost of alternative methods of complianceEstimating cost of alternative methods of compliance Estimating cost of Agricultural Water Quality Control Estimating cost of Agricultural Water Quality Control

ProgramsPrograms What we learned from the What we learned from the

LA Trash TMDL LA Trash TMDL (City of Arcadia v. SWRCB)(City of Arcadia v. SWRCB)

How to estimate costsHow to estimate costs Cost estimation examplesCost estimation examples

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CEQA Requirement CEQA Requirement

From CEQA From CEQA §§21159: 21159: (3)(c) “The environmental analysis shall (3)(c) “The environmental analysis shall take into account a reasonable range of take into account a reasonable range of environmental, economic, and technical environmental, economic, and technical factors, population and geographic areas, factors, population and geographic areas, and specific sites.”and specific sites.”

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Porter-Cologne RequirementsPorter-Cologne Requirements

From From WaterWater Code Code §§1314113141 For an “agricultural water quality control For an “agricultural water quality control program” total cost estimates and potential program” total cost estimates and potential funding sources “shall be indicated” funding sources “shall be indicated”

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Basin Planning and Basin Planning and Economic ConsiderationsEconomic Considerations

When establishing WQOs, the Board must When establishing WQOs, the Board must take economic considerations into account take economic considerations into account (among other things; Water Code (among other things; Water Code §§13241)13241)

Cost analysis required by CEQA Cost analysis required by CEQA §§21159 21159 can substitute for can substitute for §§13241 analysis 13241 analysis (according to the LA Trash TMDL (according to the LA Trash TMDL decision)decision)

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Limitations of Economic Limitations of Economic AnalysisAnalysis

PRC PRC §§2115921159(c) “The environmental analysis shall take into account (c) “The environmental analysis shall take into account

a reasonable range of…economic …factors.”a reasonable range of…economic …factors.”

(d) “Nothing in this section shall require the agency to (d) “Nothing in this section shall require the agency to conduct a project level analysis.” conduct a project level analysis.”

(f) “Nothing in this section is intended, or may be used, (f) “Nothing in this section is intended, or may be used, to delay the adoption of any rule or regulation for to delay the adoption of any rule or regulation for which an analysis is required to be performed which an analysis is required to be performed pursuant to this section.”pursuant to this section.”

In other words, we do the best we can…In other words, we do the best we can…

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The Economic Analysis The Economic Analysis and the SEDand the SED

Do NOT provide an economic cost/benefit Do NOT provide an economic cost/benefit analysis analysis

But DO include brief discussion ofBut DO include brief discussion of ““Economic gain”Economic gain” The cost of NOT doing the TMDLThe cost of NOT doing the TMDL Avoided costAvoided cost

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Estimating Costs of Estimating Costs of Alternative Methods of ComplianceAlternative Methods of Compliance

Cost estimate required by PRC Cost estimate required by PRC §21159§21159 Consider “reasonable range” of economic Consider “reasonable range” of economic

factors (c) factors (c) ……but not of a “project level analysis” (d) but not of a “project level analysis” (d) Level of analysis may depend on Level of analysis may depend on

stakeholders and controversy around the stakeholders and controversy around the TMDL/BPATMDL/BPA

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Estimating Costs for Estimating Costs for Agricultural ProgramsAgricultural Programs

Cost estimate required by Water Code Cost estimate required by Water Code §13141§13141

Same cost analysis methodology as for Same cost analysis methodology as for other analyses other analyses

However, must also identify potential However, must also identify potential sources of financingsources of financing

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What We Learned about What We Learned about Economics Economics

from the LA River Trash TMDLfrom the LA River Trash TMDL

Court did not rule on whether economic Court did not rule on whether economic analysis was required by Water Code analysis was required by Water Code §13241§13241

The court ruled that CEQA §21159 analysis The court ruled that CEQA §21159 analysis also satisfied Water Code §13241also satisfied Water Code §13241

City of Arcadia v. SWRCB

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Types of CostsTypes of Costs

Structural controlsStructural controls Non-structural controlsNon-structural controls Monitoring and reportingMonitoring and reporting AmortizationAmortization

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How to Estimate CostsHow to Estimate Costs Elicit input from stakeholdersElicit input from stakeholders Build on experience of other Regional BoardsBuild on experience of other Regional Boards Reference BMP documents (EPA, Caltrans, Reference BMP documents (EPA, Caltrans,

NRCS)NRCS) Select a range of appropriate BMPsSelect a range of appropriate BMPs Consider affected acreage Consider affected acreage Assign a cost to each BMP in the rangeAssign a cost to each BMP in the range Keep scenarios simpleKeep scenarios simple Clearly state your assumptionsClearly state your assumptions

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Estimating Costs - Example:Estimating Costs - Example:Indicator Bacteria, Indicator Bacteria, Beaches & CreeksBeaches & Creeks

Urban areas: Residential (low and high), commercial, Urban areas: Residential (low and high), commercial, industrial, military, park/rec, transitionalindustrial, military, park/rec, transitional

BMP 10 % of Watershed

Urban Areas

BMP Area

Cost of BMP/Acre

Construction Cost

Maintenance Cost

Total Costs

Buffer

Strips

1504 acres 752 $13,000 $ 9.75 Mil $241,000 $ 10 Mil

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Estimating Costs, cont’dEstimating Costs, cont’d

BMP

Estimated Total Cost to Treat 10 % of an

Urbanized Area (in acres)

Estimated Yearly Maintenance Cost

Vegetated Buffer Strip

$2.4 - $5.6 mil $60,200

Bioretention $5.9 - $78.5 mil $412,300 - $5.5 mil

Sand Filters $8.3 - $32.7 mil $1.1 - $4.3 mil

Infiltration Trench $331,000 - $783,000 $66,200 - $156,600

Diversion > $1 million per diversion structure

> $10,000 per structure

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Some War Stories from R9Some War Stories from R9

Rainbow Creek TMDLRainbow Creek TMDL Indicator Bacteria Beaches and Creeks Indicator Bacteria Beaches and Creeks

– Project I– Project I TMDL project implementation costsTMDL project implementation costs

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ReferencesReferences

City of Arcadia v State Water Resources Control Board. US EPA, 2000. Guidance for Developing TMDLs in

California. January 7, 2000. SWRCB, 1999. Economic Considerations in TMDL

Development and Basin Planning. Memo from Sheila Vassey, Office of Chief Counsel. October 27, 1999.

SWRCB, 1994. Guidance on Consideration of Economics in the Adoption of Water Quality Objectives. Memo from William Attwater, Office of Chief Counsel. January 4, 1994.

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Questions?Questions?