P.L. 566 Watershed P.L. 566 Watershed BenefitsBenefits

State Association of Kansas WatershedsState Association of Kansas Watersheds5757thth Annual Meeting Annual MeetingJanuary 24-25, 2008January 24-25, 2008

Paul J. GallagherPaul J. Gallagher

Agricultural EconomistAgricultural Economist

Salina, KansasSalina, Kansas

www.ks.nrcs.usda.govwww.ks.nrcs.usda.gov

paul.gallagher@ks.usda.govpaul.gallagher@ks.usda.gov

USDA is an equal opportunity provider and employer.

Discussion ItemsDiscussion Items• P.L. 566 Watershed PlanningP.L. 566 Watershed Planning

• Federal ObjectiveFederal Objective• PurposePurpose• Two Main PointsTwo Main Points

• Benefits & CostsBenefits & Costs

• GuidelinesGuidelines• Measuring BenefitsMeasuring Benefits• CostsCosts• Plan SelectionPlan Selection

• Kansas WatershedsKansas Watersheds• PL-566 ProjectsPL-566 Projects• Benefits & CostsBenefits & Costs• Kansas FundingKansas Funding

To contribute to national economic To contribute to national economic development consistent with protecting the development consistent with protecting the nation’s environment nation’s environment

•Requires the development of physically, Requires the development of physically, environmentally, socially and environmentally, socially and economically economically soundsound plan of improvements plan of improvements

P.L. 566 Watershed PlanningP.L. 566 Watershed PlanningFederal ObjectiveFederal Objective

• Preventing damage from erosion, Preventing damage from erosion, floodwater, and sedimentfloodwater, and sediment

• Furthering the conservation, development, Furthering the conservation, development, utilization, and disposal of waterutilization, and disposal of water

• Furthering the conservation and proper Furthering the conservation and proper utilization of landutilization of land

P.L. 566 Watershed PlanningP.L. 566 Watershed PlanningPlan PurposesPlan Purposes

1.1. Locally Led Process:Locally Led Process:• Identify resource concerns/problems and specify Identify resource concerns/problems and specify

opportunitiesopportunities

• Identify goals and objectives of the plan Identify goals and objectives of the plan

• Formulate Formulate alternativesalternatives (with NRCS assistance) (with NRCS assistance)

• Accept or reject the final planAccept or reject the final plan

• Implement approved plan (with NRCS assistance)Implement approved plan (with NRCS assistance)

P.L. 566 Watershed PlanningP.L. 566 Watershed PlanningTwo Main PointsTwo Main Points

2.2. Alternatives formulated in consideration of four Alternatives formulated in consideration of four criteria: criteria: • Completeness Completeness

• Meets goals and objectives and is consistent with NRCS Meets goals and objectives and is consistent with NRCS conservation policyconservation policy

• EffectivenessEffectiveness• Alleviates specified problems & achieves specified opportunitiesAlleviates specified problems & achieves specified opportunities

• EfficiencyEfficiency• Most cost-efficient way to alleviate problems & achieve specified Most cost-efficient way to alleviate problems & achieve specified

opportunitiesopportunities

• AcceptabilityAcceptability• By state and local entities and the publicBy state and local entities and the public• Compatible with existing laws, regulations and public policy Compatible with existing laws, regulations and public policy

P.L. 566 Watershed PlanningP.L. 566 Watershed PlanningTwo Main PointsTwo Main Points

Evaluating AlternativesEvaluating Alternatives

Benefits & Costs Benefits & Costs

P.L. 566 Watershed PlanningP.L. 566 Watershed Planning

Required GuidanceRequired Guidance• The 1954 Statute (and Amendments)The 1954 Statute (and Amendments)

• NRCS National Watershed ManualNRCS National Watershed Manual

• Economic and Environmental Principles and Economic and Environmental Principles and Guidelines for Water and Related Land Guidelines for Water and Related Land Resources Resources

• NRCS Water Resources Handbook for NRCS Water Resources Handbook for EconomicsEconomics

P.L. 566 Watershed PlanningP.L. 566 Watershed PlanningBenefit & CostsBenefit & Costs

2 Basic Benefit Categories2 Basic Benefit Categories

• Flood Reduction BenefitsFlood Reduction Benefits• Agricultural Agricultural

e.g. crop & pasture; erosione.g. crop & pasture; erosion• Non-Agricultural Non-Agricultural

e.g. road & bridge; urbane.g. road & bridge; urban

• Non-Flood Related BenefitsNon-Flood Related Benefits• AgriculturalAgricultural

e.g. stock watere.g. stock water• Non-AgriculturalNon-Agricultural

e.g. recreation; municipal & industrial e.g. recreation; municipal & industrial water supplywater supply

P.L. 566 Watershed PlanningP.L. 566 Watershed PlanningMeasuring BenefitsMeasuring Benefits

1.1. Without Project ConditionWithout Project Condition• Most likely condition expected to exist over the planning periodMost likely condition expected to exist over the planning period• Provides the baseline for estimating benefits associated with each Provides the baseline for estimating benefits associated with each

alternativealternative

2.2. With Project ConditionWith Project Condition• Condition expected to exist with each alternative plan under Condition expected to exist with each alternative plan under

considerationconsideration

3.3. Difference Between the Two Conditions = Difference Between the Two Conditions = BenefitsBenefits

P.L. 566 Watershed PlanningP.L. 566 Watershed PlanningMeasuring BenefitsMeasuring Benefits

• EconomistEconomist• HydrologistHydrologist• Resource ConservationistResource Conservationist• AgronomistAgronomist• EngineerEngineer• GeologistGeologist• BiologistBiologist• Soil ScientistSoil Scientist• Other ProfessionalsOther Professionals

People NeededPeople Needed

P.L. 566 Watershed PlanningP.L. 566 Watershed PlanningMeasuring BenefitsMeasuring Benefits

• Flood Flood reduction areareduction area• Non-flood Non-flood beneficiariesbeneficiaries

IdentifyingIdentifying

BeneficiariesBeneficiaries

P.L. 566 Watershed PlanningP.L. 566 Watershed PlanningMeasuring BenefitsMeasuring Benefits

• Land use inventoriesLand use inventories• Sediment/erosion surveysSediment/erosion surveys• Research past flood Research past flood

damagesdamages• Field interviews Field interviews

(producers, county (producers, county officials, etc.)officials, etc.)

• UniversitiesUniversities• Other Gov. AgenciesOther Gov. Agencies• Water Supply/ Recreation Water Supply/ Recreation

studiesstudies

Data SourcesData Sources

P.L. 566 Watershed PlanningP.L. 566 Watershed PlanningMeasuring BenefitsMeasuring Benefits

P.L. 566 Watershed PlanningP.L. 566 Watershed PlanningBenefit CategoriesBenefit Categories

Agricultural water Groundwater recharge Railroad

Bridge Gully erosion Recreation

Change land use Incidental recreation Road

Channel deposition Indirect (e.g. traffic flow) Secondary

Crop and pasture More intensive use Stockwater

Deposition Municipal water supply Timber production

ErosionOff project (e.g. outside

watershed)Urban

Fishery Oil field Utilities

Floodplain scour Other direct Water conservation

Grade stabilization Other agriculture (e.g. fences) Water quality

Some benefit categories in existing Kansas P.L. 566 Plans:

Crop & PastureCrop & Pasture Kinds of Benefits • Increased crop yields • Reduction in production costs

Evaluation Components• Cropping patterns• Prices• Seasonal occurrence of floods• Crop yields• Livestock production• etc.

P.L. 566 Watershed PlanningP.L. 566 Watershed PlanningBenefit CategoriesBenefit Categories

50

100

150

200

250

300

350

1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008(Jan)

Wheat Corn Soybeans

Price Index(1978=100) /a

/a Index of annual wheat, corn, soybean prices received by Kansas farmersPrice source: Kansas Agricultural Statistics

P.L. 566 Watershed PlanningP.L. 566 Watershed PlanningRecent TrendsRecent Trends

Surge in Crop Prices Bolster Crop & Pasture Benefits

RoadRoad Kinds of BenefitsKinds of Benefits • Reduced:Reduced:

• Debris/sediment removalDebris/sediment removal• Erosion of shoulders and embankmentErosion of shoulders and embankment• Washout of road surfaceWashout of road surface• Damage to fill, culverts, etc. Damage to fill, culverts, etc.

Evaluation ComponentsEvaluation Components• Location & classification roadsLocation & classification roads• Flood stage at which damage beginsFlood stage at which damage begins• Damage information from past flood Damage information from past flood

eventsevents• Estimates of flood damage from Estimates of flood damage from

engineers and geologistsengineers and geologists

P.L. 566 Watershed PlanningP.L. 566 Watershed PlanningBenefit CategoriesBenefit Categories

BridgeBridge Kinds of BenefitsKinds of Benefits • Prevent bridge washoutPrevent bridge washout• Prot. abutments, etcProt. abutments, etc• Reduced debris and sediment Reduced debris and sediment

removal removal

Evaluation ComponentsEvaluation Components• Location & classificationLocation & classification• Flood stage when damage Flood stage when damage

beginsbegins• Stage when failure is likelyStage when failure is likely• Value of bridge Value of bridge • Damage caused by past floodsDamage caused by past floods• Est. of damage from Est. of damage from

engineers/geologistsengineers/geologists

P.L. 566 Watershed PlanningP.L. 566 Watershed PlanningBenefit CategoriesBenefit Categories

Recreation Recreation Kinds of BenefitsKinds of Benefits • Public’s willingness to pay for Public’s willingness to pay for

outdoor recreation and outdoor recreation and associated fish and wildlife associated fish and wildlife enhancement created (as a enhancement created (as a purpose) by the project purpose) by the project

Evaluation ComponentsEvaluation Components• Estimate recreation resourceEstimate recreation resource• Forecast potential recreation Forecast potential recreation

use without projectuse without project• Forecast recreation use with Forecast recreation use with

projectproject• Estimate value of use with Estimate value of use with

projectproject

P.L. 566 Watershed PlanningP.L. 566 Watershed PlanningBenefit CategoriesBenefit Categories

Municipal & Industrial Water SupplyMunicipal & Industrial Water SupplyKinds of BenefitsKinds of Benefits • Value of the waterValue of the water

Evaluation ComponentsEvaluation Components• Identify existing water supply needs Identify existing water supply needs • Forecast future waters supply needs Forecast future waters supply needs • Identify most likely alternatives to meet those needs Identify most likely alternatives to meet those needs

P.L. 566 Watershed PlanningP.L. 566 Watershed PlanningBenefit CategoriesBenefit Categories

• Other AgricultureOther Agriculture• e.g. fences; stored graine.g. fences; stored grain

• Other DirectOther Direct• e.g. utilitiese.g. utilities

• IndirectIndirect• e.g. closed roadse.g. closed roads

• ErosionErosion• e.g. scour; gully, sheet/rill; e.g. scour; gully, sheet/rill;

ephemeralephemeral

• DepositionDeposition• UrbanUrban

P.L. 566 Watershed PlanningP.L. 566 Watershed PlanningBenefit CategoriesBenefit Categories

P.L. 566 Watershed PlanningP.L. 566 Watershed PlanningMeasuring BenefitsMeasuring Benefits

BenefitsBenefits

• Average Average Annual BasisAnnual Basis

• 10 Storm 10 Storm FrequenciesFrequencies

• ConstructionConstruction• Design/EngineeringDesign/Engineering• Project AdministrationProject Administration• Land AcquisitionLand Acquisition

P.L. 566 Watershed PlanningP.L. 566 Watershed PlanningCostsCosts

Annualized CostsAnnualized Costs• Total installation cost (amortized) plus annual Total installation cost (amortized) plus annual

operation and maintenance costoperation and maintenance cost

Example:Example: A project with a design life of 100 years costs $3 A project with a design life of 100 years costs $3 million to install. Interest rate at 4 7/8%.million to install. Interest rate at 4 7/8%.

($3 million)(.049)+($3,000 O&M) = ($3 million)(.049)+($3,000 O&M) = $150,000 Annualized Cost$150,000 Annualized Cost

P.L. 566 Watershed PlanningP.L. 566 Watershed PlanningCostsCosts

Alternative Selected Will Be:Alternative Selected Will Be:• The National Economic Development (NED) The National Economic Development (NED)

AlternativeAlternative• Maximizes net national economic development Maximizes net national economic development

benefits, consistent with the federal objective benefits, consistent with the federal objective • Net benefits equal to, or greater than zeroNet benefits equal to, or greater than zero

P.L. 566 Watershed PlanningP.L. 566 Watershed PlanningPlan SelectionPlan Selection

Alt 1Alt 1No-ActionNo-Action

Alt 2Alt 2Structural/LTStructural/LT

Alt 3Alt 3Str./Non-Str/LTStr./Non-Str/LT

Alt 4Alt 4Str./LTStr./LT

AnnualAnnual

BenefitsBenefits---- $550,000$550,000 $185,000$185,000 $115,000$115,000

Annualized Annualized

CostsCosts---- $575,000$575,000 $150,000$150,000 $102,000$102,000

Net BenefitsNet Benefits $0$0 - $25,000- $25,000 +$35,000+$35,000 +$13,000+$13,000

National Economic Development (NED) PlanNational Economic Development (NED) Plan

P.L. 566 Watershed PlanningP.L. 566 Watershed PlanningPlan SelectionPlan Selection

• 63 authorized projects63 authorized projects

o 44 completed44 completedo 19 active19 active

• 969 dams planned969 dams plannedo 783 completed783 completedo 186 remaining186 remaining

• 517 long term contracts517 long term contractso 356 completed356 completedo 161 remaining161 remaining

Kansas P.L. 566 WatershedsKansas P.L. 566 Watersheds

Kansas Watersheds Kansas Watersheds Dams Constructed by YearDams Constructed by Year

0

10

20

30

40

50

60

70

80

1954 1957 1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008

RC&D: 16

Pilot: 38

PL566: 783

No.

Kansas P.L. 566 WatershedsKansas P.L. 566 WatershedsAnnual Benefits - $44.6 MillionAnnual Benefits - $44.6 Million

Non-Flood"Non-

Agricultural"Non-Flood

"Agricultural"

Flood Damage Reduction

"Agricultural"

Flood Damage Reduction

"Non-Agricultural"

e.g.: Crop & Pasture; Fences; Floodplain

scour

39%

20%22%

19%

e.g.: Stock water; Gully erosione.g.: Water Supply; Recreation

e.g.: Road & Bridge

Installed P.L. 566 Watershed DamsInstalled P.L. 566 Watershed DamsEstimated Annual Benefits & Costs*Estimated Annual Benefits & Costs*

$0$2$4$6$8

$10$12$14$16$18$20

Cong. Dist. 1 Cong. Dist. 2** Cong. Dist. 4

Ann Benefits: $44.6 mil

Ann Costs: $26.8 mil

* 2007 dollars** Includes 6 dams in Cong. Dist. 3

Dams: 266

Dams: 214

Dams: 303

Millions

Planned P.L. 566 Watershed DamsPlanned P.L. 566 Watershed DamsEstimated Annual Benefits & Costs*Estimated Annual Benefits & Costs*

$0

$1

$2

$3

$4

$5

$6

$7

Cong. Dist. 1 Cong. Dist. 2 Cong. Dist. 4

Ann. Benefits: $9.1 mil.Ann. Costs: $5.8 mil.

* 2007 dollars

Dams: 44

Dams: 138

Dams: 4

Millions

Kansas P.L. 566 Watersheds Kansas P.L. 566 Watersheds Congressional FundingCongressional Funding

$0

$1

$2

$3

$4

$5

$6

$7

$8Technical Assistance

Financial Assistance

Millions

* Prior year funds provided to close-out existing projects

Paul GallagherEconomist, Water Resources Planning Staff

Natural Resources Conservation Service

760 South Broadway

Salina, Kansas 67401

785-823-4517 email: paul.gallagher@ks.usda.gov

Equal OpportunityEqual Opportunity"The U.S. Department of Agriculture (USDA) prohibits discrimination in all its programs and activities on the basis of race, color, national origin, age, disability, and where applicable, sex, marital status, familial status, parental status, religion, sexual orientation, genetic information, political beliefs, reprisal, or because all or a part of an individual's income is derived from any public assistance program. (Not all prohibited bases apply to all programs.) Persons with disabilities who require alternative means for communication of program information (Braille, large print, audiotape, etc.) should contact USDA's TARGET Center at (202) 720-2600 (voice and TDD). To file a complaint of discrimination write to USDA, Director, Office of Civil Rights, 1400 Independence Avenue, S.W., Washington, D.C. 20250-9410 or call (800) 795-3272 (voice) or (202) 720-6382 (TDD). USDA is an equal opportunity provider and employer."