5.2. RIA of Proposed Great Lakes Water Quality Guidance
This section reviews the 1993 document: Regulatory Impact Analysis of the Proposed Great Lakes Water Quality Guidance.
The Great Lakes Water Quality Guidance analyzed in this RIA directs the Great Lakes states and Tribes regarding minimum water quality standards and water quality criteria for 32 pollutants and development guidelines for water quality criteria for additional pollutants. The guidance applies to point sources, with EPA's stated intention the development of nonpoint source guidelines at a subsequent date.
The primary justification for the Great Lakes Water Quality Guidance was the accumulation of certain persistent chemicals and metals, particularly in lake sediments. EPA termed these substances Bioaccumulative Chemicals of Concern (BCC). These contaminants pose threats to lake ecosystems and to public health. The proposed guidance was developed in accord with section 118(c)2 of the Clean Water Act and section 101 of the Critical Programs Act (CPA) of 1990. The CPA required that the guidance specify numerical criteria to protect human health, aquatic life and wildlife within the Great Lakes Basin. Within two years of the publication of the guidance, states within the basin are required to adopt revised water quality standards consistent with the guidance.
The EPA considered several regulatory alternatives, including anti-degradation policies and various implementation policies. An example of one anti-degradation policy that was considered would create facility discharge limits based on total toxicity. Under this approach a facility would have been able in effect to trade reductions of one BCC for increases in another BCC. Ultimately EPA rejected this alternative due to concerns about its legality as well as practical concerns regarding monitoring and analysis. EPA considered several different implementation policies, including one policy with no special treatment for BCCs and another with a 10-year grace period, and various limits on total allowable pollution loads, levels of detection and compliance schedules. One alternative that was not considered was the potential use of effluent trading as a means of improving cost-effectiveness of the guidance.
EPA developed benefit estimates for three case study areas, the Lower Fox River/Green Bay, Saginaw River/Saginaw Bay, and Black River, arguing that a comprehensive assessment of benefits for the entire Great Lakes was not feasible. EPA identified several benefit categories for which there were actual uses of Great Lakes waters: recreational fishing, recreational boating and swimming, subsistence fishing, commercial fishing, waterfowl hunting, non-consumptive uses, and consuming water and fish (human health). EPA also identified three categories of non-use benefits: ecological benefits, existence values, and stewardship and bequest benefits.
EPA relied on the contingent valuation method along with such indirect methods as travel cost to estimate use-related benefits. For non-use benefits, EPA relied on the contingent valuation method and found supporting evidence regarding estimates of value in expenditures on wildlife management by various levels of government and in fines levied against polluters. As indicated in the following table for the Fox River case study, monetary values could be estimated for only about one-half of the categories of benefits. The dollar value of benefits in each category is quite sensitive to the assumed impact of the water quality guidance. Should the guidance be given credit for 10%, 50% 90% or some other portion of the total economic benefits in each category? In most cases, EPA assumed 50%.
Estimated Great Lakes Guidance Benefits for Lower Fox River Watershed
|Category of benefit|| Estimated benefit range |
(million $1992 per year)
|Use benefits||Recreational fishing||0.9 - 6.1|
|Recreational boating and swimming||positive but not estimated|
|Subsistence fishing||positive but not estimated|
|Commercial fisheries||0.2 - 0.3|
|Waterfowl hunting||positive but not estimated|
|Non-consumptive (wildlife observation)||1.3 - 1.8|
|Human health||positive but not estimated|
|Non-use benefits||Ecologic||0.5 - 3.7|
|Existence values||positive but not estimated|
|Stewardship and bequest||not estimated|
|Total benefits||2.9 - 11.9|
EPA contractor Science Applications International prepared cost estimates for point source dischargers in the Great Lakes watershed. An important factor affecting costs at individual facilities is the quality of the receiving waters and how that affects the waste load allocation for the facility. SAI considered two scenarios: one in which background pollutant concentrations were zero and a second in which background concentrations were equal to the guidance criteria for mercury and PCBs and one-half the guidance criteria for 30 other pollutants for which guidance criteria were being proposed. The second scenario was further subdivided into three groups depending upon the costs of waste minimization (mid range or high) and the costs of end-or-pipe treatment at POTWs (medium or high). The resulting cost estimates for the Lower Fox River watershed are presented below as representative of the information in the case studies, along with the cost estimate for the entire Great Lakes area as projected from the case studies.
Annualized Cost Estimates (millions of $1992)
|Cost Scenario||Lower Fox River Watershed||Entire Great Lakes Area|
|1 (background concentrations zero)||$2.7||$79.5|
|2 (mid range for waste minimization and POTW)||$5.1||$192.3|
|3 (mid range for waste minimization and high for POTW)||$11.7||$473.9|
|4. (high for waste minimization and for POTW)||$14.2||$505.5|
For the Lower Fox River watershed case study, EPA estimated that the midpoint value for benefits was $7.3 million per year. The midpoint value for costs was $5.1 million per year.