Introduction

Nutrients such as nitrogen and phosphorus have long been known to cause degradation of surface waters when supplied at rates above the assimilative capacity of the waterbody. Excess nutrient loading leads to the proliferation of algae, which are in turn degraded by bacteria that can deplete waters of their dissolved oxygen. Nutrient enriched waters exhibit a variety of ecological symptoms, from harmful algal blooms to loss of submersed aquatic vegetation to fish kills. Waterbodies suffering from nutrient enrichment are evident in every region of the United States, from lakes and streams in the Midwest, to the Chesapeake Bay estuary, to coastal waters of the Gulf of Mexico. Although there can be considerable debate about the relative sources of nutrients in any given location, nutrients are widely known to stem from agricultural operations, urban landscapes, municipal and some industrial wastewater, mining activities, and atmospheric deposition.

For decades Florida has experienced its share of nutrient related pollution issues, highlighted by pollution in Lake Okeechobee and the Everglades stemming principally from agriculture. Not surprisingly given its warm climate, topography, intense and varied agriculture, and rapid urbanization, hundreds of freshwater lakes and streams in Florida are polluted by nutrients to such an extent that natural populations of flora and fauna are out of balance. Florida has managed these waters using a narrative standard for nutrients. At the urging of the U.S. Environmental Protection Agency (EPA), states are moving toward the use of numeric water quality criteria for nutrients in an attempt to accelerate and standardize the restoration of nutrient-impaired waters. This report was written by a committee of the



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Introduction N utrients such as nitrogen and phosphorus have long been known to cause degradation of surface waters when supplied at rates above the assimilative capacity of the waterbody. Excess nutrient loading leads to the proliferation of algae, which are in turn degraded by bacteria that can deplete waters of their dissolved oxygen. Nutrient enriched waters exhibit a variety of ecological symptoms, from harmful algal blooms to loss of submersed aquatic vegetation to fish kills. Waterbodies suffering from nutrient enrichment are evident in every region of the United States, from lakes and streams in the Midwest, to the Chesapeake Bay estuary, to coastal waters of the Gulf of Mexico. Although there can be considerable debate about the relative sources of nutrients in any given location, nutrients are widely known to stem from agricultural operations, urban landscapes, mu- nicipal and some industrial wastewater, mining activities, and atmospheric deposition. For decades Florida has experienced its share of nutrient related pollu- tion issues, highlighted by pollution in Lake Okeechobee and the Everglades stemming principally from agriculture. Not surprisingly given its warm climate, topography, intense and varied agriculture, and rapid urbaniza- tion, hundreds of freshwater lakes and streams in Florida are polluted by nutrients to such an extent that natural populations of flora and fauna are out of balance. Florida has managed these waters using a narrative standard for nutrients. At the urging of the U.S. Environmental Protection Agency (EPA), states are moving toward the use of numeric water quality criteria for nutrients in an attempt to accelerate and standardize the restoration of nutrient-impaired waters. This report was written by a committee of the 11

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12 EPA’S ECONOMIC ANALYSIS OF NUTRIENT STANDARDS IN FLORIDA National Research Council charged with reviewing the economic implica- tions of new numeric nutrient criteria developed by EPA for Florida’s inland waters. In particular, the Committee was asked to evaluate EPA’s method for estimating the incremental costs of implementing numeric criteria com- pared to the existing narrative standard. The issue has focused national attention on Florida, which is often the case in matters of water resources. TECHNICAL CHALLENGES OF NUTRIENT MANAGEMENT IN FLORIDA Florida has more than 11,000 miles of rivers and streams, over 7,700 lakes, and 27 first-magnitude springs (stateofflorida.com; see Figure 1-1 for the state’s major water features). Many of these waterbodies suffer from nutrient pollution due to a unique convergence of human and environmen- tal conditions. These include high population growth rates and resulting demands for water, land use changes from wetlands and forests to agricul- ture and urban areas, a tropical climate and flat topography, predominantly FIGURE 1-1 Major Florida lakes, rivers, and springs. SOURCE: USGS National Hydrography Dataset 2011. http://nhd.usgs.gov/.

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13 INTRODUCTION sandy soils and transmissive geologic materials, buildup of legacy nutrients, and competing value systems that influence perceptions of costs and risks of water quality impairment by Florida’s diverse population. Combined with the fact that treatment technologies to restore nutrient-impaired waters can be very expensive, these issues have made and will continue to make nutrient management in Florida an important but formidable and costly challenge, regardless of the regulatory paradigm used. Population Growth Florida’s population increased from 12.9 million people in 1990 to 18.8 million in 2010 (BEBR, 2010). In the next 20 years, Florida’s population is expected to increase 15 to 35 percent (Figure 1-2), or to between 21.8 and 26.0 million people (BEBR, 2010). Population growth has the potential to affect transport of nitrogen and phosphorus from urban and suburban areas to surface waterbodies through increased discharge of stormwater and wastewater and loss of natural assimilative capacity. FIGURE 1-2 Projected changes in Florida population between 2010 and 2030 for moderate growth scenario. SOURCE: BEBR (2010).

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14 EPA’S ECONOMIC ANALYSIS OF NUTRIENT STANDARDS IN FLORIDA Land Use Change As Florida’s population increases, there will be secondary changes in land use (Figure 1-3) and land management practices that will affect water quality. Expansion of urban and suburban land uses into former agricul- tural land will cause shifts in agricultural production, primarily in citrus, vegetable, row crop, and cow/calf operations. Expansion of urban and suburban areas into forested landscapes will replace perennial vegetation on relatively permeable soils with urban landscapes that have more im- pervious surface area, potentially increasing nutrient exports. The specific impacts of these secondary changes are difficult to assess, as they depend specifically on which landscapes are affected and the connectivity between these landscapes and nearby surface waterbodies. Nonetheless, one can expect that nutrient loads to surface waters will increase as forested areas are converted to urban and suburban land (USGS, 1998). As agricultural lands are converted to urban and suburban land, a decrease in nutrient loads can be expected, although the exact direction and magnitude of the impact depends on many factors, including the type of agriculture practiced before conversion and the nature of the urban land use (e.g., industrial, low density residential, high density residential, park or golf course). FIGURE 1-3 FDEP-compiled Florida land cover data for 2004.

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15 INTRODUCTION Climate and Topography The effects of excess nutrients applied to the land surface, whether in agricultural or urban activities, are exacerbated by the climatic and topographic conditions particular to Florida. High temperatures prevail throughout a significant fraction of the year, oscillating from 61 oF to well over 95 oF, and can be a powerful driver for the growth of aquatic vegetation. Florida annually receives significant amounts of precipitation throughout the state, ranging from nearly 40 to over 60 inches (see Figure 1-4). Half of this precipitation occurs in a relatively short period from June to September in the form of highly localized intense thunderstorms as well as tropical storms, although there is variation in this seasonal distribution from north to south. Intense rainfall can produce heavy runoff (and asso- ciated pollutant loads) over short periods of time. Also, precipitation is a significant source of infiltration and groundwater recharge, which can carry excess nutrients to Florida’s lakes, springs, and rivers. Florida has relatively low-lying, flat topography (Figure 1-5), with a mean elevation of 100 feet. Heavy rainfall and a shallow water table are responsible for large areas of the state being covered historically by shallow FIGURE 1-4 Annual rainfall distribution in Florida. Legend units are in inches. SOURCE: ERD (2007).

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16 EPA’S ECONOMIC ANALYSIS OF NUTRIENT STANDARDS IN FLORIDA FIGURE 1-5 Florida elevation patterns. SOURCE: USGS Digital Elevation Map Resources. http://data.geocomm.com/dem/ demdownload.html. swamps, wetlands, and marshes. In order to use the land for agriculture, many of these areas have been hydrologically altered such that excess nu- trients are transported to surface waters through tile drains or drainage ditches and are no longer stored or processed in situ. Thus, water quality management strategies in Florida often take on the challenging and expen- sive task of restoring drained swamps, wetlands, and marshes to regain their nutrient assimilation capabilities. Soil and Geology Florida water quality is strongly affected by natural variability in soil and geologic materials, as manifested in clear differences in lake physical, chemical, and biological characteristics across Florida’s 47 Lake Ecoregions (Griffith et al., 1997). Florida’s geology has been influenced by fluctuations in sea level. Because low-lying Florida was covered by oceans for millions of years, bedrock is composed mainly of carbonate rocks overlain by beach or dune sand. There are extensive localized deposits of phosphate rock that

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17 INTRODUCTION formed in ancient coral reefs. Lakes and rivers in these areas typically have elevated natural background levels of total phosphorus. Carbonate rocks have weathered to produce karst landscapes with many sinkholes and springs across wide regions of Florida. The majority of Florida lakes were formed in basins affected by dissolution of carbonate rock (Schiffer, 1998). Most of the inflow to these lakes arises from groundwater discharge rather than surface runoff. Soils in Florida are primarily spodosols or entisols, with a smaller portion being histosols and ultisols (Collins, 1985). Spodosols are coarse textured soils with an amorphous mixture of organic matter and aluminum, under- lain by a gray eluvial (leached) layer where water has removed most of the organic matter. These soils are often used for production of citrus, and in the wet season are artificially drained to lower the water table. Entisols are poorly developed sandy soils without horizons. They have rapid infiltration and are often irrigated. Both soil and geologic conditions can produce high background levels of nutrients in Florida waterbodies that make meeting nu- meric water quality criteria a challenge (as discussed in a subsequent section). Legacy Nutrients Legacy nutrients, primarily stemming from agriculture, exist in large quantities in many Florida soils, wetlands, lakes, streams, and aquifers. These legacy nutrients are the result of many decades of phosphorus transport from upland contributing areas in the case of lakes and wetlands, or many decades of nitrate leaching to aquifers, which has resulted in a significant impact on spring water quality. Legacy nutrient flows can dominate a watershed’s nutri- ent flows decades after nutrient additions have been curtailed. For example, Reddy et al. (2010) estimated total phosphorus (TP) storage in upland and wetland soils in the Lake Okeechobee basin to be 215,000 metric tons. Ap- proximately 80 percent of the stored phosphorus (or 169,800 metric tons) was estimated to be located in soils and stream sediments, with the remainder stored in lake sediments in the Upper Chain of Lakes, Lake Istokpoga, and Lake Okeechobee. Reddy et al. (2010) evaluated the potential long-term role of this legacy phosphorus on loading to Lake Okeechobee. Based on con- servative estimates of phosphorus leaching rates and the amount of stored reactive phosphorus in the watershed, the authors predicted that legacy phosphorus could maintain a phosphorus load to Lake Okeechobee of 500 metric tons per year for the next 22 to 55 years. This loading rate considers only legacy phosphorus stored in the soils and sediments and does not take into account new phosphorus additions in the basin. Internal nutrient loads from sediments in Lake Okeechobee to the wa- ter column are also significant. Based on several earlier research reports, Reddy et al. (2010) estimated the internal flux from mud sediments to the

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18 EPA’S ECONOMIC ANALYSIS OF NUTRIENT STANDARDS IN FLORIDA water column to be 112 metric tons of phosphorus per year continuing for 12 to 31 years. Waterbodies suffering from legacy nutrients generally require very strin- gent and costly BMPs in order to meet water quality goals similar to the numeric nutrient criteria. Examples of this situation, highlighting the more expensive actions required, are presented in Box 2-1 for Lake Okeechobee and for the Everglades Agricultural Area. IMPAIRMENT OF FLORIDA’S INLAND STREAMS, LAKES, AND SPRINGS Given the conditions described above, it is not surprising that impair- ment of Florida waters caused by nutrient overenrichment is widespread and mostly growing. Determinations of waterbody impairment for each State are required by the Clean Water Act Section 305b every two years. For the Florida 2008 305b report, there were sufficient data to evaluate (by area or length) 53 percent of the state’s rivers and streams and 81 percent of its lakes (FDEP, 2008); poor water quality (for all causes except mercury) was found in 28 percent of the river and stream miles and 25 percent of the lake acres. Approximately 2,565 total maximum daily load (TMDL) calculations will be required for 1,688 Florida waters. The 2008 report revealed that nutrients are the most prevalent pollutant in lakes, account- ing for 349,248 impaired lake acres (157 lakes). For rivers and streams, nutrients are preceded by dissolved oxygen deficits (which can be driven by nutrients), mercury, and fecal coliform bacteria as major pollutants. At least 128 rivers and streams, accounting for 1,049 stream miles, violate the nar- rative nutrient standard. Median phosphorus in monitored Florida waters is around 0.05 mg/L, after having risen steadily in the 20th century until the mid-1980s when the state adopted its Stormwater Rule (FDEP, 2011). Water quality in many springs has also declined steadily since the 1970s. Thirty-six (36) springs that have been monitored over the last 30 years have had increasing levels of nitrate-N, such that the combined median value has doubled (and ranges from 1 to 5 mg/L). Regarding the number of waterbodies requiring a TMDL because of nutrients, EPA (2010) states that there are approximately 168 waterbodies (denoted WBIDs1 in Florida) covered under nutrient TMDLs in Florida, 1 WBID refers to a Water Body Identification Number, but it includes more than just a waterbody. For a multitude of water resource purposes, Florida was divided up into polygons that roughly delineate the drainage basins surrounding individual waterbody assessment units, and each polygon was assigned a unique Water Body Identification Number. The assessment units are lakes or portions of lakes, springs, rivers and streams, segments of rivers and streams, and coastal, bay and estuarine waters in Florida. Thus, each WBID contains both water and the surrounding drainage basin. Note that many FDEP documents use the term WBID when

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19 INTRODUCTION 117 of which are for lakes and flowing waters. An accounting of those waterbodies in the EPA report reveals 89 TMDLs because most TMDLs cover more than one WBID (see Exhibit 2-8 in EPA, 2010). Another 497 waterbodies in Florida are listed as impaired and await nutrient TMDL development (EPA, 2010, Exhibit 2-7). Higher values are reported by the Florida Department of Environmental Protection (FDEP). FDEP considers 720 WBIDs as impaired and in need of a TMDL; most have been listed as impaired based on a nutrient assessment, but others are impaired based on violations of the dissolved oxygen standard (personal communication, Frank Nearhoof, FDEP, 2011). There are 122 WBIDs for which a TMDL has already been developed (personal communication, Frank Nearhoof, FDEP, 2011). As shown in Figure 1-6, the state has adopted nine Basin Management Action Plans (BMAPs) to implement dozens of TMDLs across the state (not just for nutrient-impaired waters). This process requires that pollut- ant loads be allocated among various sectors, including point sources like industrial and wastewater treatment plants, as well as more diffuse sources such as agriculture, stormwater from urban areas, and septic systems. The contributions of nitrogen and phosphorus vary substantially by sector and by basin; examples are given in Figures 1-7 and 1-8 of nutrient loadings to the Wekiva River and the lower St. Johns River. Furthermore, each pol- luting sector operates under different legal and regulatory requirements, as described in greater detail in Chapter 2. WATER QUALITY STANDARDS AND THE TMDL PROCESS The Clean Water Act (CWA) addresses the protection and restoration of the nation’s waters through four major programs—water quality stan- dards, point source permitting of wastewater dischargers via the national pollutant discharge elimination system (NPDES), total maximum daily loads (TMDLs), and the implementation of best management practices to control nonpoint sources of pollution. In their water quality standards, States establish the objectives for how waters are used (i.e., designated beneficial uses), along with the chemical, physical, and biological qualities of those same waters that would protect their designated uses. Designated uses include aquatic life support, recreation, drinking water supply, etc. The chemical, physical, and biological qualities of waters established to protect the designated uses of waters are collectively referred to as criteria. The criteria can be narrative, i.e., a description of the desired condition, or they can be specific numeric values. The CWA specifies that individual discussing impaired waters; this use of the term should not be confused to mean that a WBID is only the waterbody.

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20 EPA’S ECONOMIC ANALYSIS OF NUTRIENT STANDARDS IN FLORIDA FIGURE 1-6 TMDL Project implementation via Basins Management Action Plans. SOURCE: Florida Department of Environmental Protection (2011).

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21 INTRODUCTION FIGURE 1-7 Relative Contribution of the Nitrogen Load by Sector to the Wekiva River in the middle St. Johns basin. OSTDS = on-site sewage treatment and disposal system (septic system). Legacy nutrients were not specified in this analysis. SOURCE: MACTEC (2010). FIGURE 1-8 Relative contribution of the nitrogen load and phosphorus load by sector to the lower St. Johns River. Legacy nutrients were not specified in this analysis. SOURCE: Hendrickson et al. (2002).

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24 EPA’S ECONOMIC ANALYSIS OF NUTRIENT STANDARDS IN FLORIDA Box 1-1 Definitions of Selected Water Quality Management Terms 1. Water Quality Standards—State or Federal regulatory requirements for sur- face waters falling under the jurisdiction of the Clean Water Act. The standards consist of three parts—a designated use or uses, water quality criteria based upon on designated uses, and an antidegradation policy. 2. Criteria—Elements of State water quality standards, expressed as constituent concentrations, levels, or narrative statements, representing a quality of water that supports a particular designated use. 3. Designated Uses—Elements of State water quality standards that specify the uses for each water body whether or not a specific use is currently being attained. Mandatory Clean Water Act uses include aquatic life and recreation support. Other common uses are drinking water, irrigation, and industrial water supply support. 4. Numeric Nutrient Criteria—Criteria that define the maximum nitrogen and/or phosphorus concentration in a water body that will maintain its designated use. 5. Narrative Criteria—Narrative statements that define a desired condition of a water. For nutrients, in Florida the narrative criterion has been “no imbalance of flora or fauna” which can be determined by measuring biota, changes in dissolved oxygen, changes in pH, or other indicators related to nutrient pollution. 6. Biological Criteria or Biocriteria—Numeric values or narrative expressions of the desired biological condition of aquatic communities in a waterbody. 7. Independent Applicability—A concept put forth in EPA policy that any one type of assessment information is enough to provide conclusive evidence of non- attainment of water quality standards regardless of the results of other types of assessment information. with several environmental organizations (the Florida Wildlife Federation, the Conservancy of Southwest Florida, the Environmental Confederation of Southwest Florida, St. John’s Riverkeeper, and the Sierra Club) that had sued EPA, maintaining that Florida’s narrative nutrient criteria were not protective of Florida’s waters. Their argument was that the narrative, site- by-site approach to address nutrient pollution problems in Florida was tak- ing too much time and too many resources to allow the state to effectively and expeditiously address its thousands of stream miles and lake acres that violate the narrative nutrient standard. The environmental groups cited EPA’s 1998 National Strategy for the Development of Regional Nutrient Criteria calling for states to develop numeric nutrient criteria by 2003 as the rationale for requiring such criteria for Florida’s waters. Furthermore, they

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25 INTRODUCTION 8. Target—Generally, a non-regulatory narrative or numeric goal established to achieve or maintain a water’s designated uses. 9. Nutrient Threshold—A concentration of nutrients against which ambient nutri- ent concentrations are compared to assess impairment of a water’s designated uses. In Florida’s proposed rules, nutrient thresholds only apply to streams. 10. Water Body Identification Number (WBID)—Florida was divided up into poly- gons that roughly delineate the drainage basins surrounding individual waterbody assessment units, and each polygon was assigned a unique Water Body Identifi- cation Number. The assessment units are lakes or portions of lakes, springs, rivers and streams, segments of rivers and streams, and coastal, bay, and estuarine waters in Florida. Thus, each WBID contains both water and the surrounding drainage basin. Note that many FDEP documents use the term WBID when discussing impaired waters; this use of the term should not be misinterpreted to mean that a WBID is only the waterbody. 11. Total Maximum Daily Load (TMDL)—the maximum pollutant load that a waterbody can receive and not violate its water quality standard. The TMDL also specifies how the load will be allocated among point and nonpoint source dis- chargers to that waterbody. 12. Basin Management Action Plan (BMAP)—A plan that outlines how a TMDL will be implemented. BMAPs can include revised permit limits for point sources as well as new pollutant control requirements for nonpoint sources. 13. Site-Specific Alternative Criteria (SSAC)—If the characteristics of a receiving water allow attainment of designated uses with nutrient concentrations lower or higher than EPA’s numeric nutrient criteria, site specific alternative criteria may be developed that could result in more or less stringent effluent limitations. Because dischargers may be required to obtain additional data to assess the appropriate- ness of SSAC, the extent to which dischargers use this mechanism to obtain regulatory relief is uncertain. cited section 303 of the CWA, which requires EPA to “promptly prepare and publish” new or revised water quality standards “in any case where the Administrator determines that a revised or new standard is necessary to meet the requirements of this Act [the Clean Water Act].” The main fundamental difference between the narrative and numeric nutrient standards is that under the narrative standard waters are listed as impaired because of an imbalance of flora and fauna, which is based on bio- logical condition assessment. Only subsequently are nutrients investigated as the cause of unacceptable biological conditions, and, if that determina- tion is made, the state creates targets for N or P or both either in terms of allowable loads or concentrations. Under the numeric nutrient standard, simple chemical monitoring of a waterbody when compared to the numeric

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26 EPA’S ECONOMIC ANALYSIS OF NUTRIENT STANDARDS IN FLORIDA TABLE 1-1 Numeric Nutrient Criteria for Lakes and Flowing Waters in Florida TN TP Chlorophyll-a Criteria Criteria Nitrate + Nitrite Region/Type of Water (mg/L) (mg/L) (mg/L) Criteria (mg/L) Colored Lakesa 0.020 1.27 0.050 NA Clear Lakes (high alkalinity)b 0.020 1.05 0.031 NA Clear Lakes (low alkalinity)c 0.006 0.50 0.011 NA Panhandle East Flowing Waters NA 1.03 0.18 NA Panhandle West Flowing Waters NA 0.67 0.06 NA North Central Flowing Waters NA 1.87 0.30 NA West Central Flowing Waters NA 1.65 0.49 NA Peninsula Flowing Waters NA 1.54 0.12 NA Springs NA NA NA 0.35 NA = not applicable aLong-term Color > 40 Pt-Co bLong-term Color ≤ 40 Pt-Co and Alkalinity > 20 mg/L CaCO . 3 cLong-term Color ≤ 40 Pt-Co and Alkalinity ≤ 20 mg/L CaCO . 3 SOURCE: EPA (2010). standards can lead to a water being listed as impaired, regardless of the associated biological condition of the water. (The reader is referred to the beginning of Chapter 3 for a more in-depth explanation of the differences between the narrative and numeric nutrient criteria.) The numeric nutrient standards established for Florida by EPA on November 14, 2010, are for nitrogen and phosphorus in lakes and flowing waters for different regions of the state, as shown in Table 1-1 (Federal Register, December 6, 2010, 75 FR 75762). This report does not evaluate the underlying scientific basis of the numeric nutrient criteria found in Table 1-1. Nonetheless, it is useful to consider the overall feasibility of meeting the given numeric nutrient criteria in Florida’s inland lakes under current conditions. As discussed in Box 1-2, a cursory analysis of lake data suggests that the numeric nutrient criteria will be difficult to attain in some (but not all) ecoregions due to differences Box 1-2 Challenges in Meeting the Numeric Nutrient Criteria in Lakes The Committee conducted a cursory analysis of lake data (which incidentally were not used by EPA in its economic analysis) to determine what percentage of Florida lakes would likely violate the numeric nutrient criteria (NNC). Note that this analysis was approximate because the lake data did not necessarily use the

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27 INTRODUCTION same threshold values as the NNC. Nonetheless, the analysis suggests that it will be challenging to meet the NNC in many Florida lakes. Florida has over 7,700 lakes (Griffith et al., 1997). The aquatic ecoregion framework developed nationally by Omernik (1987) has proven useful for lake water quality assessment and management in Minnesota (Heiskary and Walker, 1988; Hatch et al., 2001; Birr and Mulla, 2002) and Ohio (Fulmer and Cooke, 1990). Griffith et al. (1997) divided Florida into 47 level IV aquatic ecoregions to describe regional variations in Florida lake water quality characteristics. For each ecoregion, lake water quality characteristics were summarized. For colored lakes the numeric nutrient criteria proposed by EPA (2010) are 0.050 mg/L TP and 1.27 mg/L TN. Using data compiled by Griffith et al. (1997) these standards can be met by most lakes in ten of thirteen of Florida’s level IV aquatic ecoregions having colored lakes. The greatest difficulty will be in the Southwestern Flatlands ecoregion, where 75% of the lakes exceed 0.075 mg/L TP and 1.25 mg/L TN. This is a coastal lowland region, with citrus, pasture, and urban development. Numeric criteria will also be difficult to attain in the Northern Peninsula Karst Plains ecoregion, where 50% of the lakes exceed 0.074 mg/L TP. There are widespread phosphatic sand deposits in this region. In the Central Valley ecoregion 50% of lakes exceed 1.4 mg/L TN, so the numeric criteria for TN will be widely violated. This is a region of large, shallow eutrophic lakes with nutrient enriched soils. For clear alkaline lakes the numeric nutrient criteria proposed by EPA are 0.031 mg/L TP and 1.05 mg/L TN. There are eight level IV aquatic ecoregions with these types of lakes in Florida. Numeric criteria can likely be met in six of these ecore- gions. The remaining ecoregions are characterized by extensive geologic deposits of phosphatic sands or clays, where attaining numeric nutrient criteria is probably difficult. In the Lakeland/Bone Valley ecoregion, for example, there is extensive mining for phosphate deposits. The vast majority of lakes in this ecoregion exceed 0.12 mg/L TP and 1.7 mg/L TN. In the Orlando Ridge ecoregion half of the lakes exceed 0.031 mg/L TP. For clear non-alkaline lakes the numeric nutrient criteria proposed by EPA are 0.011 mg/L TP and 0.5 mg/L TN. There are thirteen Level IV aquatic ecoregions in Florida with these types of lakes. The numeric nutrient criteria can likely be met in six of these ecoregions. Attaining these criteria in the other seven ecore- gions will be challenging, if feasible at all. For example, 75% of lakes in the North Brooksville Ridge ecoregion exceed 0.008 mg/L TP and 0.57 mg/L TN. This area is characterized by thick sands underlain by phosphatic deposits. In the Weeki Wachee Hills ecoregion, 75% of the lakes exceed 0.009 mg/L TP and 0.63 mg/L TN. The results of this analysis suggest that meeting the NNC in lakes of Florida will be challenging, because TP concentrations in some lakes are controlled by natural geologic, soil and hydrologic factors (Bachmann et al., 2010) in addition to anthropogenic factors. It will be especially challenging to meet the NNC for TP in lakes within ecoregions where phosphatic deposits occur (e.g., North Peninsula Karst Plains, Lakeland/Bone Valley, and North Brooksville Ridge). It should be noted that FDEP rules allow for exceptions to meeting numeric standards given natural background conditions, using the site-specific alternative criteria (SSAC) process.

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28 EPA’S ECONOMIC ANALYSIS OF NUTRIENT STANDARDS IN FLORIDA in natural geology, soil, landscape, and hydrologic factors. Whether these results apply to streams as well is uncertain. Interestingly, a comparison of the numeric nutrient criteria with typical TMDL targets in impaired streams and lakes suggests that the numeric criteria are usually less stringent than the TMDL targets that have been developed under the narrative process, except for lakes with phosphorus pollution (see Box 3-1 in Chapter 3). It should be noted that Florida is still in the process of trying to develop its own numeric criteria for nutrients that would supersede Table 1-1 if approved by the Florida Environmental Regulatory Commission (which oc- curred December 8, 2011), the Florida legislature, and EPA. As of the writing of this report, FDEP has developed a hybrid criteria approach that includes aspects of both the current Florida narrative criteria and the EPA numeric criteria. The FDEP proposal would establish generally applicable numeric nutrient “thresholds” as an additional interpretation of the Florida narrative criteria for streams, but would only use the threshold values to make impair- ment decisions if there is concurrent confirmation of biological impairment. In addition, if a site-specific “numeric nutrient interpretation” exists, such as a site-specific numeric criterion or an approved numeric TMDL target, the site-specific interpretation is used in lieu of the applicable numeric nutri- ent threshold. Compared to the EPA’s numeric nutrient criteria, this hybrid approach has more flexibility for dealing with natural background nutrient sources and variability in site-specific conditions at finer scales. The newly proposed FDEP criteria would also include a new antidegra- dation-type provision for assessing impairment. This provision would place waters on the State’s impaired waters planning list if they show an adverse or worsening trend in biological response variables or dissolved oxygen (DO)—even if waters did not fail any of the biological indicators. The listing of waters based on adverse nutrient response trends would provide FDEP the opportunity to proactively address worsening nutrient conditions prior to observing an actual impairment of waters’ designated uses. The incremental costs of implementing Florida’s hybrid criteria approach are being evaluated by Florida State University—an effort for which the results of this report should be useful. Estimates of the Incremental Cost to Implement the Numeric Nutrient Criteria EPA’s numeric nutrient criteria for Florida may result in new impaired waters listings and reevaluation of the TMDLs for the waters that are cur- rently listed as impaired. These actions may lead to new or revised NPDES permit conditions for point source dischargers, and/or nutrient control re- quirements or best management practice (BMP) guidance on other pollutant sources, although the numeric nutrient criteria rule itself does not establish

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29 INTRODUCTION requirements directly applicable to such entities. Therefore, EPA produced an economic analysis of the potential incremental costs and benefits that may be associated with implementation of the numeric nutrient criteria rule, taking into account existing federal and Florida regulations. EPA’s economic analysis (EPA, 2010) is an assessment of the potential incremental cost of implementing the numeric nutrient criteria, taking into account technologies and other controls that may be used to meet the cri- teria in waters newly identified as impaired as a result of the new criteria. The analysis assumes that affected parties will make use of various site- specific criteria adjustment processes and Florida’s ability to re-designate beneficial uses, grant variances, and establish load allocations in TMDLs. EPA’s stated annual combined incremental cost estimates range from $135.5 to $206.1 million per year, which is a total of $1.4 to $2.2 billion over a 20-year period (EPA, 2010). Other stakeholder groups have produced their own estimates of the cost of implementing the numeric nutrient criteria, with some having esti- mated costs as high as to $12 billion (FDEP, 2010). Like the EPA report, reports from FDEP (2010) and Cardno ENTRIX (2010a,b) on behalf of the Florida Water Quality Coalition cover all pollutant sectors. Other groups targeted specific portions of the EPA economic analysis, including reports from the Florida Water Environment Association Utility Council (municipal point sources; Carollo Engineers, 2010), the Florida Department of Agri- culture and Consumer Services (agriculture; Budell et al., 2010), the Florida Pulp and Paper and the Florida Phosphate reports (industrial point sources; AWARE Environmental Inc. and AquAeTer Inc., 2010, and ENVIRON, 2010, respectively). The discrepancies between the EPA and other analyses arise from many factors (as discussed in greater detail in Chapter 2). First, EPA considers only those additional waters that that are newly identified as impaired based on the numeric nutrient criteria and does not consider waters that Florida has already determined to be impaired based on existing FDEP assessment methodologies. Second, EPA and other stakeholders made dif- ferent assumptions about which point and nonpoint source activities to include in their cost analyses. Third, there are differing opinions about the level of technology that will be needed and thus the cost necessary to meet the numeric criteria. The EPA economic analysis assumes that avail- able regulatory exemptions will be sought, while other analyses assume that more expensive technologies will be required. The cost discrepancies between the EPA analysis and others are presented in Table 1-2. Part of the controversy in Florida has been that the media, the pub- lic, and also perhaps decision makers have been misinterpreting the EPA incremental cost estimate as the total cost needed to reduce nutrient loads to levels that would meet designated uses within impaired waterbodies.

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30 EPA’S ECONOMIC ANALYSIS OF NUTRIENT STANDARDS IN FLORIDA TABLE 1-2 Cost Discrepancies between the EPA Economic Analysis and other reports Nutrient Stakeholder Cardno ENTRIX Source Estimates EPA (2010) (2011b) Municipal $2-4.6 billion/yr $22.3-38.1 million/yr $41-395 million/yr WWTPs (Carollo, 2010) $2.1 billion/yr a Industrial $25.4 million/yr $270-1,973 million/yr Facilities (FDEP, 2010) Urban $2.0 billion/yr $60.5-108 million/yr $61-629 million/yr Stormwater (FDEP, 2010) Agriculture $0.9-1.6 billion/yr $19.9-23 million/yr $33-969 million/yr (Budell et al., 2010) Septic $0.9-2.9 billion/yr $6.6-10.7 million/yr $8-65 million/yr Systems (FDEP, 2010) $1-11 million/yr b Government $0.9 million/yr Expenditures a This does not include the costs determined by the Pulp and Paper Industry and the Phosphate Industry found in AWARE Environmental Inc. and AquAeTer Inc., 2010, and ENVIRON, 2010, respectively. b These numbers came from a spreadsheet Cardno ENTRIX made available at their ftp site. The range is the low end of their “BMP/LOT” analysis and the high end of their “End of Pipe” analysis. Indeed, several of the competing stakeholder analyses that approach the billion dollar annual level (see Table 1-2) are clearly a reflection of attempts to estimate the total cost, not the incremental cost. A second point of con- troversy is that EPA implicitly assumes that the implementation activities included in its cost analysis would be adequate to meet the numeric nutrient criteria in both the incrementally impaired waters and in those already be identified as nutrient stressed under the narrative process. That is, the EPA cost analysis fails to acknowledge the possibility that what Florida histori- cally required will be insufficient to achieve the numeric nutrient criteria. Chapter 2 makes it clear that what has been implemented in the past has made some water quality improvements in some sectors, but in general has not led to attainment of designated uses. This is not meant to suggest that the EPA analysis was wrong in fo- cusing on the incremental costs; indeed, this was the most appropriate approach to take (although EPA was not comprehensive—see Chapter 3). Nonetheless, subsequent to EPA releasing its economic analysis a period of confusion ensued, during which stakeholders argued primarily about the total cost and confused incremental cost with total cost. It is certain that the total costs of attaining water quality standards in Florida waters im- paired by nutrients will be enormous, not only because of ongoing polluting activities and the current state of water quality impairment in Florida but

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31 INTRODUCTION because of natural background sources of nutrients, legacy sources that are unlikely to be remediated by common nonpoint source BMPs, and ongoing changes in population, land use, and the economy. These total long-term costs of restoring impaired surface waterbodies are going to be much higher than either the incremental costs of the EPA’s numeric nutrient criteria or the historic costs already incurred for TMDLs and BMAPs in waters im- paired under Florida’s narrative criteria, regardless of the future regulatory framework. If FDEP made a statement to that effect, it would further the public’s understanding of the scope of nutrient pollution in Florida and the challenges to its management, and overcome misunderstandings that have arisen during debate about EPA’s numeric nutrient criteria. REQUEST FOR NATIONAL RESEARCH COUNCIL STUDY Resolution of the discrepancies between various stakeholders described above is critical to moving forward with implementation of the numeric nutrient criteria. Thus, EPA requested that the National Research Council (NRC) conduct a review of the Agency’s economic analysis of the incremen- tal costs of state implementation of final numeric nutrient criteria for lakes and flowing waters in Florida. In response to this request, the NRC formed a committee to evaluate the cost estimates of implementing the numeric criteria, including the relevance and validity of certain assumptions and methodologies used in the economic analysis. The Committee’s statement of task is found in Box 1-3. There were a number of constraints placed on the Committee that were necessary in order for it to produce a report by the March 2012 deadline imposed by EPA. First, it should be noted that the Committee was not asked to do an assessment of the rule per se. This is important because the actual numeric values have been the source of considerable controversy in Florida for the last few years, and at one point the State of Florida requested the NRC’s involvement in determining what the numbers should be (although this request was never fully realized). For the purposes of this study, the numeric criteria in Table 1-1 were assumed to be unmovable. An EPA Sci- ence Advisory Board panel has issued a report evaluating the scientific merit of the proposed numeric standards (EPA, 2011). Second, the Committee was not asked to address the benefits of imple- menting the numeric nutrient criteria, despite the existence of a chapter in the EPA report devoted to a consideration of benefits and considerable interest from some stakeholders. Nor does the Committee address the important but indirect costs associated with implementing the numeric criteria, such as the number of jobs lost or gained, how certain related sec- tors of the economy will fare under the numeric criteria like real estate and tourism, etc. The committee considered all of these topics beyond the scope

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32 EPA’S ECONOMIC ANALYSIS OF NUTRIENT STANDARDS IN FLORIDA Box 1-3 NRC Committee Statement of Task In response to a request from the U.S. Environmental Protection Agency, this study undertaken by a special committee organized and overseen by the NRC’s Water Science and Technology Board is reviewing EPA’s analysis of the costs of state implementation of final numeric nutrient criteria for lakes and flowing waters in Florida. Because the numeric nutrient criteria rule is scheduled to take effect March 6, 2012, the EPA needs input quickly on a number of important issues. The committee will evaluate the cost estimates of implementing the numeric criteria, including the relevance and validity of certain assumptions and methods used in the economic analysis. The evaluation will give special attention to those assump- tions that may account for discrepancies between EPA’s analysis and those of several stakeholder groups. Specifically, the committee will review and comment on the implications of: 1. EPA’s assumption that costs should only be determined for waters that will be “newly impaired” as a result of the numeric nutrient criteria. 2. EPA’s decision to estimate the costs of only those sources of pollution that would directly affect a “newly impaired” water—in particular the number of waste- water treatment plants, the acreage of agricultural land, the acreage of urban areas, and the number of septic systems included in the EPA analysis. 3. EPA’s assumptions about the levels of control that could be used by cer- tain point and nonpoint sources, such as wastewater treatment plants, industrial point sources, agricultural activities, and septic systems. Examples of these as- sumptions could include a decision to seek a regulatory exemption, whether to implement reverse osmosis technology, or to use conventional best management practices rather than more expensive water treatment options. of the study given the statement of task and the very short time frame in which it was operating. Finally, the Committee was not asked to do its own cost estimate (i.e., there is no new calculation of the estimated costs of implementing the cri- teria in this report). Rather, the report focuses on the methods to be used in any future analyses, and it evaluates the validity of assumptions found in the EPA report and the reports of various stakeholders. The Committee made use of a wide variety of sources, most importantly the economic analyses produced by EPA and other stakeholder groups. The Committee held two open meetings, one in Orlando, Florida, in July 2011, and one in Washington, DC, in October 2011, to hear from these groups, including open-microphone sessions to take comments from the interested public at both meetings. The third committee meeting held in December 2011 was entirely in closed session. Additional background materials were also gathered from the Florida Department of Environmental Protection,

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33 INTRODUCTION the main agency responsible for water quality management in Florida, and from the EPA Office of Science and Technology. Given the detailed technical and regulatory nature of the subject, the primary audience for this report is EPA, FDEP, and the stakeholder groups mentioned above. Chapter 2, which addresses the second and third items in the statement of task, comprehensively discusses the EPA’s and others’ assumptions and incremental cost estimates for five pollutant sectors, including municipal and industrial wastewater treatment plants, agriculture, urban stormwater, and septic systems. The incremental costs to government of implementing the NNC rule are also considered. Chapter 3 tackles the first item in the statement of task by providing an alternative framework for the cost analy- sis that could be used by EPA for future work in Florida and elsewhere. The conceptual framework provides an alternative way to (1) more accurately characterize baselines and consequently the incremental effect of the NNC Rule and (2) address the timing and uncertainty of costs of a proposed rule change. Taking into consideration the narrative process, the numeric nutri- ent criteria, and the proposed FDEP hybrid approach, the chapter highlights the importance of evaluating the key differences in the three processes and the resulting implications for overall cost, including the critical issue of timing. The findings and recommendations in this report should be useful regardless of whether the EPA’s NNC rule or the proposed FDEP rule is ultimately adopted. REFERENCES AWARE Environmental Inc. and AquAeTer Inc. 2010. Treatment Technologies Assessment for Removal of Nitrogen and Phosphorus in Pulp and Paper Wastewater. Prepared for the Florida Pulp and Paper Association. Bachmann, R. W., M. V. Hoyer and D. E. Canfield, Jr. 2010. Draft alternative nutrient criteria for Florida lakes. Florida LAKEWATCH whitepaper. Univ. Florida. Gainesville, Fl. BEBR (Bureau of Economic and Business Research). 2010. Population studies. http://www. bebr.ufl.edu/ Univ. FL. Gainesville, FL. Birr, A. S., and D. J. Mulla. 2002. Relationship between lake and ground water quality pat- terns and Minnesota agroecoregions. Hydrological Sci. Tech. 18(1-4):31-41. Budell, R., A. W. Hodges and D. Bottcher. 2010. Economic Impacts and Compliance Costs of Proposed EPA Water Quality Standards for the State of Florida’s Lakes and Flowing Waters. Cardno ENTRIX. 2011a. Economic Analysis of the Proposed Federal Numeric Nutrient Criteria for Florida. Prepared for the FL Water Quality Coalition by Cardno ENTRIX, June 2011. Cardno ENTRIX. 2011b. Addendum to the Economic Analysis of the Federal Numeric Nu- trient Criteria for Florida. Prepared for the Florida Water Quality Coalition by Cardno ENTRIX, July, 2011. Carollo Engineers. 2010. Costs for Utilities and Their Ratepayers to Comply With EPA Numeric Nutrient Criteria for Freshwater Dischargers. Prepared for the Florida Water Environment Association Utility Council. November 2010.

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34 EPA’S ECONOMIC ANALYSIS OF NUTRIENT STANDARDS IN FLORIDA Collins, M. E. 1985. Key to Soil Orders in Florida. Gainesville, FL: University of Florida. ENVIRON. 2010. Assessment of Financial Impact on Phosphate Mining and Mineral Pro- cessing: Complying with EPA’s Proposed Nutrient Water Quality Standards for Florida. Prepared for the Florida Phosphate Industry. April 2010. Environmental Research & Design, Inc. 2007. Evaluation of Current Stormwater Design Criteria within the State of Florida. Final Report prepared for Florida Department of Environmental Protection, Orlando, FL. http://www.dep.state.fl.us/water/nonpoint/docs/ nonpoint/SW_TreatmentReportFinal_71907.pdf. FDEP (Florida Department of Environmental Protection). 2008. Integrated Water Quality Assessment for Florida: 2008 305(b) Report and 303(d) List Update, October 2008. FDEP. 2010. Review of EPA’s “Preliminary Estimate of Potential Compliance Costs and Benefits Associated with EPA’s Proposed Numeric Nutrient Criteria for Florida.” April 28, 2010. FDEP. 2011. An Overview of Nutrient Management in Florida, Working Draft–April 2011. Fulmer, D. G., and G. D. Cooke. 1990. Evaluating the restoration potential of 19 Ohio reser- voirs. Lake Reserv. Manage. 6:197-206. Griffith, G. E., D. E. Canfield, Jr., C. A. Horsburgh, and J. M. Omernik. 1997. Lake regions of Florida. EPA/R-97/127. US EPA. NHREEL. Western Ecology Division. Corvallis, OR. Hatch, L. K., A. P. Mallawatantri, D. Wheeler, A. Gleason, D. J. Mulla, J. A. Perry, K. W. Easter, P. Brezonik, R. Smith, and L. Gerlach. 2001. Land management at the major watershed—agroecoregion intersection. J. Soil Water Conservation 56:44-51. Heiskary, S., and W. W. Walker, Jr. 1988. Developing phosphorus criteria for Minnesota lakes. Lake Reserv. Manage. 4:1-9. Hendrickson, J., N. Trahan, E. Stecker, and Y. Ouyang. 2002. Estimation and assessment of the current and historic external load of nitrogen, phosphorus and organic carbon to the Lower St. Johns River for the fulfillment of TMDL and PLRG objectives. Palatka, Florida: St. Johns River Water Management District, Department of Water Resources. MACTEC. 2010. Final Report Wekiva River Basin Nitrate Sourcing Study. Prepared for the SJRWMD and FDEP. March 2010. Omernik, J. M. 1987. Ecoregions of the conterminous United States. Annals Assoc. Am. Geog. 77:118-125. Reddy, K. E., S. Newman, T. Z. Osborne, J. R. White, and C. Fitz. 2010. Legacy phosphorus in the Everglades ecosystem: Implications to management and restoration. Critical Reviews in Environmental Science Technology (in review). Schiffer, D. 1998. Hydrology of Central Florida lakes—A primer. U.S. Geological Survey circular 1137. Denver, CO. U.S. Govt. Printing Office. U.S. EPA (U.S. Environmental Protection Agency). 2009. Letter from Benjamin Grumbles, Assistant Administrator, Office of Water to Michael Sole, Secretary, Florida Department of Environmental Protection. January 14. http://www.epa.gov/waterscience/standards/ rules/fl-determination20090114.pdf. U.S. EPA. 2010. Economic Analysis of Final Water Quality Standards for Nutrients in Lakes and Flowing Waters in Florida. Environmental Protection Agency; November, 2010. U.S. EPA. 2011. Methods and Approaches for Deriving Numeric Criteria for Nitrogen/Phos- phorus Pollution in Florida’s Estuaries, Coastal Waters, and Southern Inland Flowing Waters. US EPA. Washington, DC. http://yosemite.epa.gov/sab/sabproduct.nsf/fedrgstr_ activities/DCC3488B67473BDA852578D20058F3C9/$File/EPA-SAB-11-010-unsigned. pdf. USGS (U.S. Geological Survey). 1998. Water Quality in the Georgia-Florida Coastal Plain, Georgia and Florida, 1992-96. By Marian P. Berndt, Hilda H. Hatzell, Christy A. Crandall, Michael Turtora, John R. Pittman, and Edward T. Oaksford. U. S. Geological Survey Circular 1151.