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Managing Wastewater in Coastal Urban Areas E Policy Options and Tools for Controlling Coastal Environmental Water Quality THE INSTITUTIONAL SETTING Institutionalized Fragmentation Three types of fragmentation exist within the institutional setting for wastewater treatment in coastal areas: Hierarchical—Important responsibilities for coastal water quality reside at every level of government—federal, state, regional, local, and tribal. At each level there may be multiple entities, each with important functions. Geographic—Bays, sounds, estuaries, and other near-coastal water bodies and their tributary watersheds invariably encompass multiple local and regional jurisdictions. Frequently these jurisdictions have overlapping areas of responsibility. For example, a regional sewage treatment system may have to interact with numerous other local jurisdictions with respect to both sewage and stormwater management. Functional—Perhaps the greatest challenge to achieving effective water-quality management, as well as accomplishing other environmental goals, is the increasing compartmentalization of functions. Water quality considerations themselves are fragmented. Sewage treatment, stormwater management, nonpoint source control, and point source regulatory programs are often conducted in virtual isolation from one another, despite the fact that these sources are in fact interrelated, interacting
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Managing Wastewater in Coastal Urban Areas both in the watersheds and in the marine environment. In most regions, fragmentation of water quality responsibilities is exacerbated by significant gaps in coverage: nonpoint source control and toxicant elimination are two relatively neglected areas. Regional land use, growth management, and natural resource planning are usually undertaken in isolation from wastewater planning and discharge permitting programs. In addition, these planning activities are often divorced from implementation activities. With the continuing rapid pace of population growth in many coastal areas, land-use and transportation decisions actually have as much to do with future water quality as the issues usually considered within the scope of water quality programs. Water quality is generally evaluated and addressed as if air pollution, solid and hazardous waste, and land-use and water-use decisions were unrelated issues. The converse is also true. This compartmentalization of environmental problems obscures the important ways in which these issues affect each other and hinders effective solutions, especially pollution prevention strategies. Funding for water quality and other environmental programs is a patchwork at the federal, state, and local levels. The way money is collected, earmarked, and spent on water quality improvements tends to reinforce fragmentation and the resulting inability to consider and rank priorities on any broad basis. Jurisdictional Complexity A typical coastal area includes hundreds of jurisdictions, agencies, and other public bodies on its list of important water-quality actors. Numerous agencies and jurisdictions may exist within a single tributary watershed. Each agency may have several separate bureaucracies with relevant programs, requirements, and responsibilities. A pertinent example is the Puget Sound region of Washington State, where 454 public entities exercise jurisdiction over water quality and related ecosystem management including ''6 federal agencies, 5 state agencies, 12 county governments, 14 tribal governments, 100 cities, 40 port districts, 110 water districts, 42 sewer districts, 25 diking districts, 50 drainage districts, 15 flood control districts, 12 soil and water conservation districts, 14 parks and recreation districts, and 9 public utility districts" (PSWQA 1984). At the federal level, the Environmental Protection Agency (EPA), the National Oceanic and Atmospheric Administration, the U.S. Army Corps of Engineers, the Fish and Wildlife Service, and the Department of Transportation are important actors in any coastal area. In some parts of the country, the U.S. Forest Service, the National Park Service, and others have significant water-quality related programs.
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Managing Wastewater in Coastal Urban Areas At the state level, separate agencies often are responsible for natural resource management, environmental regulation, community development, land use, and transportation. Local jurisdictions in most states cover very limited geographic areas yet retain major responsibilities for planning, land use, wastewater treatment, stormwater management, water supply, and solid waste. Some states have sub-state regional agencies for some of those responsibilities; all states have a plethora of special purpose districts for sewage treatment, water supply, flood control ports, soil conservation, and other purposes. In some states, tribal governments have direct environmental regulatory programs, sewage treatment responsibilities, and significant jurisdiction over natural resources, including marine fisheries. Toward Integration of Environmental Decision Making The foregoing is not intended to represent the details of any specific place, but rather to present the overall institutional challenge: how can environmental decisions in coastal areas, including specific decisions about wastewater management, be made in a large enough context with adequate mechanisms to set and implement priorities? Many past debates over specific wastewater treatment decisions have been couched in terms of priorities but have taken place in institutional situations where implementation of alternate strategies would be very unlikely, even if a particular project or proposal were rejected on the basis that some other project or proposal was more urgent. For example, sewage treatment jurisdictions resisting upgrading to secondary treatment have usually argued that the same amount of money could be more effectively invested in stormwater management or other nonpoint source reduction, even though an equivalent amount of money could not be made available for these needs. There are signs of progress toward integration of decision-making in coastal areas: Estuary protection strategies—In some major estuaries, comprehensive plans are being pursued to protect water quality and marine resources, including the sometimes huge tributary watersheds where most of an estuary's problems originate. Such efforts typically demand a specific governmental mechanism to cut through the bureaucratic turf, to coordinate multiple agencies, and to oversee plan implementation. Regional water resource agencies—Some states have created regional water-resource management entities to have a big picture perspective on water-related decisions and priorities. Such agencies are becoming major actors in issues regarding wastewater discharges in coastal areas. Growth management/land-use strategies—Some states are undertaking growth management plans that attempt to integrate land use, natural re-
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Managing Wastewater in Coastal Urban Areas source, transportation, and—to some extent—pollution prevention strategies. These strategies can be an important way to link land use and water pollution issues. Establishing real links among the several dimensions of water quality management, specifically, and resource protection, generally, is an extremely difficult matter, requiring flexibility in approaches to suit the political and institutional realities of each state or region. The integrated state-policy framework being developed in states such as Florida, Maine, Vermont, Georgia, and potentially Washington represents the most comprehensive approach. The Puget Sound estuary management plan is an example of a comprehensive attempt to protect a major water body and its tributaries through the coordinated actions of hundreds of entities at the local, tribal, state, regional, and federal level. Less comprehensive strategies are also possible and can bring about major improvements. Planning in isolation at all levels—state, regional, and local—has been standard practice in the past, but this resource-destructive pattern is being called into question and actually changed by new integrated growth management systems and estuary management programs. These systems are appearing first in coastal states and thus have a special significance for this study. Maine and Georgia illustrate the potential for growth management systems to integrate water quality and quantity programs, not only with related resource management programs but also with transportation, land-use, and other relevant systems. In both states, there is a set of state policies (standards and criteria) that frame the requirement of consistency binding the whole system together. All state, regional and local governments are required to develop new plans and to implement programs that are consistent with the state policies and with each other. In Maine, state agencies are just completing the redrafting of their plans, which will be reviewed for consistency at the state level. Resource management goals and policies are part of the framework in each state, and the existing programs of state resource agencies are being redrawn to fit with each other, with a similar requirement at the regional and local levels. While these programs are too new to allow more than preliminary judgments about their effectiveness, they show great promise for strengthening the functional links between and among programs in water resources and related resource management, transportation, land-use and economic development programs. In California, a state growth policy is being fashioned that will set the framework for new regional strategies to better integrate land use and resource management programs. Governor Wilson signaled his commitment to closer coordination by stating, in connection with his proposal for a new umbrella organization called the California Environmental Protection Agency:
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Managing Wastewater in Coastal Urban Areas "To continue to divide responsibility for the environment between a dozen agencies dilutes accountability for all state environmental programs." The California Environmental Protection Agency, implemented in July 1991, includes the following agencies: Air Resources Board, Integrated Waste Management Board, State Water Quality Resources Control Board (includes the regional Water Quality Control Boards), Department of Toxic Substances Control, Department of Pesticide Regulation, and Office of Environmental Health Hazard Assessment. When the California EPA effort is coupled with the governor's announced support for a new regional governance framework that will link regional agencies under a policy and fiscal organization capable of assuring the linkage of land use, transportation, and resource management programs, a promising governance framework can be seen. The California experience underscores the importance of leadership, especially at the highest level. The foment of activity in California is a direct result of a new governor with a new agenda that includes, among other things, better management of water resources at the state and regional levels. This new framework unfortunately is being implemented during a time of severe fiscal crisis and only time will tell if the promised results can be achieved. MANAGEMENT TOOLS Command-and-Control The centerpiece of the nation's regulatory system for restoring and protecting the quality of its waters is the Clean Water Act (CWA) (33 U.S.C. 1251 et seq.).1 This legislation consists primarily of command-and-control measures. Some provisions of the act apply other management tools, however, such as financing/economic instruments (the Construction Grant Program) and limited land-use planning and growth management techniques. In order to simplify exposition, the entire act is discussed in this section. The modern version of the CWA was first enacted in 1972. There have been four major amendments to the statute since then—in 1977, 1981, 1984, and 1987. The bulk of this section is focused on the CWA; however, there are other important statutes briefly discussed in the concluding paragraphs, 1 References to United States Code are cited with the title followed by "U.S.C." and the section.
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Managing Wastewater in Coastal Urban Areas such as the Coastal Zone Management Act (16 U.S.C. 1415 et seq.) and the Marine Protection, Research, and Sanctuaries Act (33 U.S.C. 1401 et seq.). The purpose of this section is to provide the reader with a general overview of the existing command-and-control regulatory scheme, especially as it relates to the disposal of wastes in urban coastal areas. It will also identify areas where the statutory scheme seems to be inadequate to provide either sufficient protection of aquatic resources or the most effective application of control or management techniques. The Regulatory System The CWA regulatory system is complex. Yet, several broad strategies can be identified that form the basic implementation system. Each of these is described briefly below. Certain issues are discussed in greater depth as they particularly relate to the urban setting. Standards. The CWA seeks to apply standards to those activities that could affect water quality. Beginning in 1972, the focus of this standard system has been upon point source discharges; that is, the pipes releasing effluents of municipalities and manufacturing firms. Standards have been derived from two different perspectives: 1) treatment technology based standards, and 2) water-quality based standards. The technology based standard has generally been considered the minimum acceptable requirement, to be applied universally, while more rigorous water-quality based standards have been implemented where necessary for particular water bodies. For industry, the CWA requires that technology based requirements be applied. The first industry standards were those that were derived from the best practicable treatment technology. Subsequently, a more restrictive standard based on best available technology (BAT) was required. Permits. Standards are applied to point sources through the National Pollution Discharge Elimination System (NPDES). Under this system, each point source discharger must hold a NPDES permit. The permit contains the numerical standards as well as other requirements which the discharger must meet. Pursuant to the 1987 amendments of the CWA, permits are renewed every ten years, although specific provisions may be modified at any time. Approximately 384,000 dischargers are now covered by NPDES permits. Compliance. The CWA sets forth a comprehensive system for evaluating whether a permittee is in compliance with its permit requirements, as well as enforcement procedures where non-compliance is found. This system is based on a monitoring system that is carried out and reported upon
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Managing Wastewater in Coastal Urban Areas by the permitted dischargers as well as an independent system carried out by government regulators. Penalties include civil and administrative fines as well as possible criminal prosecution. The government may also seek injunctive relief. There are also substantial provisions for citizen initiated law suits. Federalism. The federal government has recognized that the states are an essential ingredient in successful implementation of the CWA. Thus, a state that is capable of achieving substantial portions, or all, of the objectives of the federal law may apply for, and receive, delegation of authority (known as primacy) to administer the provisions of the federal program. Where such delegation has occurred, there is a complex system of federal oversight to review the conduct of the state program. As of late 1992, 38 states and 1 territory held primacy over their NPDES programs. Of those, 27 states are authorized to run their own pretreatment programs. Funding. The federal government has provided financial subsidies to states and municipalities for the purpose of wastewater treatment plant construction and other activities related to water quality since the late 1950s. Starting in 1972, the CWA greatly increased federal funding for eligible projects. Until 1987, this assistance was in the form of federal grants ranging up to 75 percent of the cost of construction of wastewater treatment plants and other central facilities. Through 1991, the total federal expenditure for the Construction Grant Program has been about $50 billion. It is estimated that state and local construction expenditures during the same period total $26 billion. Since that date, the federal role has been to provide assistance to the states for the creation of revolving loan funds. Subsidies to this program have totaled $5 billion; this assistance has been extended by congressional action through 1993. Nonpoint Sources. Discharges from diffuse sources are subject to varying degrees of regulation under the CWA. Nonpoint source regulation has had only limited effectiveness; these sources of pollution now account for the majority of water quality problems in many of the nation's water bodies. A major category of nonpoint sources is the storm and combined sewer systems of urban centers. While combined sewer overflows (CSOs) have been subject to regulation since 1972, little progress was made until recently. The EPA had no national strategy for CSO control until September 1989 (Federal Register 1989). A second type of nonpoint source is the even more diffuse pollution that comes from general urban development and from agricultural activities. The 1987 amendments to the CWA began the process of regulating these sources of water pollution through the establishment of rudimentary provisions for assessment and state program develop-
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Managing Wastewater in Coastal Urban Areas ment. But in 1990, the EPA promulgated final rules requiring all cities and urban counties with populations greater than 100,000 persons to obtain a NPDES permit for their stormwater discharges. These rules require that pollutants in urban runoff be controlled to the "maximum extent practicable" (Federal Register 1990). Agricultural runoff, however, is currently unregulated but is addressed in the final coastal zone management guidance released by NOAA in early 1993. Industrial Pre-Treatment. Especially in urban areas, the pre-treatment of industrial wastes before discharge to municipal systems is an important component of the CWA's provisions. Although these provisions have existed since 1972, little was done to ensure their implementation until recently. This recent attention is largely due to growing concern about the effect that toxics from industrial sources has on sludges resulting from the municipal treatment process or on the quality of receiving waters. Nationally, about 12,000 individual firms are covered by federal pre-treatment requirements, while as many as 200,000 are not. Of this latter number, many are subject to local limits which are determined on the basis of the NPDES permit for the treatment facility. The process of implementing a strategy for protecting the nation's water pursuant to the foregoing statutory principles has been difficult. However, an assessment at the end of two decades of effort would have to conclude that substantial progress has been made. Many water bodies have been improved in their quality. The importance of the issues that need to be addressed in the future, such as nonpoint sources, is now more clearly understood. As this report discusses elsewhere, the economic and technical issues associated with their solution remain difficult in many cases. Nowhere is this more true than for the urban centers of the country that discharge to the nation's coastal waters. Standards The question of applicable standards for dischargers remains a crucial issue. One focal point for this debate resides with the discharges of municipal wastewater treatment facilities. The CWA requires that all such plants meet, at a minimum, standards equivalent to secondary treatment. The numerical standards for biochemical oxygen demand and total suspended solids, which EPA as adopted as defining secondary treatment, were derived from a study of the effluent characteristics of approximately 80 typical sewage treatment plants (STPs). Thus, the secondary treatment requirement was essentially a technology-derived standard as was required by the statutory language of the 1972 CWA. However, if water quality considerations for the water body to which the STP discharges require it, then even higher
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Managing Wastewater in Coastal Urban Areas levels of treatment (advanced wastewater treatment such as nutrient removal) might be imposed. With approximately 12,000 municipal plants having achieved secondary levels of treatment, the question now remains as to whether water quality requirements will require general application of advanced treatment. A second focal point of the standards debate has to do with the development of new standards in areas that Congress has determined to be of importance. These include toxics, bottom sediments, and protection of biologic resources. The system for development of these standards is not technology based. Rather, it is driven by the CWA statutory language to "restore and maintain the chemical, physical, and biological integrity of the nation's waters." The process of setting water-quality standards consists of two steps. First, criteria documents that set forth basic numerical and other characteristics are prepared by the EPA for a particular constituent. These criteria are then applied by the states to develop specific standards for particular bodies of water. To date, criteria have been established by the EPA for about 135 chemical pollutants. Unfortunately, this has not resulted in the wide-spread development of water quality standards. The states have been slow to undertake the standard-setting process. In addition, no criteria documents exist for many toxic or hazardous chemicals, and the criteria that do exist may not be applicable in marine environments or may inadequately assess impacts on living resources. Specific Urban Issues Waivers and Variances. There are a number of provisions for variances from the requirements of technology- or water-quality based standards contained in the CWA. These include: 1) economic variances for cases where modified requirements represent maximum use of technology within the economic capability of the owner/operator; 2) water quality variances from BAT limitations for ammonia, chlorine, color, iron, and total phenols; 3) marine discharge variances from secondary treatment requirements; 4) innovative technology variances from BAT/BCT (best conventional pollutant control technology) deadlines for toxic, conventional, or non-conventional pollutants; 5) fundamental difference variances from BAT/BCT/NPDES guidelines where a permittee can demonstrate the existence of a situation that is fundamentally different from factors considered in establishing effluent guidelines; and 6) cooling system variances for thermal discharges. For coastal urban areas, the marine discharge waiver provision first appeared in the 1977 amendments (section 301(h)). Although waiver applications were accepted for only a short time, this section remains enormously significant for coastal wastewater management. The EPA agreed to
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Managing Wastewater in Coastal Urban Areas grant waivers where the applicant could demonstrate that a discharge to marine waters with less than secondary treatment could meet a number of criteria including preservation of a "balanced and indigenous" population in the aquatic environment. Absent this showing, the municipal system was required to provide secondary treatment. While some 25 percent of all waiver requests were ultimately granted, the fact that several large systems such as Boston and San Diego have been unsuccessful in securing waivers continues to promote controversy. Complexity. Urban systems, even as traditionally understood, are not simply characterized by STPs treating domestic sewage. They also consist of large combined stormwater and wastewater collection systems—resulting in a series of combined sewer outfalls. Many firms with manufacturing process waste discharge their effluents directly to the municipal sewerage system. Finally, there are separate stormwater collection systems that discharge directly to water bodies. The response of the regulatory system to each of these problems has been varied. In the case of CSOs, the major issue has been that Congress has not provided funding for controlling the impact that these systems have on receiving waters. Even in the absence of such funding, the polluting impacts of CSOs are increasingly coming under regulatory control (e.g., in Boston, Chicago, and Washington, D.C.). And for stormwater systems, the 1987 CWA amendments provide a separate system of standards and permits that will require control of the quality of the effluent from these sources. New Issues Toxic substances and nonpoint sources of pollution remain of serious concern. Accordingly, provisions of the 1987 Amendments established new procedures for evaluating toxic effects in receiving water from both industrial and municipal discharges. In a similar way, concern over nonpoint source discharges resulted in new provisions of the CWA. In both cases, it is too early to know how these provisions will influence local control strategies. Nonetheless, it is clear that the constellation of environmental challenges facing urban governments has become much greater. The reach of the CWA is far greater and the dimensions of the problems are more severe. Assessment The complexity of the pollution sources affecting the marine environment, especially in urban areas, is extraordinary. Necessarily, the statutory scheme which has evolved over the past two decades reflects this complexity. The command-and-control system of the CWA has brought most dis-
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Managing Wastewater in Coastal Urban Areas crete sources under regulatory control, and this has resulted in a reduction of pollutants discharged to the marine environment. However, it is uncertain that remaining issues such as toxic contaminants and nonpoint sources can be effectively managed through this approach. It is also unclear whether the sheer numbers of sources that may need to be controlled, perhaps as many as one million, can be subjected to a regulatory system of this kind. The EPA has attempted to address this problem through a fundamental re-examination of its approach to pollution control. The report of its Scientific Advisory Board entitled Reducing Risks seeks to re-orient programs so that they "address the significant remaining human and ecological threats" (EPA 1990). The principal recommendations are that 1) the EPA should set priorities on the basis of comparative risks and 2) policies should seek to prevent pollution in the first instance rather than treat it. It remains to be seen whether the complexities of the CWA can be restructured to achieve these goals. Economic Instruments Economic instruments are management strategies that provide, for the purpose of environmental improvement, monetary incentives for voluntary, non-coerced actions. Economic instruments do not specify any particular action; they merely encourage certain desired behavior. The central argument for use of economic instruments is that they tend to minimize the cost of achieving any particular level of pollution abatement. This can be illustrated—in an ideal case—by comparison to command-and-control measures. Later sections discuss practical limitations on economic incentives and review their performance with respect to other criteria. If an effluent standard is applied uniformly to all dischargers of a certain contaminant, each must comply regardless of the cost of doing so. Some dischargers may be able to meet the standard at relatively low cost while others, especially those who have already implemented substantial abatement, may face high unit costs. This situation indicates that the same result could be achieved at lower total cost. Higher removal rates could be required from those who can do so at low cost and relatively less removal from high-cost dischargers. As low-cost dischargers increase treatment, the marginal cost of abatement (the incremental cost of removing another unit of pollutant) increases. Similarly, as high cost dischargers reduce treatment, their marginal cost falls. So long as some dischargers face marginal abatement costs that are lower than for others, total cost can be reduced by reallocating abatement requirements from high-cost to low-cost dischargers. Total abatement cost is minimized, for any selected environmental target, when each discharger experiences the same marginal cost of abatement.
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Managing Wastewater in Coastal Urban Areas example the value of marine ecosystems) and information applicable to virtually everyone (what to do with waste oil or paint thinner) require such methods. Water quality education in the schools—Excellent water quality and other environmental curricula exist for use in schools. They are most effective when adapted to specific local places and issues and teachers are trained in their use. Both of these needs require resources. Basic environmental literacy is an even more important curricula goal than any specific topic; water quality curricula tend to be good for this goal, given the over-arching nature of the question "what affects water quality and how can we protect the water"? Technical and scientific training in higher education—Integration rather than compartmentalization of technical/scientific education is crucial for the next generation of environmental professionals. Academia needs to address the companion (yet often competing) objectives of producing both big thinkers and competent specialists. Public involvement linked to education—Hands-on projects for volunteers, such as stormdrain stenciling projects, beach clean-ups, restoring streams, and replanting anadromous fish, can educate while simultaneously accomplishing a direct environmental purpose. Such projects are very low cost, and will flourish with some governmental or private seed money. Pollution prevention programs—Agencies and business associations are increasingly emphasizing "pollution prevention pays" and the technical information to encourage source reduction. Because most regulatory programs focus on the end of the pipe, prevention has largely stayed in the province of education, although, ideally, regulatory pressure and education would work together to achieve prevention. Examples of Education Strategies There are examples of efforts to address water quality with effective education strategies. Notable is the Public Involvement and Education (PIE) Fund of the Puget Sound Water Quality Authority in Washington State. Over a period of six years (the program is ongoing), $3 million in small grants have been applied to diverse model education projects sponsored by non-profit organizations, trade associations, local governments, tribes, schools, and others. Projects have ranged from creative (story-telling and song projects) to mundane (manuals and workshops) and have reached a large percentage of the residents of the Puget Sound Basin in some way. The program has pioneered the concept of peer-to-peer education as an alternative to standard agency or academic training or public information programs. An example of this strategy: The Associated General Contractors of Washington were funded to work with their own members to develop
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Managing Wastewater in Coastal Urban Areas a practical handbook and workplace poster addressing the everyday water-quality problems confronted on the front lines of their business (how to handle fuels, solvents, and other common toxicants; who to call with a question about hazardous waste; tips on erosion control during construction; etc.). The unique and effective aspect of this project was not the content but the fact that it was presented to the members by a credible source (their own trade association) in a language and format specifically designed around how they work and who makes what decisions on the job. Similar peer-to-peer projects have been carried out with the automotive repair industry, the dairy industry, horse owners, and others. The program has also demonstrated the value of linking hands-on activities, such as cleaning up a stream or beach or taking water quality samples, with broader educational objectives, such as "how can I as a citizen take care of our water resources?" or "what are all the threats to this watershed, and what needs to be done"? Above all, the PIE Fund program has shown that a small amount of money directed at existing organizations with already established audiences, networks, and programs can have a magnified effect. The largest PIE grants have been under $50,000, and most have been far less. In academic settings, there are also signs of progress. The EPA has funded programs at the University of New Orleans and Tufts University. The latter is building environmental material and awareness into curricula throughout the university as an alternative to creating a separate specialty in environmental studies. The former incorporates many programs of the PIE-Washington State program into a comprehensive urban wastes control program. Several states, including Washington, have now added environmental education to the basic K-12 curricular requirements. Challenges and Issues Accomplishing improved water quality through education—while generally considered non-controversial—in fact is a strategy hindered by significant challenges. For example: Where is the line between information or education and propaganda? To motivate behavior and attitude changes, persuasion techniques and value-laden content are essential ingredients. In addition, general audiences need simplified information, which of course can be challenged by experts. Where will the funding come from for significantly increased environmental/water quality education programs? While usually afforded lip service as important, environmental education programs are rarely afforded high budgetary priority. Can higher education science and engineering programs effectively
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Managing Wastewater in Coastal Urban Areas train both specialists and interdisciplinary scientists and managers? Traditional science and engineering education rewards or even demands intense specialization, but solving environmental problems also demands scientists and engineers who can cross disciplines with facility and competence. Evaluating Education as a Tool Effectiveness. Generally speaking, education is more effective in the long term than in the short term, especially education aimed at building an environmental ethic in our society. However, the reverse may be true for specific, targeted messages; there may be only a short-term positive effect in behaviors and attitudes. For example, people may refrain from disposing of oil or other hazardous chemicals into stormdrains during and shortly after an intensive education campaign but may not sustain that behavior over time. Similarly, technical assistance and training can have very immediate effect but must be an ongoing process to address new employees and new problems. Many of the positive effects of education are hard to quantify and evaluate, and thus their effectiveness may be questionable. Efficiency. Education is not free, but it is inexpensive compared with capital investments. As noted above, effectiveness is sometimes hard to measure, and most water-quality education efforts are not rigorously evaluated with respect to actual changes in behavior or improvements in water quality (although participants in education programs are routinely asked to provide their own evaluation), making assertions about cost-benefit relationships impossible. Fairness. Water quality education could be judged unfair if funding were distributed inequitably or if education were perceived as a substitute for enforcing pollution control laws. The content of water quality education is sometimes criticized for singling out certain polluters or for implying that the individual bears all the responsibility for pollution (as opposed to industry or government). But overall, education is usually applauded as an important, and presumably fair, strategy. Redistribution of Income. This could become an issue with respect to how water-quality education programs are funded, although the amounts of money (and thus the significance of the issue) are not likely to make this a major concern. Applicability. Education is uniquely suited to address nonpoint pollution, stormwater contamination, and pollution prevention and to achieve an overall environmental consciousness linking air, water, land, and other en-
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Managing Wastewater in Coastal Urban Areas vironmental issues. Education is an important adjunct to regulatory and planning strategies. Feasibility. Education is one of the most feasible and least controversial strategies for addressing water quality. However, it is often seen as a frill when budgets are prepared. Education efforts are also often assigned to staff who are not trained or qualified to perform that kind of job. For example, the NPDES permit writer/inspector may be expected to provide technical assistance to the discharger, or the environmental engineer may be expected to train the citizen watershed action team. In schools, the major feasibility issue is the ability to provide teachers the time to learn new curricula. Risk. Education is a low-risk strategy. The amounts of money are generally not large, and the programs can be modified along the way. Incentives for Technology Improvement. Technology transfer and pollution prevention programs may be very effective ways of encouraging technology improvement, especially if the education can point to economic and reliability advantages of the improvement. Feedback/Adaptive Management/Ease of Evaluation. Education programs are often evaluated by the participants and are usually easy to adapt. Exceptions to this are school curricula that become out of date but continue to be used and the difficulty of quantifying the actual effect of education on water quality. Prevention Versus Abatement. Education is an essential part of pollution prevention efforts and is an adjunct to abatement strategies. Integrated Versus Single Medium Strategies. Education can apply to single medium strategies but is particularly well-suited to integrating environmental information. For example, a good technical assistance program targeted to a particular industry will take a top-to-bottom approach to the facility, looking at all of the environmental issues and opportunities for pollution prevention. Single Versus Cumulative Impacts. Education can occur on many levels and is especially important for problems like nonpoint pollution or pouring toxicants down the drain, where cumulative impacts are the issue. Conclusion Education is an essential component of water-quality protection strategies. There are excellent pilot and model education projects which should
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Managing Wastewater in Coastal Urban Areas be emulated. Academic programs, advocacy, and education directed toward changing attitudes and behavior are all different and valid components of water quality/environmental education. Its priority has traditionally been very low, however. To deal effectively with nonpoint pollution, stormwater management, toxicants in the municipal treatment system, and pollution prevention strategies, it will be crucial to increase education and public involvement expenditures and other resource commitments. Basic environmental literacy and improved specialized education are also important aspects of an education strategy. FINANCING MECHANISMS Introduction The costs of wastewater management expenditures are borne, in the first instance, by government agencies and private enterprises. In a typical year, the private sector pays directly about two-thirds of the total cost of wastewater management. (In 1988, the business community spent $21.6 billion for water pollution abatement and control, compared with a total expenditure—including regulation, monitoring, and research—of $33.2 billion [Bureau of the Census 19911). Private sector outlays are financed by increases in product prices and reduced corporate profits. Taken in the aggregate, these changes are small: in 1988, the private sector expenditures for water pollution control were equivalent to less than one percent of total personal consumption expenditures, or about three percent of business profits (Bureau of the Census 1991). Nevertheless, even small changes in prices and profits can potentially influence rates of price inflation, industrial output, employment, and international competitiveness. Examination of these impacts is beyond the scope of this study. Of more immediate interest, due to its close relationship to the effectiveness of management strategies, is the financing of government expenditures for wastewater management. Most financing decisions are the responsibility of the individual operating agency, whether local or regional in scope. Typically, financing occurs in a decentralized manner, even when compared with other local government programs. Participation of state and federal government is ordinarily limited to the provision of grant and loan programs, which may or may not be available at a particular place and time. Tax and fiscal policies of local and state governments generally have little or no influence on the financing strategies adopted by wastewater agencies. In developing a financing strategy, wastewater management agencies may consider a number of objectives, including: revenue adequacy, minimum financing cost,
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Managing Wastewater in Coastal Urban Areas minimum total cost, acceptable cash flow profile, minimum financial risk, acceptable incidence of cost on benefitted population, flexibility with respect to future financing decisions, and public and political acceptability. At least five major sources of funds may be considered: general taxes, dedicated taxes, user fees and charges, intergovernmental transfers, and debt financing. Within each of these categories, there are numerous variants and alternatives. The following paragraphs discuss some of the more common financing instruments, contrasting their positive and negative aspects. Possible economic impacts of financing strategies are also reviewed. Financing Alternatives The number of unique financing methods available to wastewater management agencies is very large. Numerous variations of each general type of method are possible; a number of different financing methods can be combined, either in parallel or sequentially, to produce an overall financing strategy. The following paragraphs describe the basic types of methods, without discussing any of the possible variations. General Tax Revenue This category includes all revenues derived from non-dedicated taxes and received into a government's general fund. The taxes most often levied by local governments include real property taxes, sales taxes, local income taxes (sometimes consisting of revenue-sharing with a state income tax, called piggy-backing), and excise taxes levied on specific commodities or activities (since these taxes are often levied on consumption or sale of alcohol, tobacco, etc., they are called sin taxes). In addition, some local governments levy taxes on utilities, business franchises, business inventories, etc. Since these revenues are placed in the government's general fund, they are made available to wastewater management activities by the local legislative body through the normal process of appropriation. This is a straightforward and familiar process with few financing costs. However,
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Managing Wastewater in Coastal Urban Areas local taxes are often politically unpopular and difficult to increase. Wastewater management competes with other local programs for a share of an effectively fixed revenue source. Dedicated Taxes It is also possible to levy specific taxes for the purpose of financing wastewater management. The revenues from these taxes do not flow into the general fund but are placed in a trust fund; they can only be withdrawn pursuant to an appropriation to wastewater management activities. These dedicated taxes may be levied on activities thought to contribute to water pollution costs: e.g., on value of manufacturing industry shipments. Where taxes or effluent charges are levied on pollutant discharges, it is common to dedicate the resulting revenues to wastewater management purposes. The use of dedicated taxes has the advantage of insulating wastewater management from the tax and spending policy controversies surrounding general fund transactions. On the other hand, special legislation is usually needed to create dedicated taxes and their associated trust funds. Since the taxes are often narrowly focused, those who will be taxed may be expected to oppose their adoption. User Charges User charges differ from taxes in an important way. Taxes are levied on various kinds of property or activity and cannot be avoided short of disposing of the property or ceasing the activity. User charges are payments required in return for services provided—in this case, by the government. User charges are paid only by those who receive the service; anyone who elects not to receive it is not required to pay. Where possible, user charges are proportionate to the service provided. User charges are, therefore, avoidable. The most common wastewater application of this financing mechanism is the user charge levied on individual residences, businesses, and institutions for wastewater service. This charge applies only to those actually connected to the collection system and receiving services. In most cases, the charge is based on water use, an approximate measure of the quantity of wastewater services provided. Fees for permits or special services are also user charges. User charges are generally more acceptable to the public than comparable taxes, and they have advantageous economic characteristics (see below). From the wastewater agency's perspective, user charges involve identifiable financing costs (costs of billing, collecting, etc.) and constitute a
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Managing Wastewater in Coastal Urban Areas less stable source of revenue than taxes (user charge income fluctuates with changes in the use of the related services). Intergovernmental Transfers Intergovernmental transfers of funds, or subsidies, may be provided for general purposes, or they can be dedicated to specific activities. Revenue sharing programs are often general purpose in nature, where a state or federal government simply transfers some amount of money from one general fund to another. These funds are appropriated in the same way as other general funds, derived from local taxes. Some revenue transfers may be nonspecific but restricted to a class of purposes, such as federal block grants. Other transfers are made for a particular purpose, and the funds are restricted to that purpose. State and federal grants for wastewater treatment plant construction constitute intergovernmental transfers of this kind. Grants or fund transfers may also be made to support local or regional regulatory and monitoring programs. Transfers are attractive to local governments and wastewater agencies, since they involve no local sacrifice and are relatively free of financing cost. For these reasons, they are politically popular at the local level. However, just as they require no local legislative action, they are not subject to local control and may appear and disappear unpredictably, without regard to relative need. Debt Another option is the possibility of meeting wastewater management costs with borrowed funds. This has the effect of transferring the financing requirement from the present to the future. A local government or agency may borrow funds on a short-term basis, usually through commercial banks, or for the long term through the issuance of bonds. Long-term borrowings include mortgage bonds (secured by physical assets, not often used by governments), revenue bonds (secured by anticipated future revenue from user charges, fees, and taxes), or general obligation bonds (secured by the full faith and credit of the issuing government). Revenue bonds may be issued by most wastewater utilities organized on an enterprise basis, with some degree of financial autonomy, while general obligation bonds can only be issued by a general-purpose governmental entity (often subject to voter approval). The use of debt allows an agency to spread the financing of capital outlays over time, producing more uniform and manageable annual cash requirements. Financing costs may be significant, however. Issuing bonds
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Managing Wastewater in Coastal Urban Areas involves one-time underwriting, placement, insurance, and legal costs. Interest must be paid over the life of the bond at rates that may later diverge from the current opportunity cost of capital to the utility. Also, there are market-enforced limitations on the total amount of debt that a particular agency can carry; attempts to increase debt beyond this point will greatly increase the cost of borrowing. Financing costs are sometimes reduced by subsidies from other levels of government. For example, many states have recently created revolving loan funds with federal assistance. These revolving funds will make loans to local agencies for wastewater treatment plant construction at interest rates and overall financing costs that are less, in general, than those available in the market. The cost savings can be interpreted as an intergovernmental transfer, or subsidy. Economic Impacts The choice among financing methods depends upon the relative advantages and disadvantages of each in particular situations. Some of these characteristics, such as the suitability of the cash flow profile or the public and political acceptability of a given strategy, are difficult to generalize. Others derive from the inherent economic impacts of the financing method, as described below. Revenue Adequacy and Stability The primary objective of a financing method is that it produce the necessary funds. The requirement is so basic that it seems unnecessary to mention it. Yet it is not always clear that a particular method will, in fact, produce the necessary revenue or that it will do so reliably. Some revenue sources, for example, may increase or decrease in response to external factors. Dedicated taxes may vary with changes in the taxed activity; user charges fluctuate with changes in economic activity, population, or tariff level; intergovernmental transfers may be subject to reduction or discontinuance in times of fiscal stress. Where variations in the revenue flow are accompanied by changes in financing requirement, as is the case where revenue is derived from user charges and the service area population changes, the indicator of interest is the net revenue (total revenue less total costs). Instability in net revenue can require costly supplemental financing or precipitate a fiscal crisis. Other revenue sources may vary independent of revenue requirements. In any of these cases, the result is financial risk, which must be balanced against other factors in choosing a financing method.
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Managing Wastewater in Coastal Urban Areas Cost Incidence Each financing method results in a particular distribution of cost allocation among individuals and organizations and across time. General taxes allocate costs in accordance with the nature of the tax base (e.g., according to real property value). Increases in user charges allocate costs in accordance with water use; debt instruments allocate present costs to future time periods (the nature of the cost incidence in the future depends on the method used to finance the debt service payments). Intergovernmental transfers allocate most costs to residents of other political jurisdictions. Public and political acceptability of particular methods is influenced by the resulting cost incidence and the perceived fairness of that distribution. Property owners may regard general fund financing as unfair since costs fall on all property owners regardless of use of the wastewater system, and owners of high-value property may pay a relatively large share of the costs. Dedicated taxes, especially those levied on activities or commodities unrelated to wastewater production, may be regarded as unfair. Intergovernmental transfers may be seen as unfair by residents of non-benefiting jurisdictions. Incentives for Efficient Management Wastewater management is a service performed for those who generate wastewater as well as those who may benefit from improved quality of the receiving water body. Where the costs of wastewater management are allocated, via the choice of financing mechanisms, to activities and entities who neither contribute to or benefit from the service, there is little incentive for management agencies to improve the efficiency of operation. This is also true when the funds are raised through taxes, even though those who pay the tax may benefit. Their tax liability remains the same regardless of the presence or absence of the benefit. User charges have a very different characteristic. User charge revenue is the result of voluntary payments for wastewater management services: if the service is not provided, no payment is made; if the service is too expensive, less will be used; if less service is provided, less revenue will be obtained. User charges, alone among the revenue sources discussed, create an incentive for management agencies to provide the service in a cost-effective way. In many cases, the incentive may be weak, especially when compared with the more competitive private-sector industries, but it can promote some degree of efficiency in the operation of wastewater agencies.
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Managing Wastewater in Coastal Urban Areas Willingness to Pay for Wastewater Services To the extent that wastewater management provides valuable services to those who either generate waste or have an interest in the quality of receiving waters, those individuals must have a willingness to pay for these services. Willingness to pay is defined as the maximum amount that would be paid for the level of service received rather than forego it altogether (all or nothing). Those who pay user charges demonstrate, by doing so, that their willingness to pay is at least as great as the charge paid. In fact, it may be much greater: the user charge merely establishes the lower bound. Estimates of willingness to pay can be performed by various indirect methods, such as econometric demand analysis (for those who pay user charges) or contingent valuation studies (for those who benefit from improved water quality). Such studies are seldom done for wastewater systems but are potentially important. The results would indicate which groups receive benefits from improved wastewater management and what the approximate magnitude of those benefits may be. These results would also be useful in predicting public acceptance of new financing burdens, especially where large increases in financing requirements are expected. This information could be used to tailor financing strategies to the temporal and spatial distribution of anticipated benefits, thus minimizing the chances of placing unjustified burdens on any sector of the population. REFERENCES Bernstein, J.D. 1991. Alternative Approaches to Pollution Control and Waste Management: Regulatory and Economic Instruments, draft report. Washington, D.C.: UNDP/World Bank/UNCHS Urban Management and Environment Program. Boland, J.J. 1989. Environmental Control Through Economic Incentive: A Survey of Recent Experience. Presented at the Prince Bertil Symposium on Economic Instruments in Environmental Control, Stockholm School of Economics, Stockholm, Sweden, June 12-14. Bureau of the Census. 1991. Statistical Abstract of the United States, 1991. 111th Edition. Washington, D.C.: U.S. Bureau of the Census. EPA (U.S. Environmental Protection Agency). 1990. Reducing Risk: Setting Priorities and Strategies for Environmental Protection. SAB-EC-90-021. Washington, D.C.: U.S. Environmental Protection Agency, Science Advisory Board. EPA (U.S. Environmental Protection Agency). 1991. Economic Incentives: Options for Environmental Protection. Report of the U.S. Environmental Protection Agency Economic Incentives Task Force, March 1991. Ernst and Young. 1990. 1990 National Water and Wastewater Rate Survey, Ernst & Young's National Environmental Consulting Group. Federal Register. 1989. September 8. 54(173):37370-37373. Federal Register. 1990. November 16. 55(222):47990. OECD (Organization for Economic Co-Operation and Development). 1989. Economic Instruments for Environmental Protection. Paris, France: OECD. PSWQA (Puget Sound Water Quality Authority). 1984. Annual Report. Olympia, Washington: Puget Sound Water Quality Authority.
Representative terms from entire chapter: