National Academies Press: OpenBook

Benefit–Cost Analyses Guidebook for Airport Stormwater (2019)

Chapter: Chapter 3 - Introduction to the Triple Bottom Line

« Previous: Chapter 2 - Plan the Analysis and Identify Data Needs
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Suggested Citation:"Chapter 3 - Introduction to the Triple Bottom Line." National Academies of Sciences, Engineering, and Medicine. 2019. Benefit–Cost Analyses Guidebook for Airport Stormwater. Washington, DC: The National Academies Press. doi: 10.17226/25617.
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Suggested Citation:"Chapter 3 - Introduction to the Triple Bottom Line." National Academies of Sciences, Engineering, and Medicine. 2019. Benefit–Cost Analyses Guidebook for Airport Stormwater. Washington, DC: The National Academies Press. doi: 10.17226/25617.
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Suggested Citation:"Chapter 3 - Introduction to the Triple Bottom Line." National Academies of Sciences, Engineering, and Medicine. 2019. Benefit–Cost Analyses Guidebook for Airport Stormwater. Washington, DC: The National Academies Press. doi: 10.17226/25617.
×
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Suggested Citation:"Chapter 3 - Introduction to the Triple Bottom Line." National Academies of Sciences, Engineering, and Medicine. 2019. Benefit–Cost Analyses Guidebook for Airport Stormwater. Washington, DC: The National Academies Press. doi: 10.17226/25617.
×
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Suggested Citation:"Chapter 3 - Introduction to the Triple Bottom Line." National Academies of Sciences, Engineering, and Medicine. 2019. Benefit–Cost Analyses Guidebook for Airport Stormwater. Washington, DC: The National Academies Press. doi: 10.17226/25617.
×
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Suggested Citation:"Chapter 3 - Introduction to the Triple Bottom Line." National Academies of Sciences, Engineering, and Medicine. 2019. Benefit–Cost Analyses Guidebook for Airport Stormwater. Washington, DC: The National Academies Press. doi: 10.17226/25617.
×
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17 The objective of a BCA is to help an airport identify the stormwater project that provides the best value for the airport and the community it serves. When airports develop stormwater infrastructure project options, they should ensure that the project and its associated benefits and costs meet the organization’s higher-level strategic goals and policies. The FHWA’s INVEST tool refers to the use of “mapping criteria” to find the benefit and cost elements that are most critical and relevant to a project’s goals (FHWA, n.d.). As described in the introduction, this may require that the airport go beyond a strict financial analysis (i.e., focusing on the rev- enue and expenses the project will generate for the airport) and evaluate the project’s effect on the environment and society. This broader focus on the TBL helps define what benefits and costs need to be measured and evaluated. Economic and social benefits and costs are often difficult to quantify and monetize because they are not bought and sold in a market. In some cases, the financial impacts can be hard to measure as well, and qualitative measures are used. Therefore, the analysis often is structured to include both qualitative and quantitative measures of potential financial, social, and environmental effects. 3.1 Applications of BCA Using TBL for Airports Analysis of stormwater management in airports is particularly well suited to a holistic analysis of the TBL because the decisions airports make regarding stormwater will inevitably affect surrounding communities and environments. A BCA that assesses the TBL can help airports: • Choose among infrastructure project alternatives that meet airport needs (e.g., drainage control needs, budget, timeframe, site-specific constraints) and also mitigate environmen- tal and regulatory concerns [e.g., FAA, National Environmental Policy Act (NEPA), Clean Water Act (CWA)]; • Describe project merits to both internal stakeholders (e.g., accounting, management) and external stakeholders (e.g., local officials, community or neighborhood groups); • Coordinate financial and technical staff during project implementation; • Modify a project to reduce costs or enhance benefits; • Identify project benefits that were not initially evident or quantifiable to the project team; • Demonstrate added value for additional or innovative projects, especially if the airport already has an effective stormwater program in place; and • Request FAA capital project funding and support applications for external funding other than the FAA. Airports should consider BCAs because of the benefits they provide as airports plan and advo- cate for their projects. In some cases, airports may be required to submit a BCA by the FAA for capacity projects, which are projects that increase an airport’s ability to accommodate more C H A P T E R 3 Introduction to the Triple Bottom Line

18 Benefit–Cost Analyses Guidebook for Airport Stormwater passengers, cargo, and operations. The FAA requires a BCA for capacity projects that would request more than $10 million from Airport Improve- ment Program (AIP) discretionary funds. Additionally, the FAA main- tains the right to require a BCA for any project funded by the AIP. The FAA reserves the right to reject a BCA if it is not deemed reasonable (e.g., overstated benefits, lack of quantification of environmental or other costs). An overview of the 11-step BCA process for airport proj- ects is outlined in the FAA Airport Benefit–Cost Analysis Guidance (FAA, 1999a). This guidance is summarized in Appendix B. The approach for conducting a BCA, including the types of informa- tion, the level of detail, and a method for handling benefits and costs that are difficult to monetize or quantify, will depend on airport needs, project type, available data, and other considerations. Some issues to consider are discussed in Figure 6. 3.2 Financial Benefits and Costs Financial benefits and costs are those borne directly by the airport. To accurately measure the potential financial effects of the project, the airport must include the total benefits and costs associated with the project. Financial benefits and costs relate to capital and O&M costs, climate resilience, and regulations. 3.2.1 Capital, O&M, and Financing On the cost side of the equation, the analysis should include the total life-cycle cost of the project. The total project life-cycle cost has implications for current and future budgets. Airport Examples from Interviews • One small hub finds that a BCA is helpful for communicating with stakeholders. • Another small hub expressed interest in being able to use a BCA to make a business case for alternative or innovative stormwater projects. • A large-hub airport noted that money spent on one project often takes funds away from another project and that it can be difficult to get support for a project that stakeholders have not requested; a BCA may help the staff quantify and communicate the full range of benefits of a proposed project and why it would be a better investment than the alternatives. Figure 6. Points to consider for determining BCA approach.

Introduction to the Triple Bottom Line 19 Although initial capital costs are typically considered in project design, it is also important to consider ongoing O&M, decommissioning, and replacement expenses. An accounting of costs across the full life cycle of a project provides a more holistic view and a clearer comparison of design alternatives. Capital costs can vary depending on the scope and nature of work, and may include permitting, engineering, construction, procurement, and project oversight. (See Chapter 5 for factors affecting these various costs in an airport setting.) There may be financing costs for certain projects, and these can add staff, legal, and interest costs. The cost of capital can vary depending on the source of funds (e.g., bond proceeds, com- mercial paper) and should be considered as a cost input in the analysis. There may also be increased costs or efficiency losses due to infrastructure being inoperable or temporarily shut down (e.g., a flooded runway). Additionally, airports may need to evaluate risks and potential complications (e.g., the possibility of costly, unexpected repairs; permitting or project delays; and inadequate engineering for future conditions or impending regulations). 3.2.2 Climate Resilience For stormwater infrastructure in certain parts of the country, future climatic conditions are anticipated to include increased variability and intensity of precipitation as well as more fre- quent flood events. These changes will lead to increased stress on stormwater systems. If an airport pursues GSI, that can help take pressure off existing traditional stormwater infrastruc- ture and reduce costs associated with replacing or increasing capacity. Benefits include reduced operational, real estate, and leasing costs; reduced flight/passenger delays; tenant income gains; reduced loss of social productivity; and the expansion of the aviation community. 3.2.3 Regulations While traditional stormwater projects are not a source of revenue for airports, they can help reduce costs in other areas. [See ACRP Research Report 193: Strategies for Reducing Local Storm- water Utility Fees for Airports (the Cadmus Group et al., 2018).] For example, BMPs can ensure airport compliance with stormwater regulations and NPDES permit requirements, reducing the potential liability of fines and penalties. They also can help airports meet local sustainability and LID goals. By reducing effluent flow rates, projects may help an airport lower its stormwater utility charges. Green or innovative projects can generate other financial benefits for an airport as well. For example, an underground storage tank may free up land for other uses when compared to traditional stormwater management practices like dry detention basins and culverts. The freed-up land could be used to generate revenue for the airport. 3.3 Social Benefits and Costs Social benefits and costs principally relate to effects on airport staff, airline tenants, and passengers. They also relate to the vendor commu- nity, particularly the contractors and material providers. Social benefits and costs may include safety, air and water quality, regional economic development, and aesthetics and culture. In some cases, it is possible to assign dollar values to social benefits and costs. This is possible when there are market values (or close prox- ies) for the benefits and costs. For example, estimates of hourly wages can be used to assign values to jobs. In other cases, nonmonetary mea- sures of the values may be used. More qualitative measures are often used. For example, the analysis may note whether the project has a strong positive or negative aesthetic effect. Examples of Metrics of Social Impacts • Passenger safety • Number of events of standing water in a drainage area by stormwater facility type • Aircraft ground support crew safety and well-being • Percentage of total dollars spent on regional material vendors • Percentage of outside public spaces in vegetation • Number and percentage of swales with design treatment • Number and percentage of swales with interpretive signage

20 Benefit–Cost Analyses Guidebook for Airport Stormwater Safety Safety is a primary driver of all airport infrastructure, both for current operations and for managing issues that may arise in the future. Air and Water Quality Social and environmental attributes of stormwater projects can also affect the local and regional watersheds and communities. Regional Economic Development Often local employment and regional economic development attributes are included in the social category rather than financial category. These attributes contribute to the prosperity of the local community not only in direct hires [full-time equivalents (FTEs)] but also in the purchases that they make within the region. Aesthetics and Culture Social attributes often will include the aesthetic, educational, or cultural aspects of a project. There are certainly limitations to the level of contribution that an airport can achieve in a domain such as aesthetics or education, but airports should consider and perhaps elevate these aspects when stormwater infrastructure siting lends itself to providing visual relief from hardscape. 3.4 Environmental Benefits and Costs Environmental benefits and costs that would be included in a TBL analysis are principally related to infrastructure performance, green- house gas (GHG) emissions, on-site conditions conducive to natural systems without endangering wildlife or human safety, and active par- ticipation in reducing material use and waste while maximizing end-of- life reusability and recyclability. As with social impacts, monetary values of environmental benefits and costs can be developed in some cases. For example, prices from carbon markets can be used to value reduced carbon emissions. Qualitative assess- ments of environmental impacts may be needed when monetary and quantitative measures are not feasible. Additional resources beyond frameworks and assessment tools can assist in choosing environmental metrics and attributes. These include Case Studies Analyzing the Economic Benefits of Low Impact Develop- ment and Green Infrastructure Programs (U.S. EPA, 2013), Green Values National Stormwater Management Calculator [Center for Neighbor- hood Technology (CNT), 2009], and the Port of Portland’s Stormwater Design Standards Manual (Gresham, Smith and Partners et al., 2014). 3.4.1 Site-Based Performance and Habitat Ideally, stormwater infrastructure can mimic the natural processes of peak-volume reduction, pollutant removal, and groundwater recharge through filtration and infiltration. Native plant- ings and vegetation may positively contribute to site performance (e.g., carbon sequestration, air quality). However, they may also pose a threat to wildlife (and therefore humans), particularly avian species, if the BMPs are not chosen and designed appropriately. Examples of Nonmonetary Metrics of Environmental Impacts • Whether filtration meets regulatory threshold for performance • Number or acreage of native plants that provide pollinator habitat (without attracting birds or wildlife) • Percentage of the filter mediums, sand, or soil that can be reused or blended with other materials to make a safe, usable soil product • Expected life of vegetation before replacement

Introduction to the Triple Bottom Line 21 3.4.2 GHG Emissions and Material Management GHG impacts associated with capital construction projects are predominantly embodied in the building materials rather than in the transportation of materials. Building materials from energy or GHG-intensive manufacturing (e.g., cement or steel) will have a greater GHG impact than those that use alternative (e.g., concrete with high fly ash content), natural, recyclable, or repurposed materials. Environmental and sustainability benefits may be realized from the use of nontraditional materials that still achieve project functionality and performance. 3.5 Bayside Airport and the TBL BAY’s team convened to refine the definition of outcomes as their potential effect on the TBL. Because outcomes can affect more than one account of the TBL, BAY had to be careful not to double count costs or benefits. To avoid double counting benefits and costs, BAY’s team evaluated the possible outcomes more carefully to determine how each would be represented in the analysis and under which account it would be included. In some cases, the proper account was self-evident. For example, achieving permit compliance has a direct effect on the airport’s finances because of noncompliance fines. While noncompliance would result in harm to the environment and the surrounding community, the effect of noncompliance was included under the financial account because the cost of pollution has been internalized by the airport (i.e., it must pay the cost of the environmental damage it creates). Other examples of outcomes requir- ing additional evaluation are: • Improve water quality in the bay (above permit compliance): This outcome captures water quality improvements above and beyond those defined in BAY’s NPDES permit. These improvements could be attributed to the environmental or the social accounts of the TBL. After careful thought, BAY’s team decided to attribute this benefit to the envi- ronmental account to represent improvements to the health of aquatic flora and fauna and industries that rely on clean water (e.g., fishing). This benefit would be considered separate from the recreational uses of the beach and bay, which will be accounted for under the social account. • Align with the city’s LID goals: The city encourages LID (in part) to improve water quality and to benefit the city and its inhabitants. Consequently, it would be reasonable to account for this under the environmental or social accounts. Given BAY’s recent complaints from the community, and to emphasize BAY’s commitment to the community’s goals and priorities, BAY’s team decided to account for this under the social account. • Improve resilience against effects of climate change: BAY’s team identified multiple ways in which the options could affect this outcome. To address drought resilience, water capture and reuse under Options 2 and 3 would reduce the airport’s reliance on potable water. To address rainstorms of greater intensity, Options 2 and 3 would improve the airport’s capac- ity to collect, treat, and store or discharge stormwater. In the case of a small rise in sea level, the airport’s low elevation could render it more susceptible to storm surges. All three project options would provide basic flood management. However, in the case of moderate to severe sea level rise, BAY would suffer unavoidable damage due to its proximity to the coast and its low elevation. BAY’s team decided to represent the benefit of reducing BAY’s reliance on potable water through the avoided cost of potable water purchases on the airport’s financial account under Options 2 and 3. Sea level rise would reduce the airport’s ability to conduct normal business at the airport, so BAY’s team decided to represent these effects under the financial account. In contrast, greater storm intensity would affect the quality of the bay and will be considered under the environmental account. Tables 4 and 5 summarize the results of BAY’s evaluation of the TBL and separate benefits and costs. BAY’s team decided to represent outcomes associated with the cost of expanding the

22 Benefit–Cost Analyses Guidebook for Airport Stormwater airport’s stormwater conveyance infrastructure as avoided costs on the benefits side to empha- size to stakeholders, to the extent possible, the benefits of green infrastructure (GI). BAY’s team also recognized that some costs and benefits occur under more than one option. If all options are expected to result in the outcome to an equal extent, then that outcome can be excluded from the analysis because it will not affect the difference in NPV among options. Due to limited resources, BAY’s team decided to include these outcomes only if they did not require extensive research to estimate quantitatively. Outcome Financial Social Environmental Incurs up-front costs for planning, permitting, and construction Incurs long-term O&M costs Incurs end-of-life decommissioning costs Incurs cost of education campaign Table 4. Categorized costs (financial, social, environmental) by outcome. Outcome Financial Social Environmental Achieves permit compliance and avoids fines Avoids standing water 48 hours following rain Improves water quality in bay (above permit compliance) Meets airport sustainability goals Supports city’s focus on use of LID Frees up land surface for other use Avoids cost of expanding stormwater conveyance infrastructure Expedites permit process resulting from good will Improves community relations Reduces costs associated with annual stormwater monitoring program Improves conditions on the beach and bay for recreation Reduces costs associated with beach erosion through peak-flow attenuation Improves aesthetic of airport grounds Reduces need for potable water Improves ability to handle intense storms Reduces vulnerability to sea level rise Improves education about water sustainability issues Advances permitting procedures for green infrastructure Uses native vegetation Table 5. Categorized benefits (financial, social, environmental) by outcome.

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Many airports undertake stormwater projects to accommodate facility expansion, address obsolescence, and respond to evolving regulatory requirements. Often, stormwater infrastructure is installed or upgraded on a project-by-project and piecemeal basis, resulting in mismatches of sizes, material types, ages, and conditions.

When airports are considering expanding or improving their stormwater facilities, the immediate need for stormwater infrastructure modification may not be clear, and a benefit–cost analysis (BCA) is needed.

The TRB Airport Cooperative Research Program's ACRP Research Report 208: Benefit–Cost Analyses Guidebook for Airport Stormwater provides guidance on using BCAs to identify, evaluate, and select airport stormwater management projects. The guidance focuses on a triple bottom line approach that considers an airport’s finances and environmental and societal impacts. The guidance will be particularly helpful for small airports that may not have BCA expertise or experience with innovative stormwater projects.

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