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Benefit–Cost Analyses Guidebook for Airport Stormwater (2019)

Chapter: Chapter 7 - Using the BCA

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Page 64
Suggested Citation:"Chapter 7 - Using the BCA." 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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Page 65
Suggested Citation:"Chapter 7 - Using the BCA." 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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Page 66
Suggested Citation:"Chapter 7 - Using the BCA." 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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Page 67
Suggested Citation:"Chapter 7 - Using the BCA." 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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Page 67
Page 68
Suggested Citation:"Chapter 7 - Using the BCA." 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.
×
Page 68
Page 69
Suggested Citation:"Chapter 7 - Using the BCA." 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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Page 70
Suggested Citation:"Chapter 7 - Using the BCA." 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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Page 71
Suggested Citation:"Chapter 7 - Using the BCA." 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 7 - Using the BCA." 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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Page 72

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64 The primary purpose of a BCA is to assist in making an informed project selection. However, a BCA has value beyond that primary function. There are a variety of ways an airport can use a BCA to promote initiatives, pursue fund- ing, and engage with the community. Because BCA development involves an investment of time and resources to collect data and calculate results, the more the airport can put a BCA to work, and the more useful the process is. This chapter walks airports through the ways in which they can use a BCA to make the business case for a given project and to respond to questions about and criticisms of a project. 7.1 Winning Over the Stakeholders At the start of the BCA process, the airport identified stakeholders that could be integral to the final approval or acceptance of its selected stormwater project. Of primary importance is the ability of the BCA team to gain support from top decision makers. The team should consider what type of information the decision makers will best respond to. They may prefer simple, to-the-point tables or charts that help them understand the results of the analysis, especially as they pertain to their top priorities (e.g., financial cost to the airport, effect on community relations, and effect on safety). Other stakeholders that might have significant influence over the project may include permitting or regulatory agencies such as the FAA. Other types of stakeholders, while not responsible for the final approval of a project, may play a role in the airport’s ability to gain support and approval of the project. Ideally, the airport has already identified these stakeholders and addressed their concerns to the extent possible in the development of the BCA. The airport staff should call on any stakeholders that had been involved in the BCA to help the airport promote and sell the final decision. 7.2 Put the BCA to Work Any infrastructure or capital improvement at an airport could face critical review or protest from within and outside the airport community. However, a BCA and the underlying data can be strategically used to gain project approval. Following are common questions an airport may receive as it promotes or defends a project. 7.2.1 “How Do You Know That This Is the Best Choice for the Project?” A BCA provides a justification for the ultimate project choice. It demonstrates that a wide range of benefits and costs were systematically considered for more than one alternative and that C H A P T E R 7 Using the BCA

Using the BCA 65 the selected project optimized those considerations. It provides the substantiating data to back up the process and takes into consideration the life-cycle benefits and costs rather than simply the up-front costs. This can prove useful when facing stakeholders who have conflicting interests regarding the project; the BCA can show these groups that their interests were considered and incorporated into the decision-making process. 7.2.2 “Why Are You Pursuing This Option? There Are Others with Lower Initial Capital Costs.” One of the most common issues project alternatives face is higher up-front costs. How- ever, throughout the BCA development process, variables such as expected infrastructure life span, O&M requirements, and potential changes in regulatory requirements are taken into consideration. In addition to the up-front capital costs, these factors contribute to a more holistic life-cycle cost for each alternative considered and avoid the surprise of hidden costs in the future. This information and analysis can demonstrate to financial decision makers the merits of the selected projects in the long run and ultimately represent more cost-effective opportunities. 7.2.3 “How Are You Going to Pay for This?” Availability of funding can be critical to a project’s implementation and success. There are a number of funding options available, many of which can benefit from the details of a BCA. The Smaller the Pond, the Bigger the Results During the planning stages of a taxiway extension, Naples Municipal Airport discovered that the proposed extension would run through an existing storm­ water pond. After evaluating options to replace the lost storage, the airport decided to reduce the size of the current pond next to the taxiway and reconfigure a second pond downline of the system. Naples staff worked with the FAA and Florida DOT to develop a prototype pond that could improve water quality performance and also reduce wildlife hazards. By conducting a BCA, Naples was able to procure FAA funding for the project. Naples staff worked with the University of Florida to conduct a year­long water quality study of the pond and other stormwater infrastructure. Three inlets and one outlet of the pilot pond were monitored to determine flow rates, retention time following storms, and overall water quality. The monitoring showed that the pond cleaned water at twice the rate expected for a pond 10 times its size, and bird use decreased. While the enhanced water quality and reduced wildlife hazards were clear benefits of the new pond, there were also financial advantages to the new design. By using a smaller but more efficient pond, Naples was able to use the land that would have been devoted to stormwater storage for revenue­producing activities instead. The total cost of the pond, including the monitoring program, was approximately $1 million. With the cost of land in the area approximately $1 million per acre, the use of a smaller but more efficient stormwater infrastructure footprint was an economically promising management solution.

66 Benefit–Cost Analyses Guidebook for Airport Stormwater Internal funding is one option. When discussing a project with internal stakeholders, espe- cially those who control airport funding allocations, a BCA can demonstrate that careful con- sideration was given to a wide array of costs involved in project alternatives and informed the ultimate choice. It shows that the proposed project option was not simply the first one consid- ered but chosen based on its B/C, life-cycle costs, overall benefits, and more. Using the BCA to procure project funding is particularly important when the proposed option does not have the lowest up-front capital costs. In these cases, it may also be beneficial to demonstrate why the selected project would offer the airport a better return on its investment than alternative uses of the money. External sources are the other funding option, and a BCA can be integral in procuring it. States and local governments may fund projects. The FAA provides funding to airports through the AIP and requires a BCA for all capacity projects requesting $10 million or more in discretionary funds. However, the FAA can request a BCA for smaller funding amounts as well. (Additional information on the FAA’s BCA requirements can be found in Appendix B.) There may also be opportunities to obtain funding from environmental groups for projects relating to stormwater. By conducting a BCA that includes the TBL and specifically evaluates projects for their environ- mental effects, an airport may use the analysis to procure funding from these groups. Alternative Funding Sources While many projects may have access to internal or FAA funds, airports can also think more creatively about procuring funding, especially if the given project has environmental benefits. For example, Dallas/Fort Worth has an Environmental Grants Manager who examines funding opportunities for environmental projects at the airport. Additionally, airports may be able to more creatively garner support from external groups, even if not in the form of direct financing. For example, staff at Bangor International Airport procured a donated floating island water treatment system. The islands were made of recycled plastic that held plants with roots submerged in the water and simulated natural wetland filtration. Bangor conducted experiments with the system and found it worked well, although it ultimately did not implement it out of concern for wildlife habitat creation. 7.2.4 “Understanding the Nuances of a BCA Is Difficult. How Did You Evaluate Benefits and Costs That Do Not Have a Clear Monetary Value?” The response to this question depends in part on who asks it. If it is a member of the airport’s financial team or someone who has experience with economic analysis, it may be beneficial to walk them through the BCA development process and specific data points and assumptions. However, in some cases the questioner will not have a deep understanding of cost analysis. For this audience, a better means of conveying the same information is through clear graphics (e.g., tables, charts, and graphs). Because data have already been collected for the development of the BCA, creating infographics requires little cost and time but can have a significant impact on stakeholders and their understanding. Graphical representations of data can include cost information as well as information on BCA components that are harder to quantify. By showing the degree of benefit for a given criterion in each project alterna- tive, airports can convey the relative benefits in more tangible ways. Airport staff can also

Using the BCA 67 communicate results of the sensitivity analysis to demonstrate the robustness of the results (i.e., changes in assumptions do not dramatically change the outcome of the analysis). Use of high–medium–low spectrums and ratings, color-coded tables, or simple infographics can aid airports in presenting this information. 7.2.5 “Why Is This Option Exceeding the Regulatory Requirements? Why Should the Airport Go Above and Beyond?” While an airport must meet federal, state, and local regulations, the degree to which it sur- passes those standards is more fluid. Some airports may consider exceeding regulatory require- ments to enhance environmental performance, such as decreasing effluent into local water bodies or capturing and reusing water on-site. Other airports may consider the regulatory environment over the life span of the infrastructure and make BCA estimates accordingly. Predicting future regulatory changes is not possible, but considering the likelihood and degree of potential changes can help an airport look more holistically at total costs. A BCA can help capture this uncertainty. It allows an airport to evaluate whether investments in more conserva- tive options now may ultimately save money on costly retrofits in the future should regulatory requirements change. Airports can use BCAs as well as recent or previous changes in regulations and their effects on costs to counter skepticism by showing that they may mitigate or altogether avoid the future cost of regulatory compliance. Exceeding Expectations A number of airports have taken measures to surpass regulatory requirements for stormwater management. In some cases, the airports have taken the initiative as a means of improving local water systems and their reputation in the community. San Diego International Airport developed a water stewardship plan with the intent of controlling discharges more effectively and eliminating unnecessary discharges since its effluent flows into San Diego Bay. The airport’s aim was to get ahead of, and go beyond, what was required by regulations. Naples implemented stormwater BMPs not only to meet requirements, but to be a good neighbor by reducing pollution to Naples Bay. Minneapolis–Saint Paul International Airport has a GSI initiative that aims to produce tangible, achievable goals for GSI at the airport. The airport staff wants to be able to clearly present the benefits of GSI in order to get buy­in and funding to pursue such projects. It is already in compliance with permits but wants to go above and beyond those requirements for good environmental stewardship. Other airports may work with local governments to find mutual benefit in exceeding requirements. In a citywide initiative to improve stormwater runoff, the City of Los Angeles identified Los Angeles International Airport as a good candidate because the airport captures runoff from the city as well as the airport itself. For the partnership to work, the airport had to identify direct benefits in order to justify use of airport funds. Los Angeles International Airport is subject to an LID ordinance by the city, and the two entities reached an agreement when the airport agreed to purchase land for the construction of two stormwater management projects in exchange for LID credits. These credits allow the airport to construct a certain number of new projects without LID features in the future, which will reduce the costs of those projects.

68 Benefit–Cost Analyses Guidebook for Airport Stormwater 7.2.6 “How Does This Project Option Benefit the Airport’s Overall Sustainability Initiatives?” A BCA—especially one that includes the TBL—can encompass a wider array of factors than an analysis of up-front capital costs alone. The approach synthesizes consideration of environ- mental and sustainability factors with more traditional cost and feasibility considerations and allows benefits to be more accurately accounted for in the final results. By considering how vari- ous project options reduce runoff quantity, improve runoff quality, incorporate LID and GSI, create aesthetically pleasing spaces, and more, an airport can assign value to those options that contribute to its overall sustainability initiatives and goals. Achieving Sustainability Goals Many airports have developed sustainability initiatives or plans to guide future development and operational decisions. These plans can provide impetus and support for stormwater infrastructure projects. For example, San Diego has an internal water stewardship plan that sets forth sustainability goals. Dallas/Fort Worth also incorporates sustainability considerations into the design phases of its projects, along with costs, feasibility, performance, and other factors. These efforts have won the airport a number of environmental awards and accolades. Newark uses achievement of LEED certification as a driver for a number of its projects, and in a recent terminal project, the airport conducted a BCA on each LEED credit, one of which was stormwater. These awards and achievements can bolster an airport’s public image and provide justification for sustainable projects. 7.2.7 “The Airport Just Pollutes the Water and Degrades the Environment. Why Should I Be On Board with Any Project It Does?” Public perception (or misperception) may be one of an airport’s largest sources of pushback on new project development. In many cases, local pollution may be attributed to an airport whether it was the source or not. By conducting BCAs that incorporate TBL criteria, airports can incorporate social and environmental parameters into its calculations and make informed deci- sions about projects and their benefit to the local community. By implementing sustainability initiatives and projects that support them, an airport can take steps to improve impacts on the nearby environment and community as well as work toward improving its public reputation. While taking TBL principles into account is an important part of the BCA development pro- cess, publicizing those considerations once the analysis is complete can also be effective. By pro- actively engaging with the community regarding upcoming projects, airports can build rapport and increase good will with their neighbors. Increasing transparency and educating the public on the steps being taken to mitigate harmful effects and promote beneficial ones can enhance relations with local, external stakeholders. This outreach may involve development of a mar- keting campaign that explains benefits associated with the new infrastructure, organization of public forums to hear and address concerns, or presentations at local schools. Use of data from the BCA—presented in simple, clear ways—can accomplish a great deal. If the public is more informed on how the airport takes environmental and social factors into consideration, the airport may face less backlash and skepticism when future projects are announced.

Using the BCA 69 Public Outreach and Engagement A number of airports have taken steps to involve and educate their local communities about their activities. Dayton International Airport includes information and short videos about its sustainability plan on its website, and staff have presented at Audubon Society and Lion’s Club meetings. Additionally, staff attend the Children’s Water Festival and present a model of the airport’s deicing fluid detention system to fourth and fifth graders. Naples Municipal Airport held open house sessions during planning stages for a stormwater project to provide the public with an opportunity to learn about the project and express any concerns. During the development of a BCA, an airport devotes time, energy, and financial resources to the analysis. While the primary goal of the exercise is to determine which project option is best, there are significant additional benefits that can be accrued. With relative speed and ease an airport can provide sound justification for project decision making, develop informational materials to convey results to a broad range of audiences, and use the BCA criteria to explain social and environmental considerations included in the analysis. 7.3 Using Bayside’s Analysis Once the analysis was complete, BAY’s team determined that the results must be communi- cated to the airport’s executive board to obtain its support for the project. To demonstrate the results succinctly and clearly, BAY presented the results of the scaled analysis and incorporated the B/C with a weight of 50%. The B/C ratings for each option were calculated by dividing the B/C for each option by the best possible B/C (achieved under Option 3). Table 30 illustrates the NPV, individual weighted scores for the financial and qualitative outcomes, and final score for each option. In addition to presenting the final score, the executive board was shown the importance of each element presented (B/C, pollutant removal, meeting sustainability goals, and education and out- reach). To communicate how each option performed on the TBL, BAY created a chart (Figure 11) that shows the NPV for the financial and social accounts as well as the total NPV for each option. BAY also developed a chart (Figure 12) to demonstrate the difference between benefits and costs for each stormwater project option. Scores Option NPV B/C Pollutant Removal Prior to Discharge Meeting Airport Sustainability Goals Education and Outreach Final Option 3 $6.74 50 18 11 8 87 Option 2 $4.63 43 12 11 5 71 Option 1 -$2.45 2 6 0 0 8 Table 30. Final scores for each option (dollars in millions).

70 Benefit–Cost Analyses Guidebook for Airport Stormwater -$4 -$2 $0 $2 $4 $6 $8 M ill io ns Option 1 Option 2 Option 3 The environmental account is not displayed because no costs or benefits were attributed to it. Financial Social Total Figure 11. NPV of Bayside Airport’s stormwater options. -$10 -$5 $0 $5 $10 $15 $20 Option 1 Option 2 Option 3 Millions Costs Benefits Figure 12. Costs versus benefits of Bayside’s stormwater project.

Using the BCA 71 In addition, BAY developed a graphic (Figure 13) to summarize the numerous benefits and costs that were incorporated in the analysis, specifying which values were incorporated into the monetary analysis and which were evaluated through nonmonetary analysis. This graphic was intended to communicate the depth of the analysis and to provide a platform for a question- and-answer session with the board about the considerations in the analysis. To demonstrate the robustness of the analysis, BAY also developed a chart showing how the results of the analysis change when assumptions are adjusted. Figure 14 shows the base- case scenario with no change in the basic assumptions, the outcomes under various changes in assumptions, and the worst-case scenario. As demonstrated in the figure, Option 3 has a favor- able outcome under all scenarios. Figure 13. Benefits and costs evaluated in the analysis. $. M $1. M $2. M $3. M $4. M $5. M $6. M $7. M $8. M $9. M No change in assumptions Increase costs by 20% Reduce costs by 20% Increase beach value to midpoint estimate Reduce permit expediting by 0.5 yrs Increase permit expediting by 0.5 yrs Worst case NPV = $6.74 million Figure 14. NPV of Option 3 under different assumptions.

72 Benefit–Cost Analyses Guidebook for Airport Stormwater Figure 15. Community benefits identified in BCA. Finally, BAY created an infographic to promote some of the community benefits of the selected stormwater project. BAY identified the outcomes of the project that would likely be well received by the community and created nonmonetary measures to represent how the project would benefit the community. This approach can help demonstrate the benefits using measures that are easily understood by the community, as opposed to monetary values, which may hold little meaning when out of context of the larger analysis. Figure 15 presents the community benefits identified in the BCA.

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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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