EPA releases cost estimates for TMDL programs

Companies or organizations that have contributed to the pollution of the nation's waterways could end up paying $1 to $4.3 billion per year apiece to improve the water quality, EPA estimates in a recent TMDL cost study.

Aug. 6, 2001 — Companies or organizations that have contributed to the pollution of the nation's waterways could end up paying $1 to $4.3 billion per year apiece to improve the water quality, the Environmental Protection Agency estimates in a recent TMDL cost study.

The Environmental Protection Agency has released a series of draft documents on the total estimated cost of its Total Maximum Daily Load (TMDLs) program.

Following reports from the states in 1998, EPA determined that roughly 10 percent of assessed rivers, streams, lakes and estuaries do not match state-adopted water quality standards.

Over the past several years, there has been considerable debate over the best approach to restoring impaired waters and the costs of various approaches to this task.

In response to this debate, Congress directed the EPA to study the costs of implementing the Total Maximum Daily Load or TMDL program.

The 51-page report, released Friday, takes on the monstrous task of estimating the costs of setting up pollution control measures to develop and implement TMDLs and attempts to factor in variables in the numbers.

Key findings

Costs to pollutant sources to implement the TMDL program range from under $1 billion/year to $4.3 billion/year depending on efficiency of TMDLs

The cost of measures to implement TMDLs for impaired waters now identified by states is estimated to be between $900 million and $3.2 billion per year if the problem is approached through the implementation of TMDLs that seek the lowest cost alternatives among all sources of the impairments.

If the TMDL program was implemented based on an assessment of the reduction needed for the water body and an allocation that includes all sources of impairment, without strict attention to the most cost-effective allocations, costs would be expected to rise to between $1 billion and $3.4 billion per year.

In the event that the impaired waters were addressed using a least flexible TMDL scenario costs might rise to as high as $1.9 billion and $4.3 billion per year. Under this unlikely scenario, regardless of the individual contributions of different sources, states would simply tighten discharge permits and other national requirements through a uniform and inflexible approach.

This scenario would not benefit from site-specific tailoring to local conditions that should result from development of a more careful allocation.

When a moderately cost-effective TMDL program, which looks for readily available cost effective solutions, is used to allocate pollution reduction responsibilities, the costs for both point and nonpoint sources are reduced.

The nonpoint pollution control measures expected to be implemented under each option would generate some partly offsetting cost savings (e.g. by reducing the frequency of application and the amount of fertilizer used), but these specific savings could not be calculated.

The average annual costs of developing TMDLs, primarily by states, over the next 15 years is estimated to be between $63-69 million per year, nation wide.

It will cost approximately $1 billion over 10 to 15 years for the 36,000 TMDLs in the over 20,000 water bodies known to be impaired. These costs could be higher or lower by 10%, depending on the pace that states adopt the most efficient approaches to develop TMDLs.

The average cost of developing the TMDLs for each of the roughly 20,000 impaired water bodies is estimated to be about $52,000, with a typical range of costs between $26,000 and over $500,000.

EPA expects that states will increase the number of TMDLs developed each year, spending about $30 million in the year 2000, $43-48 million in 2002, and about $68-75 million starting in 2005 and each year thereafter until 2015.

The cost estimate is based on the unit costs typical for the majority of TMDLs. EPA estimates that only 2-5% of the TMDLs nationally might have costs in excess of the range of costs used in this analysis which, to the extent that these prove to have sufficiently higher costs, might increase the national TMDL development costs by perhaps 10 to 20%.

The costs of TMDL development cited in the report are based on compliance with the current regulations including the TMDL regulations published in July 2000. The costs of the additional requirements associated with the July 2000 regulations represent less than 10% of the total development costs estimated in this report. The July 2000 regulations added requirements that increased the costs to develop TMDLs but did not add additional requirements, or therefore costs, to implement TMDLs.

It is expected that technical assistance that is routinely provided by other governmental agencies, such as the U.S. Department of Agriculture, will experience increased demand as a result of the TMDL program. But EPA has not estimated that cost.

The cost of water quality monitoring to support the development of TMDLs is expected to be approximately $17 million per year.

EPA made a preliminary estimate of additional monitoring needed for TMDL development from a limited survey of state experiences to date. This estimate needs to be revised as states gain more experience with TMDL development.

Clustering TMDLs through a watershed approach to development of TMDLs can significantly reduce the costs of developing TMDLs and implementing the resulting pollution control measures.

EPA evaluated the extent to which impaired waters listed by states fall into logical geographic clusters for the purpose of developing TMDLs and concluded that as many as 80% of the water bodies nationally could realize cost-efficiencies from developing TMDLs jointly.

The cost analysis assumes that states will increasingly be able to realize these efficiencies over a 5-10 year transition period, resulting in a iv national average of 60-70% of the waterbodies achieving cost efficiencies from clustering. The analysis estimates that the 36,000 TMDLs will be developed in about 6,000 to 8,000 submissions averaging 5-6 TMDLs per submission. These may consist of as few as one TMDL per submission to more than 30 TMDLs in each but averaging 5-6 TMDLs per submission.

The development of more cost-effective TMDLs on a watershed basis creates opportunities to shift pollution control responsibilities from high cost controls over point source discharges to comparatively low cost controls over nonpoint sources. Savings attributable to this efficient allocation of pollution control responsibilities are estimated to be between $140 - $235 million per year.

Increased costs to nonpoint sources that may occur when the more cost effective solutions are implemented are more than offset by savings to point sources.

EPA provides substantial funding to the states for management of the full range of Clean Water Act programs.

Using the high end of the range of costs for core TMDL development, and TMDL related monitoring, and assuming a further 10-20% cost increase to account for particularly high cost TMDLs, total TMDL development costs are expected to be as much as $65-74 million in 2002, rising to about $92-107 million annually in 2005 through 2015.

In FY 2001, the resources available to states to develop TMDLs include:

* Funding Under Section 106 Water Program Grants

* Funding for implementation grants under this core water program increased from $115 million in FY 2000 to $170 million in FY 2001, with an indication from the Congress that the $55 million increase was associated with the TMDL program costs.

* Funding Under Section 319 Nonpoint Pollution Control Grants

* Funding for implementation of state nonpoint pollution control programs increased from $200 million in FY 2000 to $237 million in FY 2001. EPA has provided that states may use up to 20% of this funding (i.e. about $47 million) to develop TMDLs.

Planning funds from State Revolving Loan Funds Grants

Under section 604(b)(3) of the Clean Water Act, states may use up to one percent of grant funds (or $100,000, whichever is greater) for planning and related purposes, including development of TMDLs. In FY 2001, the total funding available under this authority was $14 million.

In FY 2001, EPA expects to invest about $21.7 million in management of the current TMDL program. About $10 million of this funding is available to EPA Regions as contract funds to support development of TMDLs at the request of a state or where a state does not develop a TMDL called for in a consent decree.

EPA expects these funding levels to be maintained, or to increase slightly increase in FY 2002.

EPA has been under increasing pressure to push for TMDL improvements at the state level. To date, environmental groups have filed about 40 legal actions in 38 states. Most of the lawsuits have been filed since the mid-1990s. They generally argue that EPA must establish TMDLs where a State fails to do so. Over 20 of these lawsuits have resulted in court orders or consent decrees under which EPA is required to establish TMDLs if the State fails to do so in a timely manner.

The TMDL cost report, entitled "The National Costs of the Total Maximum Daily Load Program (Draft Report)," is part of EPA's effort to satisfy these actions. To read the whole report, visit EPA's web site at http://www.epa.gov/owow/tmdl/draftdocs.html.

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