# Presentation: 060298

## Concentrated Animal Feeding Operations (CAFO):

- <date/time>

*Concentrated Animal Feeding Operations (CAFO):*

- Example of Benefits Analysis in Support of EPA Regulations

## CAFO Background

- <date/time>

- Proposed Rule (Dec. 2000) to replace 25-year old technology requirements and permit regulations
- Final Rule (Dec. 2002):
- Reduces manure and wastewater pollutants from *feedlots* and *land application of manure*,
- Removes exemptions for stormwater-only discharges,
- Covers 15,500 ‘large’ operations (originally 4,500) (beef, poultry, swine, and dairy).

## Model CAFO Facility

- <date/time>

- Feedlot/Waste
- Lagoon

- Groundwater

- Manure Application

- Volatilization

**Model CAFO Facility**

## Pollutants

- <date/time>

| Nitrogen | runoff, leaching, air deposition |
| --- | --- |
| Phosphorus | Runoff |
| Salts/potassium | Runoff, leaching |
| Organic comp/BOD | Runoff |
| Solids | Runoff, air deposition |
| Pathogens | Runoff, leaching |
| Trace elements | Runoff |
| Pesticides/antibiotics | Runoff |
| Volatile Compounds | NH3,methane,CO2 |

## Benefits modeling 

- <date/time>

- Air benefits
- modeling

- Surface water
- Modeling –
- NWPCAM

- Groundwater
- Quality and
- benefits

- Reduced shell-
- Fish bed
- closures

- Reduced Fish
- Kills

- Other benefit
- endpoints

- Define model facilities from
- 76 representative farms

- Calculate edge-of-field loading

- Calculate
- feedlot
- area runoff

- Calculate
- seepage
- And leaching

**Benefits modeling **
**flow diagram**

**Internal deliberative draft - do not cite, quote, or distribute**

- Model facility pollutant
- loading estimates

- Surface water
- Recreation Benefits

- Non-water
- Quality (air
- And energy)
- Analysis

- Develop
- Non-water
- quality inputs

- Estimate county-
- Level counts

- Nitrogen (N), phosphorus (P),
- sediments (SED), fecal coliform (FC),
- fecal streptococcus (FS), and metals
- loads are estimated.

## Potential “Use” Benefits

- <date/time>

| In-stream | Commercial fisheries, navigation
Recreation (fishing,boating,swim,etc)
Subsistence Fishing
Human health risk |
| --- | --- |
| Near stream | Non-contact recreation (camping)
Nonconsumptive (wildlife viewing) |
| Option value | Future supply/demand for services |
| Water Diversion | Industrial/commercial water use
Agriculture/irrigation
Drinking water (treatment) |
| Aesthetic | Residing/working/traveling near water |

## Potential “Non-Use” Benefits

- <date/time>

| Ecological (aquatic and other species) | Reduced mortality/morbidity 
Improved reproductive success
Increased diversity
Improved habitat/sustainability  |
| --- | --- |
| Bequest | Intergenerational equity/insurances |
| Existence | Stewardship/preservation
Vicarious consumption |

## Benefits ( million/yr, 2001$)

- <date/time>

- Benefits ( million/yr, 2001$)

| Recreational use and non-use | $170 - $300 |
| --- | --- |
| Drinking water wells (Ben. Transf. WTP) | $31 - $46 |
| Animal water supply (Averted/Repl. Cst) | $5 |
| Public water treatment (Averted Cst) | $1 - $2 |
| Improved shellfish harvest (Market value) | $0.3 - $3 |
| Estuary Rec. fishing (Case study only) | $0.2 |
| Reduced fish kills (Replacement Cst) | $0.1 |
| TOTAL (benefits that can be monetized) | $200 - $360 |

- Note: Total Annual Pre-tax Costs = $290 million

## Overview of Recreational and Nonuse Method 

- <date/time>

- Model CAFO
- Loads

- Assign loads to Agriculture Cells

- Route loads to stream reaches

*Land Use data*
- for Nonpoint loads,
- Point sources

- Predict
- concentrations

- Water Quality Index

***NWPCAM***

- Water Quality Ladder

- Apply $WTP/Index unit

- Overview of Recreational and Nonuse Method

- Apply $WTP/Use

## Benefit Valuation Methods (cont)

- <date/time>

- Surface Water Recreation (N,P,BOD,Fec,TSS,DO):
- Estimate Aggregate WQ index by stream reach
- Apply WTP values (Carson and Mitchell, 1993) to WQ index change
- Drinking Water wells (N):
- Derive well NO3 conc. = f(nitrate load, *)
- Predict change in number of wells exceeding nitrate criterion
- Apply WTP values (Poe and Bishop, 1991); Crutchfield (1994) for wells < nitrate criteria

## Benefit Valuation Methods (cont)

- <date/time>

- Animal GW Water Supply (N, pathogens):
- Obtain baseline #animals using GW and mortality due to N and pathogens
- Model change in subsurface loads (GLEAMS)
- Assume %mortality change=%load change
- Replacement price per animal = value animal saved

## Benefit Valuation Methods (cont)

- <date/time>

- Public Water Treatment (TSS)
- Estimate change in influent [TSS]
- Estimate engineering cost savings from [TSS] change
- Improved shellfish harvest (pathogens)
- Estimate harvest/acre and acres closed due to CAFOs
- Estimate % fecal coliform load changes (NWCAM)
- Assume change %acres closed = %load change
- Estimate change in consumer surplus using prices, harvests and elasticities

## Benefit Valuation Methods (cont)

- <date/time>

- Reduced Fish Kills (N, P)
- %reduction N and P loads * #fish kills/yr = fish
- $/fish * fish, where $/fish based on:
- (1) $WTP from recreation value database
- (2) replacement cost (AmFishSoc data)
- Estuarine Recreational Fishing (N, P)
- Catch = f(nutrient loads)
- WTP = f(catch) from travel cost/Random utility models
- Smith and Palmquist (1988) (trip demand)
- Kaoru (1995) (RUM – site choice)

## Information/Modeling Gaps

- <date/time>

-  ecological endpoints = f(water quality)??
- Fish kills, fish catch = f(N or P loads)?
- Stream diversity = f(pollutant loads/conc)?
- Are other habitat factors or pollutants are affecting ecological health?
- Baseline resource and WQ conditions?
- Current fish/shellfish status
- Current diversity/forage fish status
- Other pollutants (toxics) may constrain uses
- Absence of monitoring data (surface and groundwater) Are models and benefits accurate?

## Information/Modeling Gaps (cont)

- <date/time>

- Nonuse values for changes in surface water quality and ecological health are not monetized or highly uncertain
- Carson and Mitchell values don’t capture all nonuse (survey focus is recreation)
- Basis for measuring nonuse values?
- Value = f(WQ parameters),
- Value = f(WQ aggregate index)
- Value = f( ecological endpoints or health index)
- Value = f( services derived from ecol endpoints)

## General Questions

- <date/time>

- Values for small marginal changes?
- Few or no studies available (e.g., Carson and Mitchell provides WTP for national change)
- Marginal values = f(baseline quality/condition)
- What is fair/equitable baseline?
- Do Case studies or National-level analysis?
- When to bite the bullet and do primary study?
- Standard methods for presenting uncertainty?
- Use Standard errors from studies?
- Should disbenefits be presented as part of a range?

## Applications of Benefits Results

- <date/time>

- Support Rule development (e.g., EO 12866)
- Primary Target Audience (to satisfy rule development process):
- Other EPA offices (OPEI, Regional)
- Other Agencies (USDA)
- OMB
- Public (Public comment period after proposal)

## Other Applications

- <date/time>

- Reports to Congress/retrospective studies
- Thompson Report (annual summary of costs and benefits of new rules)
- Communication - Press releases/Fact Sheets
- Future Rule makings (e.g., Meats rule)
- Apply same (approved) methods for baseline *consistency *across rules
- Improve upon prior benefits groundwork

## Appendix A

- First CAFO presentation to SAB
- April, 2004

## Concentrated Animal Feeding Operations (CAFO):

- <date/time>

*Concentrated Animal Feeding Operations (CAFO):*

- Benefits Analysis for Effluent Guidelines and NPDES Regulations

## CAFO Background

- <date/time>

- Industry consolidation in large livestock operations
- Final Rule (Dec. 2002) replaces 25-year old technology requirements and permit regulations
- Reduces pollutants from feedlots and land application,
- Removes exemptions for stormwater-only discharges,
- Coverage expands to include additional poultry, immature swine, and immature dairy facilties,
- Covers 15,500 ‘large’ operations (originally 4,500)

## Benefits ( million/yr, 2001$)

- <date/time>

- Benefits ( million/yr, 2001$)

| Recreational use and non-use | $170 - $300 |
| --- | --- |
| Drinking water wells (Ben. Transf. WTP) | $31 - $46 |
| Animal water supply (Averted/Repl. Cst) | $5 |
| Public water treatment (Averted Cst) | $1 - $2 |
| Improved shellfish harvest (Market value) | $0.3 - $3 |
| Estuary Rec. fishing (Case study only) | $0.2 |
| Reduced fish kills (Replacement Cst) | $0.1 |
| TOTAL (benefits that can be monetized) | $200 - $360 |

- Note: Total Annual Pre-tax Costs = $290 million

## Methodology Decisions

- <date/time>

- METHOD for Recreational Use and Nonuse:
- National Water Pollution Control Assessment Model
- Water quality indices, and
- Benefit transfer
- Efficient approach for:
- Estimating national-level benefits (use + nonuse)
- Addressing variety of conditions across nation,
- Filling in data gaps (e.g., baseline concentrations)
- Relatively cost-effective versus primary valuation study (Lack of options?)

## Overview of Recreational and Nonuse Methods 

- <date/time>

- Model CAFO
- Loads

- Assign loads to Agriculture Cells

- Route loads to stream reaches

*Land Use data*
- for Nonpoint loads,
- Point sources

- Predict
- concentrations

- Water Quality Index

***NWPCAM***

- Water Quality Ladder

- Apply $WTP/Index unit

- Overview of Recreational and Nonuse Methods

- Apply $WTP/Use

## Water Quality Characterization

- <date/time>

- 100

- 90

- 80

- 70

- 60

- 50

- 40

- 30

- 20

- 10

- 0

- **SWIMMABLE**: SAFE FOR SWIMMING

- **FISHABLE**: GAME FISH CAN LIVE IN IT

- **BOATABLE**: OK FOR BOATING

**WQ Index**

**WQ Ladder**

## Definitions of WQ

- <date/time>

- BOD, Fecal coliform,  NO3, PO4, TSS for 830,000 “reach” miles.  For each reach:

- 0

- 100

- Concentrationi

- Index WQIi

- WQIagg=  (WQIi)i

**Index Approach**

**Ladder Approach**
- Compare concentrations to criteria
-  *All criteria* must be satisfied for Use designation
- - Determine if recreational
- use improvement occurs

## Water Quality Valuation

- <date/time>

- Benefit Transfer: Carson and Mitchell 1984 (survey), 1993 (publication):
- National Contingent Valuation Survey (564 respondent observations)
- Incorporates the WQ Ladder
- Format*:“What are you WTP to raise the minimum level (of WQ) to where 99% or more of freshwater bodies would be swimmable (or boatable, or fishable)?”*

## Water Quality Valuation (cont)

- <date/time>

- Transfer Household Willingness to Pay (WTP):
**Index Approach**: $WTP = f(WQI values, income)
**Ladder Approach**: $WTP for “Use” attainment
- Apply Fraction of WTP based on fraction of stream miles affected.
- Allocate 2/3 of WTP to in-state improvements and 1/3 of WTP to out-of-State improvements.

## Water Quality Valuation (cont.)

- <date/time>

- EXAMPLE:
- Benefits for State j = B(instate, j) + B(out-of-state, j)
- WQ change = X = Boatable to fishable,
- WTP(x) = WTP(fishable) – WTP(boatable)
- B(in,j)= Miles(x,j)/Miles(j) * H(j) * 2/3*WTP(x)
- B(out,j)= Miles(x,n)/Miles(n) * H(j) * 1/3*WTP(x)

- B(x=f(ladder)) = $170 million/yr
- B(x=f(index)) = $300 million/yr

## Other Applications of Method

- <date/time>

- Retrospective Benefits Assessment of Water Pollution Control Programs since 1972 (1999)
- Stormwater Phase II Final Rule
- Meats and Poultry Products Effluent Limitations Guideline (2004)
- Construction and Development ELG (2004)

## Uncertainty/Sensitivity Analysis

- <date/time>

- Water Quality Modeling:
- No statistical analysis for CAFO
- Conducted Monte Carlo analysis for NWPCAM concentration predictions for *Meats and Poultry Products Final Rule*
- Valuation:
- Two approaches for valuing changes in water quality (WQI function and discrete uses) generates range of benefits

## Strengths of Analysis

- <date/time>

- Direct estimation of Benefits (no extrapolation)
- Aggregates multiple water quality parameters of concern for CAFO
- Accounts for use and some nonuse values
- Addresses marginal changes in WQ
- Integration of national databases
- Links environmental output and valuation data

## Shortcomings

- <date/time>

- WQ modeling:
- Excludes Great Lakes, estuaries, and smaller streams
- Limited calibration of concentration estimates (at the time)
- Steady state stream flow assumed (e.g., no storm events)
- Index and Use Attainment:
- Other pollutants (toxics) not acknowledged
- “Use criteria” and WQI curves may be dated
- Valuation:
- CV survey may not capture all nonuse value
- Original WTP values based on national change
- One-dimensional index consistent with Use classifications?

## Future Options: Water Quality Modeling

- <date/time>

- Considerations:
- Integration with other models or modeling systems (other agencies)?
- Case-studies with extrapolation vs National model?
- Develop estuarine and Great Lakes modeling capacity within National model?
- More calibration (partially addressed)

## Future Options: Valuation

- <date/time>

- Considerations:
- Multi-dimensional measures of water quality
- Service classification (e.g., fishing)
- Quality classification (e.g., high/low, sport/nonsport)
- Scale of valuation (national vs regional vs local)
- Example: WTP for Safe Swimming in X% of water bodies within 100 mile radius. (Harvard/Duke study)
- Conduct rule-specific primary valuation surveys
- Refine benefit transfer methods (e.g., meta analysis)

## Appendix B

- Additional Draft Conceptual Model Diagrams for CAFO

## Conceptual model 3

- Estuary- based
- terrestrial ecosystem
- endpoints

**Conceptual model 3**
**Lakes, estuaries, large streams**

- Waterfowl
- population/community
- characteristics

- Tidal area/riparian
- zone ecology,
- biogeochemistry

**Notes:**
1.  Deposition of stream-borne inputs of CAFO pollutants to estuary sediments.
2.  

## Conceptual model 3

- Estuary- based
- terrestrial ecosystem
- endpoints

**Conceptual model 3**
**Lakes, estuaries, large streams**
**Diagram 3.A**

- Waterfowl
- population/community
- characteristics

**1**

**2**

**3**

**4**

**5**

- Tidal area/riparian
- zone ecology,
- biogeochemistry

**Notes:**
1.  Deposition of stream-borne inputs of CAFO pollutants to estuary sediments.
2.  

## Conceptual model 3

**Conceptual model 3**
**Lakes, estuaries, large streams**
**Diagram 3.B**

**1**

**2**

**3**

**4**

**6**

**7**

**8**

**5**

**9**

- Estuary- based
- terrestrial ecosystem
- endpoints

- Waterfowl
- population/community
- characteristics

- Tidal area/riparian
- zone ecology,
- biogeochemistry

**Notes:**
1.  Deposition of stream-borne inputs of CAFO pollutants to estuary sediments.
2.  

## Conceptual model 3

**Conceptual model 3**
**Lakes, estuaries, large streams**
**Diagram 3.C**

**1**

**2**

**3**

**4**

- Estuary- based
- terrestrial ecosystem
- endpoints

- Waterfowl
- population/community
- characteristics

- Tidal area/riparian
- zone ecology,
- biogeochemistry

**Notes:**
1.  Deposition of stream-borne inputs of CAFO pollutants to estuary sediments.
2.  

## Conceptual model 3

**Conceptual model 3**
**Lakes, estuaries, large streams**
**Diagram 3.D**

- Estuary- based
- terrestrial ecosystem
- endpoints

- Waterfowl
- population/community
- characteristics

- Tidal area/riparian
- zone ecology,
- biogeochemistry

**1**

**2**

**3**

**4**

**5**

**6**

**7**

**8**

**9**

**10**

**11**

**12**

**13**

**Notes:**
1.  Deposition of stream-borne inputs of CAFO pollutants to estuary sediments.
2.  

## Conceptual model 3

**Conceptual model 3**
**Lakes, estuaries, large streams**
**Diagram 3.E**

- Estuary- based
- terrestrial ecosystem
- endpoints

- Waterfowl
- population/community
- characteristics

- Tidal area/riparian
- zone ecology,
- biogeochemistry

**1**

**2**

**4**

**5**

**6**

**7**

**8**

**9**

**10**

**11**

**Notes:**
1.  Deposition of stream-borne inputs of CAFO pollutants to estuary sediments.
2.  

## Conceptual model 3

**Conceptual model 3**
**Lakes, estuaries, large streams**
**Diagram 3.F**

- Estuary- based
- terrestrial ecosystem
- endpoints

- Waterfowl
- population/community
- characteristics

- Tidal area/riparian
- zone ecology,
- biogeochemistry

**1**

**2**

**3**

**4**

**5**

**6**

**7**

**8**

**9**

**10**

**11**

**Notes:**
1.  Deposition of stream-borne inputs of CAFO pollutants to estuary sediments.
2.  

## Conceptual model 3 

**Conceptual model 3 **
**Lakes, estuaries, large streams**
**Diagram 3.G**

- Estuary- based
- terrestrial ecosystem
- endpoints

- Waterfowl
- population/community
- characteristics

- Tidal area/riparian
- zone ecology,
- biogeochemistry

**1**

**2**

**3**

**4**

**Notes:**
1.  Deposition of stream-borne inputs of CAFO pollutants to estuary sediments.
2.