Economic 

Analysis of 

Proposed 

Revised 

Definition of 

Waters of the 

United States

March 2014

U.S. Environmental 

Protection Agency

primary author

U.S. Army Corps of 

Engineers

contributing author
US EPA assembled this report and is primarily responsible for the estimated benefits for CWA 404 

compensatory mitigation and the estimated costs and benefits for non-CWA 404 programs. 

Abt Associates provided technical support to US EPA under contract #EP-C-07-023.

US ACE provided expert technical and policy review and is primarily responsible for the estimated costs

associated with CWA 404
Table of Contents

Section 1: Overview of Proposed Rule..........................................................................................................1

Section 2: General Approach for the Economic Analysis.............................................................................2

Section 3: Programs Affected ......................................................................................................................3

Section 4: Potential Areas of New Indirect Costs ........................................................................................5

CWA Section 404 and 401.........................................................................................................................5

CWA Section 402.......................................................................................................................................5

CWA Section 303 and 305.........................................................................................................................6

CWA Section 311.......................................................................................................................................6

Section 5: Potential Areas of New Indirect Benefits....................................................................................8

Ecosystem Services...................................................................................................................................8

Government Efficiency..............................................................................................................................9

Comprehensive Enforcement .................................................................................................................10

Reduced Uncertainty ..............................................................................................................................10

Section 6: Scope of Impact.........................................................................................................................11

Section 7: Estimate of CWA 404 Program Costs........................................................................................13

Estimate of Permit Application Costs .....................................................................................................14

Estimate of Compensatory Mitigation Costs..........................................................................................17

Estimate of Corps Administrative Costs..................................................................................................18

Section 8: Estimate of CWA 404 Program Benefits....................................................................................20

Section 9: Costs and Benefits to Other Programs......................................................................................25

CWA Section 401 State Certification.......................................................................................................25

CWA Section 402 NPDES Permits............................................................................................................26

CWA Section 311 Oil Spill Prevention Plans............................................................................................29

EPA Enforcement Savings .......................................................................................................................30

Section 10: Summary of Estimated Costs and Benefits.............................................................................32

Section 11: Additional Considerations for Other Waters ..........................................................................34

Step 1: Examine Information on Extent of Isolated Wetlands in a Watershed......................................35

Step 2: Examine Models to Describe Probability of Aggregation and Significant Nexus........................37

Step 3: Select Model and Apply to Distribution of Extent of Isolated Wetlands....................................38

Alternative Model for Estimating Additional Incremental Other Waters ..............................................40
Impacts of Additional Incremental Other Waters ..................................................................................43

Appendix A: Supplemental Cost Analysis Information ..............................................................................46

Appendix B: Supplemental Benefit Estimate Information.........................................................................49

Summaries of Holistic Wetland Benefit Studies Used to Generate WTP Estimates...............................54
Table of Exhibits

Exhibit 1. Clean Water Act Programs Affected .............................................................................................3

Exhibit 2. Examples of Ecosystem Services Relevant to CWA Regulation ...................................................9

Exhibit 3. Analysis of FY2009-2010 ORM2 Records Showing Jurisdictional Status of Aquatic Resources.12

Exhibit 4. Conceptual Overview of CWA Section 404 Permit Compliance Costs.......................................13

Exhibit 5. Estimated Additional CWA 404 Permits and Impacts to Jurisdictional Waters.........................14

Exhibit 6. Estimated Annual Additional CWA 404 Permit Application Costs.............................................16

Exhibit 7. Estimated Annual Additional CWA 404 Compensatory Mitigation Costs..................................18

Exhibit 8. Overview of CWA 404 Permit Administrative Costs..................................................................18

Exhibit 9. Categories of Corps CWA 404 Administrative Tasks..................................................................19

Exhibit 10. Weighted-Average WTP per Acre per Household for Wetland Preservation..........................22

Exhibit 11. Estimated Annual CWA 404 Wetland Compensatory Mitigation Benefits..............................24

Exhibit 12. Estimated Annual Additional CWA 401 Administrative Costs to States..................................25

Exhibit 13. Estimated Annual Additional CWA 402 Stormwater Permitting Impacts ($ millions).............27

Exhibit 14. Estimated Annual Additional CWA 402 CAFO Permitting Impacts ($ millions) .......................28

Exhibit 15. Estimated Annual Additional CWA 402 PGP Impacts ($ millions)............................................29

Exhibit 16. Estimated Incremental Annual Indirect Costs and Benefits (2010$ in millions).(1)..................33

Exhibit 17. Isolated Wetlands in Proportion to Total Number of Wetlands in a Watershed ....................36

Exhibit 18. Isolated Wetlands in Proportion to Total Wetland Acreage in a Watershed ..........................37

Exhibit 20. Application of Probability Model to Distribution of Extent of Isolated Waters.......................39

Exhibit 21. Calculation of National Estimate of Percent of Jurisdictional Residual Other Waters Under 

Proposed Rule.............................................................................................................................................39

Exhibit 22. Various National Estimates of Percent of Jurisdictional Residual Other Waters Under 

Proposed Rule.............................................................................................................................................40

Exhibit 23. Distribution of Tiner et al (2002) Study Areas by Isolated Wetland Density in Watershed ....41

Exhibit 24. Probability Models for Isolated Wetlands Density ..................................................................41

Exhibit 25. Application of Probability Model to Distribution of Isolated Waters Density .........................42

Exhibit 26. Various National Estimates of Percent of Jurisdictional Residual Other Waters Under 

Proposed Rule Using Alternative Approach................................................................................................43

Exhibit 27. Scenarios for Consideration of Other Waters..........................................................................44

Exhibit 28. Results of Scenarios for Other Waters on Costs and Benefits Estimates ................................44

Exhibit 30. Alternative Results of Scenarios for Other Waters on Costs and Benefits Estimates..............45

Exhibit 32. Labor Rates for Private Industry and Local, State, and Federal Government Positions..........48

Exhibit 33. Summary of Environmental Benefits by Wetland Types and Other Isolated Waterbodies 

Potentially Affected ....................................................................................................................................49

Exhibit 34. Types of Benefits Associated with Environmental Policies......................................................53

Exhibit 35. Studies of WTP for Preservation of Wetlands with Characteristics of Isolated Wetlands ......57

Exhibit 36. WTP for Preservation of Wetlands...........................................................................................59

1

Section 1: Overview of Proposed Rule

The U.S. Army Corps of Engineers (Corps) and the Environmental Protection Agency (EPA), 

collectively “the agencies”, proposed a rule for public comment that that defines the scope of waters 

protected under the Clean Water Act (CWA), in light of the U.S. Supreme Court cases in U.S. v. Riverside 

Bayview, Rapanos v. United States, and Solid Waste Agency v. U.S. Army Corps of `Engineers (SWANCC). 

The effect of the SWANCC decision is primarily on so-called “isolated” (other) waters. These waters do 

not meet the agencies’ definition of “adjacent” and often include vernal pools, prairie potholes and 

playa lakes that lie entirely within a single state and lack a direct, surface water connection to the river 

network. In practice, the effect of the Rapanos decision has been primarily on some small streams, 

rivers that flow for part of the year, and nearby wetlands. The agencies believe this proposal would

enhance protection for the nation’s public health and aquatic resources, and increase CWA program 

predictability and consistency by increasing clarity on the scope of “waters of the United States” 

protected under the Act. 

Specifically, the agencies propose to define the waters of the United States for all sections of the 

Clean Water Act to mean: traditional navigable waters (TNWs); interstate waters, including interstate 

wetlands; the territorial seas; impoundments of waters otherwise defined as waters of the United 

States; tributaries, as defined, to traditional navigable waters, interstate waters, or the territorial seas; 

adjacent waters, including wetlands; and, on a case-specific basis, other waters that have a significant 

nexus to a traditional navigable water, interstate water, or the territorial seas.

The agencies also propose to exclude specified waters from the definition of "waters of the 

United States." The agencies are not proposing changes to the existing exclusions for waste treatment 

systems designed consistent with the requirements of the Clean Water Act, nor are the agencies are 

proposing any changes for prior converted cropland. The agencies are, for the first time, proposing to 

exclude by regulation certain waters and features over which the agencies have as a policy matter 

generally not asserted CWA jurisdiction.

The agencies propose for the first time to define the term "neighboring" as it is used as a 

component of the existing term “adjacent”, and in turn define the terms "riparian area" and "floodplain"

that appear in the new definition of “neighboring”. The agencies also define the terms "tributary" and 

"significant nexus." The goal is to ensure the regulatory definition is consistent with the CWA, as 

interpreted by the Supreme Court, to protect water quality, public health, and the environment.
2

Section 2: General Approach for the Economic Analysis

The definition of “waters of the U.S.,” by itself, imposes no direct costs. The potential costs and 

benefits incurred as a result of this proposed action are considered indirect because the action involves 

a definitional change to a term that is used in the implementation of a variety of CWA programs. Each 

of these programs may subsequently impose direct or indirect costs as a result of implementation of 

their specific regulations. 

Estimates of the economic costs and benefits that may indirectly be imposed on governments 

and regulated entities can help inform the public and policymakers of some of the implications 

associated with this proposal. Just over 10 years ago, almost all waters were considered “waters of the 

U.S.” Following the SWANCC (2001) and Rapanos (2006) decisions, field practice changed to limit 

assertion of CWA jurisdiction for some types of waters. For purposes of identifying a set of potential 

costs and benefits associated with this action, this analysis compares the projected outcome of 

implementing the proposed rule to the best approximation of field practices during the 2009-2010 time 

period (post SWANCC and Rapanos), following issuance of program guidance in 2008. The agencies 

expect that the outcome of the proposed rule will be an approximate 3 percent increase in assertion of 

jurisdiction when compared to 2009-2010 field practices, but not as extensive as when the existing 

regulation went into effect.1

In April 2011, the agencies published revised draft guidance on policies for determining CWA 

jurisdiction to replace guidance issued in 2003 and 2008. The agencies expect that the outcome of the 

proposed rule would be similar to the outcome of fully implementing the April 2011 draft guidance. As 

such, this analysis builds on an analysis prepared in association with the April 2011 draft guidance, 

described in the Potential Indirect Economic Impacts and Benefits Associated with Guidance Clarifying 

the Scope of Clean Water Act Jurisdiction document. This document is available in the administrative 

record for the proposed rule and available at 

http://water.epa.gov/lawsregs/guidance/wetlands/upload/cwa_guidance_impacts_benefits.pdf.

The economic analysis is necessarily based on readily available information and the resulting 

cost and benefit estimates are incomplete. Nonetheless, the agencies have considered the effects on a 

variety of CWA programs and provide quantitative estimates for many potential impacts. Readers 

should be cautious in examining these results in light of the many data and methodological limitations, 

as well as the inherent assumptions in each component of the analysis. 

 1 The existing regulations represent one appropriate baseline for comparison, and because the proposed rule is 

narrower in jurisdictional scope then the existing (1986) regulations, there would be no additional costs in 

comparison to this baseline. A comparison to field practice following the 2008 guidance is also an appropriate 

baseline, and the agencies believe that baseline is the most useful for purposes of comparing the potential 

outcome of the proposed rule.
3 

Section 3: Programs Affected

Any water found not to be a “water of the U.S.” generally is not subject to CWA requirements. 

Exhibit 1 depicts the CWA programs that are affected by the definition of “waters of the U.S.,” along 

with the government entities that are responsible for administering the programs. Among its many 

provisions, the CWA establishes oil spill prevention programs (section 311); requires permits for 

pollutant discharges (section 402); requires permits for the placement of dredged or fill material in 

waters of the United States, including wetlands (section 404); calls for states to set standards for 

meeting water quality goals and develop plans to restore polluted waters (section 303); establishes state 

roles in certifying that federal permits will not violate state water quality standards (section 401); and 

allows the federal government, states, and communities to enforce the law. 

Exhibit 1. Clean Water Act Programs Affected

As shown in Exhibit 1, states and tribes have a large role in administering many CWA programs. 

This economic analysis does not account for the possibility that some states may already be considering 

a broader set of waters to be subject to their implementation of certain CWA programs. Although the 

extent of their CWA jurisdiction may not be smaller than the definition of waters of the U.S., states and 

tribes may elect to implement CWA programs more broadly according to a definition of “waters of the 

state” or “waters of the tribe”. To the extent states have elected to do this, the economic impacts may

be smaller than presented here (because states may already be asserting jurisdiction over waters for 
4

which this analysis presumed jurisdiction was not generally asserted in practice). The particulars of state 

laws and regulations are often complex and subject to change. At present, it is believed that 

approximately two-thirds of all states place some legal constraint on the authority of state and local

government officials to adopt aquatic resource protections beyond waters of the U.S. These may be 

straightforward stringency limitations, property-based limitations, or combinations of the two. The 

provisions may be partial limitations, affecting only some applications. It is further believed that 

approximately half the states have some provisions that extend protections beyond waters of the U.S. 

Some of these provisions pre-date stringency limitations and may not be retro-active. 
5

Section 4: Potential Areas of New Indirect Costs

CWA Section 404 and 401

This proposed rule could result in new indirect costs on regulated entities such as the energy, 

agricultural, and transportation industries; land developers, municipalities, industrial operations; and on 

governments administering regulatory programs, at the tribal, state and federal levels. The recent 

challenges to CWA jurisdiction have arisen from the CWA 404 program, and it is likely that this program 

has seen the greatest impact from the SWANCC and Rapanos decision and subsequent joint agency 

guidance. As such, the CWA 404 program would also see the greatest impact of a regulatory change 

that would result in broader assertion of CWA jurisdiction. These indirect costs may include application 

costs, associated environmental compliance costs, wetlands mitigation, stream mitigation, and project 

re-design and relocation expenses. In addition, there would be program management, training, and 

associated environmental compliance costs to government associated with administering the CWA. For 

example, the Corps may process more permit requests, conduct jurisdictional determinations (JDs) if 

needed, manage data, coordinate with federal and state resource agencies, and determine 

compensatory mitigation needs. These potential costs are described in detail below. Because most 

CWA 404 permits are issued by the Corps, states or tribes may incur additional costs of certifying that 

such permits do not violate their water quality standards under CWA 401. The impact on the CWA 404 

program can be measured from data records of jurisdictional determination status of aquatic resources 

maintained by the Corps. There are no comparable data from other CWA programs. Nevertheless, the 

regulatory change to the definition of waters of the U.S. applies to all CWA programs and the potential 

impact to each of these programs should be assessed.

CWA Section 402

EPA does not believe that the SWANCC and Rapanos decisions have greatly affected traditional 

CWA 402 permits, such as those issued for municipal wastewater treatment plants or industrial facilities. 

Neither in its capacity as permitting authority, nor in fulfilling its oversight role of permitting programs 

delegated to states, has the EPA witnessed a large number of permit holders asserting they no longer 

required such a permit because of the non-jurisdictional status of a receiving water. While EPA is aware 

of occasional inquiries on this matter, no such inquiries have resulted in a permitting authority 

determining that a discharger no longer needed a permit. There are several potential explanations for 

this. The first is that the nature of a traditional discharge permit where a facility is seeking to have 

wastewater dispersed and carried away is different than a 404 permit where an entity is, for example, 

seeking to drain and fill a portion of a natural water for development. As such, it is possible that a CWA 

402 permitted discharger may have the effect of creating a permanent water where there once was an 

intermittent or ephemeral water because of continuous discharge (i.e., an “effluent dependent” or 

“effluent dominated” water). In these cases, jurisdiction may not come under question. A second 

explanation is that EPA has authorized most (46) states to operate the CWA 402 permitting program, 

and states apply jurisdiction to “waters of the state” which must be as inclusive as “waters of the U.S” 

but may be more inclusive. In contrast, only two states (Michigan and New Jersey) have assumed the 

404 program (to the extent it can be assumed for “non-navigable” waters). Additionally, facilities may 
6

have invested the capital in treatment and simply be willing to continue operating under their permit 

and see no need to challenge jurisdiction. 

Permitting for construction and development stormwater, concentrated animal feeding 

operations (CAFOs), and pesticide application are three areas of CWA 402 implementation where there 

may be potential new costs. This is because these activities relate to collection of runoff rather than 

disposal of wastewater, and EPA and states typically regulate them through CWA 402 general permits 

rather than individual permits. In addition, these newer requirements have changed in the last decade. 

Entities engaged in actions requiring general permit coverage can submit a Notice of Intent (NOI) to the 

permitting authority to obtain coverage. Under the existing CWA jurisdictional implementation, many of 

these entities may not believe their discharge affects a jurisdictional water and may not have applied for 

permit coverage. Under the proposed rule, a portion of these entities may be subject to an assertion of 

jurisdiction to a similar extent of those seeking 404 permits. Construction-related stormwater 

discharges, CAFO discharges, and application of pesticides likely occur in similar locations as CWA 404 

dredge and fill discharge with respect to proximity to “isolated waters,” small streams, and their 

adjacent wetlands. Indirect costs for these programs include implementing best management practices 

(BMPs) for regulated entities and administering permitting programs for government.

CWA Section 303 and 305

CWA Section 303 includes development of state water quality standards, monitoring and 

assessment of water quality, and development of total maximum daily loads (TMDLs) for impaired 

waters. These programs involve costs to states (standards development, monitoring and assessment, 

TMDL development). EPA’s position on these costs is that an expanded assertion of jurisdiction would 

not have an effect on annual expenditures.

States typically develop water quality standards for general categories of waters, which have 

been and are inclusive of the types of waters where jurisdiction comes into question (e.g., for wetlands, 

the vast majority of which have been and are jurisdictional). Therefore, requirements for state water 

quality standards to be consistent with the CWA (designated uses, criteria to protect those uses, 

antidegradation policies) will not change as a result of this proposed action. What could change is 

whether or not those standards apply. To the extent a state believes there are needs for water quality 

standards development for specific types of waters, those needs would exist with or without this 

proposed rule.

CWA 305(b) requires a report from states that includes (among other items) a description of the 

water quality of all navigable waters in the state and an analysis of the extent to which they meet the 

101(a)(2) goals of the Act. In practice, states typically have a set budget for these activities and make 

plans accordingly. Many states strive to be as comprehensive as possible and balance the needs to 

identify all impaired waters with probabilistic surveys designed to track general status and trends. To 

the extent that this proposed rule may increase the coverage where a state would wish to apply its 

monitoring resources, states are likely to adjust sampling locations or sampling frequency without a net 

cost increase. 
7

States conduct assessments based on all existing and readily available monitoring data. States 

are required to list waters that are impaired, but have discretion to prioritize this list for TMDL 

development, which may proceed over a period of several years under EPA policy. Monitoring, 

assessment, and TMDL development tend to occur in water segments where the agencies assert 

jurisdiction under current practices. It is not clear that additional cost burdens for TMDL development 

would result from this action. In watersheds where there are impaired water segments, waters where 

the agencies may more clearly assert jurisdiction under the proposed rule are likely to lie upstream of 

existing impaired segments. Because tribal or state–initiated water quality pollution control strategies 

are typically applied throughout the watershed of an impaired segment, all upstream waters typically 

benefit. In addition, clarifying jurisdiction may reduce the cost of returning an impaired water to a 

condition of meeting water quality standards by allowing better control of upstream sources of 

pollution.

CWA Section 311

CWA Section 311 covers oil spill prevention and preparedness, reporting obligations, and 

response planning. These requirements apply to facilities engaged in production or storage of oil 

products based on total volume. In particular, inland non-transportation oil facilities of a certain size

that have potential to discharge to navigable waters must prepare and implement Spill Prevention, 

Control, and Countermeasure (SPCC) plans. Similar to traditional 402 permits, these requirements have 

been in place since 1973 and it is not clear how regulated facilities have adjusted their behavior in 

response to SWANCC and Rapanos. However, EPA does have some limited anecdotal information from 

regional offices on facilities that have expressed no discharge potential relevant to jurisdictional water. 

Based on inferences from this information, EPA can present some potential cost implications, as 

described in section 9. 
8

Section 5: Potential Areas of New Indirect Benefits

Although costs are a very important component of any economic analysis, the value of benefits 

received is equally important. Failure to account for the full economic values of ecosystems could result 

from a lack of recognition of benefits that 1) traditional market valuation techniques may not capture, 2) 

may be public goods that are not subject to any valuation reporting, or 3) may be intangible by their 

nature (these categories are not mutually exclusive). A common concern is that government agencies 

might not effectively manage what they do not measure, and they might undervalue resources that are 

not identified or quantified.

Ecosystem Services

The term “ecosystem services” refers to the many natural processes by which ecosystems, and 

the species they include, sustain and fulfill human life. A sufficient quantity and quality of water is 

important for public health, safety, and quality of life. Polluting or destroying waterways can affect 

drinking water, places where people recreate, the fish and shellfish people eat, the irrigation water used 

on food crops, and how floods affect people and property. Waters affected by this proposed rule also 

provide habitat and biodiversity, support recreational fishing and hunting, filter sediment and 

contaminants, reduce flooding, stabilize shorelines and prevent erosion, recharge ground water, and 

maintain biogeochemical cycling. Fishing and hunting expenditure estimates, major flood losses, and 

the value of wetlands for storm protection services all total in the tens of billions of dollars per year. 

Any economic valuation exercise would have to account for the incremental portion of these values 

attributable to the incremental number of waters affected by the proposed rule.

The ecosystem services identified in Exhibit 2 have no market values. Some are closely related 

to marketed goods, which may facilitate valuation, whereas others are far removed from the end 

product of market value or contribute to consumer value directly. There are basically two types of 

effects: 1) direct effects on non-market ecosystem goods and services, and 2) effects on hydrogeology 

and biochemical processes and on life support services that are valued for themselves as well as for their 

contribution to other ecosystem goods and services. Exhibit 2 is not an exhaustive list.
9

One category of benefits includes goods and services that a proposed action or activity 

One category of benefits includes goods and services that a proposed action or activity 

generates. Although potentially easier to identify than other categories, these benefits may or may not 

be easy to measure or ascribe value. In terms of protecting waters, an example benefit might be 

supporting fish and shellfish populations in downstream waters as well as protecting the waters 

themselves. Ponds, streams, and wetlands provide habitat for a robust and diverse assemblage of 

organisms that are necessary to support the whole aquatic community structure and ecological 

function. Some associated attributes may have market value (such as the fish themselves) and some 

may have non-market value (such as biodiversity). 

Benefits also include costs avoided. Costs avoided represent what you don’t have to pay 

because of the action you have taken. For example, floodplain preservation prevents costly damage 

from frequent flooding. Although dams and levees are built to control potential flooding, altering the 

natural hydrologic regime contributes to the potential for flooding. Waters affected by this proposed 

rule store water and slow down its movement across the landscape. When these systems no longer 

perform this function, the potential losses from flooding may increase.

Government Efficiency

Administration of government programs may also benefit from avoided costs. The federal 

government and states are currently spending resources on site-by-site evaluations of jurisdiction 

against a standard that is unclear and somewhat ambiguous. This represents an investment of 

Input in Production of Marketed Goods & Services

• Flood storage & conveyance

• Support for commercial fisheries

• Water input and land productivity for agriculture and commercial & industrial production

Direct Use 

• Municipal & home water supply

• Recreation & aesthetics (including fishing and hunting)

Hydrogeology and Biochemical Processes

• Sediment and contaminant filtering

• Nutrient cycling

• Groundwater recharge

• Shoreline stabilization and erosion prevention

Life Support (Ecological)

• Biodiversity 

• Wildlife habitat (food chain, nursery, etc.) 

Exhibit 2. Examples of Ecosystem Services Relevant to CWA Regulation
10

resources that could be put to other use (and may in fact be needed to process additional CWA 404 

permits) if the agencies articulated the decision criteria more clearly. While incurring additional costs to 

process additional permits, this proposed rule may reduce some permitting costs and speed the permit 

review process in the long-term by clarifying jurisdictional matters that have been time-consuming and 

cumbersome for field staff and the regulated community for certain waters. The two Supreme Court 

cases and subsequent guidance have, in some circumstances, required agency staff to spend resources

to understand and apply complex jurisdictional standards. The uncertainty surrounding jurisdictional 

questions has increased the paperwork, costs, and time associated with jurisdictional determinations. 

However, any cost savings will be at least partially offset by reviews of additional mitigation plans, 

associated environmental compliance for larger permit areas, and implementation costs, including 

additional documentation and data management requirements.

Comprehensive Enforcement

Benefits may also be realized from more comprehensive enforcement efforts that could result 

from the proposed rule. Because it can be difficult to establish where the CWA applies after the 

Supreme Court’s decisions in SWANCC in 2001 and Rapanos in 2006, EPA enforcement managers have 

indicated that enforcement efforts have shifted away from small streams high in the watershed where 

jurisdiction is a potential issue. In short, EPA is focusing efforts on larger streams and rivers, where 

there is more certainty of establishing jurisdiction. A rule that more clearly protects small streams may 

lead to more comprehensive enforcement and therefore greater compliance with CWA program 

regulations. This, in turn, could ultimately save the costs of additional drinking water filtration, stream 

restoration, and other costs of repairing damage caused by pollution.

Reduced Uncertainty

Land developers, the energy and transportation sectors, the agricultural community, and other 

businesses face uncertainty surrounding CWA jurisdiction that may lead to reduced willingness to invest 

in projects or lost investment when entities must alter or abandon project plans. Businesses operate 

best in an environment of regulatory certainty. Business professionals are equipped to plan accordingly 

for known factors. However, uncertainty can lead businesses to sit on capital rather than take unknown 

risks. The current lack of clarity in where the CWA applies can delay building roads and houses, 

developing natural resources, and engaging in other activities where CWA 404 permits are needed. A 

rule that more clearly identifies small streams and wetlands that require protection under the CWA may

reduce uncertainty and the costs that go with it. Depending on how significant uncertainty-related costs 

are, this proposed rule might ultimately reduce net costs for people seeking CWA permits, and increase

consistency, predictability, and timeliness of the permitting process. 
11

Section 6: Scope of Impact

To evaluate the extent to which EPA and the Corps may assert CWA jurisdiction as a result of 

this proposed rule, the agencies evaluated data records from FY2009-10 in the Corps’ ORM2 (Operation 

and Maintenance Business information Link, Regulatory Module) database that documents Corps 

jurisdictional status decisions associated with various aquatic resource types. The aquatic resource data 

records include the following categories: isolated waters, relatively permanent waters, traditional 

navigable waters, non-relatively permanent waters, and wetlands associated with these categories. The 

isolated waters category is used in the Corps’ ORM2 database to represent intrastate, non-navigable, 

waters that lack a direct surface connection to other waterways; these waters are hereafter referred to 

as “other waters.” 2

The data available in ORM2 allows for an evaluation of how decisions on jurisdictional 

determinations completed in the last two fiscal years (FY2009-10) may change under different 

jurisdictional policies. This analysis will allow for an estimation of a change in assertion of CWA 

jurisdiction as viewed through the lens of potential CWA 404 permitting activity during the baseline 

period of FY2009-10. Landowners and developers may assume that some waters are non-jurisdictional 

and not request a determination or engage in the permitting process. These waters would not be 

represented in the ORM2 FY2009-2010 data base. However, these waters are also likely to be the most 

isolated and the least connected to other waters and therefore the least likely to have their status 

changed under this proposed rule. To the extent the waters evaluated are representative of waters of 

the U.S. as a whole, the proportions of each water type that would change their jurisdictional status is 

more broadly representative. 

The ORM2 aquatic resource records may be placed into three groups: streams (ORM2 

categories of traditionally navigable waters, relatively permanent waters, and non-relatively permanent 

waters), wetlands (associated with the various above categories of streams), and other waters. Streams 

comprise 67 percent of the records and 98 percent were found jurisdictional in the FY2009-2010 

baseline period. Wetlands comprise 27 percent of the records and 98.5% were found jurisdictional in 

the FY2009-2010 baseline period. Other waters comprise 6 percent of the records, none of which are 

considered to be jurisdictional for the FY2009-2010 baseline period. As was done for the economic 

analysis for the April 2011 draft guidance, the agencies assume that all streams and wetlands would be

found jurisdictional under this proposed rule for purposes of this economic analysis. The agencies 

presume that all “streams” from the ORM2 grouping are presumed to meet the definition of “tributary” 

in the proposed rule, and all “wetlands” from the ORM2 grouping meet the definition of “adjacent” in 

the proposed rule. This represents a scenario that results in the highest estimates of costs for these 

groups of waters. 

 2 The “other waters” group of ORM2 records represents a more inclusive set of waters than would be considered 

“other waters” as the term is used in the proposed rule. The “other waters” group of ORM2 records includes many 

wetlands and some non-wetlands waters that would meet the definition of “adjacent” under the proposed rule. 
12

To determine how jurisdiction might change for the “other waters” group from ORM2, a team of 

Corps experts examined a sample of 262 project files previously coordinated with Corps headquarters 

from June 2008 – January 2011, representing over 1,000 individual waters in 30 states. Of the waters

that the Corps examined, 73 percent were wetlands, and the remaining waters were ponds, streams, or 

other resource types. Based on data available in the record files, the team judged whether or not the 

Agencies would determine the waters to be jurisdictional under the policies outlined in the April 2011 

draft guidance. Overall, the team found that 17 percent of these other waters would be determined to 

be jurisdictional. An EPA team independently examined a sub-sample of 50 of these files and similarly 

estimated that 15 percent of these other waters would become jurisdictional. 

Exhibit 3 depicts the results of the analysis of ORM2 FY2009-2010 records to estimate scope of 

impact with respect to CWA 404 permitting. Overall, assuming all tributary streams and adjacent 

wetlands as well as 17 percent of other waters (based on the ORM2 records grouping) are projected to 

be jurisdictional under the proposed rule increases overall jurisdiction under the CWA by 2.7 percent 

(95.2% - 92.5%), or roughly 3 percent, over current field practices. 

Exhibit 3. Analysis of FY2009-2010 ORM2 Records Showing Jurisdictional Status of Aquatic Resources

Number of 

ORM2 

Records

Positive 

Jurisdiction 

Records

(09-10)

Projected 

Positive 

Jurisdiction 

Records

Percent of 

Total ORM2 

Records

Percent 

Positive 

Jurisdiction 

(09-10)

Projected 

Percent 

Positive 

Jurisdiction

Streams 95,476 93,538 95,476 67% 98.0% 100.0%

Wetlands 38,280 37,709 38,280 27% 98.5% 100.0%

Other Waters 8,209 0 1,396 6% 0.0% 17.0%

Total 141,965 131,247 135,152 100% 92.5% 95.2%

This representation may or may not accurately represent a proportional change for CWA 

program activity other than CWA 404 permitting. As described above, EPA is more comfortable with 

these data representing a proportional change for stormwater, CAFO, and pesticide application

permitting than for other CWA 402 permitting and CWA 311 SPCC plan imposition, because the 

locations of these latter activities may not be similar to CWA 404 permitting and the regulatory history 

of these types of entities is different. For example, a large portion of traditional CWA 402 permit 

holders are located nearby large water sources to support their operations.
13

Section 7: Estimate of CWA 404 Program Costs

Under CWA Section 404, entities seeking to discharge dredge or fill material to waters of the 

U.S. must obtain a permit. A change in assertion of CWA jurisdiction could result in indirect costs of

implementation of the CWA 404 program: a greater share of development projects would intersect with 

jurisdictional waters, thus requiring the sponsors of those additional projects to obtain and comply with 

CWA 404 permits. Exhibit 4 provides a descriptive overview of four types of CWA 404 permitting costs 

the regulated community would face —permit application costs, compensatory mitigation costs, 

permitting time costs, and impact avoidance and minimization costs. 

Exhibit 4. Conceptual Overview of CWA Section 404 Permit Compliance Costs

Cost Category Description (costs vary considerably by permit type and by region)

Permit Application 

Costs

Financial costs to finalize a permit application that the Corps deems to be complete. 

Includes costs for delineation and survey of jurisdictional waters; preparing project area 

and impact drawings and maps; alternatives analysis that investigates opportunities to 

avoid and minimize project impacts (on-site alternatives in the case of general permits, 

both on- and off-site alternatives in the case of individual permits); developing a Corpsapproved compensatory mitigation plan; submitting a completed application that includes 

all notification and other requirements. In general, permit application costs increase with 

the size of the project area, size of impacts to jurisdictional waters, the number of 

separate impact locations, and any actions needed to comply with other Federal laws 

before a permit can be issued (e.g., Endangered Species Act, National Historic 

Preservation Act). The cost of the alternatives analysis often dominates application costs 

for individual permits in the case of projects involving relatively large impacts to 

jurisdictional waters.

Compensatory 

Mitigation Costs

Financial and opportunity costs to implement the Corps-approved compensatory 

mitigation plan that is written into the permit as a special condition. In the case of a 

mitigation plan that involves third-party mitigation providers (commercial mitigation 

banks or in-lieu fee programs), cost is driven by credit prices and the number of credits 

required. In the case of a permittee-responsible mitigation plan, includes opportunity 

costs of reserving a portion of development project lands for mitigation, and the financial 

costs of mitigation project implementation as well as mitigation monitoring, maintenance, 

and reporting until success criteria have been achieved. Could also include financial and 

opportunity costs of posting any required financial assurances for mitigation project 

success and/or providing any required endowment for long-term site management after 

mitigation success has been achieved.

Permitting Time 

Costs

Potential financial and opportunity costs associated with any delay in project 

implementation resulting from the time it takes to secure a permit. In the case of private 

sector, for-profit development projects, time costs could include financial or opportunity 

costs of carrying development capital for longer periods of time. In the case of public 

sector projects, time costs could include opportunity costs of foregone public services and 

benefits from not proceeding with the project sooner rather than later.

Impact Avoidance 

and Minimization 

Costs

Potential financial and opportunity costs associated with project redesign that may be 

required in order to avoid and minimize impacts on jurisdictional waters. Opportunity 

costs could include foregone net returns to development in the case of private sector, forprofit development projects, or lower levels of public service provision and benefits in the 

case of public sector projects (e.g., road construction and maintenance, repair of flood 

control infrastructure, etc.).
14

The sponsors of all projects subject to CWA 404 regulation incur costs to finalize a permit 

application (or a pre-construction notification in the case of general permits) that the Corps deems to be 

complete. Similarly, the sponsors of virtually all permitted projects also incur costs to implement 

compensatory mitigation actions required by permits to offset permitted impacts to jurisdictional 

waters. The analysis of incremental costs to the regulated community focused on the estimation of 

these two categories of compliance costs.

Depending on circumstances, the sponsors of many private sector as well as public sector 

projects that are subject to 404 permitting can also incur non-trivial permitting time costs and/or impact 

avoidance and minimization costs. Permitting time costs include potential financial and opportunity 

costs associated with delays in project implementation resulting from the time it takes to secure a 

permit. Impact avoidance and minimization costs include potential financial and opportunity costs 

associated with permit requirements to redesign projects so as to avoid and minimize project impacts 

on jurisdictional waters to the extent practicable. The agencies recognize that time and impact 

avoidance and minimization costs can be significant for some share of permit applicants. However, 

because there is not a defensible, ready basis for estimating these costs, the agencies did not estimate 

compliance costs for these categories as part of this economic analysis.

Estimate of Permit Application Costs

Estimated permit application costs relied on estimates of the number of additional permit 

applications, and the average impact per additional application, that would result from the proposed 

rule coupled with estimates of unit permit application costs. Exhibit 5 shows estimates of additional 

Individual Permits (IP) and General Permits (GP), and average per permit impact to jurisdictional waters 

(in acres) for each permit type. 

Exhibit 5. Estimated Additional CWA 404 Permits and Impacts to Jurisdictional Waters

Permit 

Type

Permits Issued in 

FY2010

(Sec. 404 only)

Added Permits w/Rule

(2.7% increase in 

jurisdiction)

Average Impact Per 

Added Permit 

(Acres)

Total Added 

Impacts 

(Acres)

IP 2,766 75 12.81 960

GP 49,151 1,327 0.28 372

The Corps derived the total number of permits issued and associated impact totals by permit 

type (IP vs GP) from FY2010 ORM2 data, using only records from permits issued under CWA 404 

authority (excluding data associated with permits issued under Section 9, 10, and 103 authority). The 

Corps system of tracking impacts has expanded over the past few years to include the ability to 

distinguish between permanent and temporary impacts, as well as different impact activity types (e.g. 

discharge of dredged material, discharge of fill material, excavation associated with fill, conversion, 

ecological restoration, and Section 10 impact types - structures and work). There are also fields to 

record area and/or linear values and activity specific fields for these impact activity types. To produce

the table values for average impact per added permit, the Corps selected only records with permanent 

impacts associated with the discharge of dredged or fill material in FY2010, excluding ecological 

restoration and conversion activities, as well as temporary impacts. Non-zero records with values in the 
15

authorized area field were included (entries that contained just a linear feet impact value or null values 

were excluded). Dividing these acreage totals by the number of CWA 404 permits produces estimates of 

the average impact acreage per permit. Multiplying the number of added permits by the average 

impact produces estimates of the total added impacts in acres (1,332 acres in total). 

The agencies used two sets of estimates for unit permit application costs to calculate a range of 

incremental permit application costs associated with the estimated proposed rule-induced permitting 

changes shown in Exhibit 4. These were obtained from two separate 1999 estimates of permit 

application costs developed to calculate incremental permit application costs associated with the 

replacement of Nationwide Permit No. 26 (NWP 26) with a suite of new and modified nationwide 

permits in the year 2000 (hereafter referred to as the “NWP replacement package”).

The Corps developed one set of estimates as part of its analysis of the incremental costs of the 

NWP replacement package.3 This estimate relied on data and information obtained through informal 

phone interviews with permitting consulting firms (companies that help the regulated community to 

navigate the permitting process) and Corps district regulatory staff based around the country. The

Corps asked interviewees to identify major components and component and total costs for finalizing a 

NWP 26 pre-construction notification and an IP application associated with a “typical” project involving 

up to three acres of impacts to jurisdictional waters. 

The Corps analysis of unit permit application for the NWP replacement package explicitly noted 

that the cost estimates were developed for a “typical” project, and that IP application costs for some 

projects could be much higher than the estimates produced for the NWP replacement package (e.g., it 

noted that in the case of controversial projects, the costs for the alternatives analysis alone could be 

several times the Corps estimates of IP application costs for a typical project). Further, permit 

application costs can vary considerably by region, so the cost for a typical project in one region can be 

considerably different than the cost for a typical project in another region. Also, the Corps analysis of 

permit application costs for the NWP replacement package was limited to projects affecting up to three 

acres of jurisdictional waters, whereas the proposed rule considered here could involve new permit 

application costs for projects involving significantly greater impacts to jurisdictional waters (which is 

relevant since permit application costs generally increase as the impact size increases). For these 

reasons, the agencies used the highest Corps estimates of unit permit application costs for the NWP 

replacement package as a lower bound on total added permit application costs associated with the 

proposed rule.

To calculate an upper bound on incremental permit application costs associated with the 

proposed rule, the agencies used estimates of permit application costs produced by a study of the costs 

of the NWP replacement package conducted by two academic economists in 1999 (hereafter referred to 

 3 U.S. Army Corps of Engineers. 2001. Cost analysis for the 2000 issuance and modification of nationwide permits. 

Institute for Water Resources. (August)
16

as the “SZ study”). 4 The SZ study was commissioned by two groups representing public and private 

segments of the regulated community: the National Association of Counties and the Foundation for 

Environmental and Economic Progress (whose members include large real estate development 

companies). 

The SZ study relied on a survey of 103 NWP and IP applications for which the project sponsors 

were asked to report the costs they incurred in preparing and finalizing the applications. Two-thirds of 

the applications in the survey sample involved projects in western states and the remainder involved 

applications in eastern or mid-western states. The sample involved a roughly equal mix of public sector 

and private sector development projects, including school construction, quarry expansion, sediment 

containment, home building, road improvements, and flood control.5

The SZ study analysis of the survey data found a statistically-significant, positive relationship 

between the amount of permitted impacts on jurisdictional waters and the cost of preparing a NWP and 

an IP. The authors used the survey data to develop a relationship between impacts to jurisdictional 

waters (measured in acres) and the cost of preparing a NWP and an IP. For each permit type, the SZ 

study produced an estimate of a fixed cost component plus another cost component that varied based 

on the amount of impact acres.6

 

Exhibit 6 shows the unit permit application costs obtained from the two sources outlined above, 

and the range of total added permit application costs for individual permits and general permits using 

the permit change data from Exhibit 5. The unit NWP costs are used to represent unit costs for all types 

of general permits. Costs figures in Exhibit 6 are adjusted from 1999$ to 2010$ using the CPI-U 

(1999=166.6, 2010=218.056).

Exhibit 6. Estimated Annual Additional CWA 404 Permit Application Costs

Permit 

Type

Added 

Permits 

w/Rule

Avg. Impact 

per permit 

(acres)

Unit Costs from

NWP Analysis

(2010$)

Unit Costs from

Sunding & Zilberman Study

(2010$)

Additional

Annual Cost

(2010$ millions)

IP 75 12.81 $31,400 $57,180 plus $15,441 per acre impact $2.4 – $19.1

GP 1,327 0.28 $13,100 $22,079 plus $12,153 per acre impact $17.4 – $33.8

Total 1,402 - - - $19.8 - $52.9

 4 D. Sunding and D. Zilberman. 2000. Analysis of the Army Corps of Engineers’ NWP 26 Replacement Permit 

Proposal. Prepared for the National Association of Counties and the Foundation for Environmental and Economic 

Progress. (January). 

5 These details on the projects included in the survey sample are reported in: D. Sunding and D. Zilberman. 2002. 

“The economics of environmental regulation by licensing: An assessment of recent changes in the wetland 

permitting process.” Natural Resources Journal. V. 42, Winter. 6 The range of NWP application costs in the survey was between $2,000 and $140,076; the median cost was 

$11,800, and the mean cost was $28,915. The range of IP application costs in the survey was between $7,000 and 

$1,530,000; the median cost was $155,000 and the mean cost was $271,596. (All estimates are presumed to 

reflect 1999$) 
17

Estimate of Compensatory Mitigation Costs

A portion of costs to applicants will result from compensatory mitigation of wetlands and 

streams. The cost of compensatory mitigation depends upon land prices and varies substantially across 

and within states. Additionally, the scale of a project will impact costs as the amount of compensatory 

mitigation required is typically calculated as a multiple of acreage of wetlands or linear feet of streams 

to be filled.

To estimate state-specific per-acre costs of wetland mitigation and per linear foot estimates of 

stream mitigation, the Corps examined published studies and survey results, made phone inquiries to 

Corps Districts and mitigation banks, and researched web sites. A team of Corps experts agreed on a 

range of values for each state. These costs vary widely, with average costs nationwide ranging from 

$24,989 to $49,207 per acre of wetlands mitigated and from $177 to $265 per linear foot of stream 

mitigation. There is wider variation in costs from state to state (see Appendix A).

The Corps also provided an estimate of 43,000 acres of wetland mitigation and 530 miles of 

stream mitigation to represent activity in the baseline period. This estimate is based on approximately 

32,500 acres of permittee-responsible mitigation documented in the ORM2 database in FY2010; 

approximately 8,200 acres of bank mitigation documented in the Regional Internet Bank Information 

Tracking System (RIBITS) database in FY2010, and 2,200 acres of in-lieu fee (ILF) mitigation estimated 

from the ratio of ORM2 entries for banks (26%) and ILF (7%) in FY2010. This total may be incomplete, 

but the agencies believe it is a close approximation of mitigation for FY2010, and that it is consistent 

with the level of mitigation the Corps has estimated for the past 10-15 years. 

The agencies used the same methodology to estimate mitigation costs as used previously to 

estimate these costs for policies proposed in draft guidance in April 2011. The methodology assumes 

that all permits associated with projected additional jurisdictional waters would require mitigation at 

the same rate as the baseline permitting profile on a state-specific basis. The agencies assumed all nonisolated streams and wetlands in ORM2 classified as non-jurisdictional in the ORM2 data base in FY2009-

10 would be considered jurisdictional under the proposed rule, and that 17 percent7 of nonjurisdictional “other waters” would likewise be considered jurisdictional under the proposed rule (please 

see description under section 6 “Scope of Impact” above). The vast majority of these “other waters” 

among the 17 percent would be classified as “adjacent wetlands” under the proposed rule and thus, 

most appropriately associated with wetlands mitigation rates and costs on a state-by-state basis.

EPA and the Corps estimate that the proposed rule could result in an additional 2,042 acres of 

wetland compensatory mitigation annually, and an additional 49,075 linear feet of stream mitigation 

annually. Using a range of state-specific unit costs of mitigation, this translates to a total estimated cost 

of annual incremental mitigation ranging from $59.7 million to $113.5 million. Of this amount, the 

majority of costs ($51.0 – $100.5 million) are for wetlands. Exhibit 7 summarizes these results.

 7 The sample analysis of “other waters” indicated that none of the 145 waters examined in the state of California 

would become jurisdictional. While the analysis suggested no change in jurisdictional status of “other waters” in 

the state of California, the agencies applied a 5 percent change in jurisdiction to be conservative. 
18

Exhibit 7. Estimated Annual Additional CWA 404 Compensatory Mitigation Costs

Water Body Type Units of Mitigation1 Unit Cost2 Annual Cost (millions)3

Streams 49,075 feet $200 - $300 $8.7 - $13.0

Wetlands 2,042 acres $25,000 - $49,200 $51.0 - $100.5

Total -- -- $59.7 - $113.5

1. Based on method described in EPA (2011). 

2. Weighted average of varying unit costs across states. 

3. Calculated by multiplying incremental mitigation with unit costs.

Estimate of Corps Administrative Costs

The Corps anticipates that it will incur additional administrative costs under the proposed rule

associated with the increased permitting workload. The Corps is typically, but not always, the 

permitting authority for CWA 404 permits. Sources of administrative costs include: responding to 

additional requests for jurisdictional determinations; an overall increase in workload-related tasks such 

as permit actions, consultations, and compliance and enforcement actions; and additional time to 

conduct significant nexus analyses. The Corps will also likely face additional costs to provide program 

management, training, and compliance oversight associated with administering the program. Exhibit 8

briefly summarizes the principal cost categories for administering the CWA 404 program. 

Exhibit 8. Overview of CWA 404 Permit Administrative Costs

Cost Category Description (costs vary considerably by permit type and often by region)

Permitting Costs Costs associated with the time needed to review additional permits (which may be more 

complex due to a larger scope of review, reduction in the ability to avoid and minimize 

impacts, requiring more project modifications and additional mitigation) additional 

compliance and enforcement costs, additional mitigation plan reviews, effort to conduct 

additional agency consultations and coordination and possible increase in permit appeal 

requests and litigation costs. 

JD Review and 

Coordination Costs

Additional time needed to review additional JD requests, more coordination with Corps 

Headquarters for “other” (isolated) waters, additional time for District staff to prepare a 

significant nexus evaluation for “other” waters. More appeals of approved JDs may occur.

Automation Costs Additional costs for automating new JD forms, updating the permit tracking system 

(ORM2) to reflect needed data elements, updating user documentation.

Training Costs Additional costs for Corps districts to implement the new guidance/rule, includes 

webinars, field training, and outreach activities for the regulated public.

The increase in waters that the agencies consider jurisdictional from the 2008 guidance may 

result in an increase in requests for JDs. Some changes contained in the proposed rule, such as 

providing a definition of tributaries that are categorically jurisdictional, could reduce the administrative 

costs of establishing jurisdiction. If such changes balance the expected increase in JD requests, there 

would be no incremental change administrative costs related to jurisdictional determinations.

Because the agencies expect that most non-isolated waters will be jurisdictional under the 

policies under the proposed rule, applicants may find “preliminary JDs” (PJDs) more appealing. In a PJD 

a permit applicant elects to set aside the question of jurisdiction and voluntarily “opts in” to the 

permitting process and avoids a longer “approved JD” (AJD) process. In FY2010, 58 percent of JDs were 
19

PJDs (42 percent were AJDs). PJDs are less time-consuming to document than AJDs, but permit 

application processing may require more information describing jurisdictional waters (e.g., to assess 

impacts and formulate compensatory mitigation requirements). Alternatively, some applicants may 

request an AJD as a means to potentially reduce mitigation requirements and associated costs. If more 

landowners elect to request AJDs, the workload and administrative costs will increase.

The agencies expect that permit applications will increase as the agencies determine that more 

waters are jurisdictional. This increase in permit activity may increase required consultations under the 

Endangered Species Act (ESA) and Section 106 of the National Historic Preservation Act. This could 

increase costs for other agencies, such as the Fish and Wildlife Service, National Marine Fisheries 

Service, Advisory Council on Historic Preservation, and Tribal and State Historic Preservation Officers. 

Exhibit 9 depicts the broad categories and specific tasks related to Corps administration of the 

CWA 404 program. To derive an estimate of the incremental administrative costs, the Corps identified 

how many hours per year are devoted to each task at the headquarters and district office level and 

translated this into dollars using average fully loaded salary rates for the needed personnel. Applying 

the incremental percentage increase in CWA 404 permits of 2.7 percent, the Corps estimates that their 

additional administrative costs will range from $7.4 to $11.2 million annually. An increase in the Corps 

permitting budget of this amount would be necessary to maintain current levels of permitting efficiency 

with the rule in place.

Exhibit 9. Categories of Corps CWA 404 Administrative Tasks

Category Tasks

Wetland Delineation and Jurisdictional 

Determination (JD)

Preliminary JD

Office/Desk JD

Field JD

Permit Related Tasks

Pre-Application Meetings

Standard Permit (SP) Processing Base

Letter of Permissions (LOP) 

Nationwide (NWP) Processing without a Pre-Construction 

Notification (PCN)

NWP Processing with PCN

Regional/Programmatic (RGP/PGP) Processing without PCN 

(issued by Regulatory)

RGP/PGP Processing with PCN (issued by Regulatory)

Consultation

Endangered Species Act (ESA) Formal Consultation Process

ESA Informal Consultation Process

Historic Properties

Tribal

Environmental Impact Statement (EIS) EIS as Lead

EIS as Cooperating Agency

Compliance Compliance

Resolution of Non-Compliance

Enforcement Unauthorized Activity
20

Section 8: Estimate of CWA 404 Program Benefits

The CWA establishes requirements for waters of the U.S., and a revised definition of waters of 

the U.S as proposed would result in additional waters over which the agencies would clearly assert 

jurisdiction. This in turn could lead to ecosystem service benefits through 1) avoidance and 

minimization of permit impacts and 2) compensatory mitigation requirements. This analysis focuses on 

benefits of incremental compensatory mitigation because the agencies lack reliable data and 

information to estimate benefits of avoidance and minimization. Further, this analysis focuses on the 

value of wetlands mitigation. Benefits associated with stream mitigation are not quantified.

Potential benefits of the proposed rule may also accrue from cost savings to federal and state 

agencies. The policies in the proposed rule may lower the level of effort required to complete a 

jurisdictional determination or pursue an enforcement case. The additional clarity resulting from the 

proposed rule may also ultimately reduce the workload associated with jurisdictional determinations for 

streams and adjacent wetlands in the longer term, resulting in a cost-savings to the Corps. 

The agencies estimated the potential benefits from CWA 404 compensatory mitigation using a 

benefits transfer approach. Benefits transfer involves selecting study cases relevant to the policy case 

under consideration, and transferring values using a unit value or function-based approach. The major 

issue with benefits transfer is that economic values for ecosystem services are context 

(resource/region/user) specific. Thus, it is best suited for transferring estimates between comparable 

contexts. For example, there is uncertainty involved in completing a benefits transfer where waters vary 

greatly in their functionality and relative value based on the relative scarcity, location within a 

watershed, and the degree of human impacts in their vicinity, as do the waters under consideration in 

this analysis. To the extent that the waters valued in studies from the literature are more functional, 

and thus more highly valued than the additional resources subject to compensatory mitigation under 

this proposed rule, the contexts of the transfer would diverge. Also, the users of the services in the 

original valuation studies may not be comparable to users in other areas; that is, the WTP among service 

users in different areas could differ significantly. However, without knowing specifically where impacts 

will occur in the future, benefits transfer remains the only feasible option for quantifying potential 

benefits. Given these challenges, and the uncertainty as to specific sites that may be affected by this 

proposed regulatory action, the benefits values presented in this analysis should be viewed as only 

illustrative. This type of analysis would not be appropriate for a site-specific evaluation. 

The specific benefits transfer approach used in this analysis also relies on contingent valuation 

and aggregation of household level estimates of willingness to pay (WTP). Contingent valuation elicits 

“stated preferences” rather than revealed (or actual) preferences, which is not ideal for quantifying 

benefits. Stated preference methods rely on surveys that assess respondents stated WTP for goods or 

services, such as ecosystem services provided by a natural landscape feature. 

In using the household-level WTP information, there are no clear rules for aggregation (i.e., 

determining which households pay). For this analysis, the agencies attempted to make reasonable and 
21

credible choices, but it is important to recognize up front that there is uncertainty and limitations 

associated with the results.

The April 2011 draft guidance on Identifying Waters Protected by the Clean Water Act was 

accompanied by an assessment of potential benefits that may be indirectly realized from adoption of 

the jurisdictional policies proposed in the Guidance. To estimate benefits from additional mitigation,

studies of ecosystem services that reported a monetized value on a per acre basis were examined. A 

few authors have attempted to value the majority of the services provided by a wetland, although the 

estimates developed are still considered fairly incomplete by their authors. A synthesis study relied 

upon for the Guidance economic assessment presents average wetland function values for fishing, fur 

trapping, hunting, recreation, water filtration, flood control, scenic value, and habitat values. Summing 

the values for each category yields a total “unit benefit” ranging from $129,000 to $292,000 per acre 

(2010$, capitalized using a 6 percent discount rate). Applying this unit benefit estimate to the estimated

incremental number of wetland acres impacted for which mitigation is required yields a rough estimate 

of the potential indirect benefits. While this approach allows for quantification of many of the functions 

served by wetlands, combining these values leads to some uncertainty. Not all wetlands fully perform 

all of the functions evaluated in the literature. 

For this economic analysis supporting the proposed rule, the agencies pursued an alternative 

approach to seek studies from the literature that provide value estimates for a suite of ecosystem 

services provided by a particular wetland or wetland complex as a whole (i.e., total resource values 

rather than stacked service-specific values). Wetlands under consideration for their value may provide 

varying degrees of particular services, or may not provide a particular service at all. A strength of this 

approach is the values elicited implicitly account for the varying degree and interrelationships among of 

services provided8

, assuming respondents are sufficiently informed. With a set of values representing a 

variety of wetlands that provide similar services as those likely to be incrementally protected by the 

proposed rule, the agencies can develop WTP estimates to apply to aggregate national-scale estimates 

of impacted acres.

In conducting the literature search, the agencies focused on studies that assess waters expected 

to provide services similar to the waters incrementally protected under the proposed rule. The 

economic valuation literature includes a large volume of studies that estimate the value of preserving, 

protecting, restoring, replacing (mitigation), and increasing the size of wetlands, including several meta-

 8 The value of a bundle of services is generally not the same as the sum of values for individual services that 

comprise the bundle estimated separately. The independent valuation and then aggregation of multiple service 

values can introduce systemic bias in total value estimates because independent valuation does not account for 

the potential interdependence (e.g., complementarily) among services. Use of CV to estimate total values for all 

services collectively avoids this problem by estimating values for resource changes while considering the potential 

interdependence among individual resource services. 
22

analysis studies (e.g., Moeltner and Woodward 2007).

9 Many of these studies provide values for 

overseas, tidal, or coastal wetlands that may not well represent waters likely be incrementally protected 

by the proposed rule. For example, tidal wetlands are valued highly for fishery habitat, which is typically 

not provided to the same degree by wetlands adjacent to small tributaries or more isolated wetlands. 

However, the agencies identified 10 studies that provide estimates of WTP to preserve wetlands that 

provide a suite of services expected to be similar to those provided by waters incrementally protected 

under the proposed rule. These studies represent riverine or floodplain, forested, emergent, and 

depression or isolated wetlands in 12 states across the country. These studies are summarized in 

Appendix B of this report.

For this exercise, it is necessary to express values on a “per acre” basis rather than a “per acre 

per year” basis to be comparable to the cost figures presented in section VII. The cost figures are annual 

values, but they reflect an annual summation of one-time compensatory mitigation costs. These “unit 

costs” are established as the one-time cost per acre to maintain the services provided in perpetuity. 

Thus, a proper comparison would be to derive marginal benefits as the product of the estimated 

marginal number of acres affected each year and a “unit benefit” dollar value per acre. Dollar values

expressed as “per acre per year” can be converted to a present value dollar value “per acre” by dividing 

by a discount rate (typically between 3 percent and 7 percent).

The agencies standardized WTP estimates across all studies in three ways: 1) household basis, 

2) per acre basis, and 3) annual basis. For estimates reported as annual WTP for wetland preservation, 

the agencies derived the total present value over a period of 50 years using 3 percent and 7 percent 

discount rates. For estimates originally reported per individual rather than per household, the agencies

assumed one individual per household. The agencies calculated WTP on a per household per acre basis

by dividing the per household WTP value by the size of valued wetlands reported in a particular study. 

The agencies took the geometric mean of WTP values from the 10 studies, weighted by number of 

respondents in each study, to represent an overall WTP. The majority of the original studies modeled 

WTP using a log-normal distribution and reported geometric means. As shown in Exhibit 10, this 

methodology results in a WTP per household per acre of $0.016 using a 3% discount rate. The same 

approach with a 7% discount rate results in $0.012 WTP per household per acre. 

Exhibit 10. Weighted-Average WTP per Acre per Household for Wetland Preservation

States Covered in the Sample Studies WTP per HH per Acre

(3% Discount Rate)

WTP per HH per Acre

(7% Discount Rate)

CA, IA, MN, NE, SD, WI IL, IN, KY, MO,

SC, and TN $0.016 $0.012

 9 Moeltner, K. and R. Woodward. 2007. Meta-Functional Benefit Transfer for Wetland Valuation: Making Most of 

Small Samples. UNR Joint Economics Working Paper 07-012. Paper presented at the W1133 Annual Meetings, 

Richmond, VA, March 28-30, 2007.
23

Benefits values for compensatory mitigation were calculated using estimates of impacted acres 

rather than estimates of mitigation acres required. This is because the benefits associated with 

mitigation reflect the value of pre-project wetlands that will be impacted at the site. The Corps typically 

requires more mitigation acreage than impacted acres because it may take more mitigation acres to 

replace the functionality of the impacted acres at the site. To facilitate estimating permit application 

costs, the Corps estimated that there would be an additional 1,332 acres impacted across the nation 

each year as a result of the proposed rule (see Section VII, Subsection A, Table 4). The agencies 

apportioned this estimate of acreage by state according to the number of positive wetland aquatic 

resource jurisdictional status records from ORM2 in FY2009-2010 (just as the agencies did to apportion 

mitigation acres by state for the cost analysis), assuming that this serves as a proxy for permitting 

activity in the state.

As stated above, there are no clear rules for aggregating households to determine a total 

willingness to pay. One option would be to use the total number of households in the nation and the 

total incremental impact acreage estimate for the nation. Another option would be to use the total 

number of households in the state and the incremental impact acreage estimate apportioned by state. 

The agencies selected an intermediate option of grouping states into similar “wetland regions”, 

assuming that per acre benefits values accrue to all citizens in the region. The USDA Economic Research 

Service has used a set of eight wetland regions in the contiguous U.S.: Central Plains, Delta and Gulf, 

Mountain, Midwest, Northeast, Pacific, Prairie Potholes, and Southeast (Heimlich et al. 1998).10 The 

agencies assumed that the benefits in Alaska and Hawaii accrue only to households residing in those 

states. Using the incremental impact acreage estimate apportioned by state and the total number of 

households in each state, the agencies calculated wetland compensatory mitigation benefits for the 

proposed rule in each wetland region. As shown on Exhibit 11, the illustrative estimate of present value 

of wetland mitigation ranges from $257.6 million to $345.1 million annually, using a 7 percent and 3 

percent discount rate respectively.

In terms of WTP per household, the annual WTP for all regional acres ranges from $0.36 to 

$3.86 depending on the region, with an overall average of $2.30. On a per acre basis, benefits vary by 

region, ranging from approximately $26,000 to $287,000 per year with an overall average of $193,000 

(7% discount rate). In comparison, the stacked service-specific approach used in the Guidance benefit 

assessment yielded per acre benefit ranging from $129,000 to $292,000 (6% discount rate). 

 10 Heimlich, R.E., R. Claassen, K.D. Wiebe, D. Gadsby, and R.M. House. 1998. Wetlands and Agriculture: Private 

Interests and Public Benefits. AER-765, U.S. Dept. Agr. Econ. Res. Serv., Aug.
24

Exhibit 11. Estimated Annual CWA 404 Wetland Compensatory Mitigation Benefits

Region Incremental Impact 

Acreage Estimate

Number of 

Households

Present Value of Incremental Benefit Per 

Year (2010$ millions)

7% Discount Rate 3% Discount Rate

Central Plains 30 3,201,336 $1.2 $1.5 

Delta and Gulf 85 14,521,178 $14.8 $19.8 

Mountain 145 7,390,812 $12.9 $17.3 

Midwest 322 23,909,088 $92.3 $123.7 

Northeast 240 23,839,690 $68.7 $92.1 

Pacific 79 16,163,714 $15.3 $20.5 

Prairie Potholes 241 2,176,626 $6.3 $8.4 

Southeast 187 20,485,107 $46.1 $61.7 

Other 3 234,779 $0.0 $0.0 

National 1,332 111,922,330 $257.6 $345.1 

Another way to evaluate the results is to look at inferences of the relative proportion of total 

value for “use” and “non-use” values. The WTP studies evaluated ecosystem services that may be 

categorized as “use” values such as flood protection and recreation and services that may be 

categorized as “non-use” values such as wildlife habitat or “bequest” or “existence” values. It is 

reasonable to suggest that one may value wetlands very far from their home for their “non-use” values 

more than they would for their “use” values. Because of the holistic valuation approach, the agencies

cannot discern “use” or “non-use” components of the WTP estimates. However, the agencies can 

consider a scenario where the full WTP applies to state households, and a discounted WTP applies to 

out-of-state households for the impact acreage in each state. To achieve the same totals as the regional 

approach, the discounted rate for out-of-state households would be approximately 12 percent of the full 

WTP. If this discounted out-of-state WTP is considered to account for “non-use values” only (which is 

not necessarily the case because many “use” values, notably flood protection value, may accrue more 

on a watershed basis that cross state lines), then this implies a “non-use” to “use” ratio of 0.14 (12/88) 

or a “non-use” to total ratio of 0.12. This is considerably on the lower end of the range for “non-use” to 

total WTP ratios in the literature. Brown (1993) summarizes 31 studies measuring “use” and “non-use”

WTP, finding a range of “non-use” to “use” ratio of 0.11 to 10.74 with a median ratio of 1.92 (equivalent 

to a “non-use” to total ratio of 0.1 to 0.91, median of 0.66).11 Carson and Mitchell (1993), used in past 

EPA regulations, report an out-of-state to total WTP ratio of 0.33.12 The relatively small contribution 

(0.12) from out-of-state households lends credibility to the selection of the regional approach to 

household aggregation. 

 11 Brown, T. C., Measuring nonuse value: A comparison of recent contingent valuation studies, W-133 Sixth Interim 

Rep., Dep. of Agric. and Appl. Econ., Univ. of Ga., Athens, 1993.

12 Carson, R.T., Mitchell, R.C., 1993. The value of clean water: the public’s willingness to pay for boatable, fishable, 

and swimmable quality water. Water Resources Research 29 (7), 2445–2454
25

Section 9: Costs and Benefits to Other Programs

As discussed above in section III, the definition of waters of the U.S. affects several CWA 

programs. As further discussed above, EPA anticipates that this proposed rule would be cost neutral or 

minimal with respect to CWA Section 303 program implementation, as well as for traditional CWA 

Section 402 discharge permits such as those for municipal wastewater treatment facilities or industrial 

operations. However, there may be additional indirect costs may be incurred for CWA Section 401 state 

certification, CWA Section 402 stormwater permits for construction and development and 

municipalities, and CWA Section 311 oil spill prevention plans. Across the board, EPA may incur 

enforcement program savings.

CWA Section 401 State Certification

Under the CWA, tribes and states have the authority to review the issuance of federal permits 

and certify if they will meet applicable tribal/state water quality standards. Tribes and states may also 

condition federal permits to ensure they will not cause or contribute to a violation of tribal/state water 

quality standards. There is no uniform level of implementation of CWA Section 401 across all states.13 

Different states dedicate various levels of resources to CWA 401 certification. Based on program 

experience, EPA estimates that a representative distribution of effort would be 25 states dedicating 0.5 

FTE (full time employees) equivalent, 20 states dedicating 10 FTE, and 5 states dedicating 20 FTE for 

CWA 401 implementation. This tallies to 312.5 FTE nationally. Based on Bureau of Labor Statistics 

occupational employment statistics (OES) categories, an even mix of scientists, engineers, economists, 

and managers (representing a team involved in prioritizing and reviewing permits) employed by state 

government would have an average fully-loaded salary rate of $42 per hour. Assuming an eight hour 

day, five days a week, 52 weeks a year, this would be $87,360 per year per FTE. Multiplying by a total of 

312.5 FTE, this yields an annual estimate of approximately $27.3 million. Although this would represent 

effort for reviews of all federal permits, applying the incremental percentage increase in CWA 404 

permits of 2.7 percent results in a projected incremental costs to states of about $737,100 annually. 

Exhibit 12 summarizes additional cost information. 

Exhibit 12. Estimated Annual Additional CWA 401 Administrative Costs to States

FTE Amount for 401 Number of States Total FTE Total Costs (2010$)

0.5 25 12.5 $ 1,092,000 

10 20 200 $ 17,472,000 

20 5 100 $ 8,736,000 

TOTAL: 312.5 $ 27,300,000

2.7% INCREMENT: 8.44 $737,100

To the extent that states condition permits, added costs to permittees and environmental 

benefits associated with compensatory mitigation would be accounted for in the methodology for 

assessing those incremental impacts: they would accrue to the same extent as represented in the 

 13 EPA focused this estimate on state implementation and did not attempt to quantify potential impacts on tribes.
26

baseline. Any added costs to permittees and environmental benefits associated with avoidance and 

minimization that result from state certification are not quantified.

CWA Section 402 NPDES Permits

Under the CWA, the term “discharge of a pollutant” and the term “discharge of pollutants” 

generally each means any addition of any pollutant to navigable waters from any point source. 

NPDES permits all address discharge of a pollutant, yet may reflect different statutory and regulatory

requirements depending on the type of point source.

Polluted stormwater runoff is commonly transported through Municipal Separate Storm Sewer 

Systems (MS4s), from which it is often discharged untreated into local waters. To prevent harmful 

pollutants from being washed or dumped into an MS4, operators must obtain a NPDES permit and 

develop a stormwater management program. Phase I, issued in 1990, requires medium and large cities 

or certain counties with populations of 100,000 or more to obtain NPDES permit coverage for their 

stormwater discharges. Phase II, issued in 1999, requires regulated small MS4s in urbanized areas, as 

well as small MS4s outside the urbanized areas that are designated by the permitting authority, to 

obtain NPDES permit coverage for their stormwater discharges. Generally, Phase I MS4s are covered by 

individual permits and Phase II MS4s are covered by a general permit. Each regulated MS4 is required to 

develop and implement a stormwater management program (SWMP) to reduce pollutant discharge 

from stormwater to the “maximum extent practicable” (MEP) and eliminate non-stormwater discharges. 

It is unclear specifically how a broader assertion of CWA jurisdiction under this proposed rule 

would affect MS4 permits. An MS4 may have several different outflows within its service area, and 

some may be to waters where CWA jurisdiction may not apply. However, in implementing a SWMP, 

operators likely implement BMPs uniformly across their area without regard to the specific location of a 

specific outfall, and thus the jurisdictional status of a portion of the receiving water would not matter in 

terms of costs. In addition, MS4 outfalls tend not to be in wetlands, which represent a large portion of 

the CWA 404 program aquatic resource records and the most incremental waters where increased 

assertion of CWA jurisdiction is expected under this proposed rule. Thus, the true cost impact is 

considered to be negligible.

Stormwater runoff from construction activities can have a significant impact on water quality. 

As stormwater flows over a construction site, it can pick up pollutants like sediment, debris, and 

chemicals and transport these to a nearby storm sewer system or directly to a river, lake, or coastal 

water. Polluted stormwater runoff can harm or kill fish and other wildlife. Sedimentation can destroy 

aquatic habitat, and high volumes of runoff can cause stream bank erosion. Debris can clog waterways 

and potentially reach the ocean where it can kill marine wildlife and impact habitat.

The NPDES stormwater program requires construction site operators engaged in clearing, 

grading, and excavating activities that disturb one acre or more, including smaller sites in a larger 

common plan of development or sale, to obtain coverage under an NPDES permit for their stormwater 

discharges. EPA has authorized most states to implement the stormwater NPDES permitting program. 
27

EPA used information from the Economic Analysis of Final Phase II Storm Water Rule (October 1999, 

see Exhibit ES-4) to estimate potential incremental indirect costs for construction stormwater permit 

holders. The process is to 1) take the costs (in 1988 $/yr) for construction, 2) determine the 2.7 percent 

increment to account for increased jurisdictional assertion from this proposed rule, 3) account for 

program growth of 30% representing the increase from 130 thousand “construction starts” in 1994 cited 

in the 1999 Economic Analysis to 169 thousand construction sites with permit coverage in 2011 cited in 

EPA’s GPRA management measures tracking (any SWANCC and Rapanos effect would be implicit in this 

calculation step), and 4) convert to 2010 dollars. This results in incremental costs of $25.6 – 31.9 million 

annually for construction. The same process applied to benefits calculation yields a range of $25.4 -

$32.3 million per year.

Exhibit 13 summarizes costs and benefits for construction and development stormwater CWA 

402 permitting. The same process for estimating indirect permitting authority administrative costs for 

both MS4s and construction yields incremental costs of approximately $250 thousand annually. These 

costs would generally accrue to states as the typical permitting authority. The original analysis did not 

adjust the universe of affected entities based on CWA jurisdiction so the incremental impacts are 

components of costs and benefits previously identified for past rules, not new costs and benefits 

associated with this proposed rule.

Exhibit 13. Estimated Annual Additional CWA 402 Stormwater Permitting Impacts ($ millions)

Administrative 

Costs (States)

Implementation 

Costs (low)

Implementation 

Costs (high)

Benefits 

(low)

Benefits 

(high)

1998 Values 5.3 545.0 678.7 540.5 686.0

(1) 2.7% Increment 0.143 14.7 18.3 14.6 18.5

(2) Program Growth 0.186 19.1 23.8 19.0 24.1

(3) 2010 Dollars 0.249 25.6 31.9 25.4 32.3

Concentrated Animal Feeding Operations (CAFOs) are point sources under the CWA and are

regulated under the NPDES permitting program. Most current permit holders are covered under stateissued general permits. EPA promulgated regulations for Concentrated Animal Feeding Operations 

(CAFOs) in 2003 that expanded the number of operations covered by the CAFO regulations and included 

requirements to address the land application of manure from CAFOs (develop and implement nutrient 

management plans). EPA revised this regulation in 2008 to reflect changes requested by the Second 

Circuit Court in its decision in response to litigation. However, the basic cost and benefit information 

from the supporting economic analysis (see Table 8.1 and 8.4 in Federal Register volume 68 number 29 

from February 12, 2003) is useful for estimating potential indirect impacts in a similar manner as above 

for stormwater. The process is to 1) take the costs (in 2001 $/yr) for CAFO operators and permit 

authority administrators (typically states), 2) determine the 2.7 percent increment to account for 

increased jurisdictional assertion from this proposed rule, 3) adjust for a program size decrease of 50 

percent comparing the approximate 15,000 CAFOs considered in the 2003 Economic Analysis to 7,318 

CAFO permit holders in 2011 cited in EPA’s GPRA management measures tracking (any SWANCC and 

Rapanos effect would be implicit in this calculation step), and 4) convert to 2010 dollars. This results in 

incremental costs of $5.5 million annually for CAFO operators and $150 thousand annually for 
28

administrative costs to permitting authorities. The same process applied to benefits calculation yields a 

range of $3.4 - $5.9 million per year, although the benefits are only calculated for large CAFOs which 

comprise 85 percent of the operator costs and 66 percent of the administrative costs. Exhibit 14

summarizes costs and benefits for CAFO CWA 402 permitting. The original analysis did not adjust the 

universe of affected entities based on CWA jurisdiction so the incremental impacts are components of

costs and benefits previously identified for past rules, not new costs and benefits associated with this 

proposed rule.

Exhibit 14. Estimated Annual Additional CWA 402 CAFO Permitting Impacts ($ millions)

Administrative 

Costs (States)

Implementation 

Costs

Benefits 

(low)

Benefits 

(high)

2001 Values 9.0 326.0 204.0 355.0

(1) 2.7% Increment 0.243 8.8 5.5 9.6

(2) Program Size Adjustment 0.122 4.4 2.8 4.8

($) 2010 Dollars 0.151 5.5 3.4 5.9

On October 31, 2011, EPA issued the final NPDES general permit for point source discharges to 

waters of the United States from the application of (1) biological pesticides, or (2) chemical pesticides 

that leave a residue. This permit, also known as the Pesticide General Permit (PGP), was developed in 

response to a decision by the Sixth Circuit Court of Appeals (National Cotton Council, et al. v. EPA). The 

Agency’s final PGP covers operators that apply pesticides that result in discharges from the following use 

patterns: (1) mosquito and other flying insect pest control; (2) weed and algae control; (3) animal pest 

control; and (4) forest canopy pest control. The permit requires permittees to minimize pesticide 

discharges through the use of pest management measures and monitor for and report any adverse 

incidents. The general permit will provide coverage for discharges in the areas where EPA is the NPDES 

permitting authority. In the remaining areas (44 states and the Virgin Islands), states are authorized to 

develop and issue the NPDES pesticide permits.

PGP cost information from the supporting economic analysis is useful for estimating potential 

indirect impacts in a similar manner as above for stormwater and CAFOs. The process is to 1) take the 

identified PGP costs, 2) determine the 2.7 percent increment to account for increased jurisdictional 

assertion from this proposed rule, and 3) scale up from 35,376 affected entities where EPA is the 

permitting authority to the approximate 365,000 potentially affected entities nationwide once states 

develop their own general permits for these dischargers (assuming costs will be similar). This results in 

incremental costs of between $2.9 and $3.2 million annually for operators. EPA did not generate 

estimates for government costs, nor did EPA attempt to quantify benefits. Exhibit 15 summarizes costs 

and benefits for CWA 402 PGP. The original analysis did not adjust the universe of affected entities 

based on CWA jurisdiction so the incremental impacts are components of costs previously identified, not 

new costs associated with this proposed rule.
29

Exhibit 15. Estimated Annual Additional CWA 402 PGP Impacts ($ millions)

Costs 

(low)

Costs 

(high) Notes

2010 Costs 10.4 11.4

Table ES-6 of Economic Analysis of the Pesticide General Permit 

(PGP) for Point Source Discharges from the Application of 

Pesticides (2009$ adjusted to 2010$ using CPI)

(1) 2.7% 

Increment 0.3 0.3 Projected increment attributable to proposed rule

(2) Scale Up for 

States 2.9 3.2

Scale up from 35,376 affected entities under federal permit to 

potential universe of 365,000

CWA Section 311 Oil Spill Prevention Plans

CWA Section 311 covers oil spill prevention and preparedness, reporting obligations, and 

response planning. These requirements apply to facilities that produce or store oil products based on 

total volume. In particular, inland non-transportation oil facilities of a certain size that have potential to 

discharge to navigable waters must prepare and implement Spill Prevention, Control, and 

Countermeasure (SPCC) plans. Potential costs of this proposed rule associated with CWA Section 311 

include SPCC plan development and implementation for oil storage and production facilities. In its 2009 

Regulatory Impact Analysis for the Final Amendments to the Oil Pollution Prevention Regulations, EPA 

developed compliance unit costs for SPCC-regulated facilities, including plan preparation and 

maintenance, secondary containment, integrity testing, drainage, monthly inspections, security, and 

training. There are four categories of production and storage facilities, with the great majority (more 

than 80 percent) comprising the lowest two categories in terms of capacity, and the lowest unit costs for 

compliance. The weighted average annual cost is $9,128 for production facilities (about 35% of total 

facilities) and $13,038 for storage facilities (values adjusted from 2007 $/year to 2010 $/year). 

Anecdotal information from EPA Regional Office program managers and enforcement specialists 

reveal that some potentially regulated facilities believe that they are not covered by the applicable SPCC 

regulations because they do not have the potential to discharge to a water of the U.S. Although there is 

not corresponding jurisdictional determination information as available for the CWA 404 permit 

program, it is reasonable to assume that a broader assertion of CWA jurisdiction may affect some of 

these facilities. Each EPA Region inspects approximately 100 facilities per year for compliance. Upon 

closer inspection, some of these facilities conclude they do need to comply. Generally, less arid EPA 

Regions report that their facilities do not question CWA jurisdiction, whereas EPA regions that include 

more arid (western) areas more frequently encounter this claim. Some EPA Regions report that a 

handful (one to five) facilities claim non-jurisdiction and that some of these facilities report there are a 

dozen others that are similarly situated. One EPA Region reports that at least 20 have asserted nonjurisdiction. Supposing that 100 of these facilities nationally are correct in their claim, and that there are 

10 times more facilities that would also be correct in this claim, and that none of these 1,000 facilities 

has incurred compliance costs (either for the SPCC rule or to meet self-imposed industry standards), this 

would result in approximately $11.7 million per year in incremental costs.
30

One of the benefits of compliance is avoiding risk of incurring cleanup costs should there be a 

spill. The national average spill volume (2000-2005 data from NRC) is 1,290 gallons. The average clean 

up costs for a spill of this size is $221 per gallon in 2010 dollars, or a total of $285 thousand in clean up 

costs per average spill. A bigger spill can cost more. Essentially, complying facilities expend about $10 

thousand dollars a year to avoid clean up costs of several hundred thousand dollars (plus fines that 

range from 4, 400 to 230,400 on average). If the incremental risk associated with taking no steps to 

prevent a spill is 1 in 10 per year, this would represent an annual benefit of $28,509 (not including fines). 

If the risk is more like 1 in 20, the annual benefit is $14,255. Applying the lower benefit per facility per 

year value, incremental benefits for 1,000 non-complying facilities would total approximately $14.3 

million annually. This does not consider ecological benefits of avoiding oil spills. Although the precise 

number of affected facilities is highly uncertain, it does appear that reasonable assumptions with 

respect to costs and benefits suggest that benefits would justify costs.

EPA Enforcement Savings

EPA has experienced increased resource burden associated with enforcement of CWA 402, 404, 

and 311 as a result of the decisions in SWANCC and/or Rapanos and the agencies’ implementing 

guidance. The proposed rule should reduce these impacts by providing clarity on federal CWA 

jurisdiction. Compared to current practices, the proposed rule will establish jurisdiction for more 

waters, and increase the certainty regarding CWA program applicability. Although some cases may still 

require site-specific “significant nexus” analyses, the costs associated with proving federal jurisdiction in 

the majority of cases should decrease. 

The costs associated with enforcement efforts include the time of federal and state staff to 

conduct the needed jurisdictional analyses in prosecuting civil and criminal cases against CWA violators, 

primarily under CWA 402, 404, and 311. The staff includes environmental scientists, environmental 

engineers, and attorneys. Under the current system, EPA often needs to hire contractors to provide 

support in hydrology, wetlands ecology, etc. Appendix A includes the average labor costs for such staff 

that are expected to be involved in JD enforcement efforts.

EPA identified a number of representative cases to characterize the potential magnitude of costs 

or cost savings at the case level. These examples illustrate the incremental level of resources needed to 

assert jurisdiction post SWANCC and Rapanos. For example, EPA’s Region 9 expended thousands of 

hours to establish jurisdiction in the case of an Arizona rancher who bulldozed 2,000 acres within the 

floodplain of the lower Santa Cruz River, filling in over 100 acres of the River and its tributaries. The 

rancher asserted that the area filled was not subject to CWA jurisdiction, since it was not itself 

navigable. 

In another example, the government filed criminal charges against a pipe manufacturer (as well 

as several managers with knowledge of and control over the discharges) and won convictions. However, 

the discharger appealed, arguing that the receiving water is not navigable and is thus not jurisdictional 

pursuant to Rapanos. The 11th Circuit Court rejected the convictions because EPA had not sufficiently 

demonstrated the “significant nexus,” despite the fact that the convictions had occurred before the 

Rapanos decision. Although they ultimately obtained convictions in the case, EPA and DOJ expended 

thousands of hours in preparation for both the appeal and the retrial, including an extensive 
31

demonstration of CWA jurisdiction. The DOJ alone reported spending over 2,400 hours after the 

reversal, and EPA likely spent approximately half that amount working on the appeal. 

Similarly, in a case involving a dairy farm in Texas, the operator discharged a large quantity of 

wastewater (up to about 43,000 gallons) from a waste lagoon through a hose to the ground of the 

dairy’s property where it flowed to a neighboring property and then entered a creek that flows to Lake 

Fork Reservoir, a large navigable-in-fact waterbody. Although EPA expended over 300 hours on 

Rapanos-related jurisdictional analyses, the Assistant United States Attorney declined to prosecute the 

case because of concerns about establishing jurisdiction in light of Rapanos.

Although they are likely to be only a subset of cases affected by SWANCC and/or Rapanos, these 

three cases may be representative of the resource burdens associated with enforcement under the CWA 

that has been increased as a result of SWANCC and/or Rapanos. For example, as an estimate for trial 

cases, federal resource costs would be approximately $79,100 per case for 1,200 hours, based on a 

weighted average labor cost of federal environmental scientists and engineers (75%) and federal 

lawyers (25%). An estimate of non-trial cases would be 300 incremental hours,with federal resource 

cost at approximately $19,780 based on the same labor rates. These estimates may be conservative in 

some respects because they do not include additional expenses such as travel, per diem, or equipment 

utilized in the jurisdictional determination.

EPA pursues enforcement actions though the judicial system and through the administrative 

enforcement process. The labor costs associated with proving jurisdiction in these cases is on the order 

of thousands of hours of environmental scientist and attorney labor. Many more judicial cases are 

settled before trial, and because EPA must still prove CWA jurisdiction in those cases, the associated 

labor costs are only slightly less than for cases going to trial. The majority of EPA's CWA enforcement 

cases are resolved through the administrative enforcement process. Many administrative cases involve 

CWA jurisdictional issues. EPA also conducts inspections and investigations to develop CWA jurisdiction 

in hundreds of other potential enforcement cases that are never formally pursued and the case file is 

closed.
32

Section 10: Summary of Estimated Costs and Benefits

The agencies project that this proposed action to change the definition of waters of the U.S. 

would increase assertion of CWA jurisdiction when compared to a baseline of current practices under 

the existing regulation. CWA jurisdiction does not mean that waters must always be preserved in their 

natural state and never receive discharges of pollutants. Instead, CWA jurisdiction means water quality 

must be maintained to meet established water quality standards; discharges must meet minimum 

technology-based controls (or reduced to the maximum extent practicable); impacts must be avoided (if 

there is a practicable alternative), minimized, or compensated; and facilities must take actions to 

prevent oil spills.

As a result of this proposed action, costs to regulated entities will likely increase for permit 

application expenses, compensatory mitigation (if applicable), and installation of best management 

practices. Costs are also likely to increase to state and federal governments for permit program 

administration. Most of the projected costs would likely accrue to landowners and development 

companies, state and local governments investing in infrastructure, and industries involved in resource 

extraction. These types of entities are affected by additional need for CWA 404 dredge and fill permits 

and CWA 402 construction stormwater permits. Any incremental costs for routine maintenance of 

waterways (such as drainage ditches that might newly meet the definition of tributary as proposed in 

this rule) incurred by local, state, or federal authorities would likely be minimal because of the general 

permits that the Corps issues to reduce the regulatory requirements for these minor activities. 

Benefits that accrue from this action include the value of the many ecosystem services provided 

by the small streams, wetlands, and other open waters protected by the many CWA provisions that 

would apply to them. These waters provide habitat and biodiversity, support recreational fishing and 

hunting, filter sediment and contaminants, reduce flooding, stabilize shorelines and prevent erosion, 

recharge ground water, and maintain biogeochemical cycling. Other benefits include government 

savings on enforcement expenses through reduced need for costly jurisdictional determinations where 

jurisdiction has been unclear under the current interpretation of the existing regulation. Business and 

government may also achieve savings from reduced uncertainty in where CWA jurisdiction applies.

Exhibit 16 displays a summary of costs and benefits. It includes costs and benefits derived from 

original analysis to support this proposed rule and costs and benefits derivative from previous economic 

assessments for other rules. Some values reflect a greater number of assumptions than others, as 

described in previous sections of this document. The values are not intended to be definitive, but 

merely illustrative. In addition, there are both costs and benefits that are not quantified in this analysis. 

The table includes costs and benefits that accrue to both private and public entities. For example, 

information presented in the table suggests that incremental costs to state governments in total would 

be approximately $1.1 million annually (CWA 401 and 402 Administration). Overall, a comparison 

indicates that the benefits justify the costs of this proposed action.
33

Exhibit 16. Estimated Incremental Annual Indirect Costs and Benefits (2010$ in millions).(1)

COSTS BENEFITS

low high low high

CWA 404 Mitigation - Streams (2) $8.7 $13.0

CWA 404 Mitigation - Wetlands $51.0 $100.5 $257.6 $345.1

CWA 404 Permit Application (3) $19.7 $52.9

CWA 404 Administration $7.4 $11.2

CWA 401 Administration (4) $0.7

CWA 402 Construction Stormwater $25.6 $31.9 $25.4 $32.3

CWA 402 Stormwater Administration $0.2

CWA 402 CAFO Implementation (5) $5.5 $3.4 $5.9

CWA 402 CAFO Administration $0.2

CWA 402 Pesticide General Permit (6) $2.9 $3.2

CWA 311 Implementation $11.7 $14.3

Total $133.7 $231.0 $300.7 $397.6

(1) Section 303 impacts are assumed to be cost-neutral; Section 402 impacts are components of costs 

and benefits previously identified for past actions, not new costs and benefits associated with this 

proposed rule.

(2) Benefits of stream mitigation are not quantified.

(3) Costs of potential delayed permit issuance and costs and benefits of avoidance/minimization are not 

quantified, nor are any benefits from reduced uncertainty.

(4) Costs to permittees and benefits of any additional requirements as a result of 401 certification are 

reflected in the mitigation estimates to the extent additional mitigation is the result, yet not calculated 

to the extent avoidance/minimization is the result.

(5) Benefits apply to large CAFOs only, which account for 85% of implementation costs and 66% of 

administrative costs.

(6) PGP benefits and government administrative costs are not available.
34

Section 11: Additional Considerations for Other Waters

“Other waters” is a regulatory term for wetlands and non-wetlands waters that do not fall into 

the category of waters susceptible to interstate commerce (e.g., a “traditional navigable waters” or 

TNWs), interstate waters, the territorial sea, tributaries, or waters adjacent to waters in one of the first 

four categories on this list. The Corps of Engineers ORM2 data base includes a category of aquatic 

resource type that represents “other waters” for purposes of determining the potential impacts of 

proposed new policies regarding assertion of CWA jurisdiction. All of the ORM2 FY2009-2010 “other 

waters” records are considered outside of assertion of CWA jurisdiction under current policies. 

In the April 2011 draft guidance, EPA and the Corps (the agencies) suggested that “adjacent” 

wetlands and “proximate non-wetlands” are similarly situated and could be aggregated on a watershed 

scale for a significant nexus determination. An analysis of samples of “other waters” indicated that the 

agencies would assert jurisdiction for 17 percent of “other waters” under new policies proposed in the 

April 2011 draft guidance. Most of these (14 of the 17 percent) waters would be jurisdictional because 

they would be considered adjacent waters under the draft guidance. The sample review analysis 

indicated that an additional 3 percent were TNWs themselves, tributaries to TNWs, or proximate nonwetlands with a significant nexus. The sample review analysis indicated that the agencies would not 

assert jurisdiction under the April 2011 guidance policies for waters considered to be non-adjacent 

wetlands or non-proximate non-wetlands. These more remote or more isolated waters may include 

prairie potholes, vernal pools, playa lakes, and Carolina/Delmarva inland bays that have generally been 

considered “isolated, intrastate, non-navigable” and not under CWA jurisdiction since the 2001 SWANCC 

Supreme Court decision. 

In the proposed rule, wetlands and non-wetlands that meet the definition of adjacent are 

considered jurisdictional per se because they have a significant nexus. Adjacent waters include those 

that are in a floodplain or riparian area, or have a surface or shallow sub-surface connection to 

jurisdictional waters. The proposed rule would have a result that is consistent with the sample review 

analysis that estimated the agencies would assert jurisdiction for 17 percent “other waters”. However, 

the April 2011 draft guidance policies differ from the policies in the proposed rule with respect to 

aggregation of the remaining “other waters” (i.e., non-adjacent wetlands and non-proximate nonwetlands) for a significant nexus evaluation. In the April 2011 draft guidance, the agencies stated that 

non-adjacent wetlands and non-proximate non-wetlands should only be aggregated if there is 

compelling science to do so. In the proposed rule, remaining other waters may be aggregated for a 

significant nexus determination if they perform similar functions and are located sufficiently close 

together to be evaluated as a single landscape unit in the same watershed. The policy articulated in the 

proposed rule could be more inclusive of waters in the ORM2 “other waters” group with respect to CWA 

coverage depending on how it is interpreted and applied.

It is not clear from examining the aforementioned sample review analysis results (that produced 

the 17 percent estimate) how the policy differences between the draft guidance and the proposed rule 

would affect the percent of non-adjacent “other waters” considered jurisdictional. The results of the
35

sample review analysis were primarily driven by adjacency rather than the manner of aggregation within 

a watershed, and there is not sufficient information in the files that supported the analysis to consider 

watershed aggregation in a rigorous manner. It would take actual field experience to know the effect of 

the aggregation approach in the proposed rule with any precision.

In the proposed rule, aggregation of residual other waters (waters not meeting the definition of 

adjacent) can occur if 1) they perform similar functions and 2) they are located sufficiently close 

together (or close to a water of the U.S.) so that they can be evaluated as a single landscape unit with 

regard to their effect on the physical, chemical, or biological integrity of a TNW, interstate water, or 

territorial sea. In the preamble to the proposed rule, the agencies identify functions as including 

habitat, water storage, sediment retention, and pollution sequestration. They identify common soils, 

vegetation, and landforms as factors to be considered in understanding appropriate hydrologic and 

ecological bases for aggregation as well as the geographic distribution, distance between water bodies, 

and proximity to jurisdictional waters. Once aggregated, the group must then have a significant nexus 

to a traditional navigable water, interstate water, or territorial sea to be considered jurisdictional. 

Collectively, this is a multistep process that the agencies expect to be sufficiently documented. The 

intent of the policy is to focus on select areas where isolated waters are most concentrated and play an 

important role in watershed scale functions. 

To ascertain the full potential impact of the proposed rule, an important question is what 

percent of the residual “other waters” (i.e., above and beyond the 17 percent which meet the definition 

of adjacent or are otherwise jurisdictional) would the agencies be likely to assert jurisdiction over. 

These residual “other waters” represent 83 percent of non-adjacent “other waters” in the sample 

review analysis. Thus, the total percent of “other waters” where the agencies would likely assert 

jurisdiction would be 100 percent of 17 percent (all “other waters” meeting the definition of adjacent or 

otherwise jurisdictional) plus “X” percent of 83 percent (a portion of the residual “other waters” that 

were not clearly adjacent in the sample review analysis). The following three-stage process can help 

identify “X”:

1. Examine Information on Extent of Isolated Wetlands in a Watershed

2. Examine Models to Describe Probability of Aggregation and the Probability of Significant 

Nexus for Isolated Waters (these are two independent steps)

3. Select Model and Apply to Distribution of Extent of Isolated Wetlands

Step 1: Examine Information on Extent of Isolated Wetlands in a Watershed

The U.S. Fish and Wildlife Service published a study called Geographically Isolated Wetlands: A 

Preliminary Assessment of Their Characteristics and Status in Selected Areas of the United States

on the extent and characteristics of isolated wetlands (Tiner et al, 2002).14 This report focused on 72 

 

14 Tiner, R.W., H.C. Bergquist, G.P. DeAlessio, and M.J. Starr. 2002. Geographically Isolated Wetlands: A Preliminary 

Assessment of their Characteristics and Status in Selected Areas of the United States. U.S. Department of the 

Interior, Fish and Wildlife Service, Northeast Region, Hadley, MA.
36

study areas throughout the country. Although not statistically designed, it can offer some insight on the 

relative proportion of watersheds that have a significant amount of isolated wetlands. Each study area 

lies within a watershed boundary. The sites for this study represented two types of areas: 1) areas with 

an expected high concentration of isolated wetlands and 2) areas from major physiographic regions. 

The latter may or may not be typical of those regions, but in total there are representatives from each 

regions and the data set are inclusive of areas expected to contain a large amount of isolated wetlands. 

However, this group of study areas may be somewhat biased toward over-representation of areas with 

high concentrations of isolated wetlands. The isolated wetlands in these study areas could also lie 

within the floodplain or riparian area and thus be considered adjacent. Therefore, this information may 

also over-represent the residual “other waters” fraction the agencies seek to evaluate.

Tiner et al (2002) present information on the number of study areas by the proportion of the 

total number of wetlands that are isolated in the study area (Exhibit 17) and the number of study areas

by the proportion of the total wetlands acreage that are isolated in each study area (Exhibit 18). The 

isolated proportion of the total number of wetlands is often large because there tend to be a large 

number of small isolated wetlands and relatively smaller number of larger non-isolated wetlands in the 

study areas. A better indicator of the extent of isolated wetlands relevant to their relative importance in 

a watershed is the isolated proportion of total wetland acreage. The greater the proportion of isolated 

wetlands, the more likely there would be groups of isolated wetlands that are sufficiently close together 

to be evaluated as a single landscape unit for a case-specific significant nexus evaluation. The greater 

the proportion of isolated wetlands or groups of isolated wetlands in a watershed, the higher the 

likelihood of finding isolated wetlands, or groups of isolated wetlands, with a significant nexus. 

Exhibit 17. Isolated Wetlands in Proportion to Total Number of Wetlands in a Watershed

0

2

4

6

8

10

12

14

16

18

20

1-9 10-19 20-29 30-39 40-49 50-59 60-69 70-79 80-89

Number of Study Areas

Proportion of Total Number of Wetlands

Isolated Wetlands (Tiner et al, 2002)
37

Exhibit 18. Isolated Wetlands in Proportion to Total Wetland Acreage in a Watershed

Approximately 55 percent of the study areas have less than 20 percent of their wetland acreage 

as isolated wetlands, another approximate 35% percent of the study areas have between 20-50 percent 

of their wetlands as isolated wetlands. The remaining 10 percent of the study areas have a relatively 

high proportion (greater than 70 percent, with most greater than 90 percent) of their wetlands as 

isolated wetlands. These are study areas that would be most likely representative of watersheds with a 

large amount and a high density of isolated wetlands necessary to meet the aggregation requirements 

and then the significant nexus test in the proposed rule. 

Step 2: Examine Models to Describe Probability of Aggregation and Significant 

Nexus

There are various mathematical relationships (models) that could describe the probability that a 

watershed with a given proportion of isolated wetlands will include wetlands that meet aggregation 

requirements and pass the significant nexus test. Each model should have the highest probability 

associated with the highest proportion of isolated wetlands, and the lowest probability with the lowest 

proportion of isolated wetlands. Exhibit 19 presents four such model relationships. The simplest model 

is where the probability increases at the same rate as the proportion isolated (LIN model). However, it is 

more likely that the probability increases at an increasing rate as the proportion isolated becomes larger 

(LOG model). It is also possible that the relationship starts in LOG model fashion, then hits a critical 

point where a critical mass of isolated wetlands (say 50 percent) makes aggregation/significant nexus 

more likely and the remaining incremental increases are small (SIG model). 

0

5

10

15

20

25

1-9 10-19 20-29 30-39 40-49 50-59 60-69 70-79 80-89 90-100

Number of Study Areas

Proportion of Total Wetland Acreage

Isolated Wetlands (Tiner et al, 2002)
38

Exhibit 19. Probability Models for Isolated Wetlands Acreage

A feature of these models is that they all key off a top level probability of aggregation and 

significant nexus (0.5 or 50 percent probability as shown in Exhibit 19). One may select alternative top 

level probabilities to see different outcomes once applied to the distribution of extent of isolated 

wetlands in step 3. In selecting the top level probability, it is important to recognize the bias toward 

watersheds with isolated wetlands in the distribution from step 1, the potential for adjacent wetlands to 

be included in the proportion isolated, and that application of a probability to a watershed implies that 

all isolated wetlands in the watershed would be jurisdictional. It is also important to recognize that 

aggregation and the significant nexus test are reliant on functional similarities (e.g., physical, chemical, 

and biological connections and processes) as well as location within the watershed. While proportion of 

total wetland acres is a good proxy for the likelihood of these similarities and connections, it is not the 

sole arbiter. For these reasons, the top level probability should be far less than 100 percent. 

Step 3: Select Model and Apply to Distribution of Extent of Isolated Wetlands

Applying a probability model (from step 2) to a distribution of extent of isolated wetlands (from 

step 1) yields an estimate of the percent of residual other waters where the agencies would assert 

jurisdiction. Exhibit 20 depicts this final step as a graph and Exhibit 21 shows the calculation for each 

category in the distribution for the sigmoidal (SIG model) and log (LOG model) relationships with a top 

level probability of 50 percent.

0

0.1

0.2

0.3

0.4

0.5

0.6

0 0.2 0.4 0.6 0.8 1

Probability of Aggregation/SN

Proportion of Total Wetland Acreage in Watershed

Isolated Wetlands

LIN

SIG

LOG
39

Exhibit 20. Application of Probability Model to Distribution of Extent of Isolated Waters

Exhibit 21. Calculation of National Estimate of Percent of Jurisdictional Residual Other Waters Under 

Proposed Rule

Proportion of 

Isolated 

Wetlands

Number of Study 

Areas (Tiner et al 

2002)

Estimated Percent 

of National 

Watersheds(1)

Model Probability of 

Aggregation/Significant Nexus

LOG Model SIG Model LIN Model

90-100 4 6% 0.5 0.5 0.5

80-89 2 3% 0.323739 0.497198 0.445556

70-79 1 1% 0.209614 0.48812 0.391111

60-69 0 0% 0.135721 0.46026 0.336667

50-59 1 1% 0.087876 0.387231 0.282222

40-49 7 10% 0.056898 0.122769 0.227778

30-39 3 4% 0.03684 0.04974 0.173333

20-29 14 19% 0.023853 0.02188 0.118889

10-19 21 29% 0.015445 0.012802 0.064444

1-9 19 26% 0.01 0.01 0.01

TOTAL2 72 100% 6% 8% 12%

(1) Derived from the number of Tiner et al, 2002 study areas for each category of proportion of 

isolated wetlands.

(2) Model probability totals are the sum of probability multiplied by the estimated percent of 

national watersheds for each category of proportion of isolated wetlands

0%

5%

10%

15%

20%

25%

30%

35%

0

0.1

0.2

0.3

0.4

0.5

0.6

0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1

Percent of Watersheds in Nation (PERC)

Probability of Aggregation/SN

Proportion of Total Wetland Acreage in Watershed

Isolated Wetlands

PERC

SIG

LOG
40

As described above, the top level probability can be changed. Exhibit 22 presented the results 

of each probability model for various top level probabilities. Not all these outcomes are considered 

likely, and not all outcomes are considered equally likely. The most likely estimates are for the LOG and 

SIG models with top level probabilities of aggregation/significant nexus between 0.4 and 0.6.

Exhibit 22. Various National Estimates of Percent of Jurisdictional Residual Other Waters Under 

Proposed Rule

Top Level 

Probability

Total Model Probability of Aggregation/Significant Nexus

LOG Model SIG Model LIN Model

0.1 2% 2% 3%

0.2 3% 4% 5%

0.3 4% 5% 8%

0.4 5% 6% 10%

0.5 6% 8% 12%

0.6 7% 9% 15%

0.7 8% 11% 17%

0.8 9% 12% 19%

0.9 9% 13% 22%

1.0 10% 15% 24%

gray shading represents unrealistic assumptions, 

orange shading represents best estimates

Alternative Model for Estimating Additional Incremental Other Waters

The approach described above uses the proportion of total wetland acreage in a watershed that 

are isolated as the proxy for both aggregation and significant nexus. However, additional information in 

Tiner et al (2002) allows consideration of a separate proxy for aggregation. Tiner et al (2002) present 

total acreage for each study area. A measure of isolated wetland density can thus be calculated as the 

quotient of isolated wetland acreage divided by total watershed acreage. The greater this “density”, the 

more likely isolated waters that perform similar functions would be sufficiently close to be evaluated as 

a single landscape unit. Exhibit 23 shows the distribution of isolated wetland density for the 72 study 

areas. Isolated wetland density ranges from less than a tenth of a percent to nearly 11 percent.
41

Exhibit 23. Distribution of Tiner et al (2002) Study Areas by Isolated Wetland Density in Watershed

The same generalized probability models used above for proportion of total wetlands can be applied to 

these density categories for the aggregation step alone (see Exhibits 24 and 25). Without specific 

knowledge of a threshold density where aggregation would be more likely, a linear model may be most 

appropriate. 

Exhibit 24. Probability Models for Isolated Wetlands Density

0

5

10

15

20

25

30

<0.5% 0.5-1% 1.5-2% 1-1.5% 2.5-3% 2-2.5% 3.5-4% 3-3.5% 4-4.5% >4.5%

Number of Study Areas

Isolated Wetlands Density (percent)

Isolated Wetlands (adapted from Tiner et al 2002)

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5

Probability of Aggregation

Isolated Wetlands Density (percent)

LOG

SIG

LIN
42

Exhibit 25. Application of Probability Model to Distribution of Isolated Waters Density

Calculation of the overall estimate of the percent of residual other waters where the agencies 

would assert jurisdiction using this alternative model pairs the probability of aggregation using isolated 

wetlands density with the probability of significant nexus using proportion of total wetland acreage for 

each watershed. After normalizing for the fraction of all watersheds that each study area watershed 

represents (one out of 72, or approximately 1.4 percent), the products of each probability are summed 

for a national total. This approach is more complex because it requires selection of a probability model 

for density and for proportion of total wetland acreage and a selection of top level probability for each 

step. However, this added complexity offers the analyst greater flexibility and the ability to 

independently assess each step. The approach may better represent watersheds where density and 

proportion of total wetland acreage diverge, and can help further identify an appropriate range of 

percent of residual other waters for the impact analysis.

Exhibit 26 shows the results for various model combinations and for various top level probability 

combinations. The overall top level probability is the product of the two component top level 

probabilities, as each applies sequentially. To be most comparable to the previous estimates, the overall 

top level probability should align with the top level probability associated with the most likely estimates 

derived from the simpler approach presented in Exhibit 22 (i.e., approximately 0.4 to 0.6).

0%

5%

10%

15%

20%

25%

30%

35%

40%

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5

Percent of Watersheds in Nation (PERC)

Probability of Aggregation

Isolated Wetlands Density (percent)

PERC

SIG

LIN
43

Exhibit 26. Various National Estimates of Percent of Jurisdictional Residual Other Waters Under 

Proposed Rule Using Alternative Approach

Top Level 

Probability

Total Model Probability of Aggregation and Significant Nexus 

(Model Used for Density/Proportion Isolated)

Dens./Prop. Overall LOG/LOG LOG/SIG SIG/LOG LIN/LOG SIG/SIG LIN/SIG LOG/LIN SIG/LIN LIN/LIN

0.5/0.5 0.25 1.1% 1.3% 1.5% 1.6% 1.8% 2.0% 2.1% 2.6% 2.9%

0.7/0.5 0.35 1.5% 1.8% 2.1% 2.3% 2.5% 2.7% 2.8% 3.6% 4.0%

0.9/0.5 0.45 1.9% 2.3% 2.7% 2.9% 3.2% 3.5% 3.5% 4.6% 5.1%

0.7/0.7 0.49 2.0% 2.5% 2.9% 3.0% 3.5% 3.8% 3.9% 5.0% 5.5%

0.9/0.7 0.63 2.6% 3.1% 3.7% 3.8% 4.4% 4.8% 4.9% 6.4% 7.0%

0.9/0.9 0.81 3.2% 4.0% 4.6% 4.8% 5.6% 6.1% 6.3% 8.1% 9.0%

1.0/1.0 1.00 3.9% 4.8% 5.6% 5.8% 6.9% 7.5% 7.7% 10.0% 11.1%

gray shading represents unrealistic assumptions, orange shading represents best estimates

This alternative approach tempers some of the previous estimates and indicates an upper 

bound estimate of 5 percent may be most likely. This analysis also further indicates that the agencies 

should not consider estimates beyond 10 percent. The agencies caution that the proxy values used in 

this analysis simply represent the best available information for this exercise, and should not be 

considered the means of determining aggregation or significant nexus in a case specific analysis.

Impacts of Additional Incremental Other Waters

The estimated impacts of asserting jurisdiction for 5 and 10 percent of residual other waters 

(non-adjacent waters) under the proposed rule are reflected in the scenarios described in Exhibit 27

below. Recall that residual other waters (non-adjacent waters) represent approximately 83 percent of 

other waters (the sample review exercise found 17 percent of other waters would be considered 

adjacent under the proposed policies). 

The agencies also considered impacts from potential regulatory activity under the policies 

proposed that is not represented by ORM2 FY2009-2010 records. If a significant amount of waters are 

not included in the FY2009-2010 data because of presumed non-jurisdiction on the part of landowners 

and developers, then the overall percent increase in waters that become jurisdictional would be 

somewhat greater (other waters would represent more than 6 percent of the total records). To 

illustrate the effects of including waters not represented in ORM2 because potential applicants 

considered them non-jurisdictional and did not seek a jurisdictional determination, the agencies present 

the effect of doubling the number of other waters (effectively raising the share from 6 percent to 11 

percent).

Exhibit 27 summarizes the various scenarios considered. Exhibits 28 and 29 present the results 

in terms of the effect on the range of total costs and benefits. The potential impact on all categories of 

costs and benefits are considered, not just the effect on mitigation, although those reflect the greatest 

degree of impact. 
44

Exhibit 27. Scenarios for Consideration of Other Waters

Scenario Description

Scenario A 5% of non-adjacent other waters are jurisdictional under the proposed rule

Scenario B 10% of non-adjacent other waters are jurisdictional under the proposed rule

Scenario C There are double the number of other waters

Scenario D There are double the number of other waters AND 5% of non-adjacent other waters 

are jurisdictional under the proposed rule

Scenario E There are double the number of other waters AND 10% of non-adjacent other waters 

are jurisdictional under the proposed rule

Exhibit 28. Results of Scenarios for Other Waters on Costs and Benefits Estimates

Scenario

Percent of 

Other 

Waters 

Jurisdictional

Overall 

Percent 

Increment in 

Regulatory 

Actions

Low Range 

of Costs 

(2010$ 

millions)

High Range 

of Costs 

(2010$ 

millions)

Low Range of 

Benefits

(2010$ 

millions)

High Range of

Benefits

(2010$ 

millions)

Base 17% 2.7% $ 134 $ 231 $ 301 $ 398 

Scenario A 21% 2.9% $ 146 $ 251 $ 339 $ 449 

Scenario B 26% 3.2% $ 162 $ 278 $ 388 $ 514 

Scenario C 17% 3.5% $ 185 $ 328 $ 474 $ 629 

Scenario D 21% 4.0% $ 211 $ 372 $ 551 $ 733 

Scenario E 26% 4.5% $ 241 $ 422 $ 647 $ 861 

This assumes for scenarios C, D, and E that the doubling of records includes both adjacent other waters 

and non-adjacent other waters in the same proportions as the original set of records.

Exhibit 29. Results of Consideration of Other Waters on Costs and Benefits Estimates

$- 

$100 

$200 

$300 

$400 

$500 

$600 

$700 

$800 

$900 

Base Scenario A Scenario B Scenario C Scenario D Scenario E

2010$ Millions (annual)

Costs (low)

Costs (high)

Benefits (low)

Benefits (high)
45

The difference in costs between scenario E and scenario C from Exhibit 28, the highest estimate 

of the effect of asserting jurisdiction over residual other waters, is between $56-94 million per year. As 

shown on Exhibit 28 and 29, because estimated benefits would also rise with more wetland protection, 

benefits would continue to justify costs.

An alternative way of calculating the impact on costs and benefits is to assume that the doubling 

of other water records (scenarios C, D, and E) do not include any additional “adjacent other waters” 

(assuming these types of waters are adequately represented in the Corps records), and that only the 

additional percentages for residual “non-adjacent other waters” apply to the doubling of other water 

records for scenarios D and E. In this way, scenario C simply becomes equal to the base because no 

residual non-adjacent other waters are assumed jurisdictional under this scenario. Exhibit 30 presents 

these results. 

Exhibit 30. Alternative Results of Scenarios for Other Waters on Costs and Benefits Estimates

Scenario

Percent of 

Other 

Waters 

Jurisdictional

Overall 

Percent 

Increment in 

Regulatory 

Actions

Low Range 

of Costs 

(2010$ 

millions)

High Range 

of Costs 

(2010$ 

millions)

Low Range of 

Benefits

(2010$ 

millions)

High Range of

Benefits

(2010$ 

millions)

Base 17% 2.7% $ 134 $ 231 $ 301 $ 398 

Scenario A 21% 2.9% $ 146 $ 251 $ 339 $ 449 

Scenario B 26% 3.2% $ 162 $ 278 $ 388 $ 514 

Scenario C 8.5% 2.7% $ 134 $ 231 $ 301 $ 398 

Scenario D 13% 3.2% $ 162 $ 278 $ 388 $ 514 

Scenario E 18% 3.6% $ 189 $ 325 $ 482 $ 640 

This assumes for scenarios C, D, and E that the doubling of records includes only non-adjacent other 

waters, and that adjacent other waters are only represented in the original set of records.

These alternative results may represent the more likely outcomes. Using 5 percent as a most 

likely upper bound on percent of non-adjacent other waters, scenario D from Exhibit 30 (orange 

shading) represents the agencies best estimate of the total costs and benefits that can be quantified. 

The difference in costs between scenario D and scenario C, the most likely estimate of the effect of 

asserting jurisdiction over non-adjacent other waters, is between $28-47 million per year. 
46

Appendix A: Supplemental Cost Analysis Information

Exhibit 31. State-Level Unit Costs for Wetland and Stream Mitigation

State

Incremental 

Wetland 

Mitigation 

(Acres)

Unit Cost Per Acre 

of Wetland 

Mitigated

Incremental 

Stream 

Mitigation 

(Linear Feet)

Unit Cost Per 

Linear Foot 

of Stream 

Mitigated

Low High Low High

AK 5 $500 $15,250 25.5 $170 $243 

AL 8.2 $10,000 $15,000 580 $350 $619 

AR 7.1 $2,000 $3,500 680.2 $170 $243 

AZ 0 $9,000 $16,000 4.5 $170 $243 

CA 102.8 $18,500 $159,250 6514.4 $170 $243 

CO 93 $32,000 $66,000 307.4 $170 $243 

CT 4.4 $124,000 $142,000 0 $170 $243 

DE 3.9 $40,000 $40,000 0 $170 $243 

FL 87.3 $35,000 $90,000 194.9 $170 $243 

GA 43.3 $12,000 $67,000 1718.1 $106 $200 

IA 14.6 $15,000 $15,000 470.4 $170 $243 

ID 8.8 $40,000 $40,000 787.1 $170 $243 

IL 64 $40,000 $120,000 294.6 $170 $243 

IN 78 $40,000 $60,000 2680 $170 $243 

KS 7.1 $50,000 $50,000 8746.1 $170 $243 

KY 12.4 $30,000 $30,000 854.8 $170 $283 

LA 38.5 $15,000 $32,500 912.2 $170 $243 

MA 0.2 $124,000 $142,000 0 $170 $243 

MD 92.2 $11,000 $34,500 25.1 $250 $442 

ME 2.3 $125,000 $137,000 73.8 $170 $243 

MI 4.9 $40,000 $60,000 16.6 $170 $243 

MN 73.7 $4,000 $47,500 17.9 $170 $243 

MO 18.3 $15,000 $20,000 825.2 $90 $145 

MS 4.2 $3,000 $14,000 252.4 $170 $243 

MT 9.5 $40,000 $40,000 150.4 $170 $243 

NC 18.3 $23,000 $42,500 743.5 $256 $297 

ND 279.3 $15,000 $15,000 123.7 $170 $243 

NE 32.7 $15,000 $15,000 89.4 $170 $243 

NH 2.3 $138,000 $168,000 5616.6 $170 $243 

NJ 6.6 $80,000 $240,000 0 $170 $243 

NM 2.7 $40,000 $50,000 196.4 $170 $243 

NV 45.9 $55,000 $60,000 124.6 $170 $243 

NY 134.7 $50,000 $60,000 852.6 $170 $243 
47

State

Incremental 

Wetland 

Mitigation 

(Acres)

Unit Cost Per Acre 

of Wetland 

Mitigated

Incremental 

Stream 

Mitigation 

(Linear Feet)

Unit Cost Per 

Linear Foot 

of Stream 

Mitigated

Low High Low High

OH 159.6 $15,000 $15,000 1526.6 $170 $243 

OK 6.1 $12,000 $31,000 793.9 $170 $243 

OR 11.7 $43,000 $84,000 23.1 $170 $243 

PA 83 $12,000 $13,500 4151.3 $170 $243 

RI 0.4 $124,000 $142,000 0 $170 $243 

SC 107.9 $25,000 $62,500 52.7 $75 $138 

SD 65.8 $15,000 $15,000 0 $170 $243 

TN 10.6 $7,000 $13,500 878.7 $50 $125 

TX 69.8 $15,000 $30,000 3491.5 $80 $142 

UT 19.4 $55,000 $60,000 280.8 $170 $243 

VA 22.2 $16,000 $78,000 1107.4 $300 $600 

VT 4.6 $110,000 $121,000 0 $170 $243 

WA 6 $100,000 $175,000 130.6 $170 $243 

WI 81.9 $40,000 $40,000 0 $170 $243 

WV 33.7 $30,000 $45,000 2759 $400 $600 

WY 54 $15,000 $15,000 1 $170 $243 

National 2,042 $24,989 $49,207 49,075 $177 $265 
48

Exhibit 32. Labor Rates for Private Industry and Local, State, and Federal Government Positions

Position Occupational 

Code1

Mean 

Hourly 

Wage1

Benefits 

Adjustment 

Factor2

Year 

Adjustment3

Total Hourly 

Adjusted 

Wage

Private Industry

Environmental Scientist 19-2041 $35.32

1.292 1.0198

$46.54

Environmental Engineer 17-2081 $39.89 $52.56

Administrative Assistant 43-6011 $23.16 $30.52

Lawyer 23-1011 $65.65 $86.50

Economist 19-3011 $59.48 $78.37

Local Government

Environmental Scientist 19-2041 $28.86

1.319 1.0258

$39.05

Environmental Engineer 17-2081 $35.89 $48.56

Administrative Assistant 43-6011 $22.03 $29.81

Lawyer 23-1011 $43.77 $59.22

Economist 19-3011 $34.27 $46.37

State Government

Environmental Scientist 19-2041 $27.15

1.319 1.0258

$36.73

Administrative Assistant 43-6011 $18.82 $25.46

Environmental Engineer 17-2081 $31.96 $43.24

Lawyer 23-1011 $39.78 $53.82

Economist 19-3011 $27.38 $37.05

Federal Government

Environmental Scientist 19-2041 $45.05

1.3 1.0224

$59.88

Administrative Assistant 43-6011 $26.76 $35.57

Environmental Engineer 17-2081 $46.35 $61.60

Lawyer 23-1011 $61.32 $81.50

Economist 19-3011 $51.04 $67.84

1. Occupational codes and mean hourly wage from BLS (2009). Bureau of Labor Statistics (BLS), United 

States Department of Labor. 2009. Occupational Employment and Wages, December 2010. 

http://bls.gov/oes/2009/may/oes_nat.htm

2. Adjusted for benefits according to the Employment Cost for Employee Compensation Index for 

professional and related for private industry, local and state employees, and civilian workers.

3. Escalated to 2010 dollars using the Employment Cost Index for private industry (September 2010 = 

113.3; June 2009 = 111.1), state and local employees (September 2010 = 115.3; June 2009 = 112.4) and 

civilian workers (September 2010 = 114.1; June 2009 = 111.6).
*** E.O. 12866 Review – Draft – Do Not Cite, Quote, or Release During Review***

Appendix B: Supplemental Benefit Estimate Information

Exhibit 33. Summary of Environmental Benefits by Wetland Types and Other Isolated Waterbodies Potentially Affected

Wetland 

Type Distribution Region Environmental Benefits

Primary Threats

Rainwater 

Basin 

Wetlands

Southern 

Nebraska

Interior 

West

Very important habitat for waterfowl, Food 

chain support, Nutrient retention, Flood 

storage, Sediment trapping and shoreline 

anchoring

Agricultural activities such as 

drainage, clearing, and groundwater 

pumping

Sandhills 

Wetlands

North-Central 

and 

Northwestern 

Nebraska

Interior 

West

Habitat for migratory waterfowl and many 

threatened and endangered species

Ditching of wet meadows and cattle 

grazing

Prairie 

Potholes

North-Central 

U.S. 

(Iowa/South 

Dakota into 

Canada)

Midwest

Recharge and discharge areas for local 

groundwater flow and regional surface water 

flow; A great deal of storm water storage and 

flood protection; Concentric rings of vegetation 

zones create unique habitat areas; Waterfowl 

habitat (10% of breeding area; half of 

waterfowl); availability of large numbers of 

small wetlands allows dispersal

Agriculture, irrigation, and flood 

control projects

Alvar 

Wetlands

Great Lakes 

region Midwest Provide habitat to rare species and a variety of hydrophytes

Quarrying, rural development, allterrain vehicles, and construction of 

cottages, vacation homes, and 

trailer parks

Woodland 

Vernal 

Pools

Northeastern 

U.S. Northeast

Fluctuating water level prohibits establishment 

of fish populations, providing excellent 

breeding ground for amphibians and other 

species that spend most of their lives in the 

wooded areas around the pools

Often destroyed for development 

(since they are small and 

surrounded by upland), and are 

sometimes used as storm water 

detention basins. Drainage from 

agricultural fields or residential 

areas.
50

Wetland 

Type Distribution Region Environmental Benefits

Primary Threats

Delmarva 

Potholes

Delmarva 

Peninsula 

(Maryland, 

Delaware)

Northeast 

Support populations of large quantities of 

amphibians and rare and endangered plants; 

Temporary storage of surface water and flood 

protection; Recharge regional groundwater 

supplies during dry periods

Drainage associated with agriculture 

or silviculture, and some 

development

Kettle-hole 

Wetlands

New England 

and Midwest, 

north to Canada 

and Alaska

Northeast/ 

Midwest/ 

Alaska

Habitat for unique boreal plant species

Peat mining, drainage, and 

conversion to open waterbodies or 

commercial cranberry bogs; 

introduction of nutrients from lawn 

runoff

Wetlands of 

Washington'

s Channeled 

Scablands

Eastern 

Washington 

(Cascade 

Mountains)

Pacific 

Coast

Habitat and staging grounds for migratory 

waterfowl; Habitat for resident waterfowl and 

some endangered plants

Impacts from livestock (cattle use as 

wallow) and overgrazing; some are 

drained and converted to hayfield or 

pasture.

Former 

Floodplain 

Wetlands

Alaska Alaska Important havens for waterfowl

West Coast 

Vernal 

Pools

Southern 

Oregon to 

Northern Baja 

Mexico

Pacific 

Coast

Unpredictable flooding patterns promote 

endemism, creating unique flora and fauna, 

including many endangered species

Increasing urbanization and 

agricultural impacts

Pocosins

Atlantic-Gulf 

Coastal Plain, 

from Virginia to 

Florida

Southeast

Temporary storage of surface water to avoid 

quick runoff in estuaries (giving them time to 

assimilate freshwater); Habitat for many rare 

and endangered animal species

Ditching for drainage to increase 

timber production; agricultural 

conversion

Cypress 

Domes

Florida and 

Southern 

Georgia

Southeast

Maintain regional biodiversity by providing 

important breeding grounds (especially for 

amphibians); Surface water storage, flood 

prevention, and groundwater recharge

Development, including conversion 

to residential subdivisions, 

commercial sites, and gold courses; 

drying out increases susceptibility to 

fire.
51

Wetland 

Type Distribution Region Environmental Benefits

Primary Threats

Sinkhole 

Wetlands

Karst 

landscapes 

(Southern U.S.)

Southeast

Productive amphibian breeding grounds, 

including for some endangered species; 

Unique habitat for cave-adapted animals

Water pollution from runoff or direct 

discharge, groundwater withdrawal, 

impoundment of local streams, 

timber harvest, fish stocking, and 

agricultural and residential 

development.

Carolina 

Bay 

Wetlands

Atlantic-Gulf 

Coastal Plain, 

from Virginia to 

Florida

Southeast 

Habitat for abundant amphibian populations; 

Critical aquatic habitat for many species 

during droughts

Drainage for crop production

Coastal 

Zone Dune 

Swale and 

Deflation 

Plain 

Wetlands

U.S. Coastlines

Southeast/ 

Northeast/ 

Pacific 

Coast

Support a variety of hydrophytic plants (since 

they intersect groundwater tables); Food and 

habitat for migrating waterfowl; Habitat for a 

variety of species, including some unique 

Residential housing, golf courses, 

and resort development

Coastal 

Plain Ponds

Atlantic-Gulf 

Coastal Plain

Southeast/ 

Northeast

Fluctuating water levels and vegetation in 

concentric rings provide habitat supporting 

unique species

Coastal development, waste 

dumping, all-terrain vehicles, water 

withdrawal, and pollution from 

adjacent development.

Playas

Deserts, semiarid prairies in 

Southwest 

(Texas and 

New Mexico)

Southwest

Characteristic fluctuating water levels promote 

nutrient cycling and biological productivity; 

Wintering grounds for waterfowl and 

shorebirds; Vital habitat for amphibians.

Poor water quality from adjacent 

crop land, discharge of water from 

oilfields, and effluent from livestock 

operations such as cattle feedlots; 

sedimentation from farmland, pit 

construction, and overgrazing

Salt Flat and 

Salt Lake 

Wetlands

Great Basin 

region --

Nevada and 

Utah

Southwest Food and habitat for wildlife in an otherwise 

arid area

Road and utility construction; 

development pressures in urban 

areas
52

Wetland 

Type Distribution Region Environmental Benefits

Primary Threats

Desert 

Springs and 

their 

Wetlands

Southwest 

(California, 

Arizona, 

Nevada)

Southwest Isolated populations of endemic species

Pumping of groundwater for 

agriculture and energy development 

lowers water levels

Source: USFWS (2002)
*** E.O. 12866 Review – Draft – Do Not Cite, Quote, or Release During Review***

Exhibit 34. Types of Benefits Associated with Environmental Policies

Category Examples Valuation Methods

Human Health Improvements

Mortality risk reductions Reduced risk of fatality from 

cancer and acute health risks

Averting behavior, hedonics, 

stated preference

Morbidity risk reductions Reduced risk of nonfatal 

illness

Averting behavior, hedonics, 

stated preference, cost of 

illness

Ecological Improvements

Market products

Harvests or extraction of food, 

fuel, fiber, timber, fur, and 

leather

Production function

Recreation activities and 

aesthetics

Wildlife viewing, fishing, 

boating, swimming, hiking, 

scenic views

Production function, averting 

behaviors, hedonics, 

recreation demand, stated 

preference

Valued ecosystem functions

Climate moderation, flood 

moderation, groundwater 

recharge, sediment trapping, 

soil retention, nutrient cycling, 

pollination by wild species, 

biodiversity, water filtration, 

soil fertilization, pest control

Production function, averting 

behaviors, stated preference, 

hedonics

Nonuse values Relevant species populations, 

communities, or ecosystems Stated preference

Other Benefits

Aesthetic improvements Visibility, taste, odor Averting behaviors, hedonics, 

stated preference

Reduced materials damage Reduced soiling and corrosion

Averting behaviors, production 

function, cost function, 

hedonics

Source: U.S. EPA (2010b; Table 7.1)
54

Summaries of Holistic Wetland Benefit Studies Used to Generate WTP 

Estimates

Azevedo et al. (2000) conducted a survey to understand how residents of Iowa value wetlands, 

specifically with regard to the following functions: wildlife viewing, fishing, biking, hiking, waterfowl and 

upland hunting. The 5-part survey collected information regarding wetland visitation patterns, perceived 

benefits and costs associated with wetlands, socioeconomic characteristics of respondents, and their 

WTP for preservation of existing wetlands and restoration of additional wetlands via two specific 

programs: the Prairie Pothole Joint Venture (PP) and the Iowa River Corridor Project (IRCP). The authors 

used contingent valuation to evaluate WTP for restoring additional wetlands through PP and ICRP. 

Results indicated that approximately 50% of Iowans would pay $25 in support of PP and less than $10 

for ICRP (2000 dollars).

Mullarkey and Bishop (1999) conducted a study of WTP for a hypothetical rerouting of a highway 

expansion that would preserve 110 acres of wetlands in Wisconsin. The wetlands in question provide a 

range of services including flood control, water purification, bird/wildlife habitat, and for a portion of 

the affected wetlands, fish habitat. The study reported six estimates of WTP ranging from $13.68 to 

$57.83 (1999 dollars) depending upon whether respondents were informed that mitigation would be 

taking place if the wetland were destroyed and the degree of certainty respondents expressed in their 

answers.

Poor (1999) examined WTP to increase the area of wetlands in Nebraska’s rainwater basin by an average 

of 41,000 acres across multiple survey versions. The basin is a large complex of 34,000 wetland acres, 

and a plan is already in place to create an additional 25,000 wetland acres. Wetland services in this 

study included flood control, water quality improvement, wildlife production and habitat, and bird 

watching/hiking. Median and mean household WTP were $4.17 and $21.05 (1995 dollars), respectively.

Blomquist and Whitehead (1998) conducted a contingent valuation study to estimate the value of four 

wetlands in Western Kentucky with differing characteristics. One was a freshwater marsh, one was a 

temporarily flooded bottomland hardwood forest, one was a seasonally flooded bottomland hardwood 

forest, and one was a bald cypress swamp. Wetland functions included flood control, water quality 

improvements, and wildlife production/habitat. WTP ranged from $1.69 (1990 dollars) for Flat Creek, a 

freshwater marsh, to $11.21 (1990 dollars) for Cypress Creek, a cypress swamp.

Roberts and Leitch (1997) conducted a contingent valuation study of the value of Mud Lake, a managed 

lacustrine wetland on the border of Minnesota and South Dakota. This study used a discrete choice 

survey to determine use, option/bequest, and existence values for Mud Lake. Use values, defined as 

WTP for management for water related recreation and fish/wildlife habitat ranged from $22,699 to 

more than $44,736 (1997 dollars) for all respondents in the sample. Option/bequest values ranged from 

$25,795 to more than $52,750 (1997 dollars) for all respondents in the sample. Existence values ranged 

from $18,508 to more than $40,451 (1997 dollars) for all respondents in the sample. Total overall 

median willingness to pay for the sample was estimated to be $102,000 (1997 dollars).

Dillman et al. (1993) estimated the WTP for preservation of 2,500 acres of wetlands in the Francis 

Biedler forest of South Carolina using dichotomous choice contingent valuation method. The study 

examined three types of wetland: frequently flooded bottomland (cypress-tupelo swamp), infrequently 

flooded bottomland hardwood forest, and nonbottomland pine plantation with hardwood runners. 
55

These wetlands served the following functions: flood control, wildlife habitat, recreational activities, 

water supply, and aesthetic value. The mean WTP estimated was $16.74 (1993 dollars) per household 

(ranging from $6.82 for infrequently flooded bottomland hardwood forests to $19.57 for pine 

plantations with scattered hardwood runners).

Whitehead and Blomquist (1991) utilized contingent valuation to examine Kentucky residents’ WTP for 

preservation of the Clear Creek wetland, a large natural wetland with hardwood trees, standing water, 

and nonwoody vegetation. The wetland provides a range of services including water quality 

maintenance, fish and wildlife habitat, flood and sediment control, groundwater recharge, biological 

productivity and outdoor recreation. The study used three different survey versions consisting of two 

WTP questions each, with the difference in each case reflecting a difference in information presented 

about the wetland quality that would result if Clear Creek is not preserved. WTP values ranged from 

$5.09 to $16.61 (1991 dollars) under the scenario discussing preservation and reclamation of Clear 

Creek itself, and from $3.75 to $8.13 (1991 dollars) under scenarios discussing preservation of other 

wetlands concurrent with reclamation of Clear Creek. 

Johnson and Linder (1986) conducted a contingent valuation study to estimate the value of wetlands in 

South Dakota as a recreational resource for resident hunters. The study examined wetlands statewide, 

the majority of which are located in the eastern part of the state. Their results indicated that the total 

value for waterfowl, upland, big game, and predator hunting in South Dakota wetlands in 1986 dollars 

was $34 million, and that the average total per user value of wetlands was $289.90 for a single hunting 

season.

Loomis et al. (1991) studied California residents’ willingness to pay additional taxes to preserve and 

restore wetlands in California’s San Joaquin Valley. The study’s focus was wetlands as a habitat for 

migratory birds. The study found that average annual household willingness to pay for a program to 

prevent further degradation of an existing 85,000 acres of wetlands was $174 in the San Joaquin Valley 

and $152 in the rest of the state, and willingness to pay for a program including both maintenance of 

existing acreage plus the restoration of an additional 40,000 acres was $286 in the San Joaquin Valley 

and $251 in the rest of the state (1990 dollars). The study also examined a program to reduce and 

prevent further pollution of wildlife habitat in the region, and to increase Chinook salmon populations. 

Lant and Tobin (1989) studied willingness to pay higher state sales tax to improve water quality of 

riparian corridors in Iowa and Illinois. The study examined three river corridors utilizing face-to-face 

interviews: the Edwards River in Illinois, the South Skunk River in Iowa, and the Wapsipinicon River in 

Iowa. Value per person for improvement of quality in the Edwards River to that in the South Skunk was 

$8.85 per year, and value per person for improvement of quality in the South Skunk River to that in the 

Wapsipinicon was $20.37 per year. This study had a very small sample size.

Azevedo, C., J.A. Herriges, and C.L. Kling. 2000. Iowa Wetlands: Perceptions and Values. Center for 

Agricultural and Rural Development. Staff Report 00-SR 91.

Blomquist, G.C. and J.C. Whitehead. 1998. Resource Quality Information and Validity of Willingness to 

Pay in Contingent Valuation. Resource and Energy Economics 20: 179-196.

Dillman, B., L.J. Beran, and D.D. Hook. 1993. Nonmarket Valuation of Freshwater Wetlands: The Francis 

Beidler Forest. South Carolina Water Resources Research Institute, Clemson University.
56

Lant, C.L. and G.A. Tobin. 1989. "The Economic Value of Riparian Corridors in Cornbelt Floodplains: A 

Research Framework". Professional Geographer 41(3): 337-49.

Loomis, J., M. Hanemann, B. Kanninen and T. Wegge. 1991. "Willingness to Pay to Protect Wetlands 

and Reduce Wildlife Contamination from Agricultural Drainage." In A. Dinar and D. Zilberman (eds.), The 

Economics and management of Water and Drainage in Agriculture. Boston, Massachusetts: Kluwer 

Academic Publishers, pp. 411-445.

Johnson, C.W. and R.L. Linder. 1986. An Economic Valuation of South Dakota Wetlands as a Recreation 

Resource for Resident Hunters. Landscape Journal 5(1): 33-38.

Mullarkey, D.J. and R.C. Bishop. 1999. Sensitivity to Scope: Evidence from a CVM Study of Wetlands. 

Presented at the Annual Meeting of the American Agricultural Economics Association, Nashville, TN, 

August 8-11, 1999.

Poor, P.J. 1999. The Value of Additional Central Flyway Wetlands: The Case of Nebraska’s Rainwater 

Basin Wetlands. Journal of Agricultural and Resource Economics 24: 253-265.

Roberts, L.A. and J.A. Leitch. 1997. Economic Valuation of Some Wetland Outputs of Mud Lake, 

Minnesota-South Dakota. North Dakota Agricultural Experiment Station. Agricultural Economics Report 

No. 381.

Whitehead, J.C. and G.C. Blomquist. 1991. Measuring Contingent Values for Wetlands: Effects of 

Information about Related Environmental Goods. Water Resources Research 27: 2523-2531.
57

Exhibit 35. Studies of WTP for Preservation of Wetlands with Characteristics of Isolated Wetlands

Study Publication 

Type

Year of 

Reported 

Dollar 

Values2

Location Study 

Type Survey Population Response Rate

Azevedo et 

al. (2000) Report 2000 IA

CVM, 

travel 

cost3

Random sample of 

Iowa residents 

statewide, additional 

random sample of a 

targeted group of 

hunters/anglers

58.1%4

Mullarkey 

and Bishop 

(1999)

Presentation 1999 WI CVM

Random sample of 

Wisconsin residents 

statewide

43.5%

Poor 

(1999)

Journal 

article 1995 NE CVM

Random statewide 

sample of Nebraska 

households

46%

Blomquist 

and 

Whitehead 

(1998)

Journal 

article 1990

KY, IN, 

TN, IL, 

MO

CVM

Random dialing of 

households in 

Western Kentucky 

and nearby areas of 

Indiana, Tennessee, 

Illinois and Missouri

from phone directories

66.7%

Roberts 

and Leitch 

(1997)

Report 1997 MN, SD CVM

Minnesota and South 

Dakota households 

within a 30-mile radius 

of Mud Lake

62%

Dillman et 

al. (1993) Report 1993 SC CVM

Random sample of 

South Carolina 

households statewide

21%

Loomis et 

al. (1991) Book chapter 1991 CA CVM

Random telephone 

samples of California 

households statewide 

including random 

sample of targeted 

group, San Joaquin 

Valley residents

51%

Whitehead 

and 

Blomquist 

(1991)

Journal 

article 1991 KY CVM

Random cluster 

sample of Western 

Kentucky households 

from phone directories

31%

Lant and 

Tobin 

(1989)

Journal 

article 1989 IA, IL CVM

In person interviews 

with residents of 

towns near the three 

rivers surveyed

Not 

available
58

Study Publication 

Type

Year of 

Reported 

Dollar 

Values2

Location Study 

Type Survey Population Response Rate

Johnson 

and Linder 

(1986)

Journal 

article 1986 SD CVM

One percent random 

sample of a targeted 

group, South Dakota 

anglers and hunters 

statewide

61%

1. Excludes studies of tidal wetlands or wetlands adjacent to navigable waters.

2. Where studies provided only the year a survey was conducted and did not specify dollar value years, we 

assumed publication year dollars rather than data year dollars, as this is the more conservative 

assumption.

3. Non-CVM methodology estimates were excluded from meta-analysis.

4. 58.1% represents average overall response rate for Azevedo et al. The response rate for the Prairie 

Pothole version of the survey was 58.9% and the response rate for the Iowa River Corridor version was 

56.5%.
59

Exhibit 36. WTP for Preservation of Wetlands

Study Wetland Type

Wetland 

Area 

(acres)

WTP 2,3 WTP Description

Azevedo et 

al. (2000)

Depression/

isolated, 

Riverine/ 

floodplain

7,000 and

2,500 4

$12.66 -

$31.66

Iowa residents' WTP to preserve and 

restore wetlands through the Prairie 

Pothole Joint Venture and Iowa River 

Corridor Project

Mullarkey 

and Bishop 

(1999)

Depression/

isolated, 

Riverine/ 

floodplain

110 $247.10 -

$460.69

Individual WTP for a hypothetical 

rerouting of a highway expansion that 

would preserve 110 acres of wetlands in 

Wisconsin

Poor (1999) Depression/

isolated 41,000 $415.86 -$774.98

WTP to increase the area of wetlands in 

Nebraska’s rainwater basin by an average 

of 41,000 acres

Blomquist 

and 

Whitehead 

(1998)

Emergent, 

Forested 500 $38.92 -$481.20

Household WTP for four wetlands with 

differing characteristics in western 

Kentucky

Roberts 

and Leitch 

(1997)

Emergent 5,000 $124.59 –

232.29

Annual value to households of Mud Lake, 

a managed lacustrine wetland on the 

border of Minnesota and South Dakota

Dillman et 

al. (1993) Forested 2,500 $26.02

South Carolina households' one-time 

WTP for preservation of one of three 

2,500 acre wetlands in the Francis Biedler 

forest of South Carolina

Loomis et 

al. (1991)

Riverine/

floodplain

85,000

and

125,000 5

$243.35 -

$278.57

and 

$401.85 –

$457.89

Annual California household WTP taxes 

to protect and restore San Joaquin Valley 

wetlands

Whitehead 

and 

Blomquist 

(1991)

Forested 5,000 $112.46 -

$684.23

Kentucky households' WTP for 

preservation of the Clear Creek wetland, a 

large natural wetland with hardwood 

trees, standing water, and nonwoody 

vegetation

Lant and 

Tobin 

(1989)

Riverine/ 

floodplain

1,406 and 

1,663 6

$23.05 -

$212.79

Individual WTP in Illinois and Iowa to 

improve water quality in the Edwards 

River to that in the South Skunk River, 

and to improve water quality in the South 

Skunk River to that in the Wapsipinicon 

River.
60

Study Wetland Type

Wetland 

Area 

(acres)

WTP 2,3 WTP Description

Johnson 

and Linder 

(1986)

Emergent 1,307,187 $576.77

South Dakota hunters' individual WTP for 

wetlands statewide for hunting, the 

majority of which are located in the 

eastern part of the state

1. Excludes studies of tidal wetlands or wetlands adjacent to navigable waters.

2. For studies that provide only the year a survey was conducted and did not specify dollar value years, EPA

assumed publication year dollars rather than data year dollars, as this is the more conservative assumption.

3. If entity is not specified, EPA assumed WTP is on an individual basis. If frequency of payment is not 

specified, EPA assumed WTP is in terms of a one-time payment.

4. Azevedo et al. present WTP values for two different study areas, sized 7,000 acres and 2,500 acres.

5. Loomis et al. present WTP values to preserve existing wetlands of 85,000 acres and to preserve that 

acreage plus increase acreage by 40,000 to a total of 125,000.

6. Lant and Tobin present WTP values for two different riparian corridors with different acreage.