United States Office of Water (4303) EPA-821-R-01-002

Environmental Protection Washington, DC 20460 January 2001

Agency

Environmental and Economic

Benefit Analysis of Proposed

Revisions to the National

Pollutant Discharge Elimination

System Regulation and the

Effluent Guidelines for

Concentrated Animal Feeding

Operations
ENVIRONMENTAL AND ECONOMIC BENEFIT ANALYSIS OF THE PROPOSED

REVISIONS TO THE NATIONAL POLLUTANT DISCHARGE ELIMINATION

SYSTEM REGULATION AND THE EFFLUENT GUIDELINES FOR

CONCENTRATED ANIMAL FEEDING OPERATIONS

U.S. Environmental Protection Agency

1200 Pennsylvania Avenue NW

Washington, DC 20460

January, 2001
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TABLE OF CONTENTS

INTRODUCTION AND SUMMARY ................................... CHAPTER 1

1.1 Definition of CAFOs ................................................... 1-2

1.2 Current Issues Related to CAFOs ......................................... 1-3

1.2.1 Potential Environmental Impacts of CAFOs ........................... 1-4

1.2.1.1 Water Quality Impairments .................................. 1-4

1.2.1.2 Ecological Impacts ......................................... 1-5

1.2.1.3 Human Health Effects ...................................... 1-5

1.2.2 Recent Industry Trends ........................................... 1-5

1.2.2.1 Increased Production and Industry Concentration ................. 1-6

1.2.2.2 Location of Animal Operations Closer to Consumer Markets ....... 1-6

1.2.2.3 Advances in Agriculture Production Practices to

Manage and Dispose Manure ................................. 1-7

1.3 Proposed Changes to CAFO Regulations ................................... 1-7

1.3.1 Changes to NPDES Regulations .................................... 1-7

1.3.2 Changes to ELGs ................................................ 1-9

1.3.3 Number of Regulated Operations .................................. 1-10

1.4 Analytic Methods and Results ........................................... 1-10

1.5 Organization of Report ................................................ 1-11

1.6 References .......................................................... 1-13

POTENTIAL IMPACTS OF AFOs ON

ENVIRONMENTAL QUALITY AND HUMAN HEALTH .................. CHAPTER 2

2.1 Pathways for the Release of Pollutants from AFOs ............................ 2-2

2.1.1 Overland Discharge .............................................. 2-4

2.1.1.1 Surface Runoff ............................................ 2-4

2.1.1.2 Soil Erosion .............................................. 2-4

2.1.1.3 Acute Events ............................................. 2-5
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(continued)

2.1.2 Leaching to Groundwater .......................................... 2-6

2.1.3 Discharges to the Air and Subsequent Deposition ....................... 2-6

2.2 Potential Ecological Hazards Posed by AFO Pollutants ........................ 2-7

2.2.1 Nutrients and Eutrophication ....................................... 2-9

2.2.1.1 Nitrogen and Nitrogen Compounds ............................ 2-9

2.2.1.2 Phosphorus .............................................. 2-10

2.2.1.3 Eutrophication ........................................... 2-12

2.2.2 Pathogens ..................................................... 2-12

2.2.3 Organic Compounds and Biochemical Oxygen Demand (BOD) .......... 2-14

2.2.4 Solids and Siltation ............................................. 2-15

2.2.5 Salts and Trace Elements ......................................... 2-16

2.2.6 Odorous/Volatile Compounds ..................................... 2-17

2.2.7 Other Pollutants and Ecosystem Imbalances .......................... 2-17

2.3 Human Health Impacts Related to AFO Pollutants ........................... 2-18

2.3.1 Health Impacts Associated with Nitrates ............................. 2-19

2.3.2 Health Impacts Associated with Algal Blooms ........................ 2-20

2.3.3 Health Impacts Associated with Pathogens ........................... 2-21

2.3.4 Health Impacts Associated with Trace Elements and Salts ............... 2-22

2.3.5 Other Health Impacts ............................................ 2-22

2.4 References .......................................................... 2-24

CONCEPTUAL FRAMEWORK AND OVERVIEW OF METHODS .......... CHAPTER 3

3.1 Possible Environmental Improvements and Resulting Benefits .................. 3-1

3.2 Specific Benefits Analyzed .............................................. 3-3

3.3 Predicting Change in Environmental Quality and Resulting Beneficial Use ......... 3-4

3.4 Valuing Benefits ...................................................... 3-6

3.4.1 Overview of Economic Valuation ................................... 3-6

3.4.2 Primary Approaches for Measuring Benefits ........................... 3-7
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(continued)

3.4.3 Valuation of CAFO Regulatory Benefits Based on Previous Studies ........ 3-8

3.4.4 Aggregating Benefits ............................................. 3-9

3.5 Summary ........................................................... 3-10

3.6 References .......................................................... 3-11

MODELING OF IMPROVEMENTS IN SURFACE WATER QUALITY

AND BENEFITS OF ACHIEVING RECREATIONAL USE LEVELS .......... CHAPTER 4

4.1 Introduction and Overview .............................................. 4-1

4.2 Model Facility Analysis ................................................. 4-2

4.3 Edge-of-Field Loadings Analysis .......................................... 4-6

4.3.1 Loadings from Manure Application .................................. 4-6

4.3.2 Loadings from Lagoons and Other Storage Structures ................... 4-7

4.3.3 Loadings from Feedlots ........................................... 4-8

4.3.4 Model Loadings Under Regulatory Scenarios .......................... 4-8

4.4 Analysis of AFO/CAFO Distribution ...................................... 4-9

4.4.1 Approach ...................................................... 4-9

4.4.2 Estimated Number of AFOs and CAFOs ............................. 4-11

4.4.3 Geographic Placement of Facilities ................................. 4-13

4.5 Surface Water Modeling ............................................... 4-13

4.5.1 Defining the Hydrologic Network .................................. 4-15

4.5.2 Distributing AFOs and CAFOs to Agricultural Land ................... 4-16

4.5.3 Calculating AFO/CAFO-Related Loadings to Waterbodies .............. 4-16

4.5.4 Loadings from Other Sources ..................................... 4-16

4.5.5 Fate and Transport Modeling ...................................... 4-17

4.5.6 Estimated Changes in Loadings .................................... 4-17

4.6 Valuation of Water Quality Changes ...................................... 4-17

4.6.1 Support of Designated Uses ....................................... 4-22

4.6.2 Application of CV Study ......................................... 4-23

4.6.3 Estimated Benefits .............................................. 4-25
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(continued)

4.7 References .......................................................... 4-26

Appendix 4-A: NWPCAM Calculation of the Economic Benefits of

Improved Surface Water Quality .............................................. 4A-1

REDUCED INCIDENCE OF FISH KILLS ................................ CHAPTER 5

5.1 Introduction .......................................................... 5-1

5.2 Analytic Approach ..................................................... 5-2

5.2.1 Data Sources and Limitations ...................................... 5-2

5.2.2 Predicted Change in Fish Kills Under Alternate CAFO Regulations ........ 5-4

5.2.2.1 Baseline Scenario .......................................... 5-4

5.2.2.2 Regulatory Scenarios ....................................... 5-7

5.2.3 Valuation of Predicted Reduction in Fish Kills ......................... 5-8

5.3 Results ............................................................. 5-10

5.4 Limitations and Caveats ................................................ 5-10

5.5 References .......................................................... 5-11

Appendix 5-A: Calculation of Annual Benefits Using Minimum and

Maximum Fish Replacement Values ........................................... 5A-1

IMPROVED COMMERCIAL SHELLFISHING ........................... CHAPTER 6

6.1 Introduction .......................................................... 6-1

6.2 Analytic Approach ..................................................... 6-1

6.2.1 Data on Shellfish Harvest Restrictions Attributed to AFOs ............... 6-1

6.2.2 Estimated Impact on Shellfish Harvests .............................. 6-4

6.2.2.1 Baseline Annual Shellfish Landings ........................... 6-5

6.2.2.2 Estimated Acreage of Harvested Waters ........................ 6-5
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(continued)

6.2.2.3 Average Annual Yield of Harvested Waters ..................... 6-6

6.2.2.4 Characterization of Waters that are 

Unharvested Due to Pollution from AFOs ....................... 6-6

6.2.2.5 Estimated Impact of Pollution from AFOs on

Commercial Shellfish Landings ............................... 6-7

6.2.3 Estimated Impact of Alternate Regulations on

Commercial Shellfish Harvests ..................................... 6-8

6.2.4 Valuation of Predicted Change in Shellfish Harvests .................... 6-9

6.2.4.1 Characterization of Consumer Demand for Shellfish ............. 6-11

6.2.4.2 Determining the Change in Consumer Surplus

Associated with Increased Harvests ........................... 6-11

6.3 Results ............................................................. 6-13

6.4 Limitations and Caveats ................................................ 6-14

6.5 References .......................................................... 6-15

REDUCED CONTAMINATION OF PRIVATE WELLS .................... CHAPTER 7

7.1 Introduction .......................................................... 7-1

7.2 Analytic Approach ..................................................... 7-3

7.2.1 Relationship Between Well Nitrate Concentrations and

Nitrogen Loadings ............................................... 7-3

7.2.1.1 Included Variables and Data Sources .......................... 7-3

7.2.1.2 Omitted Variables ......................................... 7-6

7.2.2 Modeling of Well Nitrate Concentrations Under Alternate

Regulatory Scenarios ............................................. 7-6

7.2.3 Discrete Changes from above the MCL to below the MCL ............... 7-7

7.2.4 Incremental Changes below the MCL ................................ 7-8

7.2.5 Valuation of Predicted Reductions in Well Nitrate Concentrations ......... 7-9

7.2.5.1 Poe and Bishop (1992) ..................................... 7-11

7.2.5.2 Crutchfield et al. (1997) .................................... 7-12

7.2.5.3 De Zoysa (1995) .......................................... 7-13

7.2.5.4 Adjustments to the Values .................................. 7-13
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(continued)

7.2.5.5 Timing of Benefits ........................................ 7-14

7.3 Results ............................................................. 7-15

7.4 Limitations and Caveats ................................................ 7-15

7.5 References .......................................................... 7-19

Appendix 7-A: Model Variables .............................................. 7A-1

Appendix 7-B: The Gamma Model ............................................ 7B-1

Appendix 7-C: Literature Search and Evaluation .................................. 7C-1

INTEGRATION OF RESULTS ........................................ CHAPTER 8

8.1 Introduction .......................................................... 8-1

8.2 Integration of Analytic Results ........................................... 8-1

8.3 Present Value of Benefits ................................................ 8-2

8.4 Annualized Benefits Estimates ........................................... 8-6

8.5 Limitations of the Analysis and Implications for Characterizing Benefits .......... 8-8

Appendix 8-A: Impact of Alternative Time Frames on Present Value and

Annualized Benefits Estimates ............................................... 8A-1

Appendix 8-B: Calculation of Present Values .................................... 8B-1

Appendix 8-C: Calculation of Annualized Benefits ................................ 8C-1
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INTRODUCTION AND SUMMARY CHAPTER 1

The U.S. Environmental Protection Agency (EPA) is revising and updating the two primary

regulations that ensure that manure, wastewater, and other process waters generated by concentrated

animal feeding operations (CAFOs) do not impair water quality. EPA's proposed regulatory changes

affect the existing National Pollutant Discharge Elimination System (NPDES) provisions that define

and establish permit requirementsfor CAFOs, and the existing effluent limitations guidelines (ELGs)

for feedlots, which establish the technology-based effluent discharge standard that is applied to

specified CAFOs. Both of these existing regulations were originally promulgated in the 1970s. EPA

is revising the regulations to address changes that have occurred in the animal industry sectors over

the last 25 years, to clarify and improve implementation of CAFO requirements, and to improve the

environmental protection achieved under these rules. 

This report addresses the environmental and economic benefits of several alternative

regulatory scenarios, including two scenarios that EPA is proposing. It examines in detail four

environmental quality improvements that would result from the regulatory changes: improvements

in the suitability of freshwater resources for fishing and swimming; reduced incidence of fish kills;

improved commercial shellfishing; and reduced contamination of private wells. Because these are

not the only beneficial impacts of the regulatory scenarios considered by EPA — and because, in

general, EPA takes a conservative approach to quantifying the benefits analyzed — the Agency

believes that this report presents a lower-bound estimate of the beneficial impacts of the proposed

scenarios.

This chapter first defines and describes animal feeding operations and CAFOs, then briefly

summarizes the environmental problems and industry changes associated with animal feeding

operations that EPA is addressing with its proposed regulations. Finally, the chapter outlines the

regulatory changes and alternatives that EPA is considering, and provides a summary of the methods

and results of the more detailed benefits analyses presented in the remaining chapters.
 Animal units are defined in EPA's current regulations at 40 CFR 122 and vary by animal 1

type. An AU is considered equivalent to one beef cow.

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1.1 DEFINITION OF CAFOS

The term CAFO is a regulatory designation that describes certain animal feeding operations

(AFOs). AFOs are defined by federal regulation as lots or facilities where animals "have been, are,

or will be stabled or confined and fed or maintained for a total of 45 days or more in any 12 month

period and crops, vegetation forage growth, or post-harvest residues are not sustained in the normal

growing season over any portion of the lot or facility" (40 CFR 122.23(b)(1)). AFOs congregate

animals on a small land area where feed must be brought to the animals. Winter feeding of animals

on pasture or rangeland is not normally considered an AFO.

Current EPA regulations employ a three-tier structure to identify AFOs that are subject to

regulation as CAFOs. Tier 1 facilities include any animal feeding operation where more than 1,000

"animal units" (AUs) are confined; such facilities are by definition CAFOs unless discharges from

the operation occur only as the result of a 25-year, 24-hour (or more severe) storm event. Tier 2

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facilities include AFOs that confine 301 to 1000 AUs; these facilities are defined as CAFOs if:

• Pollutants are discharged into navigable waters through a manmade ditch,

flushing system, or other similar man-made device; or

• Pollutants are discharged directly into waters that originate outside of and

pass over, across, or through the facility or come into direct contact with the

confined animals.

The regulatory definition of a CAFO does not extend to operations with 300 or fewer AUs (i.e., Tier

3 facilities). Under certain circumstances, however (e.g., a facility causing significant surface water

impairment), a permitting authority may designate such facilities as CAFOs.

Current CAFO regulations address only those facilities with wet-manure management

systems; this eliminates most poultry operations from regulation under the Clean Water Act because

they use dry manure management systems. In addition, the current definition of CAFO includes only

swine over 55 pounds and mature dairy cattle, assuming that immature swine and heifers would be

raised in the same operations as adults. As a result, the regulatory definition does not address the

"stand-alone" immature swine or heifer operations that have proliferated in the last two decades.

USDA reports that there were 1.2 million livestock and poultry operations in the United

States in 1997. This number includes all operations that raise beef or dairy cattle, hogs, chickens

(broilers or layers), and turkeys, and includes both confinement and non-confinement (i.e., grazing
EPA's proposed regulatory changes do not address certain types of animal confinement

2

operations, such as farms that raise sheep, lambs, goats, horses, and other miscellaneous animal

species, as well as nontraditional animals, such as bison and various exotic species. 

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and rangefed) production. Of these, EPA estimates that there are about 376,000 AFOs that raise

2

or house animals in confinement, as defined by the existing regulations. For many of the animal

sectors, it is not possible to estimate from available data what proportion of the total livestock

operations have feedlots (i.e., confinement) and what proportion are grazing operations only. For

analytical purposes, EPA has therefore assumed that all dairy, hog, and poultry operations are AFOs.

Exhibit 1-1 summarizes the estimated total number of AFOs of all sizes in each of the four major

livestock categories, based on 1997 data. EPA estimates that only a subset of these AFOs will be

regulated as CAFOs.

Exhibit 1-1

NUMBER OF ANIMAL FEEDING OPERATIONS

 (based on 1997 data)

Sector Total AFOs

Beef operations, including both cattle and veal operations. 106,930

Dairy operations, including both milk and heifer operations. 118,130

Hog operations, including both "farrow to finish" and "grower to finish" operations. 117,860

Poultry operations, including broilers, layers (both wet and dry operations) and turkeys. 123,750

Sum Total 466,670

Total AFOs 375,740 1

Source: EPA estimates derived from published USDA/NASS data, including 1997 Census of Agriculture. For more

information, see Technical Development Document of Proposed Effluent Limitations Guidelines for Animal

Feeding Operations.

"Total AFOs" eliminates double counting of operations with mixed animal types. Based on survey level

1

Census data, operations with mixed animal types account for roughly 20 percent of total AFOs. 

1.2 CURRENT ISSUES RELATED TO CAFOS 

AFOs (including CAFOs) produce and manage large amounts of animal waste, most in the

form of manure. USDA estimates that 291 billion pounds (132 million metric tons) of "as excreted"

manure were generated in 1997 from major livestock and poultry operations. Despite the existing

ELG and NPDES regulations that define CAFOs and regulate their discharges, the management of

animal wastes at AFOs has continued to be associated with environmental problems, including large

spills of manure, fish kills, and outbreaks of Pfiesteria. In addition, industry changes in recent years

may contribute to and exacerbate the problems caused by releases of manure from AFOs. EPA is

revising the existing regulations with the following goals:
 The National Water Quality Inventory 1998 Report to Congress notes that 28 states and

3

tribes reported impairment by agricultural subcategory. Specifically, these states and tribes reported

that animal feeding operations degraded 16 percent of impaired river miles; range and pasture

grazing degraded 11 and 6 percent of impaired river miles, respectively; and irrigated and nonirrigated crop production degraded 18 and 27 percent of impaired river miles, respectively.

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• To address reports of continued discharge and runoff of manure and nutrients

from livestock and poultry farms; 

• To update the existing regulations to reflect structural changes in these

industries over the last few decades; and

• To improve the effectiveness of the CAFO regulation.

Below we summarize the potential environmental impacts of manure releases from AFOs,

and outline the recent industry changes that may exacerbate these impacts.

1.2.1 Potential Environmental Impacts of CAFOs

Manure management practices at AFOs can include storage in piles or in open waste lagoons,

followed by land application to agricultural fields as fertilizer. While some discharges from

regulated CAFOs are governed as point sources, unregulated releases of manure from waste piles

or lagoons and overapplication of manure to agricultural lands can affect nearby surface and

groundwater. National and local studies have confirmed the presence of manure pollutants in surface

waters. Once contaminants from manure have reached surface waters they can cause a variety of

ecological and human health problems, including water quality impairments, ecological impacts, and

human health effects from recreational exposure or from contaminated drinking water. 

1.2.1.1 Water Quality Impairments

EPA's 1998 National Water Quality Inventory, prepared under Section 305(b) of the Clean

Water Act, identifies agriculture (including irrigated and non-irrigated crop production, rangeland,

feedlots, pastureland, and animal holding areas) as the leading contributor to identified water quality

impairments in the nation’s rivers and lakes, and the fifth leading contributor to identified water

quality impairments in the nation’s estuaries. The report also identifies the key pollutants and

stressors that impair the nation's waters. Among the most problematic pollutants are several -

including pathogens, nutrients, and oxygen depleting substances - that are associated commonly,

although not exclusively, with animal waste. 

3
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1.2.1.2 Ecological Impacts

The most dramatic ecological impacts associated with manure pollutants in surface waters

are massive fish kills. Incomplete records indicate that every year dozens of fish kills associated with

AFOs result in the deaths of hundreds of thousands of fish. In addition, manure pollutants such as

nutrients and suspended solids can seriously disrupt aquatic systems by over-enriching water (in the

case of nutrients) or by increasing turbidity (in the case of solids). Excess nutrients cause

fast-growing algae blooms that reduce the penetration of sunlight in the water column, and reduce

the amount of available oxygen in the water, reducing fish and shellfish habitat and affecting fish

and invertebrates. Manure pollutants can also encourage the growth of toxic organisms, including

Pfiesteria, which has also been associated with fish kills and fish disease events. Reduction in

biodiversity due to animal feeding operations has also been documented; for example, a study of

three Indiana stream systems found fewer fish and more limited diversity of fish species downstream

of CAFOs than were found downstream of study reference sites. 

1.2.1.3 Human Health Effects

Manure contains over 100 human pathogens; contact with some of these pathogens during

recreational activities in surface water can result in infections of the skin, eye, ear, nose, and throat.

Eutrophication due to excess nutrients can also promote blooms of a variety of organisms that are

toxic to humans either through ingestion or contact. This includes the estuarine dinoflagellate

Pfiesteria piscicida. While Pfiesteria is primarily associated with fish kills and fish disease events,

the organism has also been linked with human health impacts through dermal exposure. Finally,

even with no visible signs of algae blooms, shellfish such as oysters, clams and mussels can carry

toxins produced by some types of algae in their tissue. These can affect people who eat

contaminated shellfish.

Contaminants from manure, including nitrogen, algae, and pathogens, can also affect human

health through drinking water sources and can result in increased drinking water treatment costs.

For example, nitrogen in manure can be transported to drinking water as nitrates, which are

associated with human health risks. EPA has identified nitrate as the most widespread agricultural

contaminant in drinking water wells. Algae blooms triggered by nutrient pollution can affect

drinking water by clogging treatment plant intakes, producing objectionable tastes and odors, and

reacting with the chlorine used to disinfect drinking water to produce harmful chlorinated byproducts

(e.g., trihalomethanes).

1.2.2 Recent Industry Trends

Since EPA promulgated the existing ELG and NPDES regulations governing CAFOs in the

1970s, a number of trends in the livestock and poultry industries have influenced the nature of

pollution from AFOs and the potential for contamination of surface and groundwater. These trends
This more than two-fold increase in the number of broilers raised annually signals the need 4

to review the existing CAFO regulations, which effectively do not cover broiler operations since

virtually no such operations use wet manure management systems. 

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include a combination of industry growth and concentration of animals on fewer, larger farms;

location of farms closer to population centers; and advances in farm production practices and waste

management techniques. The changes in the industry have limited the effectiveness of the current

regulations that define and govern releases from CAFOs.

1.2.2.1 Increased Production and Industry Concentration

U.S. livestock and poultry production has risen sharply since the 1970s, resulting in an

increase in the amount of manure and wastewater generated annually. The Census of Agriculture

reports 1997 turkey sales of 299 million birds, compared to 141 million sold in 1978. Sales of

broilers increased to 6.4 billion in 1997 from 2.5 billion in 1974. Red meat production also rose 4

during the 1974-1997 period; the number of hogs and pigs sold in 1997 totaled 142.6 million,

compared to 79.9 million in 1974. 

As production has increased, the U.S. livestock and poultry sectors have also consolidated

animal production into a smaller number of larger-scale, highly specialized operations that

concentrate more animals (and manure) in a single location. At the same time, significant gains in

production efficiency have increased per-animal yields and the rate of turnover of animals between

farm and market. These large AFOs can present considerable environmental risks, because they often

do not have an adequate land base for manure disposal through land application. As a result, large

facilities must incur the risks associated with storing significant volumes of manure, or must attempt

to maximize the application of manure to the limited land they have available. By comparison,

smaller AFOs manage fewer animals and tend to concentrate less manure nutrients at a single

location. These operations are more likely to have sufficient cropland and fertilizer needs to land

apply manure nutrients generated at a livestock or poultry business. 

1.2.2.2 Location of Animal Operations Closer to Consumer Markets

Since the 1970s, the combined forces of population growth and re-location of operations

closer to consumer markets and processing sectors have resulted in more AFOs located near densely

populated areas. Surface waters in these areas face additional stresses from urban runoff and other

point sources. The proximity of large AFOs to human populations thus increases the potential for

human health impacts and ecological damage if manure and wastewater at AFOs is improperly

discharged.
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1.2.2.3 Advances in Agriculture Production Practices to Manage and Dispose Manure

Continued research by USDA, state agencies and universities has led to advances in

technologies and management practices that minimize the potential environmental degradation

attributable to discharge and runoff of manure and wastewater. Today, there are many more

practicable options to properly collect, store, treat, transport, and utilize manure and wastewater than

there were in the 1970s, when the existing regulations were instituted. As a result, current

regulations do not reflect the full range of management practices and technologies that may be

implemented to achieve greater protection of the environment (e.g., by more effectively treating

certain constituents present in animal manure or by converting manure into a more marketable form).

In addition, during the time since promulgation of the existing regulation, certain practices have

proven to be relatively less protective of the environment. There is documented evidence that

lagoons may leak if not properly maintained, and evidence of overapplication of manure and nutrient

saturation of soils in some parts of the country. 

1.3 PROPOSED CHANGES TO CAFO REGULATIONS

In response to persistent reports of environmental problems, and to changes in the industries

and technologies associated with AFOs, EPA is proposing changes to both the NPDES regulations

for CAFOs and the ELG regulations for feedlots. Proposed changes to the NPDES regulations for

CAFOs affect which animal feeding operations are defined as CAFOs and are therefore subject to

the NPDES permit program. Changes to the ELG regulations for feedlots affect which technologybased requirements will apply to CAFOs.

EPA's analysis of the benefits of revised regulations considers four alternatives for the

NPDES definition of a CAFO (described as Scenarios 1, 2/3, 4a, and 4b), combined with two

alternative ELG regulations (Options 1 and 2), yielding a total of eight regulatory scenarios. EPA

is co-proposing two of these scenarios. The first incorporates NPDES scenario 2/3 and ELG Option

2; this scenario would preserve the current three-tier structure for identifying facilities that are

CAFOs (though with revised conditions for identifying CAFOs within the tiers), and would revise

the ELG to establish a phosphorus-based manure application limit. The second proposed scenario

incorporates NPDES scenario 4a and ELG Option 2; this scenario would replace the current threetier structure with a two-tier structure, and would also incorporate a phosphorus-based ELG.

Specific proposed changes are described in more detail below, and are summarized in Exhibit 1-2.

1.3.1 Changes to NPDES Regulations

EPA considered four regulatory scenarios that reflect changes to the current approach to

determining which facilities are CAFOs that are subject to NPDES requirements. Scenario 1 would

retain the existing three-tier structure for identifying CAFOs (described in section 1.1). Scenario 2/3

would also retain the current three-tier structure, but would revise the conditions within the tiers for

determining which facilities are CAFOs. Scenario 4a would replace the current three-tier structure
Each of the regulatory scenarios analyzed also reflects several proposed structural changes 5

that would revise the CAFO definition and permit requirements under the NPDES permit program.

For example, EPA is proposing to include dry poultry and stand-alone immature swine and heifer

operations as AFOs; this change would increase the number of facilities that meet the definition of

a CAFO and must obtain an NPDES permit. In addition, EPA is proposing several clarifications

designed to assure that all facilities meeting the CAFO definition obtain an NPDES permit.

Similarly, EPA is proposing changes to the ELGs for feedlots that would clarify the development

of technical standards for manure storage and land application operations. These changes from the

current baseline are reflected in all of the regulatory scenarios.

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with a two-tier structure that would alter the definition of a CAFO to include all AFOs with 500 or

more AUs; operations with fewer than 500 AUs would be regulated at the discretion of the

permitting authority (similar to the current Tier 3 facilities). Finally, Scenario 4b would change to

a two-tier structure similar to that in Scenario 4a, but would define as a CAFO any operation with

300 or more animal units. 

5

As noted above, EPA has chosen to co-propose NPDES Scenario 2/3 and NPDES Scenario

4a. In doing so, the Agency is soliciting comments on regulatory approaches that, on a national

basis, yield similar environmental benefits, but offer different administrative benefits and have

differing impacts on regulated industry sectors. Specifically:

• Scenario 2/3 would apply a three-tier structure combined with a risk-based

approach to identify which AFOs pose a potential to discharge. This scenario

would automatically define all operations over 1,000 AUs as CAFOs. AFOs

with between 300 and 1,000 AUs would be required to either apply for an

NPDES permit or certify to the permitting authority that they do not meet any

of the conditions that define a CAFO. An advantage of this approach is that

it would offer states flexibility in developing requirements and programs that

could reduce the number of facilities needing NPDES permits. A potential

disadvantage, however, is the complexity associated with administering this

approach, as well as the cost associated with extending the

certification/application requirement to facilities as small as 300 AUs.

• In contrast to Scenario 2/3, the two-tier structure of Scenario 4a would define

all operations with at least 500 AUs as CAFOs. As such, all facilities with

at least 500 AUs would be required to obtain and comply with an NPDES

permit; operations with fewer than 500 AUs would be subject to permitting

only if designated by the permitting authority as a significant contributor of

pollution. An advantage of this approach is that it simplifies the structure of

the regulations and supports EPA's goal of clarifying their scope. In addition,

operations with at least 300 but fewer than 500 AUs would not automatically

incur permitting or certification costs; however, the potential benefits

associated with a more flexible, risk-based approach to permitting operations

with between 500 and 1,000 AUs would be foregone.
1-9

Exhibit 1-2

REGULATORY SCENARIOS CONSIDERED IN

THE BENEFITS ANALYSIS

Regulatory

Scenario NPDES Revisions ELG Revisions

Baseline CAFOs include any AFO with over 1,000 AUs, as well as AFOs with Manure application

fewer AUs that meet certain requirements. not regulated

Option 1- Baseline scenario plus dry poultry and immature swine and heifer Nitrogen-based

Scenario 1 operations. manure application

Option 1- New NPDES conditions for identifying CAFOs among AFOs with 300 Nitrogen-based

Scenario 2/3 - 1000 AUs, plus dry poultry and immature swine and heifer operations. manure application

Option 1- CAFOs include all AFOs with 500 or more AUs, plus dry poultry, Nitrogen-based

Scenario 4a immature swine and heifer operations. manure application

Option 1- CAFOs include all AFOs with 300 or more AUs, plus dry poultry, Nitrogen-based

Scenario 4b immature swine and heifer operations. manure application

Option 2- Baseline scenario plus dry poultry and immature swine and heifer Phosphorus-based

Scenario 1 operations. manure application

Option 2- New NPDES conditions for identifying CAFOs among AFOs with 300 Phosphorus-based

Scenario - 1000 AUs, plus dry poultry and immature swine and heifer operations. manure application

2/3*

Option 2- CAFOs include all AFOs with 500 or more AUs, plus dry poultry, Phosphorus-based

Scenario 4a* immature swine and heifer operations. manure application

Option 2- CAFOs include all AFOs with 300 or more AUs, plus dry poultry, Phosphorus-based

Scenario 4b immature swine and heifer operations. manure application

* Proposed scenarios.

1.3.2 Changes to ELGs

EPA's proposed changes to the effluent limitation guidelines would include a technical

standard for nutrient-based land application of manure. The Agency is considering two regulatory

options. Option 1 would limit manure application to a nitrogen-based agronomic application rate

(i.e., manure application could not exceed the soil and crop demand for the nitrogen within the

manure). Option 2 would limit manure application to a phosphorus-based agronomic application

rate (i.e., manure application could not exceed the soil and crop demand for the phosphorus within

the manure). 
1-10

EPA's proposed regulatory scenarios both reflect the phosphorus standard. Because manure

is phosphorus rich, nitrogen-based manure application is likely to result in application of phosphorus

in excess of crop requirements. Although excess phosphorus does not usually harm crops and is

often adsorbed by soils, the capacity of soil to adsorb phosphorus will vary by soil type. Recent

observations indicate that soils can and do become saturated with phosphorus. When saturation

occurs, continued application of phosphorus in excess of what can be used by the crop and soil will

result in phosphorus leaving the field with storm water via leaching or runoff; eutrophication of

surface waters can result. 

1.3.3 Number of Regulated Operations

EPA has estimated the likely number of AFOs that would be regulated under the revised

definition of CAFO in each of the four NPDES scenarios (i.e., Scenarios 1, 2/3, 4a, and 4b). EPA

analyzed data from the USDA's 1997 Census of Agriculture to identify AFOs and CAFOs. EPA first

determined the number of operations that raise animals under confinement by using available data

on the total number of livestock and poultry facilities. Next, EPA determined the number of CAFOs

based on the number of facilities that discharge or have the potential to discharge to U.S. waters and

which meet a minimum size threshold (i.e., number of animals) as defined by the regulatory options.

Exhibit 1-3 shows the number of CAFOs estimated for each scenario.

1.4 ANALYTIC METHODS AND RESULTS

To determine the economic benefits of the regulatory scenarios, EPA performed four separate

analyses of expected changes in environmental quality that would likely result from reduced AFO

pollution. These include:

• Improvements in Water Quality and Suitability for Recreational

Activities: this analysis estimates the economic value of improvements in

inland surface water quality that would increase opportunities for recreational

fishing and swimming;

• Reduced Incidence of Fish Kills: this analysis estimates the economic

value of a potential reduction in the number of fish kills caused by AFOrelated waste;

• Improved Commercial Shellfishing: this analysis characterizes the impact

of pollution from AFOs on access to commercial shellfish growing waters,

and values the potential increase in commercial shellfish harvests that may

result from improved control of that pollution; and
1-11

Exhibit 1-3

ESTIMATED NUMBER OF CAFOS UNDER ALTERNATIVE REGULATORY SCENARIOS*

Production Currently NPDES NPDES NPDES NPDES

Sector Regulated Scenario 1 Scenario 2/3 Scenario 4a Scenario 4b

Beef 2,220 2,290 2,720 3,080 4,080

Dairy 3,150 3,560 5,430 3,760 7,140

Heifers 620 590 830 800 1,050

Veal 20 20 70 90 210

Swine 5,260 5,630 7,520 8,550 14,370

Layers 470 870 1,420 1,640 2,050

Broilers 620 4,320 13,830 9,780 14,140

Turkeys 50 420 1,680 1,280 2,100

Total 12,410 17,700 33,500 28,980 45,140

* AFOs with more than one animal type are counted more than once; numbers have been rounded to nearest

ten.

• Reduced Contamination of Private Wells: this analysis examines the

impact of the revised regulations on groundwater quality, and values

predicted improvements in the quality of aquifers that supply private wells.

Exhibit 1-4 summarizes the results of these four studies for each of the regulatory scenarios.

It is important to note that these results are not intended to represent the total value of all benefits

associated with a reduction in AFO pollutants; they include only the subset of benefits that is

addressed by EPA's analyses. Moreover, EPA's analyses generally take a conservative approach to

quantifying benefits; therefore, the results are likely to reflect conservative estimates of the specific

benefits that EPA has examined.

1.5 ORGANIZATION OF REPORT

The remainder of this report presents EPA's analysis of the benefits expected under each of

the regulatory scenarios considered. Specifically:

• Chapter 2 provides a detailed description of the potential impacts of AFOs

on environmental quality and human health;
1-12

Exhibit 1-4

ESTIMATED ANNUALIZED BENEFITS OF CHANGES IN REGULATION OF CAFOS

(1999 dollars, millions)

Regulatory Scenario Benefits Fish Kills Shellfishing Pollution Total

Recreational Reduced

and Non-use Reduced Improved Private Well

Option 1- Scenario 1 $4.9 $0.1 - $0.2 $0.1 - $1.8 $33.3 - $49.0 $38.4 - $55.9

Option 1- Scenario 2/3 $6.3 $0.1 - $0.3 $0.2 - $2.4 $33.3 - $49.1 $39.9 - $58.0

Option 1- Scenario 4a $5.5 $0.1 - $0.3 $0.2 - $2.2 $35.5 - $52.2 $41.2 - $60.2

Option 1- Scenario 4b $7.2 $0.1 - $0.3 $0.2 - $2.6 $35.5 - $52.2 $43.0 - $62.3

Option 2- Scenario 1 $87.6 $0.2 - $0.3 $0.2 - $2.1 $35.4 - $52.1 $123.3 - $142.1

Option 2- Scenario 2/3* $127.1 $0.2 - $0.4 $0.2 - $2.7 $35.4 - $52.1 $163.0 - $182.3

Option 2- Scenario 4a* $108.5 $0.2 - $0.4 $0.2 - $2.4 $36.6 - $53.9 $145.5 - $165.1

Option 2- Scenario 4b $145.0 $0.2 - $0.4 $0.2 - $3.0 $36.6 - $53.9 $182.1 - $202.2

* Proposed scenarios.

• Chapter 3 describes the range of benefits that would result from decreased

AFO loadings, and outlines EPA's general approach to quantifying and

valuing the subset of benefits analyzed;

• Chapter 4 assesses the value of changes in surface water quality that would

result from a reduction in AFO loadings, focusing on changes in the quality

of freshwater resources that would improve their suitability for fishing and

swimming;

• Chapter 5 assesses the value of reducing the incidence of fish kills

attributable to pollution from AFOs;

• Chapter 6 assesses the value of improved commercial shellfishing resulting

from decreased AFO loadings;

• Chapter 7 assesses the value of reduced contamination of private wells

associated with reductions in the pollution of groundwater by AFOs; and

• Chapter 8 provides the summary and conclusions of the benefits analysis.
1-13

1.6 REFERENCES

USDA/USEPA (U.S. Department of Agriculture and U.S. Environmental Protection Agency). 1999.

Unified National Strategy for Animal Feeding Operations, Section 4.2. Available on EPA's

web site at: http://www.epa.gov/owm/finafost.htm#1.0.
 This document uses the term manure to refer to both "solid" manure and urine, since these 6

wastes are typically managed together. Additional animal wastes associated with AFOs (e.g., hair,

feathers, bedding material and carcasses) are identified separately in the discussion.

 The National Water Quality Inventory 1998 Report to Congress notes that 28 states and 7

tribes reported impairment by agricultural subcategory. Specifically, these states and tribes reported

that animal feeding operations degraded 16 percent of impaired river miles; range and pasture

grazing degraded 11 and 6 percent of impaired river miles, respectively; and irrigated and nonirrigated crop production degraded 18 and 27 percent of impaired river miles, respectively.

2-1

POTENTIAL IMPACTS OF AFOS ON 

ENVIRONMENTAL QUALITY AND HUMAN HEALTH CHAPTER 2

Animal manure, the primary cause of pollution related to AFOs, contains a variety of

pollutants that can cause environmental degradation, particularly when released to surface waters in

large quantities. Documented releases from AFOs have been associated with a number of adverse 6

human health and ecological impacts, including fish kills, disease outbreaks, and degradation of

water quality and aquatic life. 

EPA's 1998 National Water Quality Inventory, prepared under Section 305(b) of the Clean

Water Act, presents recent information on impaired water bodies nationwide. The Inventory

identifies agriculture (including irrigated and non-irrigated crop production, range grazing, pasture

grazing, and animal feeding operations) as the leading contributor to identified water quality

impairments in the nation’s rivers and lakes, and the fifth leading contributor to identified water

quality impairments in the nation’s estuaries. The report also identifies the key pollutants and

stressors that impair the nation's waters. Among the most problematic pollutants are several -

including pathogens, nutrients, and oxygen depleting substances - that are associated commonly,

although not exclusively, with animal waste (USEPA, 2000). 

7

The animal waste management practices and pollutant transport pathways that can lead to

contamination of surface waters are well known. Animal wastes at AFOs are typically managed by

land application and/or storage in waste piles or lagoons. Land application and storage of manure

are centuries-old farming practices. In small or low-density farming operations these methods pose
2-2

minimal pollution potential. AFOs, however, manage large amounts of manure in a concentrated

area. Under these circumstances, the following waste management failures pose an increased

potential for pollution:

• Over-application of manure: While land application of manure can provide

valuable nutrients to soil and crops, the capacity of soil and crops to absorb

nutrients over any given period is limited. Excess manure applied to

cropland can damage crops and soil, and is more likely to run off into surface

waters or be released to air through volatilization or erosion (for example,

through spray application)..

• Runoff from uncovered manure piles: Manure piles are frequently used

for temporary storage of animal wastes. Precipitation may wash pollutants

from uncovered manure piles into nearby surface waters. 

• Lagoon failures: AFOs frequently store large quantities of manure in

lagoons prior to land application or other disposal. While lagoons are

designed to prevent the release of wastes into the environment, they are

subject to various types of failure, including spills due to overfilling;

washouts in floods; liner failures; failures of dikes, pipes, or other aboveground structures; and accidental and intentional operator-related releases.

This chapter briefly describes the pathways, pollutants, and environmental and human health effects

associated with releases from AFOs. More detailed information is available in Environmental

Assessment of the Proposed Effluent Limitation Guidelines for Concentrated Animal Feeding

Operations (available in Section 8.1 of the Record).

2.1 PATHWAYS FOR THE RELEASE OF POLLUTANTS FROM AFOS

Pollutants in animal wastes can reach surface waters by several pathways, including overland

discharge, migration through groundwater, and atmospheric deposition. The most common pathway

is overland discharge, which includes surface runoff (i.e., land-applied or piled manure that is

washed into surface waters by rain), soil erosion, and acute events such as spills or impoundment

failures. Contamination can also occur when pollutants leach through soil into groundwater and then

to surface water through groundwater recharge. In addition, airborne pollutants created by

volatilization or by spray-application of manure to land can contaminate surface water through

atmospheric deposition. Exhibit 2-1 illustrates the various pathways by which AFO releases can

affect surface waters and groundwater. The following discussion describes these pathways in

greater detail.
Atmospheric

deposition

Runoff

Groundwater

recharge

Infiltration

Land

Application

Site

Direct

Discharge

Surface

Water

Exhibit 2-1

PATHWAYS FOR AFO-RELATED POLLUTANTS

Waste

Lagoon

2-3
Surface discharges can also result from direct contact between confined animals and surface

8

waters. Certain animals, particularly cattle, will wade into the surface waters to drink, and will often

urinate and defecate there as well. This practice is now restricted for CAFOs, but may still occur at

other types of AFOs.

 Experiments show that for all animal wastes, application rates have a significant effect on 9

runoff concentrations of pollutants. See Daniel et al., 1995. 

2-4

2.1.1 Overland Discharge

Contamination from manure often reaches surface water though overland discharge; that is,

by flowing directly into surface waters from land application sites or lagoons. There are three

distinct types of overland discharge: surface runoff, soil erosion, and direct discharge of manure to

surface water during acute events. For example, a single flood event might include lagoon

"washouts," soil erosion and surface runoff. This section describes the various types of overland

discharge in more detail.

2.1.1.1 Surface Runoff

Surface runoff occurs whenever rainfall or snowmelt is not absorbed by soil and flows

overland to surface waters. Runoff from land application sites or manure piles can transport

8

pollutants to surface waters, especially if rainfall occurs soon after application, if manure is overapplied, or if it is misapplied. The potential for runoff of animal wastes varies considerably with 9

climate, soil conditions, and management practices. For example, manure applied to saturated or

frozen soils is more likely to runoff the soil surface (ODNR, 1997). Other factors that promote

runoff to surface waters are steep land slope, high rainfall, low soil porosity or permeability, and

close proximity to surface waters.

Surface runoff is a particularly significant transport mechanism for water soluble pollutants,

including nitrogen compounds. However, runoff can also carry solids. Runoff of manure pollutants

has been identified as a factor in a number of documented impacts from AFOs, including hog, cattle,

and chicken operations. For example, in 1994, multiple runoff problems were cited for a hog

operation in Minnesota, and in 1996 runoff from manure spread on land was identified at hog and

chicken operations in Ohio. In 1996 and 1997, runoff problems were identified for several cattle

operations in numerous counties in Minnesota (CWAA, 1998; ODNR, 1997).

2.1.1.2 Soil Erosion 

In addition to simple surface runoff, pollutants from animal wastes can enter surface water

through erosion, in which the soil surface itself is worn away by the action of water or wind. Soil

erosion often occurs in conjunction with surface runoff as part of rainfall events, but it represents a

transport mechanism for additional pollutants that are strongly sorbed (i.e., chemically bound) to
2-5

Catastrophic Release of Manure:

New River, North Carolina, 1995

On June 21, 1995, a breach in the dike of a 30 million

gallon hog waste lagoon discharged over 25 million

gallons of waste into tributaries of the New River in

Onslow County, North Carolina.

Within a week of the event, North Carolina state officials

estimated that roughly 2,600 fish were destroyed, though

monitoring indicated that oxygen levels had recovered in

the river within a week of the event. JoAnne Burkholder,

a North Carolina State University marine scientist,

noted that the initial waste deluge probably smothered

many fish. Others were killed more slowly by declining

oxygen levels and the toxic effects of ammonia and

bacteria in the water.

Two days after the spill scientists sampling in some of

the affected areas found ammonia levels of about 20

times the lethal limit for most fish.

Though oxygen levels recovered rapidly, Burkholder

noted that it could take years for the upper New

ecosystem to fully recover and support the range of fish,

clams and other creatures that existed before the spill. 

In addition to immediate problems, longer term

problems caused by the breach would include rains

churning up settled pollution and potential algae

blooms.

State environmental officials also confirmed that high

levels of fecal coliform bacteria were detected in the

river, and Onslow County healthy officials posted

warnings in public recreation areas to prevent people

from swimming. According to local newspaper reports,

in some places fecal coliform levels were 10,000 times

the state standard for swimming. 

Sources: Warrick and Stith,1995b; Warrick 1995b,

1995c, 1995d.

soils. The most important of these pollutants is phosphorus. Because of its tendency to sorb to soils,

many agricultural phosphorus control measures focus on soil erosion control. However, soils do not

have infinite adsorption capacity for phosphorus or other pollutants, and dissolved pollutants

(including phosphates) can still enter waterways through runoff even if soil erosion is controlled

(NRC, 1993).

In spite of control efforts, soil

erosion remains a serious challenge for

agriculture. For example, in 1997 the

USDA Natural Resources Conservation

Service (NRCS) reviewed the connection

between manure production, soil erosion,

and water quality in a watershed in South

Carolina. NRCS calculated that soil

erosion from the 13,000 acres of cropland

in the watershed ranged from 9.6 to 41.5

tons per acre per year. The report further

found that manure and erosion-related

pollutants such as bacteria, nutrients, and

sediment are the primary contaminants

affecting streams and ponds in the

watershed (USEPA, 1997).

2.1.1.3 Acute Events

In addition to surface runoff and

erosion, acute events such as spills,

floods, or other lagoon or application

failures can affect surface waters. Unlike

runoff and erosion, which generally affect

land-applied wastes, acute events

frequently affect waste management

lagoons. Spills can result from

mechanical malfunctions (e.g., pump

failures, manure irrigation gun

malfunctions, and failures in pipes or

retaining walls), overfilling, or washouts

during flood events. There are even

indications that some operators discharge

wastes into surface waters deliberately in

order to reduce the volume of waste in

overfull lagoons (CWAA, 1998). Acute

events frequently result in large waste discharges and are often associated with immediate ecological
2-6

effects such as fish kills. Furthermore, In addition to immediate fish kills, large releases can be

linked with eutrophication, sedimentation, and the growth of pathogens. All of these impacts can

also cause acute mortality in fish and other aquatic species. 

2.1.2 Leaching to Groundwater

Pollutants from animal waste can migrate to groundwater and subsequently contaminate

surface waters through the process of "groundwater recharge," in which hydrological connections

between aquifers and surface waters allow transfer of water (and pollutants). Groundwater

contamination itself can result from leaching of land-applied pollutants into the soil, or from leaking

lagoons. Although most lagoons are lined with clay or are designed to be "self-sealed" by manure

solids that prevent infiltration of pollutants into groundwater, these methods are not always

effective. For example, a survey of hog and poultry lagoons in the Carolinas found that the contents

of nearly two-thirds of the 36 lagoons sampled had leaked into the groundwater (Meadows, 1995).

Similarly, clay-lined lagoons can crack or break as they age, and are susceptible to burrowing worms.

In a three-year study of clay-lined swine lagoons on the Delmarva Peninsula, researchers found that

leachate from lagoons located in well-drained loamy sand adversely affected groundwater quality

(Ritter et al., 1990).

Surface water contamination from groundwater is most likely to occur in areas with high soil

permeability and shallow water tables, and is most likely to involve water soluble contaminants such

as nitrogen (Smith et al., 1997). Overall, the potential for contamination by this pathway may be

considerable. For example, in the Chesapeake Bay watershed, the USGS estimates that about half

of the nitrogen loads from all sources to non-tidal streams and rivers originates from groundwater

(ASCE, 1998). In addition, about 40 percent of the average annual stream flow in the United States

results from groundwater recharge (USEPA, 1993).

2.1.3 Discharges to the Air and Subsequent Deposition

Discharges to the air from AFOs include both volatile pollutants (e.g., ammonia and various

by-products of manure decomposition) and particulate matter such as dried manure, feed, hair, and

feathers. The degree of volatilization of pollutants from manure depends on environmental

conditions and the manure management system employed. For example, spray application of manure

increases the potential for volatilization, as does the practice of spreading manure on the land

without incorporating it into the soil. Volatilization is also affected by climate and soil conditions,

(e.g., soil acidity and moisture content), and is reduced by the presence of growing plants (Follett,

1995).
 "Respirable" generally refers to particles less than 10 microns in diameter, or PM10; these

10

particles are responsible for the majority of human health effects related to air pollution because they

are small enough to travel through the nasal passage and into the lungs.

 For more detailed discussion of the pollutants associated with animal waste, see Phillips 11

et al., 1992.

2-7

Particulate matter from manure forms an organic dust made up of dried manure, feed, and

epithelial cells. These airborne particles can contain adsorbed gases, endotoxin (the toxic protoplasm

liberated when a microorganism dies and disintegrates), and possibly steroids from animal waste.

According to information presented to the Centers for Disease Control, at least 50 percent of the dust

emissions from swine operations are believed to be respirable and may therefore be associated with

inhalation-related human health effects (Thu, 1998).10

In addition to creating the potential for air-related health effects, both volatilized pollutants

and particulate matter can contaminate nearby surface waters through atmospheric deposition.

Volatilization of the ammonia in urine, in particular, has been linked with atmospheric deposition

of nitrogen (Lander et al., 1998). While it is not clear what percentage of total deposition of

pollutants can be linked to AFOs, EPA’s 1998 National Water Quality Inventory indicates that

atmospheric deposition from all sources is the third greatest cause of water quality impairment for

estuaries, and the fifth greatest cause of water quality impairment for lakes, reservoirs and ponds.

2.2 POTENTIAL ECOLOGICAL HAZARDS 

POSED BY AFO POLLUTANTS

The primary pollutants associated with animal waste are nutrients (particularly nitrogen and

phosphorus), organic matter, solids, pathogens, and odorous/volatile compounds. Animal waste is

also a source of salts and trace elements and, to a lesser extent, antibiotics, pesticides, and hormones.

The concentration of particular pollutants in manure varies with animal species, the size, maturity,

and health of the individual animal, and the composition (e.g., protein content) of animal feed. The

11

range of pollutants associated with manure is evident in a 1991 U.S. Fish and Wildlife Service

(USFWS) report on suspected impacts from cattle feedlots on Tierra Blanca Creek in the Texas

Panhandle. The impacts the USFWS reported included elevated concentrations of ammonia,

coliform bacteria, chloride, nitrogen, and volatile suspended solids, as well as reduced concentrations

of dissolved oxygen. In addition, USFWS found elevated concentrations of the feed additives copper

and zinc in creek sediment (USFWS, 1991).

The ecological impacts of animal waste releases to surface water can range from minor,

temporary fluctuations in water quality (e.g., associated with limited surface runoff) to chronic

degradation of ecosystems (e.g., associated with consistently poor management practices such as

over-application), to dramatic impacts such as extensive fish or wildlife kills (e.g., associated with

acute events such as spills or toxic algae blooms). In some cases, individual pollutants associated

with animal waste are the clear and direct cause of observable ecological effects. In other cases,
2-8

ecological effects such as declines in aquatic populations are the result of complex systemic changes

that are linked directly or indirectly to pollution from AFOs.

Exhibit 2-2 lists the key pollutants associated with AFO waste, and notes their potential

impacts. The remainder of this section describes in more detail the relationship between AFO

pollutants and observed ecological effects. Section 2.3 focuses on the specific impacts of AFO

pollutants on human health.

Exhibit 2-2

KEY POLLUTANTS IN ANIMAL WASTE

Pollutant in Animal Waste Pathways Potential Impacts

Description of Pollutant Forms 

Nutrients

Nitrogen Exists in fresh manure in organic (e.g., < Overland discharge < Eutrophication

ammonia in urea) and inorganic forms (e.g., < Leachate into < Animal, human

ammonium and nitrate). Microbes transform groundwater health effects

organic nitrogen to inorganic forms that are < Atmospheric deposition

absorbed by plants. as ammonia

Phosphorus Exists in both organic (water soluble) and < Overland discharge < Eutrophication

inorganic forms. As manure ages, phosphorus < Leachate into

mineralizes to inorganic phosphate compounds groundwater (water

that are absorbed by plants. soluble forms)

Potassium Most potassium in manure is in an inorganic < Overland discharge < Eutrophication

form available for absorption by plants; it can < Leachate into < Increased salinity

also be stored in soil for future uptake. groundwater

Organic

Compounds 

Carbon-based compounds in manure that are < Overland discharge < Depletion of

decomposed by surface water micro- dissolved oxygen

organisms. Creates biochemical oxygen < Reduction in aquatic

demand, or BOD, because decomposition life

consumes dissolved oxygen in the water.

Solids Includes manure itself and other elements < Overland discharge < Turbidity 

(e.g., feed, bedding, hair, feathers, and < Atmospheric deposition < Siltation

corpses).

Pathogens Includes range of disease-causing organisms, < Overland discharge < Animal, human

including bacteria, viruses, protozoa, fungi, < Growth in waters with health effects

and algae. Some pathogens are found in high nutrient, organic

manure, others grow in surface water due to materials

increased nutrients and organic matter. < Algal by-products

Salts Includes soluble salts containing cations < Overland discharge < Reduction in aquatic

sodium and potassium (from undigested feed), < Leachate into life

calcium and magnesium; and anions chloride, groundwater < Human health

sulfate, bicarbonate, carbonate, and nitrate. effects

Trace Elements Includes feed additives arsenic, copper, < Overland discharge < Toxicity at high

selenium, zinc, cadmium; and trace metals levels

molybdenum, nickel, lead, iron, manganese,

aluminum, and boron (pesticide ingredients).
Exhibit 2-2

KEY POLLUTANTS IN ANIMAL WASTE

Pollutant in Animal Waste Pathways Potential Impacts

Description of Pollutant Forms 

 Potassium contributes to the salinity of animal manure, which may in turn contribute

12

salinity to surface water polluted by manure. Actual or anticipated levels of potassium in surface

water and groundwater, however, are unlikely to pose hazards to human health or aquatic life. For

more information see Wetzel, 1983. 

2-9

Odorous,

Volatile

Compounds

Includes carbon dioxide, methane, hydrogen < Inhalation < Human health

sulfide, and ammonia gases generated during < Atmospheric deposition effects

decomposition of waste. of ammonia < Eutrophication

Other

Pollutants

Includes pesticides, antibiotics, and hormones < Overland discharge < Impacts unknown

used in feeding operations.

2.2.1 Nutrients and Eutrophication

EPA's 1998 National Water Quality Inventory indicates that nutrients from all sources

comprise the leading stressor in impaired lakes, ponds, and reservoirs, and are among the most

frequent stressors in impaired rivers, streams, and estuaries. Nutrients are naturally occurring

elements that are necessary for plant growth. However, when excess nutrients enter surface waters

they can stimulate overgrowth of algae and bacteria, changing ecosystems in a process called

"eutrophication." In addition, nutrients (nitrogen, in particular) in high concentrations can be toxic

to animals and humans. 

The two nutrients of most concern related to AFOs are nitrogen and phosphorus. Each of 12

these elements exists in several forms in the environment, and is involved in several phases of uptake

and digestion by animals and plants. This section briefly describes the processes by which nitrogen

and phosphorus enter aquatic ecosystems, then discusses the process and impacts of eutrophication.

2.2.1.1 Nitrogen and Nitrogen Compounds

Nitrogen, an element essential to plant growth, moves through the environment in a series

of chemical reactions known as the nitrogen cycle. Nitrogen in manure exists in both organic forms

(e.g., urea) and inorganic forms (e.g., ammonium and nitrate) (NCAES, 1982). In fresh manure, 60

to 90 percent of total nitrogen is present in the organic form. Inorganic nitrogen can enter the

environment by volatilizing in the form of ammonia, or through soil or water microbe processes that

transform organic nitrogen to an inorganic form that can be used by plants (i.e., as fertilizer). Both

ammonia and ammonium are toxic to aquatic life, and ammonia in particular reduces the dissolved

oxygen in surface waters that is necessary for aquatic animals. Nitrites pose additional risks to
2-10

National Study of Nitrogen Sources to Watersheds

In 1994, the USGS analyzed potential

nitrogen sources to 107 watersheds, including

manure (from both confined and unconfined animals),

fertilizers, point sources, and atmospheric deposition.

While the study found that proportions of nitrogen

originating from various sources differ according to

climate, hydrologic conditions, land use, population,

and physical geography, results for selected

watersheds for the 1987 base year showed that in

some instances, nitrogen from manure represents a

large portion of the total nitrogen added to the

watershed. For example, in nine study watersheds

more than 25 percent of nitrogen originates from

manure. 

Source: Puckett, 1994.

aquatic life: if sediments are enriched with nutrients, nitrite concentrations in the water may be

raised enough to cause nitrite poisoning or "brown blood disease" in fish (USDA, 1992).

A 1975 study found that up to 50

percent or more of the nitrogen in fresh

manure may be in ammonia form or

converted to ammonia relatively quickly

once manure is excreted (Vanderholm,

1975). Ammonia is highly volatile, and

ammonia losses from animal feeding

operations can be considerable. In North

Carolina, animal agriculture is responsible

for over 90 percent of all ammonia

emissions; ammonia composes more than 40

percent of the total estimated nitrogen

emissions from all sources. Once airborne,

these volatile pollutants may be deposited

onto nearby streams, rivers, and lakes. Data

from Sampson County, North Carolina show

that "ammonia rain" has increased as the hog

industry has grown, with ammonia levels in

rain more than doubling between 1985 and

1995 (Aneja et al., 1998).

Ammonia is highly toxic to aquatic life and is a leading cause of fish kills. In a May 1997

incident in Wabasha County, Minnesota, ammonia in a dairy cattle manure discharge killed 16,500

minnows and white suckers (CWAA, 1998). In addition, ammonia and other pollutants in manure

exert a direct biochemical oxygen demand (BOD) on the receiving water. As ammonia is oxidized,

dissolved oxygen is consumed. Moderate depressions of dissolved oxygen are associated with

reduced species diversity, while more severe depressions can produce fish kills (USFWS, 1991).

2.2.1.2 Phosphorus

Like nitrogen, phosphorus is necessary for the growth of plants, but is damaging in excess

amounts. Phosphorus exists in solid and dissolved phases, in both organic and inorganic forms. Over

70 percent of the phosphorus in animal manure is in the organic form (USDA, 1992). As manure

ages, phosphorus mineralizes to inorganic phosphate compounds which are available to plants.

Organic phosphorus compounds are generally water soluble and may leach through soil to

groundwater or runoff into surface waters. In contrast, inorganic phosphorus tends to adhere to soils

and is less likely to leach into groundwater, though it can reach surface waters through erosion or

over-application. A report by the Agricultural Research Service noted that phosphorus bound to

eroded sediment particles makes up 60 to 90 percent of phosphorus transported in surface runoff

from cultivated land (USDA/ARS, 1999). Animal wastes typically have lower nitrogen: phosphorus
2-11

Available Nitrogen and Phosphorus 

1998 U.S. Department of Agriculture Study 

In 1998, the USDA studied the amount of manure nitrogen and phosphorus produced by confined

animals relative to crop uptake potential. USDA evaluated the quantity of nutrients available from

recoverable livestock manure relative to crop growth requirements, by county, based on data from the

1992 Census of Agriculture. The analyses did not consider manure from grazing animals in pasture.

When calculating available nutrients, USDA also corrected for unrecoverable manure, nutrient losses that

occur during storage and treatment, and losses to the environment that can occur through runoff, erosion,

leaching to groundwater, and volatilization (especially for nitrogen in the form of ammonia). Considering

typical management systems, USDA estimates that average manure nitrogen losses range from 31 to 50

percent for poultry, 60 to 70 percent for cattle (including the beef and dairy categories), and 75 percent

for swine. The typical phosphorus loss is 15 percent.

USDA's study examined the potential for available manure nitrogen and phosphorus generated

to meet or exceed plant uptake in each of the 3,141 mainland counties, considering harvested non-legume

cropland and hayland. Based on the analysis of 1992 conditions, available manure nitrogen exceeds crop

system needs in 266 counties, and available manure phosphorus exceeds crop system needs in 485

counties. The relative excess of phosphorus compared to nitrogen is expected because manure is typically

nitrogen-deficient relative to crop needs. Therefore, when manure is applied to meet a crop’s nitrogen

requirement, phosphorus is typically over-applied with respect to crop requirements (Sims, 1995). 

These analyses do not evaluate environmental transport of applied manure nutrients. Therefore,

an excess of nutrients does not necessarily indicate that a water quality problem exists; likewise, a lack

of excess nutrients does not imply the absence of water quality problems. Nevertheless, the analyses

provide a general indicator of excess nutrients on a broad basis.

Source: Lander et al., 1998.

ratios than crop requirements. The application of manure at a nitrogen-based agronomic rate can

therefore result in application of phosphorus at several times the agronomic rate. Soil test data in

the United States confirm that many soils in areas dominated by animal-based agriculture exhibit

excessive levels of phosphorus (Sims, 1995). 
2-12

2.2.1.3 Eutrophication

Eutrophication is a process in which excess phosphorus or nitrogen over-enriches water

bodies and disrupts aquatic ecosystems. Excess nutrients cause overgrowth of plants, including fastgrowing algae "blooms." Eutrophication can affect the population diversity, abundance, and biomass

of phytoplankton and zooplankton, and can increase the mortality rates of aquatic species (USEPA,

1991). Even when algae are not themselves directly harmful to aquatic life, floating algal mats can

reduce the penetration of sunlight in the water column and limit growth of seagrass beds and other

submerged vegetation. Reduction in submerged aquatic vegetation adversely affects both fish and

shellfish populations, and is the leading cause of biological decline in Chesapeake Bay (Carpenter

et al., 1998). The 1998 National Water Quality Inventory indicates that excess algal growth alone

is the seventh leading stressor in lakes, ponds, and reservoirs.

Increased algal growth can also raise the pH of water bodies as algae consume dissolved

carbon dioxide to support photosynthesis. This elevated pH can harm the gills of aquatic organisms.

The pH may then drop rapidly at night, when algal photosynthesis stops. In extreme cases, such pH

fluctuations can severely stress aquatic species. In addition, excess nitrogen can contribute to water

quality decline by increasing the acidity of surface waters (USEPA, 1995, 1991).

Damage from eutrophication increases when algae blooms die and are digested by bacteria

in a decomposition process that depletes the level of oxygen in the water. Dissolved oxygen is

necessary for the survival of aquatic life in a healthy ecosystem, and depressed levels of dissolved

oxygen can cause widespread morbidity and mortality among aquatic species. Algal decay and

night-time respiration can lower the dissolved oxygen content of a water body to levels insufficient

to support fish and invertebrates. Severe reductions in dissolved oxygen can result in dramatic fish

kills (Carpenter et al., 1998). 

In addition to reducing plant diversity and dissolved oxygen, eutrophication can encourage

the growth of toxic microorganisms such as cyanobacteria (a toxic algae) and the dinoflagellate

Pfiesteria piscicida. These organisms can be toxic to both wildlife and humans. Researchers have

documented stimulation of Pfiesteria growth by swine effluent spills, and have shown that the

organism’s growth can be highly stimulated by both inorganic and organic nitrogen and phosphorus

enrichment (NCSU, 1998).

2.2.2 Pathogens

Pathogens are organisms that cause disease in humans and other species; they include certain

species of bacteria, viruses, protozoa, fungi, and algae. Animal waste itself contains hundreds of

species of microorganisms, including bacteria, viruses, protozoa, and parasites (USDA, 1998;

Jackson et al., 1987; Boyd, 1990). Pathogens may be transmitted directly from manure to surface

water, and pathogens already in surface water may increase in number due to loadings of animal

manure nutrients and organic matter. Of particular concern are certain pathogens associated with

algae blooms. EPA's 1998 National Water Quality Inventory focuses on bacterial pathogens and
2-13

1995 Algae Blooms and Pfiesteria Outbreaks:

Neuse River, North Carolina

Algae blooms and pfiesteria outbreaks on the Neuse

River in North Carolina during the summer and fall of 1995

were the identified causes of three major fish kills and the

suspected causes of several incidents of human illness. 

Heavy rains in June of 1995 caused overflows of

wastewater treatment plants and hog lagoons in the

watershed. Within weeks, large mats of algae and aquatic

weeds were reported near the town of New Bern on the

Trent River, a tributary of the Neuse. By July, historically

low levels of dissolved oxygen were recorded in a stretch of

the Neuse downstream from New Bern, coinciding with the

deaths of over 100,000 fish. A second fish kill in August on

another Neuse tributary numbered in the thousands.

In September and October a third major fish kill

occurred along a 35-mile stretch of the Neuse River itself;

the dead fish were covered with sores, and the cause of the

outbreak was determined to be the dinoflagellate pfiesteria.

After multiple reports of similar welts and sores on the

bodies of those who went swimming or fishing in

contaminated areas, state officials declared a health

warning for the area, urging people not to swim, boat, or

fish in the affected area. In addition, the area was closed to

commercial fishing for two weeks.

Source: Leavenworth, 1995a, 1995b.

notes that they are the leading stressors in impaired estuaries and the second most prevalent stressors

in impaired rivers and streams.

Over 150 pathogens in livestock manure are associated with risks to humans; these include

the bacteria Escheria coli and Salmonella species. and the protozoa Cryptosporidium parvum and

Giardia species. A recent study by the USDA revealed that about half the cattle at the nation’s

feedlots carry E. coli (NAS, 2000). The pathogens C. parvum, Giardia, and E. coli are able to

survive and remain infectious in the environment for long periods of time (Stehman, 2000). In

addition, some bacteria in livestock waste cause avian botulism and avian cholera, which have in the

past killed tens of thousands of migratory waterfowl annually (USEPA, 1993).

Eutrophication is associated

with blooms of a variety of organisms

that can be toxic to fish. This includes

the estuarine dinoflagellate Pfiesteria

piscicida, which is believed to be the

primary cause of many major fish kills

and fish disease events in North

Carolina estuaries and coastal areas, as

well as in Maryland and Virginia

tributaries to the Chesapeake Bay

(NCSU, 1998; USEPA, 1993). In

1997, hog operations were linked to a

Pfiesteria piscicida outbreak in North

Carolina rivers in which 450,000 fish

died (U.S. Senate, 1997). That same

year, poultry operation wastes caused

Pfiesteria outbreaks that killed tens of

thousands of fish in Maryland waters,

including the Pokomoke River, King’s

Creek, and Chesapeake Bay (Shields,

1997; Shields and Meyer, 1997; New

York Times, 1997).

The generation of toxins

associated with eutrophication can also

threaten other species. In freshwater,

cyanobacterial toxins have caused

many incidents of poisoning of wild

and domestic animals that have

consumed contaminated waters (Health

Canada Environmental Health

Program, 1998; Carpenter et al., 1998). In coastal waters, visible algae blooms known as red or

brown tides have caused significant mortality in marine mammals. Even when algae blooms are not
 Biochemical oxygen demand (BOD) is an indirect measure of the concentration of

13

biodegradable substances present in an aqueous solution. Anaerobic lagoon effluent from AFOs

typically contains BOD values 10 to 200 times higher than treated domestic sewage. See NCAES,

1982; USDA, 1992; USDA/NRCS,1992/1996.

2-14

visible, shellfish such as oysters, clams and mussels can carry the toxins from certain algae in their

tissue. Shellfish are filter feeders, and pass large volumes of water over their gills to obtain

nutrients. As a result, they can concentrate a broad range of microorganisms in their tissues, and

provide a pathway for pathogen transmission from surface water to higher trophic organisms (Chai

et al., 1994). Information is becoming available to assess the health effects of contaminated shellfish

on wildlife receptors. In 1998, the death of over 400 California sea lions was linked to ingestion of

mussels contaminated by a bloom of toxic algae (Scholin et al., 2000). Previous incidents associated

the deaths of manatees and whales with toxic and harmful algae blooms (Anderson, 1998).

In August 1997, the National Oceanic and Atmospheric Administration (NOAA) released

The 1995 National Shellfish Register of Classified Growing Waters. The register characterizes the

status of 4,230 shellfish-growing water areas in 21 coastal states, reflecting an assessment of nearly

25 million acres of estuarine and non-estuarine waters. NOAA found that 3,404 shellfish areas had

some level of impairment. Of these, 110 (3 percent) were impaired to varying degrees by feedlots,

and 280 (8 percent) were impaired by "other agriculture," which could include land where manure

is applied (NOAA, 1997).

2.2.3 Organic Compounds and Biochemical Oxygen Demand (BOD)

Livestock manures contain many carbon-based, biodegradable compounds. Once these

compounds reach surface water, they are decomposed by aquatic bacteria and other microorganisms.

During this process dissolved oxygen is consumed, which in turn reduces the amount of oxygen

available for aquatic animals. EPA's 1998 National Water Quality Inventory indicates that oxygendepleting substances are the second leading stressor in estuaries. They are also the fourth leading

stressor both in impaired rivers and streams and in impaired lakes, ponds, and reservoirs.

Carbon compounds and associated biochemical oxygen demand (BOD) can deplete oxygen

and affect the health of aquatic ecosystems in the absence of any other pollutants (e.g., due to

decaying vegetation). When carbon compounds enter aquatic ecosystems in conjunction with

13

nutrients (which is generally the case in manure-related pollution), the impacts of BOD are

compounded by eutrophication and the presence and growth of pathogens. The result is often a rapid

decrease in biodiversity. A study of three Indiana stream systems documents such a reduction in

biodiversity due to AFOs (Hoosier Environmental Council, 1997). The study found that waters
2-15

Arkansas Water Quality Inventory Report:

Agricultural Activities and Turbidity 

Arkansas’ 1996 Water Quality Inventory Report

discussed a sub-watershed in northwestern Arkansas. 

Land uses in that area, primarily poultry production

and pasture management, are major sources of

nutrients and chronic high turbidity, and water in the

area only partially supports aquatic life.

Source: USEPA, 1993.

downstream of animal feedlots (mainly hog and dairy operations) contained fewer fish and a limited

number of species of fish in comparison with reference sites. It also found excessive algal growth,

altered oxygen content, and increased levels of ammonia, turbidity, pH, and total dissolved solids.

2.2.4 Solids and Siltation

Solids from animal manure include the manure itself and any other elements that have been

mixed with it, such as spilled feed, bedding, hair, feathers, and corpses. Smaller solids with less

weight remain in the water column as "suspended solids" while heavier solids sink to the bottom of

receiving waters in the gradual process of "siltation." 

Solids entering surface water can degrade aquatic ecosystems to the point of non-viability.

Suspended particles can reduce the depth to which sunlight can penetrate, decreasing photosynthetic

activity and the resulting oxygen production by plants and phytoplankton. The increased turbidity

also limits the growth of aquatic plants, which serve as critical habitat for fish, crabs, shellfish, and

other aquatic organisms upon which these animals feed. In addition, suspended particles can clog

fish gills, reduce visibility for sight feeders, and disrupt migration by interfering with fish’s ability

to navigate using chemical signals (Goldman and Horne, 1983; Abt, 1993). EPA's 1998 National

Water Quality Inventory indicates that suspended solids from all sources are the fifth leading stressor

in lakes, ponds, and reservoirs. 

A major source of siltation is

erosion from agricultural lands, including

AFOs, cropland, and grazing lands

(USEPA, 1992b). Silt can contain heavier

manure particles as well as the soil particles

carried by erosion. Such sediment can

smother fish eggs and otherwise interrupt

the reproduction of aquatic species (Boyd,

1990). It can also alter or destroy habitat

for benthic organisms. Solids can also

degrade drinking water sources, thereby

increasing treatment costs. The 1998

National Water Quality Inventory indicates

that siltation from all sources (including agriculture and non-agriculture) is the leading stressor in

impaired rivers and the third greatest stressor in impaired lakes, ponds, and reservoirs. 
 See Boyd, 1990 and NCAES, 1982. Other major cations contributing to manure salinity 14

are calcium and magnesium; the major anions are chloride, sulfate, bicarbonate, carbonate, and

nitrate. See NRC, 1993.

2-16

2.2.5 Salts and Trace Elements

Animal manure contains a number of salts and trace elements such as metals. While these

contaminants do not directly alter or interfere with ecosystem processes such as oxygen availability,

they are toxic in high concentrations, both to animals and plants. For example, bottom feeding birds

may be susceptible to metal toxicity because they are attracted to shallow feedlot wastewater ponds

and waters adjacent to feedlots. In addition, metals can remain in aquatic ecosystems for long

periods of time because of adsorption to suspended or bed sediments or uptake by aquatic biota.

The salinity of animal manure is due to the presence of dissolved mineral salts. In particular,

significant concentrations of soluble salts containing sodium and potassium remain from undigested

feed that passes unabsorbed through animals. Salinity tends to increase as the volume of manure 14

decreases during decomposition, and can have an adverse effect on aquatic life and drinking water

supplies (Gresham et al., 1990). Repeated application of manure can lead to increased soil salinity

in the root zone and on top of the soil, where it can damage crops; to reduce salinity farmers apply

excess water, and salts are washed into surface waters in runoff. In fresh waters, increasing salinity

can disrupt the balance of the ecosystem, making it difficult for resident species of plants and

animals to remain. For example, laboratory experiments have linked increased salinity with

inhibited growth and slowed molting in mallard ducklings (USFWS, 1992). 

Trace elements in manure can include arsenic, copper, selenium, zinc, cadmium,

molybdenum, nickel, lead, iron, manganese, aluminum, and boron. Of these, arsenic, copper,

selenium, and zinc are often added to animal feed as growth stimulants or biocides (Sims, 1995).

Trace metals may also end up in manure through use of pesticides that are applied to livestock to

suppress houseflies and other pests (USDA/ARS, 1998).

A recent Iowa investigation of chemical and microbial contamination near large scale swine

operations demonstrated the presence of trace elements not only in manure lagoons used to store

swine waste before it is land applied, but also in drainage ditches, agricultural drainage wells, tile

line inlets and outlets, and an adjacent river (CDCP, 1998). Similarly, USFWS has reported on

suspected impacts from a large number of cattle feedlots on Tierra Blanca Creek, upstream of the

Buffalo Lake National Wildlife Refuge in the Texas Panhandle. USFWS found elevated

concentrations of the feed additives copper and zinc in the creek sediment (USFWS, 1991).
2-17

2.2.6 Odorous/Volatile Compounds

Sources of volatile compounds and odor from AFOs include animal confinement buildings,

manure piles, waste lagoons, and land application sites, where decomposition of animal wastes by

microorganisms produces gases. The four main gases generated are carbon dioxide, methane,

hydrogen sulfide, and ammonia. Aerobic conditions yield mainly carbon dioxide, while anaerobic

conditions that dominate in typical, unaerated animal waste lagoons generate both methane and

carbon dioxide. Anaerobic conditions are also associated with the generation of hydrogen sulfide

and about 40 other odorous compounds, including volatile fatty acids, phenols, mercaptans,

aromatics, sulfides, and various esters, carbonyls, and amines (USDA, 1992; Bouzaher et al, 1993).

Volatile compounds affect aquatic ecosystems through atmospheric deposition; ammonia

(discussed in Section 2.2.1.1) is the most important AFO-related volatile because it is itself toxic and

also contributes to eutrophication as a source of nitrogen. Other compounds are less clearly

associated with broad ecological impacts, but may have localized impacts.

2.2.7 Other Pollutants and Ecosystem Imbalances

In addition to the pollutants discussed above, pesticides, antibiotics, and hormones used in

animal feeding operations may exist in animal wastes and may be present in increased levels in the

environment (USDA/ARS, 1998). These compounds may pose risks such as chronic aquatic toxicity

(from pesticides) and reproductive impairment (from hormones). While there is limited information

on the quantities of these compounds that reach surface waters from AFOs, some research suggests

that manure-related runoff may be a significant source of these contaminants.

• Pesticides: Pesticides are used to suppress houseflies and other livestock

pests. There is little information on the rate at which pesticides in manure

enter surface water, but a 1999 literature review by the University of

Minnesota notes a 1994 study that links quantities of cyromazine (used to

control flies in poultry litter) in runoff to the rate of manure application and

rainfall intensity. The review also identifies a 1995 study finding that roughly

one percent of all applied pesticides enter surface water. The impacts of

these compounds on aquatic ecosystems are unclear, but there is some

concern that pesticides may contribute to endocrine disruption (Mulla, 1999).

• Hormones: Animal operations use a variety of hormones such as steroids

(e.g., estrogen, progesterone, testosterone) and proteins (e.g., prolactin,

growth hormone) to improve animal health and productivity. Studies have

identified hormones in animal manures. Naturally high hormone

concentrations in birds contribute to higher hormone levels in poultry

manure, including measurable amounts of estrogen and testosterone. When

present in high concentrations, hormones in the environment are linked to

reduced fertility, mutations, and the death of fish. There is evidence that fish
 The presence of estrogen and estrogen-like compounds in surface water has been the focus

15

of recent research. While their ultimate fate in the environment is unknown, studies indicate that no

common soil or fecal bacteria can metabolize estrogen (Shore et al., 1995). Estradiol, an estrogen

hormone, was found in runoff from a field receiving poultry litter at concentrations up to 3.5

micrograms per litre (ug/L). Fish exposed to 0.25 ug/L of estradiol can undergo gender changes, and

exposures at levels above 10 ug/L can be fatal (Mulla, 1999).

2-18

in some streams are experiencing endocrine disruption (Shore et al., 1995;

Mulla, 1999).15

• Antibiotics The majority of livestock (roughly 60 to 80 percent) receive

antibiotics during their productive life span. Some of these agents are used

only therapeutically (e.g., to treat illness), but in both the swine and poultry

industries, most antibiotics are administered as feed additives to promote

growth or to improve feed conversion efficiency. Essentially all of an

antibiotic administered is eventually excreted, either unchanged or in

metabolite form (Tetra Tech, 2000). Little information is available regarding

the concentrations of antibiotics in animal wastes, or on the fate and transport

of antibiotics in the environment. However, the key concern related to

antibiotics in animal manure is the potential emergence of antibiotic-resistant

pathogens in surface and drinking water. As antibiotics use has increased,

more strains of antibiotic resistant pathogens are emerging (Mulla, 1999).

Finally, manure pollutants of all types can affect terrestrial as well as aquatic ecosystems. 

Over-application of manure, in particular, can have terrestrial effects. High oxygen depletion rates

due to microbial activity have been reported in manure-amended agricultural soils. In addition,

elevated microbial populations can affect crop growth by competing with plant roots for soil oxygen

and nutrients. Trace elements (e.g., feed additives such as arsenic, copper, and selenium) and salts

in animal manure can accumulate in soil and become toxic to plants (USDA, 1992 and USFWS,

1991).

2.3 HUMAN HEALTH IMPACTS RELATED TO AFO POLLUTANTS

Human health impacts from manure-related contaminants are primarily associated with

drinking contaminated water, contact with contaminated water, and consuming contaminated

shellfish. The most common causes of health effects are ingestion of nitrates in drinking water,

ingestion of water containing pathogens from manure, and contact with or ingestion of harmful algae

or toxic algal by-products. The ingestion of elevated concentrations of trace elements (e.g., arsenic,

copper, selenium, and zinc) may also affect human health, and certain gases associated with AFOs

may pose inhalation risks for nearby residents.
 See USEPA, 1991. In addition, studies in Australia found an increased risk of congenital 16

malformations with consumption of high-nitrate groundwater. Nitrate- and nitrite-containing

compounds also have the ability to cause hypotension or circulatory collapse. Nitrate metabolites

such as N-nitroso compounds (especially nitrosamines) have been linked to severe human health

effects such as gastric cancer. See Bruning-Fann and Kaneene, 1993.

2-19

While some recorded human health effects stem from contamination of public drinking water

supplies and ingestion of shellfish, more frequently health effects are caused by contamination of

private wells, or recreational ingestion or contact. Public water supplies are generally protected by

monitoring and treatment, though contaminants and algae blooms may increase treatment costs and

affect system operation. Ingestion of contaminated shellfish is reduced by monitoring and closure

of shellfish beds in response to excessive levels of contaminants.

2.3.1 Health Impacts Associated with Nitrates

Nitrogen in manure is easily transformed into nitrate form, which can be transported to

drinking water sources (e.g., through leaching to groundwater) and presents a range of health risks.

EPA found that nitrate is the most widespread agricultural contaminant in drinking water wells, and

estimates that 4.5 million people served by wells are exposed to elevated nitrate levels (USEPA,

1990). Elevated nitrate levels can cause nitrate poisoning, particularly in infants (this is known as

methemoglobinemia or "blue baby syndrome"), in which potentially fatal oxygen starvation gives

a "blue" appearance to the skin. In addition to blue baby syndrome, low blood oxygen due to

methemoglobinemia has also been linked to birth defects, miscarriages, and poor health in humans

and animals.16

Reported cases of methemoglobinemia are most often associated with wells that were

privately dug and that may have been badly positioned in relation to the disposal of human and

animal excreta (Addiscott et al., 1991). Reported cases of methemoglobinemia are rare, though the

incidence of actual cases may be greater than the number reported. Studies in South Dakota and

Nebraska have indicated that most cases of methemoglobinemia are not reported. Under-reporting

may result from the fact that methemoglobinemia can be difficult to detect in infants because its

symptoms are similar to other conditions. In addition, doctors are not always required to report it

(Michel, 1996; Meyer, 1994).

In 1995, several private wells in North Carolina were found to be contaminated with nitrates

at levels 10 times higher than the health standard; this contamination was linked with a nearby hog

operation (Warrick 1995c, 1995d). In 1982, nitrate levels greater that 10 milligrams per liter were

found in 32 percent of the wells in Sussex County, Delaware; these levels were associated with local

poultry operations (Chapman, 1996). In southeastern Delaware and the Eastern Shore of Maryland,

where poultry production is prominent, over 20 percent of wells were found to have nitrate levels
2-20

Impacts of Manure Pollutants on Water Treatment Costs

Public water providers may incur considerable expenses associated with removing manure-related

contaminants and algae from public water supplies. For example:

< In California’s Chino Basin, it could cost over $1 million per year to remove the nitrates from

drinking water due to loadings from local dairies. 

< In Wisconsin, the City of Oshkosh has spent an extra $30,000 per year on copper sulfate to kill

the algae in the water it draws from Lake Winnebago. The thick mats of algae in the lake have

been attributed to excess nutrients from manure, commercial fertilizers, and soil. 

< In Tulsa, Oklahoma, excessive algal growth in Lake Eucha is associated with poultry farming.

The city spends $100,000 per year to address taste and odor problems in the drinking water .

Sources: For more details on these examples, see USEPA, 1993; Behm, 1989; Lassek, 1998; and

Lassek, 1997.

exceeding EPA's maximum contaminant level (MCL) (Ritter et al., 1989). Nitrate is not removed

by conventional drinking water treatment processes. Its removal requires additional, relatively

expensive treatment units.

2.3.2 Health Impacts Associated with Algal Blooms

Eutrophication can affect human health by encouraging the formation of algal blooms. Some

algae release toxins as they die and may affect human health through dermal contact or through

consumption of contaminated water or shellfish. In marine ecosystems, algal blooms such as red

tides form toxic byproducts that can affect human health through recreational contact or consumption

of contaminated shellfish (Thomann and Muller, 1987). In freshwater, blooms of cyanobacteria

(blue-green algae) may pose a serious health hazard to those who consume the water. When

cyanobacterial blooms die or are ingested, they release water-soluble compounds that are toxic to

the nervous system and liver (Carpenter et al., 1998).

Non-toxic algae blooms triggered by nutrient pollution can also affect drinking water by

clogging treatment plant intakes and by producing objectionable tastes and odors. In addition,

increased algae in drinking water sources can increase production of harmful chlorinated byproducts

(e.g., trihalomethanes) by reacting with chlorine used to disinfect drinking water. 
 By the year 2010, about 20% of the human population (especially infants, the elderly, and 17

those with compromised immune systems) will be classified as particularly vulnerable to the health

effects of pathogens (Mulla, 1999).

2-21

2.3.3 Health Impacts Associated with Pathogens

Over 150 pathogens in livestock manure are associated with risks to humans (Juranek, 1991;

CAST, 1992). Although human contact can occur through contaminated drinking water, adequate

treatment of public water supplies generally prevents exposure. Most exposure occurs through

incidental ingestion during recreation in contaminated waters or through ingestion of contaminated

shellfish (Stelma and McCabe, 1992). Relatively few microbial agents are responsible for the

majority of human disease outbreaks from water-based exposure routes. Intestinal infections are the

most common type of waterborne infection, but contact recreation with pathogens can also result in

infections of the skin, eye, ear, nose, and throat (Juranek, 1995; and Stehman, 2000). In 1989, ear

and skin infections and intestinal illnesses were reported in swimmers as a result of discharges from

a dairy operation in Wisconsin (Behm, 1989).

A study for the period 1989 to 1996 revealed that Cryptosporidium parvum (a pathogen

associated with cows) was one of the leading causes of infectious water-borne disease outbreaks in

which an agent was identified. C. parvum can produce gastrointestinal illnesses such as

cryptosporidiosis, with symptoms that include severe diarrhea (Stehman, 2000). While otherwise

healthy people typically recover quickly from illnesses such as cryptosporidiosis, these diseases can

be fatal in certain subpopulations, including children, the elderly, people with HIV infection,

chemotherapy patients, and those taking medications that suppress the immune system. In

17

Milwaukee, Wisconsin in 1993, C. parvum contamination of a public water supply caused more than

100 deaths and an estimated 403,000 illnesses. The source was not identified, but speculated sources

include runoff from cow manure application sites (Casman, 1996). More recently, a May, 2000

outbreak of Escherichia coli O157:H7 in Walkerton, Ontario resulted in at least seven deaths and

1,000 cases of intestinal problems; public health officials theorize that flood waters washed manure

contaminated with E. coli into the town’s drinking water well (Brooke, 2000). 

Algae blooms are associated with a variety of organisms that are toxic to humans, including

the algae associated with "red tide" and a number dinoflagellates. One pathogen of particular

concern is the estuarine dinoflagellate Pfiesteria piscicida. While Pfiesteria is primarily associated

with fish kills and fish disease events, the organism has also been linked with human health impacts

through dermal or inhalation exposure. Researchers working with dilute toxic cultures of Pfiesteria

have exhibited symptoms such as skin sores, severe headaches, blurred vision, nausea/vomiting,

sustained difficulty breathing, kidney and liver dysfunction, acute short-term memory loss, and

severe cognitive impairment. In addition, people with heavy environmental exposure have exhibited

symptoms as well. In a 1998 study, such environmental exposure was definitively linked with

cognitive impairment, and less consistently linked with physical symptoms (NCSU, 1998; Morris

et al., 1998).
 In a 1997 survey of drinking water standard violations in six states over a four-year period,

18

the U.S. General Accounting Office reported that bacterial standard violations occurred in up to 6

percent of community water systems each year and in up to 42 percent of private wells. See

USGAO, 1997.

2-22

While many soil types prevent most pathogens from reaching aquifers, groundwater in areas

of sandy soils, limestone formations, or sinkholes is more vulnerable to contamination. Private

wells, in particular, are prone to contamination because they tend to be shallower than public wells

and therefore more susceptible to contaminants leaching from the surface. While the general extent

18

of groundwater contamination from AFOs is unknown, there are incidents that indicate a connection

between livestock waste and contaminated well water. For example, in cow pasture areas of Door

County, Wisconsin, where a thin topsoil layer is underlain by fractured limestone bedrock,

groundwater wells have commonly been shut down due to high bacteria levels (Behm, 1989).

2.3.4 Health Impacts Associated with Trace Elements and Salts

Trace elements in manure include feed additives such as zinc, arsenic, copper, and selenium.

While these are necessary nutrients, they are toxic at elevated concentrations, and tend to persist in

the environment and to bioconcentrate in plant and animal tissues. Trace elements are associated

with a variety of illnesses. For example, over exposure to selenium can cause liver dysfunction and

loss of hair and nails, while ingestion of too much zinc can produce changes in copper and iron

balances, particularly copper deficiency anemia (IRIS, 2000).

Total concentrations of trace elements in animal manures have been reported as comparable

to those in some municipal sludges, with typical values well below the maximum concentrations that

EPA allows in land-applied sewage sludge (Sims, 1995). Based on this information, trace elements

in agronomically applied manures should pose little risk to human health and the environment.

However, repeated application of manures above agronomic rates could result in exceedances of the

cumulative metal loading rates that EPA considers safe, potentially affecting human health and the

environment. There is some evidence that this is happening. For example, in 1995, zinc and copper

were found building to potentially harmful levels on the fields of a North Carolina hog farm

(Warrick and Stith, 1995b).

Salts in manure can also affect the salinity of drinking water. Increased salts in drinking

water can in turn increase blood pressure in salt-sensitive individuals, increasing the risk of stroke

and heart attack (Anderson, 1998; Boyd, 1990).

2.3.5 Other Health Impacts

Potential health effects associated with other contaminants in manure include inhalationrelated risks associated with volatile organic chemicals and odors, and the effects of hormones,

antibiotics, and pesticides that are found in animal feed.
2-23

Volatile Compounds 

In 1996, the Minnesota Department of Health found levels of hydrogen sulfide gas at

residences near AFOs that were high enough to cause symptoms such as headaches, nausea,

vomiting, eye irritation, respiratory problems (including shallow breathing and coughing), achy

joints, dizziness, fatigue, sore throats, swollen glands, tightness in the chest, irritability, insomnia,

and blackouts (Hoosier Environmental Council, 1997). In an Iowa study, neighbors within two miles

of a 4,000-sow swine facility reported more physical and mental health symptoms than a control

group (Thu, 1998). These symptoms included chronic bronchitis, hyperactive airways, mucus

membrane irritation, headache, nausea, tension, anger, fatigue, and confusion. Odor is itself a

significant concern because of its documented effect on moods, such as increased tension,

depression, and fatigue (Schiffman et al., 1995). Heavy odors are the most common complaint from

neighbors of swine operations (Agricultural Animal Waste Task Force, 1996).

Pesticides 

Various ingredients in pesticides have been linked to a variety of human health effects, such

as systemic toxicity and endocrine disruption (see below). However, information linking pesticide

levels in surface and drinking water to human exposure and to animal manure is currently limited.

It is therefore unclear what health risks are posed by pesticide concentrations in AFO wastes.

Hormones and Endocrine Disruption 

Hormones in the environment can act as endocrine disruptors, altering hormone pathways

that regulate reproductive processes in both human and animal populations. Estrogen hormones

have been implicated in the drastic reduction in sperm counts among European and North American

men (Sharpe and Skakkebaek, 1993) and widespread reproductive disorders in a variety of wildlife

(Colburn et al., 1993). A number of agricultural chemicals have also been demonstrated to cause

endocrine disruption as well, including pesticides (Shore et al, 1995). The effects of these chemicals

on the environment and their impacts on human health through environmental exposures are not

completely understood, but they are currently being studied for evidence that they cause

neurobiological, developmental, reproductive, and carcinogenic effects (Tetra Tech, 2000). No

studies exist on the human health impact of hormones from manure watersheds.

Antibiotics and Antibiotic Resistance 

While antibiotics themselves are not generally associated with human health impacts,

antibiotic resistance poses a significant health threat. In April 2000, the New England Journal of

Medicine published an article that discussed the case of a 12-year old boy infected with a strain of

Salmonella that was resistant to no fewer than 13 antimicrobial agents (Fey, 2000). The cause of the

child’s illness is believed to be exposure to the cattle on his family’s Nebraska ranch. The Centers
2-24

for Disease Control, the Food and Drug Administration, and the National Institutes of Health issued

a draft action plan in June, 2000, to address the increase in antibiotic resistant diseases (CDCP,

2000). The plan is intended to combat antimicrobial resistance through surveys, prevention and

control activities, research, and product development. Some actions are already underway.

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Leavenworth, Stuart. 1995a. "Airborne threats rain down on Neuse." The News and Observer May

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Meadows, R. 1995. Livestock Legacy. Environmental Health Perspectives 103(12):1096-1100.

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Conference, Bismarck, ND. Cited in: Michel et al., 1996. 
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Water Quality in the Appoquinimink Watershed. J. Environ. Sci. Health, A24(8):897-924.

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Schiffman, S.S., E.A. Sattely Miller, M.S. Suggs, and B.G. Graham. 1995. The Effect of

Environmental Odors Emanating from Commercial Swine Operations on the Mood of

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Scholin, Christopher A., et al.. 2000. "Mortality of sea lions along the central California coast

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3-1

CONCEPTUAL FRAMEWORK AND OVERVIEW OF METHODS CHAPTER 3

_________________________________________________________________________________

Pollutants associated with AFOs can have a range of harmful impacts on water quality, on

aquatic and shoreline ecosystems, and on the range of uses (or services) that water resources provide.

While some pollutants pose a direct threat to human health (e.g., pathogens that prevent drinking

or contact with contaminated water), AFO-related pollutants can also contribute to the decline of

recreational and commercial activities, injury to species that live in or depend on contaminated

waters (e.g., aquatic shorebirds), and even a reduction in the intrinsic "existence" value that people

place on a pristine or well-protected ecosystem.

The benefits of a regulation that reduces AFO pollution are reflected by identifiable changes

in environmental quality that result from the regulation, and by the related improvements in the range

of potential uses of the resource. The value of the regulation is then measured according to the value

that people place on the changes in these potential uses. EPA characterizes these changes by

considering the use and non-use benefits that water resources provide under baseline conditions, and

contrasting these benefits with the enhanced benefits realized under each of the regulatory scenarios.

This chapter describes the general approach that EPA uses to value environmental quality

improvements associated with reduced AFO pollution. The first section describes the types of

environmental improvements and benefits to humans that would likely result from changes in water

quality due to the regulation of CAFOs. The chapter then identifies the key environmental changes

and benefits that are the focus of the evaluation of EPA's proposed regulations, and describes EPA's

approaches to measuring and valuing the selected benefits. The broad methods outlined in this

chapter form the basis of the specific benefits analyses described in Chapters 4 through 7.

3.1 POSSIBLE ENVIRONMENTAL IMPROVEMENTS 

AND RESULTING BENEFITS

Groundwater and surface water resources (including rivers, lakes, estuaries, and oceans)

provide a range of benefits to humans and other species that reflect the actual and potential "uses"

that they support. Potential uses can include active consumption or diversion of water for industry,

agriculture, or drinking water, and can also include a range of active and passive "in-place" uses such

as swimming, fishing, and aesthetic enjoyment.
A common example of intrinsic value is the broad public support for the preservation of 19

National Parks, even by people who do not expect to visit them.

3-2

Water resources also provide intrinsic (or non-use) benefits that reflect the importance of

protecting environmental quality regardless of any specific use that humans may enjoy or intend.

Intrinsic benefits include "existence value," i.e., the sense of well-being that people derive from the

existence of pristine water resources, even when they do not expect to see or use these resources.19

The protection of resources for future generations (intergenerational equity) or for non-human

species (ecological benefits) are other key intrinsic benefits. 

Degradation of a water resource may restrict its use or the intrinsic benefits it provides, and

therefore reduce its value. Conversely, improvement in environmental quality provides benefits

associated with an increase in the range of potential uses and intrinsic benefits that a resource can

support. Exhibit 3-1 provides a summary of the potential benefits associated with an improvement

in the quality of aquatic resources.

Exhibit 3-1

POTENTIAL BENEFITS OF WATER QUALITY IMPROVEMENTS

Use Benefits

In-Stream • Commercial fisheries, shell fisheries, and aquaculture; navigation

• Recreation (fishing, boating, swimming, etc.)

• Subsistence fishing

• Human health risk reductions

Near Stream • Water-enhanced non-contact recreation (picnicking, photography, jogging, camping, etc.)

• Nonconsumptive use (e.g., wildlife observation)

Option Value • Premium for uncertain future demand

• Premium for uncertain future supply

Diversionary • Industry/commercial (process and cooling waters)

• Agriculture/irrigation

• Municipal/private drinking water (treatment cost savings and/or human health risk

reductions)

Aesthetic • Residing, working, traveling and/or owning property near water, etc.

Intrinsic (Non-Use) Benefits

Bequest • Intergenerational equity

Existence • Stewardship/preservation

• Vicarious consumption

Ecological • Reduced mortality/morbidity for aquatic and other species

• Improved reproductive success for aquatic and other species

• Increased diversity of aquatic and other species

• Improved habitat, etc.
3-3

AFO pollutants have impacts on a broad range of water resource services. Pollution by

nutrients, for example, can reduce the value of both groundwater and surface water as a drinking

water source, and algae in eutrophied surface water can reduce recreational and aesthetic uses (due

to foul odor and appearance), as well as clog municipal and industrial intakes. Acute nitrogen

loadings and decaying algae cause fish kills, which affect commercial and recreational fishing, and

indicate injury to natural resources; some of these injuries may require restoration in order to achieve

full recovery of the ecosystem. Both chronic and acute nutrient loadings can reduce aquatic

populations and the shoreline species that depend on them; this affects both opportunities to view

wildlife and ecological "existence" values. Finally, nutrient-related red tide and Pfiesteria events

can restrict access to shellfish and beaches, affecting shellfishing and recreational opportunities. 

Other AFO pollutants have similar impacts or can cause additional effects (e.g., turbidity

from solids, human health effects from pathogens). In addition, any pollutant that reduces the quality

of an environmental resource may adversely affect intrinsic values, such as bequest values (i.e.,

preserving environmental quality for future generations). While the beneficial impacts of improved

control of any one pollutant can be difficult to isolate, AFO-related pollution generally involves a

broad range of impacts that, taken together, affect to some degree most of the potential uses and

intrinsic benefits of water resources. 

3.2 SPECIFIC BENEFITS ANALYZED

The benefits of water quality improvements are a function of the specific pollutants reduced,

the water resources affected, and the improvements in the potential uses of these resources. The key

challenge of a benefits calculation is to establish a clear link between the implementation of a

regulation, the reduction of a pollutant, the resulting improvement in environmental quality, and the

value of that improvement. 

While AFO-related pollutants can affect most potential uses of surface and groundwater,

EPA has identified a set of environmental quality changes that meet three criteria: 1) they represent

identifiable and measurable changes in water quality; 2) they can be linked with the proposed CAFO

regulations; and 3) together, they represent a broad range of potential human uses and benefits and

are likely to capture important environmental changes that result from the rule. Specifically, EPA

implements four analyses:

• Improvements in Water Quality and Suitability for Recreational

Activities: this analysis addresses increased opportunities for recreational

fishing and swimming, as well as the potential increase in non-use values

associated with improvements in inland surface water quality;

• Reduced Incidence of Fish Kills: this analysis assesses the value of

reducing the incidence of fish kills attributable to pollution from AFOs;
3-4

• Improved Commercial Shell Fishing: this analysis characterizes the impact

of pollution from AFOs on access to commercial shellfish growing waters,

and values the potential increase in commercial shellfish harvests that may

result from improved control of that pollution; and

• Reduced Contamination of Private Wells: this analysis values the impact

of the revised regulations in reducing the concentration of nitrates in water

drawn from private wells.

EPA's analysis does not attempt to comprehensively identify and value all potential

environmental changes associated with proposed revisions to the CAFO regulations. For example,

the analysis of the suitability of water resources for recreational use excludes the Great Lakes, as well

as all estuarine or marine waters. In addition, the analysis examines only a limited set of potential

improvements in water quality; it does not attempt to value the improvement of non-boatable waters

to boatable condition, nor does it attempt to value improvements in the quality of water resources

that are already suitable for swimming. Furthermore, the analysis does not value the potential impact

of improvements in water quality on near-stream activities, such as birdwatching or camping, nor

does it consider non-water related benefits, such as potential reductions in odor from waste

management areas. EPA also does not evaluate potential impacts on certain diversionary uses (e.g.,

improvements in the quality of reservoirs and other sources of public water supplies, and the

associated reduction in the cost of treating water to remove AFO-related pollutants).

While changes in water quality resulting from CAFO regulations may have real impacts on

these types of uses, and may even be associated with significant benefits, several factors make it

difficult to measure the specific impacts of the regulation and identify related changes in value. For

example, analysis of potential changes in estuarine or marine water quality nationwide is currently

beyond the capabilities of the water quality model employed in this study. In addition, while EPA's

proposed CAFO regulations will contribute to improvements in environmental quality beyond

surface waters, it is difficult to establish clear relationships between regulation of AFOs and certain

environmental quality changes, such as reductions in odor or improvements in the health of

shorebirds. Although these benefits are not specifically addressed by the analysis, they likely

represent additional benefits of the regulation.

3.3 PREDICTING CHANGE IN ENVIRONMENTAL

QUALITY AND RESULTING BENEFICIAL USE

To calculate the benefits associated with a proposed regulations, an analysis must explore

the difference between present conditions (i.e., the baseline scenario) and the likely future conditions

that would result from the regulation. The baseline scenario is typically assessed using the best and

most recently collected data that characterize existing environmental quality. Because likely future

conditions are theoretical, the characterization of environmental quality for each of the regulatory

scenarios must be evaluated through environmental modeling or other approaches designed to
3-5

simulate possible future conditions. The difference in environmental quality between the present

and future conditions thus represents the marginal environmental quality gains or human benefits

that would be produced under each scenario. 

EPA's analysis of the proposed CAFO regulations examines the difference between the

baseline and each of the regulatory scenarios for each of the four benefits categories identified above.

Ideally, the baseline scenarios would be constant across benefit categories and analyses; however,

data limitations forced EPA to define baseline conditions based on the most up to date record of

existing conditions for each analysis. For instance, the analysis of increased commercial shellfish

supply benefits relies upon 1995 data on shellfish bed closures to define baseline conditions, whereas

the analysis of fish kill events relies upon data collected between 1980 and 1999. Detailed

information on the time frame used to define baseline scenarios for each of the selected

environmental benefit categories is provided for each of the analyses addressed in Chapters 4

through 7.

For each of the benefit categories analyzed, post-regulatory conditions are assessed using

modeling approaches most applicable to the specific analysis. For each of the selected benefit

categories, EPA models post-regulatory conditions as follows:

• Improvements in Water Quality and Suitability for Recreational

Activities: EPA relies on a national water quality model to predict changes

in the ambient concentration of pollutants attributable to changes in pollutant

loadings from CAFOs. Under each regulatory scenario, the model determines

whether estimated changes in pollutant concentrations would improve the

suitability of water resources for recreational uses such as fishing and

swimming.

• Reduced Incidence of Fish Kills: Through modeling of nitrogen and

phosphorus loading reductions, the analysis estimates changes in the

frequency of fish kill events under each regulatory scenario. 

• Improved Commercial Shell Fishing: EPA employs data on the impact of

agricultural pollution on commercial shellfish harvesting, combined with

modeled estimates of the change in pathogen loadings from CAFOs, to

estimate the potential increase in annual shellfish harvests under each

regulatory scenario.

• Reduced Contamination of Private Wells: EPA employs data from the

U.S. Geological Survey (USGS), EPA, and the Bureau of Census to model

the relationship between nitrate concentrations in private domestic wells and

sources of nitrogen to aquifers. EPA uses this model, combined with

estimates of the change in nitrogen loadings under alternate regulatory

scenarios, to predict changes in well nitrate concentrations nationally.
 Economists also sometimes consider a similar concept of "willingness to accept

20

compensation"; i.e., the amount of monetary compensation that would make the individual

indifferent between having an environmental improvement and foregoing the improvement.

3-6

3.4 VALUING BENEFITS

The final step of the benefits analyses is to estimate the economic value of the modeled

physical changes in environmental quality. This section provides a brief overview of economic

valuation concepts and discusses the valuation approach applied in the studies performed for the

proposed CAFO rule.

3.4.1 Overview of Economic Valuation

Economists define benefits by focusing on measures of individual satisfaction or well-being,

referred to as measures of welfare or utility. A fundamental assumption in economic theory is that

individuals can maintain the same level of utility while trading-off different "bundles" of goods,

services, and money. The tradeoffs individuals make reveal information about the value they place

on these goods and services.

The willingness to trade-off compensation for goods or services can be measured by an

individuals' willingness to pay. While these measures can be expressed in terms of goods, services,

or money, economists generally express willingness to pay in monetary terms. In the case of an

environmental policy, willingness to pay represents the amount of money an individual would give

up to receive an improvement (or avoid a decrement) in environmental quality.20

The use of willingness to pay to measure benefits is closely related to the concept of

consumer surplus. Resource economists generally rely on consumer surplus as a measure of overall

economic welfare for benefits to individuals. The concept of consumer surplus is based on the

principle that some consumers benefit at current prices because they are able to purchase goods (or

services) at a price that is less than their total willingness to pay for the good. For example, if a

consumer is willing to pay $4 for an additional gallon of clean drinking water that costs the

consumer only $1.50, then the marginal consumer surplus is $2.50.
In the case of goods and services traded in the marketplace, net benefits also include

21

producer surplus: the excess of producer revenues over costs. For simplicity, we leave aside for now

any discussion of producer surplus in assessing the benefits associated with enjoyment of natural

resource services.

These same techniques can be applied to estimate the economic damages attributable to

22

a decline in environmental quality.

3-7

3.4.2 Primary Approaches for Measuring Benefits

Economists generally define the economic benefits provided by a natural resource as the sum

of individuals' willingness to pay for the goods and services the resource provides, net of any costs

associated with enjoying these services. In some cases (e.g., commercial fishing), natural resource

21

products are traded in the marketplace, and willingness to pay information can be directly obtained

from demand for these commodities. In other cases, when natural resource goods or services are not

traded in the market, economists use a variety of analytic techniques to value them, or to estimate

the economic benefits of improvements in environmental quality. These non-market methods,

22

which are grounded in the theory of consumer choice, utility maximization, and welfare economics,

attempt to determine individuals' willingness to pay for natural resource services directly, through

survey research, or indirectly, through the examination of behavior in related markets. Descriptions

of market and non-market methods for analyzing benefits follow below.

• Market Methods: To measure the economic value of environmental

improvements, market methods rely upon the direct link between the quality

or stock of an environmental good or service and the supply or demand for

that market commodity. Market methods can be used, for example, to

characterize the effect of an increase in commercial fish and shellfish harvests

on market prices. In turn, these market changes affect the welfare of

consumers and producers in quantifiable ways.

• Revealed Preference: Revealed preference approaches are premised on the

assumption that the value of natural resource services to users of those

services can be inferred by indirect economic measures. For example,

willingness to pay for recreational beach services can be estimated by

observing how the number of visits individuals make to a beach varies with

the cost of traveling to the beach. Similarly, property values can be

influenced by proximity to an environmental amenity or disamenity;

econometric analysis can estimate the nature and magnitude of such effects,

providing a basis for valuing natural resource services.
3-8

• Stated Preference: Stated preference models involve the direct elicitation

of economic values from individuals through the use of carefully designed

and administered surveys. Contingent valuation techniques are the most

widely used stated preference approach, and rely on surveys designed to

derive people's willingness to pay for an amenity (e.g., improved water

quality) described in the study. This method can be used to estimate both

use and non-use values.

• Averted Cost: Changes in environmental quality can impose additional

costs on the users of an affected resource. For example, contamination of

drinking water supplies might lead homeowners to purchase in-home water

filters. A potential proxy measure of the benefits of preventing pollution of

the resource is the averted cost of these expenditures.

3.4.3 Valuation of CAFO Regulatory Benefits Based on Previous Studies

Because of their high resource demands, the use of primary approaches is beyond the scope

of this analysis. Instead, the analysis draws on previous studies that evaluated similar water quality

benefits issues. This approach—typically referred to as "benefits transfer"—involves the application

of values, functions, or data from existing studies to estimate the benefits of the resource changes

currently being considered, and is commonly used in analyzing the benefits of proposed

environmental regulations. The primary research material and analytic approach used for the

valuation of each benefit category are summarized below; more detailed descriptions of the methods

applied are provided in subsequent chapters of this report.

• Improvements in Water Quality and Suitability for Recreational

Activities: To determine how people value improvements in the suitability

of water resources for recreational activities (e.g., fishing, swimming), the

analysis relies on the results of a contingent valuation survey conducted by

Carson and Mitchell (1993). Based on this study, economic benefits are

determined from people's willingness to pay for achievement of water quality

levels that restore affected waters to fishable or swimmable conditions.

• Reduced Incidence of Fish Kills: The valuation of benefits from the

reduced incidence of fish kills is based on fish replacement costs, as reflected

in an American Fisheries Society (1990) report. Because this value

represents only a portion of the economic damages associated with fish kills,

it likely provides a conservative estimate of the benefits of reducing the

frequency of such events.
3-9

• Improved Commercial Shell Fishing: To value the economic benefit of

increased shellfish harvests, the analysis relies on available literature that

models consumers' demand for shellfish. Based on the demand equations

from these primary sources, EPA determines the increase in consumer surplus

that would result from increased harvests.

• Reduced Contamination of Private Wells: The analysis surveys the

literature concerning the values people place on avoiding or reducing nitrate

contamination in private domestic wells. Based on this review, it develops

estimates of people's willingness-to-pay to reduce nitrate concentrations to

certain levels, and applies these estimates to value predicted changes in the

quality of water that supplies private wells.

3.4.4 Aggregating Benefits

The final step in determining the benefits of the proposed CAFO regulatory scenarios is

aggregation of the benefits calculated for each of the benefit categories. To avoid over-estimation,

this requires consideration of the extent to which underlying analyses may double-count certain

benefits. For this analysis, however, the benefits that each of the underlying studies explore are

relatively distinct. As a result, the potential for double-counting appears to be small.

Another consideration in aggregating benefits is ensuring that all values are reported on a

comparable basis, taking into account the effects of inflation on real dollar values. For purposes of

this analysis, all values are reported in 1999 dollars. The price indices employed in converting

source data to 1999 dollars vary, depending on which index is most appropriate. Further information

on these adjustments is provided in the detailed discussion of each analysis.

The detailed analyses presented in Chapters 4 through 7 report benefits on an annual basis.

To determine the present value of these benefits, EPA employs three alternative discount rates: a

7 percent real discount rate, which is representative of the real rate of return on private investments

and consistent with the rate mandated by the Office of Management and Budget for analysis of

proposed regulations; a 3 percent real discount rate, which is representative of the social rate of time

preference for consumption of goods and services, and consistent with the rate recommended by

many economists for analysis of environmental benefits; and a 5 percent real discount rate, which

represents the mid-point of the 3 and 7 percent range.

In calculating the present value of benefits at the time new regulations are implemented, EPA

assumes an infinite time frame; i.e., as long as the regulations remain in effect, the associated

benefits will be enjoyed in perpetuity. EPA further assumes that its estimates of beneficial impacts

on surface water resources will be fully realized in the year immediately following implementation

of the revised regulations. This assumption reflects EPA's judgment that reductions in the loadings

of pollutants from CAFOs will quickly yield improvements in surface water quality. With respect

to reduced contamination of private wells, however, EPA assumes that several years will pass before

the full benefits of the regulation are realized. To permit consistent comparison of these benefits to

the annual benefits estimated for surface water resources, EPA presents the benefits of reduced
3-10

contamination of private wells on an annualized basis, as well as on a present value basis. The

calculation of an annualized value for this benefits category indicates the constant flow of benefits

over time that would generate the same present value as the anticipated, uneven, flow of benefits.

Additional information on the calculation of present values and the aggregation of benefits

is presented in Chapter 8.

3.5 SUMMARY

Exhibit 3-2 summarizes EPA's approach to measuring and valuing the anticipated benefits

of the revised CAFO regulations. Additional information on the methods employed is provided in

the detailed discussion of each analysis that follows.

Exhibit 3-2

SUMMARY OF APPROACH TO ESTIMATING REGULATORY BENEFITS

Benefit Category Human Use Measurement Approach Valuation Approach

Improvements in Recreational fishing, Model potential changes in Stated preference approach

Water Quality and swimming, and non-use water quality based on assessing willingness-toSuitability for benefits associated with estimated changes in pay for water quality that

Recreational surface water resources. loadings of CAFO-related supports recreation.

Activities pollutants. 

Reduced Incidence Recreational fishing, near- Estimate changes in the Avoided damages based on

of Fish Kills stream use and non-use frequency of fish kill events fish replacement costs.

benefits. based on estimated

reductions in nutrient

loadings.

Improved Commercial shellfishing. Estimate increased access to Market estimate of

Commercial shellfish growing waters increased consumer surplus.

Shellfishing and resulting increase in

annual shellfish harvests,

based on modeled changes

in fecal coliform

concentrations. 

Reduced Drinking water. Model potential changes in Stated preference approach

Contamination of private domestic well water assessing willingness-toPrivate Wells quality based on estimated pay to reduce the

changes in loadings of concentration of nitrates in

CAFO-related pollutants. water drawn from private

domestic wells.
3-11

3.6 REFERENCES

AFS. 1990. American Fisheries Society Socioeconomics Section, A Handbook of Monetary Values

of Fishes and Fish-Kill Counting Guidelines, Draft, July 1990.

Carson, Richard T. and Robert Cameron Mitchell. 1993. "The Value of Clean Water: The Public's

Willingness to Pay for Boatable, Fishable, and Swimmable Water Quality." Water

Resources Research, Vol. 29, No. 7.
4-1

MODELING OF IMPROVEMENTS IN

SURFACE WATER QUALITY AND BENEFITS

OF ACHIEVING RECREATIONAL USE LEVELS CHAPTER 4

______________________________________________________________________________

4.1 INTRODUCTION AND OVERVIEW

A major component of EPA's CAFO benefits analysis is an assessment of how water quality

in freshwater rivers and lakes would be influenced by reduced CAFO pollution, accompanied by an

evaluation of the economic value of these changes to society. EPA has developed a comprehensive

analysis of these benefits using the methodology summarized in Exhibit 4-1. As shown, key

components of the analysis include:

C Development of model facilities that typify conditions across different production sectors,

facility sizes, and geographic regions;

C Modeling of "edge-of-field" pollutant releases that take into account manure management

practices, manure constituents, and physical conditions (e.g., soil characteristics);

C Calculation of the number of AFOs in the various production sectors/size categories to allow

extrapolation of the model facility loadings estimates;

C Modeling of the change in surface water pollutant concentrations as determined by changes

in loadings; and

C Valuation of the water quality changes through a benefits transfer analysis focused primarily

on the public's willingness to pay for improved water conditions necessary to support

recreation.

EPA implements this set of analyses for baseline conditions as well as the various regulatory

scenarios under consideration to allow estimation of overall water quality benefits. The following

sections summarize the five analytic components and the resulting estimates.
Exhibit 4-1

OVERVIEW OF RECREATIONAL BENEFITS ANALYSIS

Model Facility

Analysis

Edge-of-Field

Loadings

Analysis

Analysis of

AFO/CAFO

Distribution

Valuation of

Water Quality

Changes

Surface

Water

Modeling

Exhibit 4-2

MODEL FACILITY ANALYSIS

• Number of Operations

• Available Land for Manure Applications

• Typical Cropping Systems and Yields

• Crop Removal Rates

• Manure Production

• Nutrient Content

• Pathogen & Metal Content

 Agronomic Manure

Application Rates

 1997 Census

Input Data: of Agriculture

Analyses:

Define

Model

Facility

Calculate

Pollutant

Production

Determine Application

Rates and Nutrient

Removal Capabilities

for Model Facility

Calculate

Excess Nutrients

Applied

Note that for this analysis, the term agriculture facility, facility, or operation includes the 23

feedlot and the land application area under the control of the feedlot operator.

4-2

4.2 MODEL FACILITY ANALYSIS

Assessing the impacts of CAFO regulatory scenarios requires that EPA recognize the

diversity of animal feeding operations across the country. Exhibit 4-2 provides an overview of the

analysis used to define model facilities and their associated pollution potential. For detailed

23

information regarding the development of model facilities, see Chapters 4 and 11 of the Technical

Development Document of Proposed Effluent Limitations Guidelines for Animal Feeding Operations

(EPA, 2000a), hereafter referred to as the "TDD". 
Sioux/Pork

Yuma

Pork

Lancaster

Beef

Scott/Beef

Wicomico

Poultry

Fresno/Poultry

Tulare Barry/Poultry

Dairy-Pork

Benton

Poultry

Duplin

Pork Deaf Smith/Beef

Macon

Pork

Imperial/Beef

Erath/Dairy

Shelby

Poultry Okeechobee

Beef-Dairy

Marathon

Dairy Wyoming

Dairy

Pacific

Central

Midwest

South

Mid-Atlantic

AFO Regions

State Boundaries

County with Highest

Production by Sector

Historical Climate Station

4-3

Exhibit 4-3

GEOGRAPHIC REGIONS FOR GROUPING AFOS

First, EPA disaggregates the universe of AFOs according to a suite of characteristics directly

affecting manure generation, manure management, and pollutant loadings. AFOs are grouped into

five geographic regions, as shown in Exhibit 4-3. To establish geographic regions, EPA developed

algorithms to estimate the number of facilities by size (number of animals), using a combination of

inventory and sales data. NASS applied the algorithms to 1997 Census of Agriculture data to

generate the output by which EPA estimated facility counts. Due to disclosure criteria established

by NASS to protect respondent-level census data, the regions were aggregated into broader

production regions. 

Within each geographic region, EPA defines model facilities by production sector, subsector,

and size (number of animals). Based on these various dimensions, an example of a model facility

would be a large beef facility with more than 8,000 head in the Midwest region. Exhibit 4-4
The USDA animal unit is based on average liveweight of the animal, and is markedly

24

different from the animal unit definition in EPA’s regulations at 40 CFR 122 and 412.

 Metal production (zinc, copper, cadmium, nickel, lead) is calculated in terms of pounds

25

of metals excreted per animal unit, while pathogen production (fecal coliform and fecal

streptococcus) is calculated in terms of colonies per animal unit.

4-4

summarizes the key dimensions on which model facilities are defined. In all, EPA considered 200

different model facilities. The key model facilities are those that reflect the majority of production,

resulting in approximately 76 different model facilities used for further analysis.

Exhibit 4-4

SUMMARY OF MODEL FACILITY DIMENSIONS

Production Sector Facility Size Regions

Beef, cattle >1,000 Animal Units Pacific

Beef, veal 500-1,000 Animal Units Central

Dairy, milk 300-500 Animal Units Midwest

Dairy, heifers South

Swine, farrow-finish Mid-Atlantic

Swine, grower-finish

Layer, wet manure system

Layer, dry manure system

Broiler

Turkey

To guide the selection of modeling parameters related to fields and soils, EPA must identify

a specific location for each model facility in a given geographic region. For these purposes, the

analysis assumes that the model facility is located in the highest animal-production county of the

region's highest production state for a given animal type. 

EPA calculates manure production and the associated production of pollutants for each model

facility using a process developed by Lander, et al. (1998), and refined by Kellogg, et al. (2000). The

number of animals per operation is converted to USDA animal units using conversion factors

24

standardized to a 1,000-pound beef cow. EPA multiplies the number of animal units per model

facility by the manure production per animal unit to determine total manure production. Manure

production is adjusted to reflect the fraction that is recoverable, i.e., the portion of manure that is

collected, stored, or otherwise managed so as to be available for land application. Finally, EPA

calculates total generation of nutrients based on the typical nitrogen and phosphorus concentrations

per unit of recoverable manure for each animal type, e.g., pounds of nitrogen per ton of manure from

finishing pigs in the swine sector.25
EPA assumes that 30 percent of the animal waste's nitrogen content volatilizes during and 26

shortly after land application. The analysis also assumes that facilities use no fertilizers other than

manure.

For consistency, pollutant loadings from the off-site cropland to which these facilities are 27

assumed to ship manure are also captured in the baseline analysis. The modeling of baseline

conditions assumes the application of commercial fertilizer to this land.

4-5

Next, EPA defines land application practices for each model facility and the capacity for soil

and crop removal of nutrients applied to the land. This analysis entails several steps. The analysis

first considers the total nitrogen and phosphorus generated in manure at the model facility. EPA

divides these figures by the average total acreage available for land application of manure for an

operation in the given region, size class, and production sector; this average acreage is drawn from

a recent NRCS study (Kellogg et al., 2000). 

EPA then considers the likely cropping systems at the model facilities and relates the quantity

of nutrients applied annually to cropland and pastureland nutrient requirements. For example, typical

cropping systems for the Mid-Atlantic AFO Region are corn, soybean, and wheat in two-year

rotation. The ratio of nutrients applied to crop nutrient requirements provides a measure of the

excess nutrients applied in the manure. This in turn forms the foundation for loadings analyses of 26

regulatory scenarios that call for adherence to agronomic rates of nutrient application. To

characterize land application practices, the analysis considers three categories of facilities:

• Category 1 facilities include CAFOs with sufficient crop- or pastureland onsite to apply the manure they generate at agronomic rates. The analysis

assumes that these facilities apply all manure on-site (i.e., no manure is

shipped off-site) under both baseline and post-regulatory conditions.

• Category 2 facilities include those with insufficient crop- or pastureland onsite to apply the manure they generate at agronomic rates. For the baseline

scenario, the analysis assumes that these facilities apply all the manure they

generate on-site, regardless of the degree to which agronomic application

rates are exceeded. For the post-regulatory scenarios, the analysis assumes

that on-site manure application is limited to the agronomic rate, and that the

remaining manure is shipped off-site for application to crop- or pastureland

at agronomic rates. EPA's model captures the pollutant loadings associated

with both on-site and off-site application of the manure generated by

Category 2 facilities. (The sole exception to this approach occurs in

27

modeling loadings from Category 2 broiler operations. The baseline analysis

caps on-site application of this manure at five times the agronomic rate; any

excess manure is assumed to be shipped off-site. The analysis of postregulatory conditions assumes that Category 2 broiler facilities apply manure
4-6

on-site only up to the agronomic rate, beyond which the excess is shipped offsite. In both cases, the manure shipped off-site is not captured in the loadings

modeling.)

• Category 3 facilities include CAFOs without cropland. EPA assumes that

these facilities transfer all manure off-site for use or disposal. The pollutant

loadings associated with this manure are not captured in modeling either

baseline or post-regulatory conditions.

4.3 EDGE-OF-FIELD LOADINGS ANALYSIS

The second major component of the water quality analysis is estimation of pollutant loadings

leaving the model facility, i.e., edge-of-field loadings. EPA estimates the loadings associated with:

(1) application of manure; (2) lagoons and other storage structures; and (3) feedlots. The sections

below review the methods applied for each of these analyses.

4.3.1 Loadings from Manure Application

EPA's loadings analysis first examines loadings from manure application to cropland and

pastureland. The analysis combines information on manure generation and land application practices

(see above) with data on the timing of application, hydrological conditions, geological conditions,

and weather patterns (see Exhibit 4-5). EPA integrates these data using the Groundwater Loading

Effects of Agricultural Management Systems (GLEAMS) model. This field-scale model simulates

hydrologic transport, erosion, and biochemical processes such as chemical transformation and plant

uptake. The model uses information on soil characteristics and climate, along with nutrient

production data, to model losses of nutrients in surface runoff, sediment, and groundwater leachate.

Loadings are modeled for the pre- and post-regulatory scenarios to estimate changes in loadings

attributable to the proposed standards.

The data used in the GLEAMS model runs include the following:

C Soils Data: GLEAMS uses data from the State Soil Geographic (STATSGO) data base

maintained by USDA's Natural Resources Conservation Service. Key soil parameters drawn

or estimated from the data base include permeability, soil porosity, baseline organic matter

content, percent clay, and percent silt. EPA employs data on these parameters, in

combination with data on other factors (see below), to characterize soil erosion, surface

runoff, and groundwater leaching at model facilities.
Exhibit 4-5

EDGE-OF-FIELD LOADINGS ANALYSIS FOR MODEL FACILITIES

 Excess Nutrients Applied

(from model facility analysis)

Farm Practice Data/Assumptions:

• Planting Date

• Harvest Data

• Manure Application Date

 Soils Information

(permeability, porosity, etc.)

 Climate Data

 Manure Characteristics

GLEAMS Modeling to

Calculate Pollutant Runoff

from Manure Application

 Calculate Seepage Losses

from Lagoons and Other

Storage Structures

 Calculate Feedlot

Runoff

Total Loadings for

Each Model Facility

(pre-and post-regulation)

 Input Data Analyses

4-7

C Climate Data: EPA prepared climate data using CLIGEN, a synthetic climate generator

commonly used in conjunction with a variety of agricultural runoff models. CLIGEN

simulates weather patterns based on 25 or more years of precipitation and temperature data.

C Crop Planting and Harvest Dates: EPA developed assumptions for crop planting and

harvesting using USDA reports and determined likely manure application dates for model

facilities based on contacts with USDA Extension Agents in relevant locations. The

application dates are a function of the crops grown. Some single-cycle crops (e.g., corn)

allow only one application per year, while other crops (e.g., alfalfa) allow multiple

applications.

4.3.2 Loadings from Lagoons and Other Storage Structures

Lagoons and other manure storage structures at animal feedlots are also potential pollution

sources, posing risks primarily through seepage to groundwater and subsequent discharge to surface

water. For the purposes of this analysis, EPA assumes that all lagoons and other storage structures

leak. Storage structure seepage estimates were obtained from Ham and DeSutter (1999), who

measured nitrogen that leaked from three established swine-waste lagoons in Kansas. From these

results, it was assumed that 2,000 pounds per acre per year leaked from manure storage structures
 EPA assumes that only surface runoff occurs from the feedlot. 28

4-8

lined with silt loam soils. EPA scales seepage estimates for clay and sandy soils from these

estimates as described in the TDD. 

For most storage structures, EPA models transport of pollution through groundwater and

estimates the associated attenuation of pollutants. However, conditions in some cases (as defined by

Sobecki and Clipper, 1999) suggest that leaks from lagoons or other storage structures may seep

directly to surface water, i.e., hydrologic conditions are such that pollutant concentrations are not

attenuated by dilution in groundwater. This might occur, for example, in the presence of sandy soils

or karst-like terrain. To characterize the potential for leaks from lagoons or other storage structures

to seep directly to surface water, EPA evaluated soil and hydrological conditions in each AFO

region. Based on this evaluation, EPA determined the percentage of the region's area in which the

potential for direct contamination of surface water is high. EPA's analysis assumes that this

percentage of storage leaks in each region would result in direct contamination of surface water.

4.3.3 Loadings from Feedlots

Another pollution source that EPA analyzes is runoff from feedlots. These loadings can be

particularly significant in the beef sector because the animals are typically housed in open lots. 

To estimate feedlot runoff loadings, EPA first calculates the volume of runoff from the

feedlot at the model facility. The annual depth of runoff from the feedlot is calculated for each of

the five AFO regions using average precipitation from the National Climatic Data Center. The

volume of runoff is calculated using this depth of runoff and the estimated area of the dry lot and

feedlot handling areas for each model facility. 

28

To characterize the loadings of pollutants in feedlot runoff, EPA assumes a solids content

of 1.5 percent. The composition of these solids is estimated based on the characteristics of dry

manure, which varies across production sectors. Annual loadings of specific pollutants are then

determined, based on the estimated composition of solids, the assumed percentage of solids in

feedlot runoff, and the estimated annual volume of runoff from the feedlot.

4.3.4 Model Loadings Under Regulatory Scenarios

EPA applies the data and methods described above to analyze loadings associated with

baseline conditions and each of the various regulatory scenarios. Under all of the options, the

analysis assumes that regulated facilities modify current activities to comply with feedlot best
In prior years, the Census was conducted by the Department of Commerce’s Bureau of the

29

Census.

4-9

management practices, mortality handling requirements, nutrient management planning/

recordkeeping, and elimination of manure application within 100 feet of surface water. Factors that

vary among regulatory scenarios that may impact loadings include:

C reduction of manure application to agronomic nitrogen rates; and

C reduction of manure application to agronomic phosphorous rates.

4.4 ANALYSIS OF AFO/CAFO DISTRIBUTION

To develop a national estimate of baseline pollutant loadings from AFOs, as well as estimates

of the change in loadings under alternate regulatory scenarios, EPA must determine the number of

operations that would be governed by the proposed regulations, i.e., the number of facilities

considered to be AFOs and the number of AFOs considered to be CAFOs, and therefore subject to

the proposed rule. These operations represent the universe to which model facility results are

extrapolated.

The sections below discuss EPA's approach and the resulting characterization of the

population of AFOs and CAFOs. More detailed information on the procedure used by EPA to

estimate the number of operations that may be subject to the proposed regulations can be found in

the TDD (USEPA, 2000a).

4.4.1 Approach

EPA estimates the number of operations that may be affected by alternative requirements

using a two-step procedure. First, EPA determines the number of operations that raise animals under

confinement by using available data on the total number of livestock and poultry facilities (see

below). Next, the number of CAFOs is determined based on operations that are defined as CAFOs

and smaller operations that are designated as CAFOs based on site-specific conditions, as

determined by the permitting authority. For purposes of this discussion, the affected CAFO

population includes those facilities that discharge or have the potential to discharge to U.S. waters.

This definition does not include those smaller operations that are not defined or designated as

CAFOs.

 The USDA Census of Agriculture is a complete accounting of United States agricultural

production and is the only source of uniform, comprehensive agricultural data for every county in

the nation. The Census is conducted every five years by USDA's National Agricultural Statistics

Service (NASS). The Census is implemented through a mail questionnaire that is sent to a list of 29

known U.S. agriculture operations from which $1,000 or more of agricultural products were

produced and sold or normally would have been sold during the census year. 
Available information from USDA indicates that few large hog operations are non30

confinement facilities (USDA/APHIS, 1995); therefore EPA assumes that all hog operations with

more than 2,500 swine are AFOs.

4-10

Aggregated 1997 Census data are readily available from USDA. In general, the published

compendium provides summary inventory and sales data for the nation and for states. The Census

database itself, however, contains respondent-level information that can be aggregated into more

precise agriculture facility size groupings. The requested data summaries used for EPA’s analysis

were compiled with the assistance of staff at USDA's NASS, who performed special tabulations of

the data to obtain information on the characteristics of facilities at specific size thresholds for each

sector. All data provided to EPA were aggregated to ensure the confidentiality of an individual

operation. EPA supplemented the available data with information from other sources, including

other USDA data sets and industry publications. The following discussion briefly notes the nature

of key gaps in the Census data and EPA's approach to addressing them. 

C All USDA data are reported across all animal agriculture operations and do not distinguish

between confinement and nonconfinement production types (e.g., pasture or rangeland

animals). However, only operations that raise animals under confinement (as defined under

40 CFR 122 Appendix B) would be subject to the proposed regulations. For analytical

purposes, EPA has assumed that all animals at larger dairy and poultry operations are grown

under confinement, which may overstate EPA’s estimate of the number of operations subject

to the regulation. For the beef and hog sectors, the USDA has limited data on the number

of operations that are feedlot operations only. NASS Statistical Bulletin Number 953,

Cattle: Final Estimates 1994-1998, was used to estimate the number of beef feedlots with

more than 1,000 head; 1997 Census data on "Cattle fattened on grains and concentrates

(sold)" are used to distinguish confinement from non-confinement operations with less than

1,000 head (USDA/NASS, 1999a; USDA/NASS, 1999b). Available information from USDA

and industry feedback was used to adjust the total number of hog operations to exclude those

that are pasture operations (USDA/Animal and Plant Health Inspection Service, 1995;

NPPC, 1997).30

C Available Census data on the number of animal facilities by inventory size distribution do

not always correspond with the facility size definitions examined by EPA. Where data were

not available in the desired size ranges, EPA interpolated estimates from available data by

assuming that, for a given size group, the largest 40 percent of the facilities account for 60

percent of the animal inventory. 
4-11

C USDA data are also not available for the number of poultry operations with wet manure

management systems. EPA estimated these figures using available data from USDA and

supplemental information from industry experts and agricultural extension agency personnel.

C Information on the number of animal facilities that raise more than a single animal type is

also not available. EPA algorithms written for use with the 1992 Census data included an

estimate of CAFOs that maintained more than one animal type. The analysis revealed that,

for facilities with more than 1000 animal units, 21 percent raise more than one animal type;

for facilities with less than 1000 animal units, about 25 percent raise more than one animal

type. To the extent that combinations of animal types are located at facilities, facility counts

may be overstated. 

C Finally, USDA Census data report the number and size of livestock and poultry facilities as

of year-end (December 31) and may not adequately reflect seasonal fluctuations in beef,

dairy, and layer inventory, or the year-to-year fluctuations in number of animals sold. EPA

algorithms reflect average herd sizes at larger confinement facilities over the year. The

outputs are based on both reported inventory and sales, adjusted by expected turnovers. This

approach is consistent with that developed by USDA to estimate potential manure nutrient

loadings from animal agriculture (Lander, et al., 1998; Kellogg, et al., 2000). 

4.4.2 Estimated Number of AFOs and CAFOs

Based on the USDA data sources described above, there were 1.2 million livestock and

poultry facilities in the United States in 1997. This number includes all operations in the beef, dairy,

pork, broiler, layer, and turkey production sectors, and includes both confinement and nonconfinement (grazing and range fed) production. 

Of all these operations, EPA estimates that there are about 376,000 AFOs that raise or house

animals in confinement, as defined by the existing regulations. Exhibit 4-6 summarizes the number

of AFOs by production sector and facility size. 
This number is likely the upper bound estimate of the total number of operations that will 31

be subject to the proposed revisions. 

4-12

Exhibit 4-6

TOTAL NUMBER OF AFOs BY PRODUCTION SECTOR AND FACILITY SIZE

Production Sector Total AFOs >1000 AU 300 AU-1000 AU <300 AU 1

Beef: cattle 106,080 2,080 2,000 102,000

Beef: veal 850 10 200 640

Dairy: milk 116,880 1,450 5,690 109,740

Dairy: heifers 1,250 400 750 100

Hogs: FF2 64,240 2,420 9,240 52,580

Hogs: GF2 53,620 1,670 3,250 48,700

Broilers 34,860 3,940 10,200 20,720

Layers: wet3 3,110 360 800 1,950

Layers: dry3 72,060 360 1,330 70,370

Turkeys 13,720 370 1,730 11,620

Sum Total 466,670 13,060 35,190 418,420

Total AFOs 375,740 12,850 28,150 334,740 4 

Source: Values presented in the table are EPA estimates, derived from published USDA/NASS data, including 1997 Census

of Agriculture. For more information, see Technical Development Document of Proposed Effluent Limitations

Guidelines for Animal Feeding Operations.

As defined by the existing regulation, one animal unit (AU) is equivalent to one slaughter or feeder cattle; 0.7 mature dairy 1 

cattle; 2.5 hogs (over 55 pounds); 0.5 horses; 10 sheep or lambs; 55 turkeys; 100 laying hens or broilers (with continuous

overflow watering); 30 laying hens or broilers (with liquid manure system); or 5 ducks.

FF = farrow-finish (includes breeder and nursery pigs); GF=grower-finish. Data from USDA’s NAHMS indicate that

2 

roughly 40 percent of hog farms are grower-finish and 60 percent are farrowing operations. 

The “Layers: wet” category covers operations with liquid manure systems. Such AFOs are currently defined as CAFOs 3 

for operations with 30,000 birds (1,000 AUs). No layer operations use continuous watering systems. “Layers: dry” are

defined at 1,000 AUs for operations with 100,000 birds.

“Total AFOs” eliminates double counting of operations with mixed animal types. Operations with mixed animal types 4 

account for roughly 20 percent of total AFOs. 

Exhibit 4-7 summarizes the total number of CAFOs defined or designated under each of the

regulatory scenarios. Under the proposed scenarios, between about 29,000 and 33,500 AFOs will

be defined or designated as CAFOs, and are therefore subject to the proposed rule.31
4-13

Exhibit 4-7

TOTAL NUMBER OF CAFOs BY 

REGULATORY SCENARIO

Regulatory Scenario Total CAFOs

Option 1-Scenario 1 17,700

Option 1-Scenario 2/3 33,500

Option 1-Scenario 4a 28,980

Option 1-Scenario 4b 45,140

Option 2-Scenario 1 17,700

Option 2-Scenario 2/3* 33,500

Option 2-Scenario 4a* 28,980

Option 2-Scenario 4b 45,140

Source: Values presented in the table are EPA estimates, derived from

published USDA/NASS data, including 1997 Census of

Agriculture. For more information, see Technical Development

Document of Proposed Effluent Limitations Guidelines for Animal

Feeding Operations.

* Proposed scenarios.

4.4.3 Geographic Placement of Facilities

Finally, AFOs and CAFOs by region are placed into counties (and eventually watersheds)

using the published county level Census data. Where county level data was not presented, the

facilities in the undisclosed counties were imputed from state- and region-level data. 

4.5 SURFACE WATER MODELING

EPA develops estimates of changes in surface water quality by building on the analysis

of edge-of-field pollutant loadings for model facilities and the analysis of the distribution of

AFOs and CAFOs. These data are integrated into the National Water Pollution Control

Assessment Model (NWPCAM), a national-scale model designed to translate pollutant loadings

into water quality changes and associated economic benefits to support policy-level regulatory

decisionmaking.
NWPCAM does not address water quality benefits in bays, estuarine waters, or the Great 32

Lakes.

 Both the water quality modeling and the economic benefits analysis are presented in greater

33

detail in Estimation of National Surface Water Quality Benefits of Regulating Concentrated Animal

Feeding Operations (CAFOs) Using the National Water Pollution Control Assessment Model

(NWPCAM) (USEPA, 2000b). This report is provided under separate cover as Attachment A.

4-14

NWPCAM covers virtually all inland waters in the U.S., allowing EPA to examine how

changes in loadings under various regulatory scenarios would influence key water quality

parameters. The model incorporates routines that simulate overland transport of pollutants,

32

discharge of pollutants to nearby surface waters, discharges to surface water from other (nonAFO/CAFO) sources, and the fate and transport of pollutants in the interconnected network of

surface waters. Specifically, the modeling involves the following steps:

C Developing the network of rivers and streams that serves as the geographic foundation for

the modeling;

C Distributing AFO/CAFOs and associated facility-level edge-of-field loadings to

agricultural lands within a defined watershed or county;

C Simulating transport of nutrients/pollutants and subsequent discharge to nearby

waterbodies;

C Delivering nutrient/pollutant loadings from point sources (e.g., municipal wastewater

treatment plants, industrial facilities) and non-point sources (e.g., non-AFO/CAFO

agricultural run-off, municipal run-off) to waterbodies; and

C Simulating dilution, transport, and kinetics of the nutrients/pollutants loaded to the

waterbody as the nutrients/pollutants are transported along the waterbody.

Exhibit 4-8 summarizes these steps and the primary data used in the analysis. The sections below

discuss the modeling in more detail and provide an overview of the estimated changes in pollutant

loadings under the various regulatory scenarios.33
Exhibit 4-8

WATER QUALITY MODELING ANALYSIS

Analyses:

Input Data:

Develop Hydrologic

Network

Distribute AFOs/CAFOs

to Agricultural Land

Calculate Nutrient/Pollutant

Loadings from AFOs/CAFOs

to Waterbodies

•Reach File Data on 

 Surface Waters

•Land Use/Land

 Cover Data

•Watershed Data

AFO/CAFO

Facilities by 

County

Edge-of-Field

Loadings

Data

Deliver Loadings from

Other Point and Non-Point 

Sources to Waterbodies

Simulate Fate and 

Transport of Pollutants

•Loadings Data for Point Sources

•Loadings Data for Non-Point

 Sources (other than AFOs/CAFOs)

RF3 includes numerous small tributaries and headwaters. To simplify the modeling, EPA 34

focuses on loadings to a subset of larger rivers and streams (referred to as "RF3 Lite"). Unless

otherwise noted, the water quality and economic modeling results reported below reflect changes in

loadings to the RF3 Lite subset of RF3.

4-15

4.5.1 Defining the Hydrologic Network

In the initial step of the analysis, EPA prepares the hydrological network of rivers and

streams that serves as the geographic backdrop to the modeling. The hydrological network is

developed from EPA's Reach Files, a series of hydrologic databases describing the inland surface

waters of the U.S. Each "reach" in the database represents a segment of a river or stream; these

segments are linked together to characterize complete systems of rivers and streams. EPA's

Reach File 3 (RF3) forms the geographic foundation for NWPCAM, allowing the model to

simulate the flow of water and pollutants from a point of origin to major rivers, and ultimately

to ocean discharge.34

Once the hydrologic network is established, EPA uses a geographic information system

(GIS) approach to overlay information on land-cover, characterizing land across the U.S. at a

square-kilometer degree of resolution. From these data, EPA can identify areas classified as

"agricultural" land. Each land section, or "cell", is associated with a river reach in the hydrologic

network.
 EPA did not model facilities below 300 animal units. Discharges from these small

35

operations were included in the agriculture nonpoint source component.

 Non-point source data for fecal coliform, fecal streptococci, and sediments were not

36

available at the national level; therefore, only nutrients are covered in the analysis of non-AFO nonpoint sources. 

4-16

4.5.2 Distributing AFOs and CAFOs to Agricultural Land

Once the hydrologic network is established, NWPCAM integrates data on the location of

AFOs and CAFOs to spatially orient the facilities relative to surface waters. This analytic step

links directly to the analyses discussed above wherein EPA determined the numbers of AFOs and

CAFOs by county and, through analysis of model facilities, estimated the edge-of-field loadings

associated with each facility. Here, AFOs/CAFOs and their associated edge-of-field loadings are

randomly distributed to agricultural land in the appropriate county. By placing each facility in

a land use cell, the facility can be linked to a river reach in the hydrologic network.35

4.5.3 Calculating AFO/CAFO-Related Loadings to Waterbodies

Once facility pollutant loadings are linked to a geographic area and river reach, these

loadings are delivered from the agriculture cells to the river reaches using a routine to simulate

an overland transport process. Overland travel times and associated nutrient decay are based on

flow in a natural ditch or channel, as may typically be found on agricultural lands. A unit runoff

(ft /sec/km ) is derived for each watershed based on data compiled by the U.S. Geological Survey.

3 2

The unit runoff therefore represents runoff from each agricultural cell within the watershed and

can be used to derive time-of-travel estimates necessary to route pollutants from the facility to a

river reach. NWPCAM also calculates nutrient/pollutant decay associated with overland

transport. Total loadings to any given river reach are the total loadings discharged from all landuse cells draining to the reach (as well as discharges from upstream river reaches).

4.5.4 Loadings from Other Sources

In addition to loadings from AFOs/CAFOs, NWPCAM integrates data on loadings from

other pollutant sources. This complete inventory of loadings is needed to assess the cumulative

changes in water quality (i.e., the attainment of beneficial use levels) in surface waters.

Specifically, the model integrates data on discharges from municipal and industrial point sources

as well as loadings from (non-AFO) non-point sources. These loadings are constant across

regulatory scenarios. To model nutrient loads for non-point sources, EPA uses SPARROW

(SPAtially Referenced Regression On Watershed attributes) (Smith, et al., 1997), a statistical

modeling approach for estimating major nutrient source loadings at a detailed geographic scale

based on watershed characteristics.36
4-17

4.5.5 Fate and Transport Modeling

Once all loadings to surface waters have been estimated, NWPCAM routes pollutants

through the hydrologic network from upstream to downstream reaches. The model simulates

pollutant decay during this routing process. The resulting pollutant concentrations are then

compared to beneficial use criteria to determine how potential recreational uses would change

with improved water quality (see below).

4.5.6 Estimated Changes in Loadings

Exhibit 4-9a summarizes the NWPCAM estimates of baseline loadings from AFOs and

CAFOs and shows loadings under the various regulatory scenarios. Similarly, Exhibit 4-9b

presents the resulting removals under each of the regulatory scenarios. As shown, reduction of

nutrient and pollutant loadings is greater under the phosphorus-based standards (Option 2),

particularly under Option 2-Scenario 4b. Significant reductions are also realized under the

proposed scenarios; for example, nitrogen loadings are reduced from 67 million kilograms per

year in the baseline to between 37 and 38 million kilograms per year.

Exhibits 4-10a and 4-10b present additional modeling results for metals. As shown,

significant reductions in loadings of metals could be realized under the regulatory scenarios.

However, these results differ from those presented above for several reasons. First, the estimates

reflect changes in loadings to the larger set of RF3 rivers and streams as opposed to the smaller

set of RF3 Lite rivers and streams. Second, EPA does not model metals independently; instead,

overland transport of metals is assumed to be similar to the overland transport of phosphorus,

with the assumption that metals adhere to soil in a manner similar to phosphorus. For these

reasons, the metals loading reductions cannot be compared directly to the reported reductions for

nutrients and other pollutants. The metals reductions are reported here for descriptive purposes

and do not play a role in the calculation of economic benefits (see below).

4.6 VALUATION OF WATER QUALITY CHANGES

To value predicted reductions in the pollution of rivers and streams by CAFOs,

NWPCAM applies estimates of Americans' willingness to pay for improvements in water quality.

This approach first entails relating changes in water quality parameters - e.g., concentrations of

chlorophyll " - to the ability of a body of water to support fishing or swimming. Once the

potential improvement in the ability of modeled rivers and streams to support these uses is

determined, the analysis relies upon estimates of willingness to pay for such improvements

obtained from the results of a contingent valuation survey developed by Richard Carson and

Robert Mitchell. This survey, which is national in scope, characterizes households' annual

willingness to pay to improve freshwater resources from baseline conditions to fishable or

swimmable quality.
4-18

Exhibit 4-9a

ESTIMATED ANNUAL AFO/CAFO NUTRIENT/POLLUTANT LOADINGS 

UNDER BASELINE AND REGULATORY SCENARIOS

Regulatory Scenario (million kg) (million kg) colonies) colonies) (billion kg)

Nitrogen Phosphorus (billion (billion Sediments

Fecal Fecal 

Coliforms Streptococci

Baseline Conditions 67 76 50 117 118

Option 1-Scenario 1 53 41 24 80 118

Option 1-Scenario 2/3 52 31 19 72 118

Option 1-Scenario 4a 53 34 21 73 118

Option 1-Scenario 4b 50 28 15 70 118

Option 2-Scenario 1 43 34 21 67 92

Option 2-Scenario 2/3* 37 22 15 57 83

Option 2-Scenario 4a* 38 24 18 59 84

Option 2-Scenario 4b 34 17 12 52 80

Source: Estimation of National Surface Water Quality Benefits of Regulating Concentrated Animal Feeding

Operations (CAFOs) Using the National Water Pollution Control Assessment Model (NWPCAM),

prepared for U.S. EPA Office of Wastewater Management, prepared by Research Triangle Institute,

August 2000.

* Proposed scenarios.
4-19

Exhibit 4-9b

ESTIMATED ANNUAL REMOVALS UNDER REGULATORY SCENARIOS

Regulatory Scenario (million kg) (million kg) colonies) colonies) kg)

Nitrogen Phosphorus (billion (billion (billion

Fecal Fecal 

Coliforms Streptococci Sediments

Option 1-Scenario 1 14 35 26 37 0

Option 1-Scenario

2/3

15 45 31 45 0

Option 1-Scenario 4a 14 42 29 44 0

Option 1-Scenario 4b 17 48 35 47 0

Option 2-Scenario 1 24 42 29 50 26

Option 2-Scenario

2/3*

30 54 35 60 35

Option 2-Scenario

4a*

29 52 32 58 34

Option 2-Scenario 4b 33 59 38 65 38

Source: Estimation of National Surface Water Quality Benefits of Regulating Concentrated Animal Feeding Operations

(CAFOs) Using the National Water Pollution Control Assessment Model (NWPCAM), prepared for U.S. EPA Office

of Wastewater Management, prepared by Research Triangle Institute, August 2000.

* Proposed scenarios.
4-20

Exhibit 4-10a

ESTIMATED ANNUAL AFO/CAFO METALS LOADINGS 

UNDER BASELINE AND REGULATORY SCENARIOS*

Regulatory Scenario kg) kg) kg) kg) kg)

Zinc Copper Cadmium Nickel Lead

(million (thousand (thousand (thousand (thousand

Baseline Conditions 27 1,495 42 572 1,143

Option 1-Scenario 1 17 949 19 353 748

Option 1-Scenario 2/3 12 727 9 277 570

Option 1-Scenario 4a 13 796 11 306 613

Option 1-Scenario 4b 12 677 8 251 545

Option 2-Scenario 1 14 796 16 286 634

Option 2-Scenario 2/3** 9 516 5 192 405

Option 2-Scenario 4a** 10 600 7 226 457

Option 2-Scenario 4b 8 444 3 154 366

Source: National AFO/CAFO Metals Edge-of-Field Loadings and Reductions from Agricultural Landuse

Cells to RF3 Reaches for AFO/CAFO Rulemaking Scenarios, table prepared for EPA by Research

Triangle Institute, August 2000.

* Metals loadings are estimated based on modeling of the overland transport of phosphorus. These

estimates do not play a role in the subsequent modeling of economic benefits.

** Proposed scenarios.
4-21

Exhibit 4-10b

ESTIMATED ANNUAL METALS REMOVALS 

UNDER REGULATORY SCENARIOS*

Regulatory Scenario kg) kg) kg) kg) kg)

Zinc Copper Cadmium Nickel Lead

(million (thousand (thousand (thousand (thousand

Option 1-Scenario 1 10 546 23 219 395

Option 1-Scenario 2/3 15 768 33 295 573

Option 1-Scenario 4a 14 699 31 266 530

Option 1-Scenario 4b 15 818 34 321 598

Option 2-Scenario 1 13 699 26 286 509

Option 2-Scenario 2/3** 18 979 37 380 738

Option 2-Scenario 4a** 17 895 35 346 686

Option 2-Scenario 4b 19 1,051 39 418 777

Source: National AFO/CAFO Metals Edge-of-Field Loadings and Reductions from Agricultural Landuse Cells to RF3

Reaches for AFO/CAFO Rulemaking Scenarios, table prepared for EPA by Research Triangle Institute, August

2000.

* Metals loadings are estimated based on modeling of the overland transport of phosphorus. These estimates do not

play a role in the subsequent modeling of economic benefits.

** Proposed scenarios.
4-22

Exhibit 4-11

WATER QUALITY LADDER

The discussion that follows summarizes the valuation approach. It begins by explaining

the process by which EPA relates the results of the surface water modeling effort to the ability

of a body of water to support a particular use. It then describes Carson and Mitchell's contingent

valuation study and its use in analyzing the economic benefits of alternate CAFO regulations.

4.6.1 Support of Designated Uses

EPA's approach to relating

surface water conditions to the ability

of a body of water to support a

particular designated use is based on

a water quality index - often referred

to as a water quality "ladder" - that

Resources for the Future initially

developed to support Carson and

Mitchell's contingent valuation

survey. As Exhibit 4-11 shows, the

ladder uses a scale that ranges from 0

to 10, with 0 representing the worst

possible water quality and 10

representing the best possible quality.

The low end of the scale represents

water quality so poor that it supports

no plant or animal life, and human

contact with it would be unsafe; the

high end of the scale represents water

safe enough to drink. Between these

extremes, the ladder depicts levels of

water quality sufficient to support

boating, fishing, or swimming.

Each step of the water quality

ladder is defined by measures of the

following parameters:

C dissolved oxygen content;

C biological oxygen demand;

C suspended sediment concentrations;
 The scope of the survey excluded the Great Lakes. 37

4-23

C pathogen counts; and

C chlorophyll " concentrations.

In order for a body of water to be considered boatable, fishable or swimmable, it must satisfy the

minimum conditions consistent with that use for all modeled parameters. With the exception of

chlorophyll ", these minimum conditions are the same for all areas. The maximum chlorophyll

" concentration considered consistent with a particular use varies across four geographic regions,

which EPA defined specifically for this analysis. This approach takes into account the impact of

regional variation in factors like climate on the relationship between chlorophyll " concentrations

and the trophic state of a lake or reservoir.

Based on the framework described above, NWPCAM classifies each segment of each

modeled river or stream as swimmable, fishable, boatable, or non-supportive of any of these uses.

For each scenario analyzed, the model calculates the total stream-miles that support each

designated use.

4.6.2 Application of CV Study

The contingent valuation survey upon which this analysis relies examined households'

willingness to pay to maintain or achieve specified levels of water quality in freshwater lakes,

rivers and streams throughout the United States (Carson and Mitchell, 1993). The survey was 37

conducted in 1983 via in-person interviews at 61 sampling points nationwide, and employed a

national probability sample based on the 1980 Census. Respondents were presented with the

water quality ladder depicted in Exhibit 4-11 and asked to state how much they would be willing

to pay to maintain or achieve various levels of water quality throughout the country. In eliciting

responses, the survey used a payment card showing the amounts average households were then

currently paying in taxes or higher prices for certain publicly provided goods (e.g., national

defense); respondents were then asked their willingness to pay for a given water quality change.

The survey respondents were told that improvements in water quality would be paid for in higher

product prices and higher taxes.
 EPA employed the Consumer Price Index to adjust 1983 values to 1999 values. In

38

addition, the adjustment to 1999 values takes into account the increase in real per capita disposable

income over the period of interest. The adjustment for changes in real income is consistent with the

survey's results, which found that respondents' willingness to pay for water quality improvements

increased in almost direct proportion to household income. 

4-24

Exhibit 4-12 presents the results of the survey, adjusted to account for inflation and

changes in real income between 1983 and 1999. These values represent "best estimates" of

38

mean annual household willingness to pay (WTP) for the specified water quality improvement.

Exhibit 4-12

INDIVIDUAL HOUSEHOLD WILLINGNESS TO PAY

FOR WATER QUALITY IMPROVEMENTS

(1999 $)

Water Quality Improvement Total WTP WTP

Incremental

Swimmable: WTP to raise all sub-swimmable water quality to $634 $205

swimmable

Fishable: WTP to raise all sub-fishable water quality to fishable $429 $184

Boatable: WTP to maintain boatable water quality $245 $245

Source: Carson and Mitchell, 1993. The values originally reported have been adjusted to account for inflation

and changes in real income between 1983 and 1999.

Applying the willingness to pay estimates presented above to analyze the benefits of

alternate CAFO regulations requires consideration of how households' willingness to pay for

water quality improvements is likely to vary with the extent and location of the resources affected.

All else equal, people are likely to value an action that improves water quality along a ten-mile

stretch of river more highly than they would value an action that improves only a one-mile stretch.

Similarly, people are likely to place greater value on improving the quality of water resources that

are nearer to them. This is simply because less time and expense is typically required to reach

nearer resources; as a result, these resources generally provide lower cost and more frequent

opportunities for recreation and enjoyment. This assumption is supported by the results of the

Carson and Mitchell survey, which asked respondents to apportion their willingness to pay values

between improving the quality of local waters - where local waters were defined as those in each

respondent's own state - and improving the quality of non-local waters (i.e., those located out-ofstate). On average, respondents allocated two-thirds of their values to achieving water quality

goals in-state, and one-third to achieving those goals in the remainder of the nation.
4-25

To reflect the considerations noted above, the analysis of the benefits of alternate CAFO

regulations examines water quality improvements on a state-by-state basis and separately

calculates the benefits of in-state and out-of-state improvements, assuming that households will

allocate two-thirds of their willingness to pay values to the improvement of in-state waters. In

addition, the analysis takes into account the extent of each scenario's estimated impacts (i.e., the

number of stream-miles that improve from non-supportive or boatable to fishable, or from nonsupportive, boatable or fishable to swimmable) by scaling household willingness to pay for a

given improvement in the quality of the nation's waters by the proportion of total stream-miles

in-state or out-of-state that are projected to make the improvement. For purposes of these

calculations, the analysis relies on estimates of the 1999 population and the average number of

individuals per household (2.62) as reported in the Statistical Abstract of the United States.

Appendix 4-A provides a detailed summary of the calculations employed.

It is important to note that the valuation process described above does not address a

number of potential improvements in water quality. For example, the analysis assigns no

economic value to improvements in the quality of waters already classified as swimmable under

the baseline scenario; the Carson and Mitchell contingent valuation survey did not examine this

area, and thus provides no basis for valuing such changes. In addition, the analysis does not value

the improvement of non-boatable waters to boatable condition. Although the survey asked

respondents how much they would be willing to pay to avoid a drop in water quality to nonboatable conditions, the definition of non-boatable water quality - "water containing raw sewage,

with strong odors, floating garbage and pathogens that would cause illness through human

contact" - was so extreme that the resulting willingness to pay values may be overstated.

Consequently, EPA has chosen not to employ Carson and Mitchell's estimates of willingness to

pay to maintain boatable water quality in this analysis. EPA is reassessing the boatable level in

the water quality ladder to be more consistent with the language of the Carson and Mitchell study.

Overall, the Agency believes that the benefits calculated here are conservative because they

reflect only swimming and fishing improvements, not boating improvements or improvements

in the quality of waters already considered swimmable.

4.6.3 Estimated Benefits

Exhibit 4-13 presents NWPCAM's estimates of the annual economic benefits associated

with each regulatory scenario. As the table indicates, the estimates range from approximately $5

million per year under Option 1-Scenario 1 to $145 million per year under Option 2-Scenario 4b.

EPA estimates that the annual benefits of the proposed scenarios range from approximately

$108.5 million per year to $127.1 million per year. Roughly 80 percent of these benefits are

derived from improving previously non-fishable waters to fishable status. The remaining benefits

are attributed to improving a smaller number of stream miles to swimmable condition.
4-26

Exhibit 4-13

ANNUAL ECONOMIC BENEFIT OF ESTIMATED

IMPROVEMENTS IN SURFACE WATER QUALITY

(1999 $, millions)

Regulatory Scenario Fishable Swimmable Total Benefits

Waters Waters

Improved to Improved to

Option 1-Scenario 1 $2.8 $2.1 $4.9

Option 1-Scenario 2/3 $3.2 $3.1 $6.3

Option 1-Scenario 4a $3.1 $2.4 $5.5

Option 1-Scenario 4b $3.8 $3.4 $7.2

Option 2-Scenario 1 $71.0 $16.7 $87.6

Option 2-Scenario 2/3* $102.4 $24.7 $127.1

Option 2-Scenario 4a* $84.0 $24.5 $108.5

Option 2-Scenario 4b $115.5 $29.5 $145.0

* Proposed scenarios.

4.7 REFERENCES

Carson, Richard T. and Robert Cameron Mitchell. 1993. "The Value of Clean Water: The

Public's Willingness to Pay for Boatable, Fishable, and Swimmable Water Quality."

Water Resources Research, Vol. 29, No. 7.

Ham, J.M. and T.M. DeSutter. 1999. "Seepage Losses and Nitrogen Export from Swine-Waste

Lagoons: A Water Balance Study." Journal of Environmental Quality. 28:1090-1099.

Kellogg, Robert L., Charles Lander, David Moffitt, and Noel Gollehon. 2000. Manure Nutrients

Relative to the Capacity of Cropland and Pastureland to Assimilate Nutrients: Spatial

and Temporal Trends for the U.S. Forthcoming. U.S. Department of Agriculture,

National Resources Conservation Service. Washington, DC.

Lander, C.H., D. Moffitt, and K. Alt. 1998. Nutrients Available from Livestock Manure

Relative to Crop Growth Requirements. U.S. Department of Agriculture. Natural

Resources Conservation Service. Washington, DC. February.

NPPC (National Pork Producers Council). 1998. Pork facts 1998/1999. Des Moines, IA:

National Pork Producers Council. http://www.nppc.org/PorkFacts/pfindex.html
4-27

Smith, Richard A., Gregory E. Schwarz, and Richard B. Alexander. 1997. "Regional

Interpretation of Water-Quality Monitoring Data." Water Resources Research, Vol. 33,

no. 12. December.

Sobecki, T.M., and M. Clipper. 1999. Identification of Acreage of U.S. Agricultural Land with

a Significant Potential for Siting of Animal Waste Facilities and Associated Limitations

from Potential of Groundwater Contamination, Draft. U.S. Environmental Protection

Agency, Office of Water. December.

USDA/APHIS (Animal and Plant Health Inspection Service). 1995. Swine ‘95. Part III and Part

I: Reference of 1995 Swine Management Practices. October.

USDA/NASS (U.S. Department of Agriculture, National Agricultural Statistics Service). 1999a.

1997 Census of Agriculture. Volume I, Geographic Area Series Part 51. Washington,

DC. March. 

USDA/NASS (U.S. Department of Agriculture, National Agricultural Statistics Service). 1999b.

Cattle Final Estimates 1994-1998. January.

USEPA (U.S. Environmental Protection Agency). 2000a. Technical Development Document for

Proposed Effluent Limitations Guidelines for Animal Feeding Operations. Office of

Water.

USEPA (U.S. Environmental Protection Agency). 2000b. Estimation of National Surface Water

Quality Benefits of Regulating Concentrated Animal Feeding Operations (CAFOs) Using

the National Water Pollution Control Assessment Model (NWPCAM). Office of Water.

July. 
4A-1

Appendix 4-A

NWPCAM CALCULATION OF THE ECONOMIC BENEFITS

OF IMPROVED SURFACE WATER QUALITY

Definitions

N = national benefits of estimated improvements in water quality

S = total benefits of estimated improvements in water quality for residents of state "j" j

B = benefits of in-state improvements in water quality for residents of state "j" (l, j)

B = benefits of out-of-state improvements in water quality for residents of state "j" (n, j)

M = total stream-miles in state "j" j

M = total stream-miles outside state "j" n

M = stream-miles in state "j" that achieve water quality improvement "x" (x, j)

M = stream-miles outside state "j" that achieve water quality improvement "x" (x, n)

H = total households in state "j" j 

WTP = average household willingness to pay for water quality improvement "x" x

Calculations

 

N = 3 Sj

 

J

Sj = B(l, j) + B(n, j)

 

B = 3 (M / M )(H )(WTP )(2/3) (l, j) (x, j) j j x

 

X

B = 3 (M / M )(H )(WTP )(1/3) (n, j) (x, n) n j x

 

 X
 For example, in 1998, the release of manure into the West Branch of Wisconsin's

39

Pecatonica River resulted in a complete kill of smallmouth bass, catfish, forage fish, and all but the

hardiest insects in a 13-mile reach.

 For example, in 1996, the gradual runoff of manure into Atkins Lake, a shallow lake in

40

Arkansas, resulted in a heavy algae bloom that depleted the lake of oxygen, killing many fish.

5-1

REDUCED INCIDENCE OF FISH KILLS CHAPTER 5

___________________________________________________________________________

5.1 INTRODUCTION

Episodic fish kills resulting from manure runoff, spills, and other discharges from AFOs

remain a serious problem in the United States. As described in Chapter 2, large releases of

nutrients, pathogens, and solids from AFOs can cause sudden, extensive kill events. In less

39

dramatic cases, nutrients contained in runoff from AFOs can trigger increases in algae

growth—often called algae blooms—that reduce concentrations of dissolved oxygen in water and

can eventually cause fish to die.40

In addition to killing and harming fish directly, pollution from AFOs can affect other

aquatic organisms that in turn harm fish. In particular, the Eastern Shore of the United States has

been plagued with problems related to Pfiesteria, a dinoflagellate algae that, under certain

circumstances, can transform into a toxin that attacks fish, breaking down their skin tissue and

leaving lesions or large, gaping holes that often result in death. The transformation of Pfiesteria

to its toxic form is believed to be the result of high levels of nutrients in water. Fish kills related

to Pfiesteria in North Carolina's Neuse River have been blamed on waste spills and runoff from

the state's booming hog industry.
 EPA's database incorporates records on fish kills obtained from the Natural Resources

41

Defense Council (NRDC) and the Izaak Walton League (IWL).

For instance, in 1995 the Raleigh News & Observer reported a 1991 manure spill incident 42

in the North Carolina town of Magnolia that neither the town nor the responsible farm reported to

state water quality officials.

5-2

This chapter examines the damages attributable to AFO-related fish kills and estimates

the economic benefits that revised CAFO standards would provide in reducing such incidents.

As explained below, the analysis employs state data on historical fish kill events, combined with

predicted reductions in the frequency of such events under alternate regulatory scenarios, to

estimate the decrease that would occur in the number of fish killed annually in AFO-induced

incidents. It then employs data on average fish replacement costs to develop a conservative

estimate of the economic benefits associated with the predicted reduction in fish kill incidents.

5.2 ANALYTIC APPROACH

5.2.1 Data Sources and Limitations

Data on fish kill incidents are limited, with no consistent collection and reporting

requirements and no national repository of fish kill data. States are not required to report fish

kills to EPA. As a result, EPA does not maintain a comprehensive database detailing the

frequency or severity of fish kill events.

Despite the lack of EPA reporting requirements, many states do record information on fish

kills. For purposes of this analysis, EPA has compiled a database of fish kill events in 19 states.

This database incorporates a range of information on each incident. Exhibit 5-1 lists the 19 states

included in the database, the years for which data from each state were obtained, and the average

number of fish kill events reported by each state annually.41

As Exhibit 5-1 indicates, the data upon which this analysis relies are not comprehensive.

The fish kill database excludes 31 states, including several, such as Oklahoma, that host a

relatively large number of AFOs. The period of time for which data were obtained also varies

from state to state; the information collected from some states, such as Missouri, covers nearly

two decades, while that collected from others, such as West Virginia, covers only a few years.

In addition, even in the states and years for which data were collected, it is likely that some fish

kill events remain unreported, particularly if they occurred in remote areas. These data gaps

42

introduce considerable uncertainty into the analysis.
5-3

Exhibit 5-1

FISH KILL EVENT DATA OBTAINED BY EPA

State Data Number of Recorded

 Years for which Average Annual

were Obtained Events

Arkansas 1995-1999 8.6

Illinois 1987-1999 14.0

Indiana 1994-1999 27.2

Iowa 1981-1998 26.3

Kansas 1990-1999 15.7

Kentucky 1995-1998 15.5

Minnesota 1981-1991 23.9

Mississippi 1990-1998 18.6

Missouri 1980-1999 125.3

Montana 1994-1998 1.8

Nebraska 1991-1998 22.1

New Mexico 1995-1998 4.8

New York 1984-1996 18.0

North Carolina 1994-1998 41.2

Ohio 1995-1998 20.3

South Carolina 1995-1998 5.5

Texas 1990-1998 114.7

West Virginia 1995-1997 6.0

Wisconsin 1988-1998 6.4

Total 515.9

In addition to the data gaps cited above, the analysis is limited by inconsistencies in the

information collected in state fish kill reports. Some states appear to have established consistent

guidelines for investigating a kill, which often include reporting the number of stream miles or

lake acres affected, estimating the number of fish killed, describing the exact location of the kill,

identifying the source of the pollutants suspected to have caused the kill, and obtaining water
 This may be due to a variety of circumstances. In some cases, the report may accurately 43

indicate an event in which contamination occurred (such as a manure spill or municipal waste

release) but no fish were killed. In other cases, a record may indicate zero fish killed simply because

investigators were unable to develop a count (e.g., because the number killed was too great to count,

or because the investigation was conducted too late to determine the number killed).

5-4

quality samples for testing. Other states appear to gather information on an ad hoc basis. In

addition, the data present a number of anomalies or other limitations. For example, 25 percent

of the records included in EPA's database give no estimate of the number of fish killed or provide

only a qualitative description of the incident's magnitude. Another 13 percent of the records

indicate that the number of fish killed in the event was zero. In addition, most reports do not 43

indicate the type(s) of fish killed.

Despite the apparent limitations of these data, they are useful for purposes of this analysis.

EPA's database is the most comprehensive source of information on fish kill events currently

available, and in most instances characterizes the source of the pollutants that caused individual

fish kill events. Thus, EPA can apply these data to characterize a baseline of kill events

potentially attributable to pollution from AFOs.

5.2.2 Predicted Change in Fish Kills Under Alternate CAFO Regulations

To estimate the potential benefits of alternate CAFO regulations in reducing fish kill

incidents, EPA’s analysis must first assess the current — or baseline — number of AFO-related

fish kills. It must then determine the impact of alternate regulatory scenarios in reducing these

incidents. EPA's approach to this analysis is described below.

5.2.2.1 Baseline Scenario

The EPA database records fish kill events attributable to a wide range of sources and

causes, the classification of which varies from state to state. Exhibit 5-2 lists the sources and

causes that are potentially associated with AFOs, and indicates EPA's assessment of the strength

of the association; i.e., whether the Agency considers the link to AFOs to be definite or possible.

Based on this assessment of sources and causes, EPA reviewed the data on each reported event,

identifying fish kills positively or possibly attributable to pollution from AFOs. Exhibit 5-3

presents the results of this evaluation. As the exhibit indicates, EPA's database lists 589 fish kill

events that are positively or possibly attributable to pollution from AFOs. These incidents killed

a reported total of approximately 4.2 million fish. Based on these data, EPA estimates that in the

states evaluated, incidents positively attributable to pollution from AFOs kill an average of 351
 EPA estimates the average number of fish killed annually in the 19 states of record by

44

dividing the total number of fish killed in each state by the number of years for which data from the

state are reported. EPA then sums the state averages to obtain the annual average for all 19 states.

5-5

thousand fish per year. In addition, incidents possibly attributable to pollution from AFOs kill,

on average, another 40 thousand fish annually. In total, the database indicates that in the 19

states analyzed, pollution from AFOs may kill an average of 391 thousand fish each year.44

Exhibit 5-2

SOURCES AND CAUSES OF FISH KILL EVENTS POTENTIALLY

RELATED TO ANIMAL FEEDING OPERATIONS

Source AFOs Cause AFOs

Relation to Relation to

animal feeding/waste Definite ammonia toxicity Definite

operations

agriculture Possible lagoon breaks Definite

agriculture point source Possible manure Definite

algae related Possible nutrients Definite

algae blooms Possible

dissolved oxygen Possible

employee error Possible

equipment failures Possible

fertilizer Possible

nonpoint source runoff Possible

spills Possible

weather Possible
5-6

Exhibit 5-3

NUMBER OF FISH KILL EVENTS POTENTIALLY

RELATED TO ANIMAL FEEDING OPERATIONS

Cause Operations re Source d n Source Total

Number of Occurrences for Each Source

Animal cultur

Feeding e Algaeand Waste Agricultu Point Relate Unknow

AgriAmmonia Toxicity 8 6 3 - - 17

Ammonia Toxicity/ -

Dissolved Oxygen 96 3 4 -

103

Dissolved Oxygen - 26 1 33 - 60

Employee Error/Manure 3 2 - - - 5

Equipment Failure - 1 - - - 1

Equipment Failure/Manure - 3 - - - 3

Equipment - 1 - - -

Failure/Fertilizer 1

Fertilizer - 24 - - - 24

Lagoon Breaks 5 - - - - 5

Manure 74 158 1 - 110 343

Manure/Dissolved Oxygen - - 2 - - 2

Manure/Weather - 1 - - - 1

Algal Toxins/Algal - 6 - 1 -

Oxygen Deficiency 7

Nonpoint Source Runoff 1 5 - - - 6

Nutrient - 1 - - - 1

Spills 3 - 1 - - 4

Weather - - 3 - - 3

Other / Unknown 1 2 - - - 3

Total: 191 239 15 34 110 589

Note: Numbers in bold indicate fish kill events considered to be definitely induced by AFOs. 
For purposes of this analysis, EPA considers all fish kill events identified as definitely or 45

possibly attributable to AFOs.

 Chapter 4 provides additional detail on the RF3 and RF3 Lite datasets. 46

5-7

5.2.2.2 Regulatory Scenarios

Due to time and resource constraints, EPA has not conducted a detailed analysis of the

impact of alternate CAFO standards on the frequency or severity of fish kill events. It is likely,

however, that the implementation of new regulations would have a number of beneficial effects.

For example, because more AFOs would be subject to regulation as CAFOs, the number of fish

kill incidents caused by lagoon breaks and similar catastrophic events would likely diminish. In

addition, the improvements in manure management practices required under the new regulations

would likely reduce the chronic discharge of nutrients to the nation's waters, and thus reduce the

number of fish killed as a result of severe eutrophication.

In lieu of more detailed modeling, EPA has attempted to develop a reasonable estimate of

the impact of alternate CAFO standards on fish kills. The analysis begins with EPA's estimate of

the number of fish killed annually by releases from AFOs. EPA multiplies this figure by the

45

anticipated percentage reduction in nutrient loadings from the animal feeding operations modeled

by NWPCAM (see Chapter 4). The resulting value, for each regulatory scenario, represents an

estimate of the reduction in the number of fish killed annually by releases from AFOs.

Because the relationship between nutrient loadings and fish kill events is complex, this

approach provides only a rough approximation of the beneficial impacts of alternate regulations.

To reflect the underlying uncertainty, the analysis employs two different scaling factors:

• the percentage reduction in phosphorus loadings; and

• the percentage reduction in nitrogen loadings.

Exhibit 5-4 summarizes the estimated percentage reduction in nitrogen and phosphorus loadings

under each regulatory scenario. The values reported are those estimated by NWPCAM for the

full RF3 set of rivers and streams. The analysis uses these values, rather than those reported for

the RF3 Lite subset, in order to reflect changes in loadings to small as well as large rivers and

streams.46
5-8

Exhibit 5-4

REGULATORY SCENARIO SCALING FACTORS

Regulatory Scenario Reduction Reduction

Percent Nitrogen Percent Phosphorus

Option 1/Scenario 1 18.10 45.53

Option 1/Scenario 2/3 23.02 59.79

Option 1/Scenario 4a 21.82 56.51

Option 1/Scenario 4b 25.66 63.00

Option 2/Scenario 1 34.55 55.22

Option 2/Scenario 2/3* 43.00 72.06

Option 2/Scenario 4a* 41.48 68.81

Option 2/Scenario 4b 47.24 77.40

* Proposed scenarios

Based on the methods described above, EPA estimates the anticipated reduction in fish kills

under each of the regulatory scenarios. Exhibit 5-5 presents the results. As the exhibit shows, EPA

estimates that under the proposed scenarios, the reduction in fish killed annually would range from

162 thousand to 282 thousand.

Exhibit 5-5

ESTIMATED REDUCTION IN THE NUMBER OF FISH KILLED

ANNUALLY DUE TO RELEASE OF POLLUTANTS FROM AFOs

(thousands)

Regulatory Scenario Nitrogen Reduction Phosphorus Reduction 

Scaling Factor

Option 1/Scenario 1 71 178

Option 1/Scenario 2/3 90 234

Option 1/Scenario 4a 85 221

Option 1/Scenario 4b 100 247

Option 2/Scenario 1 135 216

Option 2/Scenario 2/3* 168 282

Option 2/Scenario 4a* 162 269

Option 2/Scenario 4b 185 303

*Proposed scenarios

5.2.3 Valuation of Predicted Reduction in Fish Kills

The economic damages that stem from natural resource injuries like fish kills include the

costs of restoring the resource to its prior state, any interim lost use values (e.g., the economic value

of lost fishing days from the time the damage occurs until fish stocks are restored), and any interim
 The analysis employs fish replacement costs as a proxy measure for valuing anticipated

47

reductions in fish kill incidents. The approach does not presume that all fish killed would necessarily

be restocked.

 To adjust replacement costs to 1999 dollars, EPA applies the Gross Domestic Product

48

deflator. 

 To bound the potential uncertainty associated with fish replacement costs, the analysis also

49

develops benefits estimates based on the averages of the minimum and maximum replacement costs

reported for each species. Appendix 5-A presents the results of this analysis.

5-9

lost non-use values. Unfortunately, estimating these values for a large number of heterogeneous

fish kill events nationwide is infeasible without a significant investment of analytic resources.

Determining full habitat restoration costs requires a case-by-case assessment of the nature of the

injury and the restoration options available, while estimating interim lost non-use values requires

the use of stated preference techniques to explore people's willingness to pay to avoid temporary

depletions of fish stocks and associated damage to fish habitat. The economics literature does

provide estimates of potential lost use values— e.g., willingness to pay for another day of fishing

or willingness to pay for an additional fish caught—that could, theoretically, be applied to the

analysis using a benefits transfer approach. This assessment, however, would need to make general

assumptions about a number of highly variable site-specific factors, such as the duration of the

reduction in fish stocks, the effect of this reduction on recreational fishing activity in the affected

areas, and the availability and characteristics of alternative fishing areas. Thus, an evaluation of

interim lost use values would be subject to considerable uncertainty.

Because of the difficulties cited above, this analysis takes a simplified approach, estimating

the economic benefits of reducing the frequency of fish kills based on one component of resource

restoration costs: the replacement cost of the fish. Specifically, the analysis employs replacement

cost estimates presented in a report developed by the American Fisheries Society (AFS, 1990).

These replacement values incorporate the cost of raising fish at a hatchery, transporting them, and

placing them in the water. As such, they provide a conservative estimate of the economic benefits

of reducing the incidence of fish kills.47

The American Fisheries Society report provides replacement cost estimates for a variety

of fish species and size categories. Unfortunately, the available data on fish kills do not always

indicate the species of fish affected, and generally do not report mortality by size of fish. In light

of these limitations, EPA applies a general fish replacement cost estimate, derived by selecting

species known to have been killed in incidents related to AFOs and averaging reported replacement

costs for these species across all size classes. The resulting average replacement cost employed

in the analysis equals $1.31 per fish ($1999). To value the benefits of each regulatory scenario, 48

the analysis simply multiplies this average replacement cost by the corresponding estimated

reduction in the number of fish killed each year.49
5-10

5.3 RESULTS

Exhibit 5-6 presents estimates of the annual benefits attributable to the reduced incidence

of fish kills under each of the regulatory scenarios. As the exhibit indicates, these benefits range

from $93 thousand to $397 thousand, depending upon the regulatory option considered and the

scaling factor employed. Annual benefits under the proposed scenarios are estimated to range from

$213 thousand to $369 thousand.

Exhibit 5-6

ESTIMATED ANNUAL BENEFITS 

ATTRIBUTED TO REDUCTION IN FISH KILLS

($1999, thousands)

Regulatory Scenario Nitrogen Reduction Phosphorus Reduction

Scaling Factor

Option 1/Scenario 1 $93 $233

Option 1/Scenario 2/3 $118 $306

Option 1/Scenario 4a $112 $290

Option 1/Scenario 4b $132 $323

Option 2/Scenario 1 $177 $283

Option 2/Scenario 2/3* $220 $369

Option 2/Scenario 4a* $213 $353

Option 2/Scenario 4b $242 $397

*Proposed scenarios

5.4 LIMITATIONS AND CAVEATS

EPA's analysis of the benefits of alternate CAFO regulations in reducing fish kills is subject

to numerous data gaps and uncertainties. In the face of these uncertainties, the analysis employs

a number of simplifying assumptions. The major limitations of the analysis are summarized below.

• The scope of the analysis is limited to 19 states. The data available from

these states may not include all fish kill events, and the data on reported

incidents often fail to include estimates of the number of fish killed.

Therefore, EPA's baseline estimate is likely to understate the number of fish

kill events and the total number of fish killed nationwide each year in

incidents related to pollution from AFOs.
5-11

• EPA has not undertaken a detailed analysis of the impact of alternate

regulatory scenarios on the incidence of fish kills. In lieu of a detailed

analysis, EPA assumes that fish kills attributable to releases of pollution

from AFOs will be reduced in proportion to estimated reductions in

loadings of nutrients from AFOs. The direction and magnitude of bias

associated with these assumptions is unknown.

• To value estimated reductions in fish kill incidents, the analysis applies an

estimate of average fish replacement costs. Because this proxy measure

ignores other aspects of the economic damages associated with fish kills

(i.e., habitat restoration costs, interim lost use values, and interim lost nonuse values), it likely understates the economic benefit of reducing fish kill

incidents.

5.5 REFERENCES

AFS. 1993. American Fisheries Society Socioeconomics Section, Sourcebook for Investigation

and Valuation of Fish Kills.

Griffiths, Charles and Cynthia Morgan. 2000. "Benefits of Avoiding Fish Kills by Regulating

Livestock Waste," National Center for Environmental Economics, U.S. Environmental

Protection Agency.

Warrick, Joby and Pat Smith. 2000. The News & Observer, "New studies show that lagoons are

leaking: Groundwater, rivers affected by waste," Sunday, February 19, 1995, obtained from:

http://www.nando.net/sproject/hogs/1water.html, June 28.
5A-1

Appendix 5-A

CALCULATION OF ANNUAL BENEFITS USING

MINIMUM AND MAXIMUM FISH REPLACEMENT VALUES

Replacement values for a fish species can vary significantly depending on the size class of

the fish. This appendix presents the results of the benefits assessment using averages of the

minimum and maximum replacement values reported for each fish species. The average minimum

and maximum replacement costs equal $0.28 and $2.37 ($1999), respectively. Exhibit 5A-1

presents annual benefit estimates based upon the minimum fish replacement cost; annual benefits

for the proposed scenarios in this case range between $45 and $79 thousand. Exhibit 5A-2 presents

annual benefit estimates based on the maximum replacement cost; in this case, annual benefits

under the proposed scenarios range from $385 to $668 thousand.

Exhibit 5A-1

ESTIMATED ANNUAL BENEFITS 

ATTRIBUTED TO REDUCTION IN FISH KILLS:

MINIMUM REPLACEMENT COST

($1999, thousands)

Regulatory Scenario Nitrogen Reduction Phosphorus Reduction

Scaling Factor

Option 1/Scenario 1 $20 $50

Option 1/Scenario 2/3 $25 $66

Option 1/Scenario 4a $24 $62

Option 1/Scenario 4b $28 $69

Option 2/Scenario 1 $38 $60

Option 2/Scenario 2/3* $47 $79

Option 2/Scenario 4a* $45 $75

Option 2/Scenario 4b $52 $85

*Proposed scenarios
5A-2

Exhibit 5A-2

ESTIMATED ANNUAL BENEFITS 

ATTRIBUTED TO REDUCTION IN FISH KILLS:

MAXIMUM REPLACEMENT COST

($1999, thousands)

Regulatory Scenario Nitrogen Reduction Phosphorus Reduction

Scaling Factor

Option 1/Scenario 1 $168 $422

Option 1/Scenario 2/3 $213 $554

Option 1/Scenario 4a $202 $524

Option 1/Scenario 4b $238 $584

Option 2/Scenario 1 $320 $512

Option 2/Scenario 2/3* $399 $668

Option 2/Scenario 4a* $385 $638

Option 2/Scenario 4b $438 $718

*Proposed scenarios
6-1

IMPROVED COMMERCIAL SHELLFISHING CHAPTER6

______________________________________________________________________________

6.1 INTRODUCTION

The National Oceanic and Atmospheric Administration (NOAA) has identified pathogen

contamination of U.S. coastal waters as a leading cause of government restrictions on commercial

shellfish harvesting. Among the sources of pollution that contribute to such contamination are

animal feeding operations (AFOs) and runoff from agricultural lands. This chapter estimates the

impact of pollution from AFOs on commercial access to shellfish growing waters, the resulting

impact on commercial shellfish harvests, and the potential increase in harvests that would result

under alternate approaches to regulating the discharge of pollutants from CAFOs. It then uses

available estimates of consumer demand for shellfish to calculate the economic benefits associated

with the predicted increase in commercial shellfish harvests under each regulatory scenario.

6.2 ANALYTIC APPROACH

6.2.1 Data on Shellfish Harvest Restrictions Attributed to AFOs

EPA's analysis of the impact of pollution from AFOs on shellfish harvests is based on

information from The 1995 National Shellfish Register of Classified Growing Waters (NOAA,

1997) and related databases. NOAA produces the Register, which is published every five years,

in cooperation with the nation's shellfish-producing states, federal agencies such as the U.S. Food

and Drug Administration (FDA), and the Interstate Shellfish Sanitation Conference (ISSC). Its

purpose is to summarize the status of shellfish-growing waters under the National Shellfish

Sanitation Program (NSSP), which ISSC administers. The NSSP establishes comprehensive

guidelines to regulate the commercial harvesting, processing, and shipment of shellfish. These

guidelines include the measurement of fecal coliform concentrations as an indicator of pollution

in shellfish-growing waters. Based in large part upon these measurements, shellfish-growing areas

are designated as approved, conditionally approved, restricted, conditionally restricted, prohibited,

or unclassified, and subjected to appropriate harvest and processing standards. Exhibit 6-1

describes these standards for each designation.
6-2

Exhibit 6-1

NSSP STANDARDS FOR CLASSIFIED SHELLFISH GROWING WATERS

Classifi Description Standard

cation

1

Approv Growing waters from which shellfish may be MPN may not

ed Waters harvested for direct marketing. exceed 14 per 100 ml, and

not more than 10 percent

of the samples may

exceed an MPN of 43 per

100 ml for a 5-tube

decimal dilution test.

Conditi Growing waters meeting the approved

onally Approved classification standards under predictable conditions. 

Waters These waters are open to harvest when water quality

standards are met. At all other times these waters are

closed.

Restrict Growing waters from which shellfish may be MPN may not

ed Waters harvested only if they are relayed or depurated before exceed 88 per 100 ml, and

direct marketing. not more than 10 percent 2

of the samples may

exceed an MPN of 260

per 100 ml for a 5-tube

decimal dilution test.

Conditi Growing waters that do not meet the criteria for

onally Restricted restricted waters if subjected to intermittent

Waters microbiological pollution, but may be harvested if

shellfish are subjected to a suitable purification process.

Prohibit Growing waters from which shellfish may not be NA

ed Waters harvested for marketing under any conditions.

Unclassi Growing waters that are part of a state's shellfish NA

fied Waters program but are inactive (i.e., there is no harvesting) and

unmonitored.

Source: National Oceanic and Atmospheric Administration, The 1995 National Shellfish Register of

Classified Growing Waters, obtained from: http://seaserver.nos.noaa.gov/projects/95register/,

11 June 2000.

Notes:

MPN = fecal coliform most probable number (median or geometric mean). 1

The process of relaying shellfish refers to the transfer of shellfish from restricted waters to

2

approved waters for natural biological cleansing using the ambient environment as a treatment

system, usually for a minimum of 14 days before harvest. Depuration is the process of removing

impurities by placing the contaminated shellfish in clean water for a period of time.
The Shellfish Register includes data for the following states: Alabama, California,

50

Connecticut, Delaware, Florida, Georgia, Louisiana, Massachusetts, Maryland, Maine, Mississippi,

North Carolina, New Hampshire, New Jersey, New York, Oregon, Rhode Island, South Carolina,

Texas, Virginia, and Washington.

6-3

The 1995 Shellfish Register provides information on 21.4 million acres of estuarine and nonestuarine commercial shellfish-growing waters as of January 1, 1995. A companion CD contains

a GIS-based database of the location of all 4,320 shellfish growing areas in 21 coastal states, the

acreage of each growing area, and the species harvested. These species are classified into 13

50

categories of clams, four categories of oysters, six categories of mussels, and two categories of

scallops. In most cases, each category represents a unique species (e.g., Blue Mussel (Mytilus

edulis)), but in some instances a category may include two or more species (e.g., Other Mussels

(Mytilus galloprovincialis and Mytilus edulis)). The types of species harvested vary geographically,

with large differences between the East and West Coasts.

In addition to the data described above, the shellfish database notes for each growing area

any harvest limitations imposed and the known or possible source(s) of pollutants causing any

impairment. The list of pollutant sources includes both “Animal Feedlots” and “Agriculture

Runoff.” Sources of impairment are further classified as actual or potential contributors. If a source

is listed as an actual contributor, its significance as a cause of impairment is rated as high, medium,

or low. Exhibit 6-2 shows the acreage of shellfish-growing waters that are potentially or known to

be impaired by pollution from AFOs and/or agricultural runoff. As the exhibit indicates, AFOs

and/or agricultural runoff are known or potential contributors to the impairment of more than 1.6

million acres of shellfish-growing waters.
6-4

Exhibit 6-2

SHELLFISH HARVEST LIMITATIONS BY REGION

Region Acres Acres Runoff

Approved Limited Agricultural

Harvest- AFOs and/or

Harvest-Limited

Acres with

Impacts from

North Atlantic (MA, ME, NH) 2,920,575 714,191 33,626

Middle Atlantic (CT, DE, MD, NJ, NY, RI, VA) 4,969,680 973,715 100,284

South Atlantic (FL, GA, NC, SC) 3,505,729 1,751,844 660,679

Gulf of Mexico (AL, LA, MS, TX) 3,238,431 3,067,730 718,828

Pacific (CA, OR, WA) 206,574 214,494 96,296

Total 14,840,989 6,721,975 1,609,713

Discrepancies between reported totals and sum of regional totals are due to rounding. 

Source: U.S. National Oceanic and Atmospheric Administration, The 1995 National Shellfish Register of

Classified Growing Waters, U.S. Department of Commerce, Silver Spring, MD, August 1997.

6.2.2 Estimated Impact on Shellfish Harvests

As a causal factor in the imposition of government restrictions or prohibitions on shellfish

harvesting, pollution from AFOs likely serves to reduce shellfish landings below levels that would

otherwise be realized. To evaluate the potential beneficial effects of new CAFO regulations, EPA's

analysis begins by estimating the adverse impacts currently attributable to pollution from AFOs. The

approach to this analysis involves the following steps.

• Step 1: characterize current, or baseline, annual shellfish landings.

• Step 2: estimate the area of shellfish-growing waters from which current

landings are harvested.

• Step 3: calculate the average annual per-acre yield of shellfish from

harvested waters.

• Step 4: estimate the area of shellfish-growing waters that are currently

unharvested as a result of pollution from AFOs.
 The calculation of the mean ignores years for which harvest data for a particular species 51

are unavailable. If landings in these years were actually zero, this approach will overstate average

annual landings.

6-5

• Step 5: estimate the foregone harvest, i.e., the potential annual harvest of

shellfish from waters that are currently unharvested as a result of pollution

from AFOs.

Each of these steps is described in greater detail below.

6.2.2.1 Baseline Annual Shellfish Landings

To characterize the baseline quantity (Q0) of shellfish harvested in each coastal state, the

analysis relies on data collected by NOAA’s National Marine Fisheries Service (NMFS), which

reports commercial fishing harvests by state, year, and species (NMFS, 2000). NMFS maintains

complete commercial harvest data on various species of clams, mussels, oysters and scallops for each

state. The data consist of total pounds harvested and total ex-vessel revenues for harvested species.

The data are provided as state-wide totals only and do not disaggregate harvest quantities between

shellfish growing areas within each state. For the purpose of this analysis, EPA obtained shellfish

harvest data by species and state for the five most recent years available: 1994 through 1998. The

analysis employs the mean of the reported annual values for each species and state to characterize

shellfish harvests under baseline conditions.51

6.2.2.2 Estimated Acreage of Harvested Waters

The available data do not indicate the distribution of shellfish landings from waters that the

1995 Shellfish Register identifies as approved, conditionally approved, restricted, or conditionally

restricted. For purposes of this analysis, EPA assumes that baseline landings are harvested primarily

from approved or conditionally approved waters. Thus, in a given state (j), the area of shellfish

growing waters assumed to be harvested is determined by the following calculation:

Acres Harvested(j) = Acres Approved(j) + Acres Conditionally Approved(j)
In addition, NOAA staff who maintain the Register suggest that difficulty in pinpointing 52

the source of pollution often results in classifying impacts from AFOs under the more general

heading of "Agriculture Runoff." Personal communication with Jamison Higgins, NOAA, April 12,

1999.

6-6

6.2.2.3 Average Annual Yield of Harvested Waters

To calculate the average annual yield (Y) of harvested waters for a given species (n) in a

given state (j), the analysis simply divides the annual baseline harvest (Q0) for that species and state

by the acres assumed to be harvested:

Y(n,j) = Q0(n,j)/Acres Harvested(j)

This calculation provides an estimate of the pounds of shellfish landed per year from harvested

waters.

6.2.2.4 Characterization of Waters that are 

Unharvested due to Pollution from AFOs

The next step in the analysis is to estimate the area of shellfish-growing waters that are

currently unharvested due, at least in part, to pollution from AFOs. Consistent with the approach

outlined thus far, EPA assumes that waters classified in the 1995 Shellfish Register as restricted,

conditionally restricted, or prohibited are essentially unharvested. Thus, in a given state (j), the area

of shellfish growing waters assumed to be unharvested is determined by the following calculation:

Acres Unharvested(j) = Acres Restricted(j) + Acres Conditionally Restricted(j) + Acres Prohibited(j)

This calculation, however, includes all impaired waters. To identify areas impaired, in whole or in

part, by pollution from AFOs, EPA's analysis considers two cases. Under Case 1, EPA evaluates

only those shellfish-growing waters for which AFOs are specifically identified as a contributing

source of impairment. Under Case 2, EPA expands the analysis to include shellfish-growing waters

that the Register identifies as impaired, in whole or in part, by AFOs and/or agricultural runoff. The

inclusion of Case 2 is justified by the classification of shellfish-growing waters on the basis of fecal

coliform levels. To the extent that agricultural runoff causes elevated fecal coliform counts, animal

manure, potentially from AFOs, is the likely contributing factor.52
6-7

6.2.2.5 Estimated Impact of Pollution from

AFOs on Commercial Shellfish Landings

To characterize the impact of pollution from AFOs on commercial shellfish landings, it is

first necessary to estimate the potential yield of impaired shellfish growing areas. For purposes of

this analysis, EPA assumes that the average annual yield from harvested waters, as calculated above,

is representative of the potential annual yield from impaired waters. Thus, the foregone harvest (Q )F

from an area of any size for a given species (n) in a given state (j) is calculated as follows:

QF(n,j) = Y(n,j) x Acres Unharvested(j)

It would be inappropriate, however, to assume that pollution from AFOs accounts for the

entire foregone harvest. The Shellfish Register identifies AFOs and/or agricultural runoff as a source

of impairment for only a subset of impaired growing waters. Moreover, even in situations where

AFOs and/or agricultural runoff contribute to impairment, they are not necessarily the sole source

of impairment. Under these circumstances, it is difficult to characterize the marginal impact of

pollution from AFOs and/or agricultural runoff on annual shellfish harvests.

To address this concern, EPA relies on the Shellfish Register's characterization of the

significance of pollution from AFOs and/or agricultural runoff as a source of impairment. As noted

above, the Register indicates whether a source is an actual or potential contributor to impairment,

and when identified as an actual contributor notes the overall importance of the source (i.e., high,

medium, or low). EPA uses this information to characterize the marginal impact of pollution from

AFOs and/or agricultural runoff on shellfish harvests. It does so by subjectively assigning a

weighting factor that varies with the contribution of AFOs and/or agricultural runoff to impairment

of a given shellfish growing area; Exhibit 6-3 summarizes the weighting factors employed. EPA

then applies these weighting factors to estimates of the foregone harvest (Q ) from each shellfish- F

growing area to estimate the marginal impact of pollution from AFOs and/or agricultural runoff on

annual shellfish harvests. Mathematically, the harvest of a given species that EPA estimates as lost

due to pollution from AFOs and/or agricultural runoff (Q ) in an impaired area is simply the product A

of the foregone harvest of the species from the area (Q ) and the appropriate weighting factor(W): F

QA = QF x W

Summing QA across all impaired shellfish growing areas in a given state provides EPA's estimate

of the marginal impact of pollution from AFOs and/or agricultural runoff on annual commercial

harvests of each shellfish species.
6-8

Exhibit 6-3

WEIGHTING FACTORS EMPLOYED TO CHARACTERIZE

THE IMPACT OF AFOs AND AGRICULTURAL RUNOFF ON HARVESTS

FROM IMPAIRED SHELLFISH-GROWING WATERS

Significance of Source Weighting Factor

 Not a contributor .00

Potential contributor .25

Actual contributor (low) .50

Actual contributor (medium) .75

Actual contributor (high) 1.0

6.2.3 Estimated Impact of Alternate Regulations

on Commercial Shellfish Harvests

The next step in EPA's analysis is to estimate the impact of alternate CAFO regulatory

scenarios on commercial shellfish harvests. To do so, EPA employs information obtained from the

surface water quality modeling effort described in Chapter 4. The modeling exercise does not extend

to estuaries or near-coastal waters, where most commercial shellfish-growing areas are located;

however, it does consider the impact of each regulatory scenario on fecal coliform counts associated

with pollution from AFOs. Since classification of shellfish-growing areas is based in part on

measurement of fecal coliform counts, the estimated impact of alternate regulatory scenarios on this

measure of water quality in upstream areas provides a reasonable proxy for characterizing potential

changes downstream.

EPA's approach to estimating the beneficial impacts of new CAFO regulations on

commercial shellfish harvests assumes that the adverse impact of pollution from AFOs will be

reduced in proportion to modeled reductions in fecal coliform pollution attributable to AFOs. The

details of this approach are described below.

• First, EPA assigns each coastal state included in the shellfish analysis to one

of the 18 hydroregions that EPA's water quality model evaluates. In all but

one case, the entire coastline of each state falls within a single hydroregion.

The sole exception, Virginia, was assigned to the hydroregion that

encompasses the majority of its coastline.
 Regional estimates of changes in fecal coliform counts are only available for NPDES

53

Scenarios 1, 2/3, and 4b. For purposes of characterizing changes in fecal coliform counts under

NPDES Scenario 4a, EPA employs the estimated percentage reduction nationwide.

As discussed in Chapter 3, the concept of consumer surplus is based on the principle that 54

some consumers benefit at current prices because they are able to purchase a good at a price that is

less than the amount they are willing to pay.

Anecdotal evidence suggests that some shellfishing areas are leased by municipalities to 55

individual enterprises with sole rights to harvest the area. In these cases, the limits on competition

could lead to positive producer surplus. The extent of this practice, however, is unclear.

6-9

• Next, for each hydroregion/state, EPA calculates the percentage reduction in

fecal coliform counts predicted under each regulatory scenario.53

• Third, EPA multiplies its estimates of the percentage reduction in fecal

coliform counts attributable to AFOs by its previously developed estimates

of the impact of pollution from AFOs and/or agricultural runoff on shellfish

harvests (Q ). This calculation was performed separately for each species A

and state. The result, Q , represents the incremental increase in harvest R

associated with each regulatory alternative.

Adding QR to baseline harvests (Q0) yields an estimate of annual shellfish harvests following

implementation of revised CAFO regulations (Q1). This calculation is performed for each state and

species. Thus:

Q1(n,j) = Q0(n,j) +QR(n,j)

6.2.4 Valuation of Predicted Change in Shellfish Harvests

The appropriate measure of the economic benefits of an increase in commercial shellfish

harvests is the welfare gain (i.e., the change in producer and consumer surplus) associated with the

increased harvest. For purposes of this analysis, EPA focuses solely on changes in consumer

surplus. This focus is necessary because the information required to evaluate any changes in

54

producer surplus that might result from an increase in shellfish harvests (i.e., a long-run supply curve

for each species harvested) is difficult to obtain. In addition, the shellfish harvesting industry is to

a significant extent characterized by regulated harvest levels and unregulated harvester effort (i.e.,

open access fisheries). Generally accepted natural resource economics theory suggests that, in open

55

access fisheries, overcapitalization leads to zero producer surplus. Thus, although shellfish

harvesting is not entirely open access, any producer surplus in the industry is likely to be small, and

any changes in producer surplus brought about by new CAFO regulations is likely to be minor.
6-10

 

Price

 Quantity

Exhibit 6-4

CONSUMER DEMAND AND CONSUMER SURPLUS

To calculate the change in consumer surplus associated with an increase in commercial

shellfish harvests, the analysis makes use of information on consumer demand. Exhibit 6-4

illustrates a simple demand curve. The demand curve is the downward sloping solid line labeled D,

and the initial quantity sold is the dashed, vertical line at Q . The intersection of these two lines 0

gives the price at which quantity Q0 is sold. This price is marked as P0 and represented by the dashed

horizontal line. The consumer surplus for quantity Q0 is the area below the demand curve and above

the horizontal line at P . That is, the consumer surplus for Q is the area labeled “C” in Exhibit 6-4. 0 0

The measurement of the benefits of revised CAFO regulations relies on the assumption that

a decrease in the contamination of shellfish-growing waters would increase commercial access to

shellfish beds, and thus increase the quantity of shellfish supplied to consumers (i.e., an increase

from Q to Q ). This in turn would result in a lower market price for shellfish (i.e., P ). The benefit 0 1 1

to consumers can be determined based on the old and new prices and quantities. Before the change,

the area labeled “C” in Exhibit 6-4 measures consumer surplus. After the change, consumer surplus

is measured by the area of A+B+C. Thus, the difference in consumer surplus between these

scenarios (i.e., Area A + Area B) is the additional consumer surplus attributable to the proposed rule

and the appropriate economic measure of benefits to consumers.
The price elasticity of demand represents the percentage change in demand for a good

56

brought about by a one percent change in its price; thus, a price elasticity of -2 implies that a one

percent increase in price will result in a two percent decrease in demand.

 EPA adjusts reported revenues to 1999 dollars using the Consumer Price Index. For

57

purposes of calculating P0, EPA considers only those years for which harvest and revenue data are

available.

6-11

6.2.4.1 Characterization of Consumer Demand for Shellfish

Analysis of the changes in consumer surplus that might result from an increase in shellfish

harvests requires an understanding of the effect of an increased harvest on market prices. To gather

the necessary information, EPA reviewed the economics literature. This review identified a number

of relevant studies: Lipton and Strand (1992), which estimates a demand equation for surf clams and

ocean quahogs on the East Coast; Wessells et al. (1995), which estimates a demand equation for U.S.

harvested mussels in Montreal; Cheng and Capps, Jr. (1988), which estimates demand equations for

oysters and total shellfish in the U.S.; and Capps, Jr. and Lambregts (1991), which estimates demand

equations for scallops and oysters in Houston, Texas. Exhibit 6-5 lists the demand elasticities

obtained from each of these studies. These demand elasticities provide the means to determine the

56

consumer benefits associated with changes in shellfish harvests.

Exhibit 6-5

SHELLFISH DEMAND ELASTICITIES

Citation Species Elasticity

Cheng and Capps oysters -1.132

Cheng and Capps total shellfish -0.885

Capps and Lambregts oysters not significant

Capps and Lambregts scallops -1.84

Wessells et al. mussels -1.98

Lipton and Strand surf clams -2

Lipton and Strand ocean quahogs -0.87

6.2.4.2 Determining the Change in Consumer

Surplus Associated with Increased Harvests

EPA's analysis of the benefits of an increase in shellfish harvests begins by estimating prices

and quantities (i.e., P0 and Q0) under baseline conditions, as well as the quantity of shellfish EPA

estimates would be harvested following the implementation of new CAFO regulations (Q ). 1

Consistent with the analysis of shellfish harvests described above, Q for each state and species is 0

based on NMFS data, and specified as the mean annual harvest for the years 1994 through 1998. P0

is calculated by dividing the total reported revenues from 1994 through 1998 for each species and

state, adjusted to 1999 dollars, by the total quantity harvested. Q is determined as described above,

57

1
The analysis employs the Wessells et al. demand elasticity for mussels and the Capps and 58

Lambregts demand elasticity for scallops for all states in which these species are harvested. When

disaggregated data on surf clam or quahog harvests are available, the analysis relies on the demand

elasticities for these species developed by Lipton and Strand; in all other instances, demand for clams

is analyzed using the total shellfish price elasticity estimated by Cheng and Capps. For oysters, the

analysis relies upon the demand elasticity estimated by Cheng and Capps; this value was selected

because it was based on evaluation of a broader market than that considered by Capps and

Lambregts.

 Mathematically, the price elasticity of demand (0) is calculated as: 59

0 = MQ/MP

where:

MQ = (Q1 - Q0)/Q0

MP = (P1 - P0)/P0

therefore:

MP = MQ/0

P1 = (Q1 - Q0)(P0)/[(0)(Q0)] + P0

6-12

adding to Q the increase in shellfish harvests estimated to occur under each regulatory scenario (Q ). 0 R

EPA determined the value of these factors for each broad category of shellfish for which NMFS data

are available: scallops, oysters, mussels, and clams. When the data allow, EPA developed separate

values for quahogs, surf clams, and other clams. This approach enables the analysis to take

advantage, whenever possible, of the demand equations identified for the quahog and surf clam

subcategories.58

Once P0, Q0, and Q1 are estimated, the appropriate price elasticities of demand are applied

to determine the new price (P ) associated with an increase in shellfish harvests. For purposes of this 1

analysis, the percentage change in price is determined by dividing the percentage increase in the

quantity of shellfish supplied in each case by the appropriate price elasticity. This percentage change

is then applied to the initial price (P ) to calculate the new price (P ) for each species harvested. 0 1

59
 The calculation of increased consumer surplus is based on a simple geometric

60

approximation of the change in areas under the demand curve, rather than formal integration using

calculus. As a result, the estimated increase in consumer surplus may be slightly overstated.

6-13

EPA employs the estimated values for P , P , Q and Q to measure the increase in consumer 0 1 0 1

surplus associated with the projected increase in shellfish harvested and resulting reduction in market

price under each regulatory scenario. This calculation is conducted for every state and species

category. The estimated annual benefit under each regulatory scenario is simply the sum of the

estimated increase in consumer surplus across states and species.60

6.3 RESULTS

Exhibit 6-6 summarizes the estimated economic benefits associated with increased shellfish

harvests under each regulatory scenario evaluated. The exhibit presents two cases: Case 1, which

considers beneficial impacts on shellfish growing waters that the Shellfish Register specifically

identifies as impaired by pollution from AFOs; and Case 2, which expands the analysis to consider

beneficial impacts on shellfish growing waters identified as impaired by pollution from AFOs and/or

agricultural runoff. As the exhibit indicates, EPA's estimates of annual benefits under Case 2 are

more than an order of magnitude greater than under Case 1; this range reflects the significant

increase in the number and area of shellfish growing waters considered to be impaired by AFOs

when runoff from agricultural land, as opposed to pollution specifically attributed to AFOs, is

included in the analysis. For the proposed scenarios, the estimate of annual benefits ranges from

approximately $195 thousand under Case 1 to $2.7 million under Case 2. Within each case, the

range of annual benefits across regulatory scenarios is relatively small: from $146 thousand to $245

thousand under Case 1, and from $1.8 million to $3.0 million under Case 2. In both cases, Option

1/Scenario 1 provides the lowest benefits, while Option 2/Scenario 4b provides the highest.

Exhibit 6-6

ESTIMATED ANNUAL BENEFITS OF INCREASED COMMERCIAL SHELLFISH HARVESTS

(1999 $, thousands)

Regulatory Scenario Case 1: AFOs Agricultural Runoff

Case 2: AFOs and

Option 1/Scenario 1 $146 $1,816

Option 1/Scenario 2/3 $198 $2,357

Option 1/Scenario 4a $178 $2,204

Option 1/Scenario 4b $221 $2,564 

 Option 2/Scenario 1 $165 $2,141

Option 2/Scenario 2/3* $219 $2,717

Option 2/Scenario 4a* $195 $2,417

Option 2/Scenario 4b $245 $2,960

* Proposed scenarios
6-14

6.4 LIMITATIONS AND CAVEATS

The analysis set forth above is subject to a number of uncertainties and relies upon several

simplifying assumptions. These factors may lead to a potential under- or over-estimation of the

benefits of decreasing AFO-related contamination of commercial shellfish growing waters. The

most significant of these limitations are described below.

• The analysis assumes that a reduction in pollution from AFOs will result in

an increase in commercial shellfish harvests. While this assumption appears

reasonable in light of the extent to which AFOs contribute to current

restrictions or prohibitions on shellfish harvesting, the actual impact of these

restrictions or prohibitions on annual shellfish landings is unknown.

• To estimate the potential impact of pollution on annual shellfish landings, the

analysis calculates an average annual yield (pounds per acre) for shellfish

growing waters. The calculation of this figure assumes that current harvests

are obtained from waters classified as approved or conditionally approved.

To the extent that this approach over- or understates the increase in annual

yields that might be realized from waters currently subject to harvest

restrictions or prohibitions, the analysis may either over- or understate the

impact of pollution on annual shellfish landings.

• The actual contribution of AFOs to the impairment of shellfish growing

waters is unclear. In light of ambiguities in the data and uncertainties

associated with the impact of pollution from other sources, the analysis

considers two cases and employs subjectively developed weighting factors

to characterize the impact of pollution from AFOs on shellfish harvests. The

degree of judgment required in the analysis and the broad range of results

across the cases analyzed suggests considerable uncertainty concerning the

impact of pollution from AFOs.

• Similarly, in characterizing the impact of alternate regulatory scenarios, the

analysis assumes that the adverse impact of pollution from AFOs (i.e., the

foregone harvest) will be reduced in proportion to modeled reductions in

fecal coliform pollution. While this approach may provide a reasonable

approximation of the relative impacts of alternate CAFO regulations, it is less

reliable than detailed modeling of pathogen concentrations in shellfishgrowing areas. The nature and magnitude of any bias introduced by reliance

on this approach is unclear.
6-15

• The analysis relies on estimates of the price elasticity of demand for shellfish

that are not necessarily representative of current conditions or of conditions

nationwide. The nature and magnitude of any bias introduced by reliance on

these estimates, however, is unclear.

6.5 REFERENCES

Capps, Oral Jr. and Johannes Adrianus Lambregts. 1991. "Assessing Effects of Prices and

Advertising on Purchases of Finfish and Shellfish in a Local Market in Texas," Southern

Journal of Agricultural Economics, Vol. 23, July, pp. 181-194.

Cheng, Hsiang-tai and Oral Capps, Jr. 1998. "Demand Analysis of Fresh and Frozen Finfish and

Shellfish in the United States," American Journal of Agricultural Economics, Vol. 70,

August, pp. 533-542.

Griffiths, Charles and Sabrina Lovell. 2000. "Benefits of Proposed CAFO Rules to Shellfish Beds,"

Office of Economy and Environment, U.S. Environmental Protection Agency, July 28.

Lipton, D.W. and I. Strand. 1992. "Effect of Stock Size and Regulations on Fishing Industry Cost

and Structure: The Surf Clam Industry," American Journal of Agricultural Economics, Vol.

64, February, pp. 197-208.

U.S. National Oceanic and Atmospheric Administration. 1997. The 1995 National Shellfish Register

of Classified Growing Waters, Office of Ocean Resources Conservation and Assessment,

Silver Spring, MD. Available from: http://seaserver.nos.noaa.gov/projects/95register/.

U.S. National Oceanic and Atmospheric Administration, Fisheries Statistics and Economics

Division, "Commercial Fisheries," U.S. Department of Commerce, obtained from

http://www.st.nmfs.gov/st1/commercial/index.html.

Wessells, Cathy R., Christopher J. Miller and Priscilla M. Brooks. 1995. "Toxic Algae

Contamination and Demand for Shellfish: A Case Study of Demand for Mussels in

Montreal," Marine Resource Economics, Vol. 10, pp. 143-159.
No other health impacts are consistently attributed to elevated nitrate concentrations in

61

drinking water. As discussed in Chapter 2, however, other health effects are suspected.

7-1

REDUCED CONTAMINATION OF PRIVATE WELLS CHAPTER 7

______________________________________________________________________________

7.1 INTRODUCTION

CAFOs can contaminate aquifers and thus impose health risks and welfare losses on those

who rely on groundwater for drinking water or other uses. Of particular concern are nitrogen and

other animal waste-related contaminants (which come from manure and liquid wastes) that leach

through soils and ultimately reach groundwater. Nitrogen loadings convert to elevated nitrate

concentrations at household and community system wells, and elevated nitrate levels in turn pose

a risk to human health.

The federal health-based National Primary Drinking Water Standard for nitrate is 10 mg/L.

This Maximum Contaminant Level (MCL) applies to all Community Water Supply systems, but not

to households that rely on private wells. As a result, households served by private wells are at risk

to exposure to nitrate concentrations above 10 mg/L, which EPA considers unsafe for sensitive

subpopulations (e.g., infants). Nitrate above concentrations of 10 mg/L can cause

methemoglobinemia (“blue baby syndrome”) in bottle-fed infants (National Research Council,

1997), which causes a blue-gray skin color, irritableness or lethargy, and potentially long-term

developmental or neurological effects. Generally, once nitrate intake levels are reduced, symptoms

abate. If the condition is untreated, however, methemoglobinemia can be fatal.61

The most recent U.S. Census data show that approximately 13.5 million households located

in counties with AFOs are served by domestic wells. A number of sources provide information on

the percentage of such wells with nitrate concentrations in excess of 10 mg/L. As indicated in

Exhibit 7-1, the values reported vary widely, depending on the location studied, local hydrology, and

other factors. According to the nationwide USGS Retrospective Database, however, the

concentration of nitrate in 9.5 percent of domestic wells in the U.S. exceeds the 10 mg/L threshold.

Thus, EPA estimates that approximately 1.3 million households in counties with AFOs are served

by domestic wells with nitrate concentrations above 10 mg/L.
7-2

Exhibit 7-1

PERCENTAGE OF WELLS EXCEEDING THE MCL FOR NITRATE

Study Location Well 10 mg/L

Type of Percent Exceeding

CDC, 1998 Illinois, Iowa, Kansas, Minnesota, Domestic 13.4%

Missouri, Nebraska, North Dakota,

South Dakota, Wisconsin

Agriculture Ontario Domestic 13%

Canada, 1991 (as farm

cited by Giraldez

and Fox, 1995)

Kross et al., 1993 Iowa Rural 18%

Retrospective National Domestic 9.5%

Database (USGS)

Richards et al., Indiana, Kentucky, Ohio, West Rural 3.4%

1996 Virginia

Spalding and Iowa, Kansas, Nebraska, North Rural 20%, 20%, 20%, 

Exner, 1993 Carolina, Ohio, Texas 3.2%, 2.7%, 8.2%,

respectively

Swistock et al., 1993 Pennsylvania Private 9%

U.S. EPA, 1990 National Rural 2.4%

domestic

USGS, 1985 Upper Conestoga River Basin Rural 40+%

USGS, 1998 Nemaha Natural Resources District, Nebraska Rural 10%

Vitosh, 1985 (cited in Southern Michigan Rural 34% 

Walker and Hoehn,

1990)

EPA's proposed revisions to the NPDES regulation and effluent guidelines would affect the

number and type of facilities subject to regulation as CAFOs, and would also introduce new

requirements governing the land application of manure. As a result, EPA anticipates that its

regulatory proposal will reduce nitrate levels in household wells. In light of clear empirical evidence

from the economics literature that households are willing to pay to reduce nitrate concentrations in

their water supplies -- especially to reduce concentrations below the MCL — the anticipated

improvement in the quality of water drawn from private domestic wells represents a clear economic

benefit. This chapter estimates these benefits for each of the eight regulatory scenarios evaluated.
Citations provided here and in Section 7.2.1.2 are suggestive of the literature on these

62

issues. A more comprehensive review of the literature is provided in Attachment B. 

7-3

7.2 ANALYTIC APPROACH

Exhibit 7-2 provides an overview of EPA's approach to estimating the benefits of well nitrate

reductions. As the exhibit indicates, the analysis begins by developing a statistical model of the

relationship between nitrate concentrations in private domestic wells and a number of variables

found to affect nitrate levels, including nitrogen loadings from AFOs. It then applies this model, in

combination with the projected change in nitrogen loadings from CAFOs under each regulatory

scenario, to characterize the distribution of expected changes in well nitrate concentrations. Next,

the analysis applies this distribution to the number of households served by private domestic wells

to calculate (1) the increase in the number of households served by wells with nitrate concentrations

that are below the MCL and (2) the marginal change in nitrate concentrations for households

currently served by wells with nitrate concentrations below the MCL. Finally, the analysis employs

estimates of households’ values for reducing well nitrate concentrations to develop a profile of the

economic benefits of anticipated improvements in well water quality. Additional detail on EPA's

analytic approach is provided below.

7.2.1 Relationship Between Well Nitrate

Concentrations and Nitrogen Loadings

EPA's approach begins with the use of regression analysis to develop a model characterizing

the empirical relationship between well nitrate concentrations and a number of variables that may

affect nitrate levels, including nitrogen loadings from AFOs. The variables included in the model

are based on a review of hydrogeological studies that have observed statistical relationships between

groundwater nitrate concentrations and various other hydrogeological and land use factors. The

following discussion describes the variables included in EPA's model and the sources of data for

each variable. It also notes potentially significant variables that the model does not include.

Appendix 7-A and Appendix 7-B provide additional detail on the model's development.

7.2.1.1 Included Variables and Data Sources

Although the groundwater monitoring and modeling studies that EPA reviewed covered

different geographic areas and focused on varying nitrate sources (e.g., septic systems, agricultural

fertilizers, animal feedlots), they often found similar variables to be significant. In particular,

nitrogen application or loadings rates, whether from animal wastes, private septic systems, or

agricultural fertilizers, were the most consistent and significant factor affecting well nitrate levels

(e.g., Burrow, 1998; CDC, 1998). EPA's model includes variables characterizing nitrogen loadings

62

from each of these sources:
Exhibit 7-2

OVERVIEW OF ANALYTIC APPROACH

NPLA

Retrospective Database

U.S. Census

Ag Census

NPLA scenarios

U.S. Census

Benefits Transfer

Baseline model: Statistical model estimation

Nitrates = ∝ + βoχo + ... + βnχn + ,

Calculation of changes in well

nitrates under options/scenarios

• Change in number of households above

 10 mg/L MCL

• Change in nitrates 1 < N < 10 mg/L

Annual benefit estimates for

CAFO regulatory options

DATA SOURCES ANALYSIS

7-4
7-5

• AFOs — Studies that addressed the effect of animal manure production on

groundwater nitrate concentrations found a positive correlation between these

variables (e.g., Ritter and Chirnside, 1990; Division of Water Quality,

Groundwater Section, 1998). EPA's model therefore includes a variable that

characterizes nitrogen loadings from AFOs. EPA obtained data on these

loadings, aggregated at the county level, from the National Pollutants

Loadings Analysis (Tetra Tech, 2000).

• Septic Systems — Several studies found that the proximity of septic systems

to wells is a small, but significant, contributing factor to elevated nitrate

concentrations (e.g., Carleton, 1996; Richards et al., 1996). As a proxy

measure for loadings from septic systems, EPA's model includes a variable

characterizing the use of private septic systems in each county. Information

on septic system use was drawn from the 1990 U.S. Census.

• Other Sources — Several studies found that the type of crop cultivated in the

vicinity of wells significantly influences well nitrate levels, reflecting

variation in the crops’ nutrient and water needs and suggesting that

agricultural fertilizers are a significant source of nitrogen to groundwater

(e.g., Swistock et al., 1993; Lichtenberg and Shapiro, 1997). EPA obtained

data on nitrogen loadings associated with agricultural fertilizers and other

sources (e.g., atmospheric deposition) from the USGS Retrospective

Database (1996).

In addition to variables characterizing nitrogen loadings, EPA's model includes the following

variables describing well, soil, and land use characteristics found to significantly influence well

nitrate concentrations:

• Well Depth -- Several studies found well depth to be a significant variable,

inversely correlated with well nitrate concentrations, regardless of nitrate

source (e.g., Detroy, 1988; Ham et al., 1998).

• Soil Group: A number of studies identified at least one hydrogeological

characteristic, such as aquifer composition and soil type, as a significant

factor affecting well nitrate concentrations (e.g., Lichtenberg and Shapiro,

1997; Lindsey, 1997).

• Land Use: Agricultural land use in the vicinity of wells was found to be

associated with higher groundwater nitrate in several studies (e.g., Mueller

et al., 1995; Carleton, 1996).
7-6

For purposes of model development, EPA obtained data on these variables from the USGS

Retrospective Database.

7.2.1.2 Omitted Variables

Because of incomplete or unreliable national data, EPA's model does not include all of the

potentially significant variables the literature identifies. For example, several studies cite well

construction and age as significant variables with respect to well nitrate concentrations (e.g.,

Spalding and Exner, 1993; Swistock et al., 1993). In general, older wells are more vulnerable to

nitrate contamination because their casings are more likely to be cracked, allowing surface

contaminants to enter the well. Different construction materials and methods also affect how easily

nitrate or other pollutants can reach groundwater via direct contamination at the wellhead. Data on

this variable, however, are often unreliable because they are generally obtained by surveying well

owners and relying on their subjective assessment of when and how a well was constructed; no

reliable, nationally comprehensive data on well construction are available.

Several studies also found the distance from a pollutant source to the well to be significantly

correlated with well nitrate concentrations (e.g., Swistock et al., 1993; Division of Water Quality,

Groundwater Section, 1998). Although spatial data for well locations are available, data on the

location of animal feedlots, cropland, and septic systems are not; therefore, the model excludes this

variable.

7.2.2 Modeling of Well Nitrate Concentrations

Under Alternate Regulatory Scenarios

To estimate the impact of selected variables on well nitrate concentrations, EPA compiled

a database of 2,928 records. Each record provides information characterizing a different well,

including the observed well nitrate concentration; well depth, soil, and land use information; data

on baseline nitrogen loadings from AFOs; and data characterizing nitrogen loadings from septic

systems, agricultural fertilizer, and other sources. EPA developed its regression model on the basis

of this database.

After estimating the regression model using baseline loading information, EPA estimated

expected values for well nitrate concentrations, both for the baseline and for each of the eight

alternative regulatory scenarios. The calculation of expected values under each scenario employed

data on AFO nitrogen loadings obtained from the National Pollutants Loadings Analysis (Tetra Tech,

2000); these loadings vary across the regulatory scenarios, reflecting different manure application
For additional information on the development of pollutant loadings estimates under

63

alternate regulatory scenarios, see Chapter 4.

Testing of EPA's model indicates that it underestimates well nitrate concentrations (see

64

Attachment B). As a result, comparing predicted values under alternate regulatory scenarios to

observed baseline values would bias the analysis. To avoid this bias, EPA compares the well nitrate

concentrations the model predicts under each regulatory scenario to the values it predicts under

baseline conditions. The benefits assessment is based on the resulting projected percentage changes

in expected well nitrate concentrations.

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rates, manure management practices, and other factors. To examine the impact of alternate

63

regulatory scenarios on well nitrate concentrations, the AFO loadings variable is the only

independent variable that changes value; the values for all other variables are held constant. Exhibit

7-3 summarizes the expected percentage changes in well nitrate concentrations under each scenario.64

Exhibit 7-3

PERCENT REDUCTION IN PROJECTED NITRATE CONCENTRATIONS

Regulatory Scenario Mean Percent Reduction Median Percent Reduction

Projected Nitrate Concentration (mg/L)

Option 1 — Scenario 1 3.0 0.8

Option 1 — Scenario 2/3 3.2 0.8

Option 1 — Scenario 4a 3.7 0.8

Option 1 — Scenario 4b 3.7 0.8

Option 2 — Scenario 1 3.5 0.8

Option 2 — Scenario 2/3* 3.7 0.8

Option 2 — Scenario 4a* 4.3 0.9

Option 2 — Scenario 4b 4.3 0.9

*Proposed scenarios

7.2.3 Discrete Changes from above the MCL to below the MCL

As noted above, the most recent U.S. Census data show that approximately 13.5 million

households located in counties with AFOs are served by domestic wells. The USGS Retrospective

Database indicates that the concentration of nitrate in 9.47 percent of U.S. domestic wells exceeds

10 mg/L. Thus, under the baseline scenario, EPA estimates that approximately 1.3 million

households in counties with AFOs are served by domestic wells with nitrate concentrations above

10 mg/L.
 EPA's analysis also ignores marginal reductions in nitrate concentrations for wells that

65

would remain above the MCL. The Agency's review of the economics literature failed to identify

studies that would provide an adequate basis for valuing such changes.

7-8

To estimate the impact of alternative CAFO standards on the number of wells that would

exceed the nitrate MCL, EPA applied the mean percentage reduction in nitrate concentrations

predicted under each regulatory scenario to the nitrate concentration values that the USGS

Retrospective Database reports. Based on the resulting values, EPA calculated the percentage

reduction in the number of wells with nitrate concentrations exceeding 10 mg/L. As shown in

Exhibit 7-4, it then applied these values to EPA's baseline estimate of the number of households in

counties with AFOs that are served by domestic wells with nitrate concentrations above 10 mg/L.

Based on this analysis, EPA estimates that the regulatory scenarios evaluated would bring between

152,000 and 166,000 households under the 10 mg/L nitrate threshold.

Exhibit 7-4

EXPECTED REDUCTIONS IN NUMBER OF HOUSEHOLDS WITH WELL

NITRATE CONCENTRATIONS ABOVE 10 mg/L

Regulatory Scenario Option/Scenario above the MCL

Percentage of Wells above

MCL at Baseline Expected Reduction in Number of

to Achieve MCL under Households

Option 1 — Scenario 1 11.9% 152,204

Option 1 — Scenario 2/3 11.9% 152,204

Option 1 — Scenario 4a 12.6% 161,384

Option 1 — Scenario 4b 12.6% 161,384

Option 2 — Scenario 1 12.6% 161,384

Option 2 — Scenario 2/3* 12.6% 161,384

Option 2 — Scenario 4a* 13.0% 165,974

Option 2 — Scenario 4b 13.0% 165,974

* Proposed scenarios

7.2.4 Incremental Changes below the MCL

Households currently served by wells with nitrate concentrations below the 10 mg/L level

may also benefit from marginal reductions in nitrate concentrations. For purposes of this analysis,

EPA assumes that such incremental benefits would be realized only for wells with baseline nitrate

concentrations between 1 and 10 mg/L; presumably, an individual would not benefit if nitrate

concentrations were reduced to below background levels, which for purposes of this analysis are

assumed to be 1 mg/L. Exhibit 7-5 shows, for each regulatory scenario, EPA's estimate of the

65
The information reported in Exhibit 7-5 pertains only to wells with baseline nitrate

66

concentrations below the MCL. Information for wells with baseline nitrate concentrations above the

MCL is not included, since the benefits associated with reducing nitrate concentrations in these wells

to below the MCL are potentially captured in valuing the achievement of safe nitrate concentrations.

7-9

mean and median reduction in nitrate concentrations for wells with baseline values between 1 and

10 mg/L. The exhibit also indicates for these wells the aggregate expected reduction in nitrate levels,

expressed in mg/L. EPA estimates that approximately 600,000 households would benefit from

66

these marginal reductions.

Exhibit 7-5

MEAN AND MEDIAN REDUCTIONS IN NITRATE CONCENTRATIONS FOR WELLS WITH

CONCENTRATIONS BETWEEN 1 AND 10 mg/L AT BASELINE

Regulatory Scenario (mg/L) (mg/L) (mg/L)

Mean Nitrate Median Nitrate Total Expected National

Reduction Reduction Nitrate Reduction

Option 1 — Scenario 1 0.16 0.12 961,741

Option 1 — Scenario 2/3 0.16 0.12 1,007,611

Option 1 — Scenario 4a 0.19 0.15 1,186,423

Option 1 — Scenario 4b 0.19 0.15 1,186,423

Option 2 — Scenario 1 0.18 0.14 1,103,166

Option 2 — Scenario 2/3* 0.19 0.15 1,159,907

Option 1 — Scenario 4a* 0.22 0.18 1,374,990

Option 2 — Scenario 4b 0.22 0.18 1,374,990

* Proposed scenarios

7.2.5 Valuation of Predicted Reductions

in Well Nitrate Concentrations

EPA's analysis relies upon a benefits transfer approach to value predicted reductions in well

nitrate concentrations. EPA used three general steps to identify and apply values for benefits

transfer:

(1) A literature search to identify potentially applicable primary studies.

(2) Evaluation of the validity and reliability of the studies identified. Primary

evaluation criteria included:
7-10

• the relevance (applicability) of the commodity being valued in the

original studies to the policy options being considered for CAFOs;

and

• the robustness (quality) of the original study, evaluated on multiple

criteria such as sample size, response rates, significance of findings

in statistical analysis, etc.

(3) Selection and adjustment of values for application to CAFO impacts.

Appendix 7-C provides detailed information on EPA's literature search and the criteria applied to

evaluate and select the studies employed in the benefits assessment.

Through its review and evaluation of the relevant literature, EPA selected three studies to

provide the primary values used for the benefit transfer: 

• A study by Poe and Bishop (1992), which the analysis employs to value

changes in well nitrate concentrations from above the MCL to below the

MCL.

• A study by Crutchfield et al. (1997), which EPA employs to value marginal

changes in nitrate concentrations below the MCL.

• A study by De Zoysa (1995), which EPA employs to value marginal changes

in nitrate concentrations below the MCL.

The discussion below briefly summarizes these studies. Additional information is provided in

Exhibit 7-6.
7-11

Exhibit 7-6

 SUMMARY INFORMATION ON STUDIES USED FOR BENEFITS TRANSFER

Study Reference Poe and Bishop Crutchfield et al. De Zoysa

Year of Analysis 1992 1997 1995

Place Portage County, WI IN, Central NE, PA, WA Maumee River Basin,

northwest Ohio

Household Water 100% on private wells IN 73%; NE 31%; PA 47%; Not specified

Supply/ WA 26% non-municipal

Groundwater Use

Groundwater An increase in the number of None given Typical N concentrations

Baseline Scenarios wells in Portage County with range from 0.5-3 mg/L,

nitrate contamination although some are much

higher

Change in Groundwater protection If tap water has 50% greater Reduce levels to

Groundwater program to keep nitrate levels N levels than EPA’s MCL, 0.5-1 mg/L

Scenario below EPA standards how much to reduce to min.

safety standards; how much

to eliminate

Source of Agricultural activities Not specified Agricultural fertilizer

Contaminants

Types of Values Option price (use value) Total value Total value

Estimated

Duration of Payment Annually, for as long as Monthly, in perpetuity One time

Vehicle respondent lives in the county

Mean HH WTP in $412.00 (25% reduction in $21.72 to reduce from 10 $59.33 (lower bound

1999 Dollars nitrates to safe level) mg/L to 0 mg/L ($2.17 per mean)

$484.00 (households with mg/L) $1.78 per mg/L (using 3%

100% probability of future discount rate)

contamination)

7.2.5.1 Poe and Bishop (1992)

Poe and Bishop (1992, 1999) and Poe (1993) report on the results of a contingent valuation

study conducted in rural Portage County, Wisconsin, to estimate the conditional incremental benefits

of reducing nitrate levels in household wells. The area has had extensive nitrate problems, and

previous research suggested that 18 percent of private wells in the area exceeded the MCL. The

survey comprised two stages. In the first stage, individuals were asked to submit water samples from

their tap and to complete an initial questionnaire. In the second stage, individuals were provided

with their nitrate test results, general information about nitrates, and a graphical depiction of their

exposure levels relative to both natural levels and the MCL; they then were asked to respond to

contingent valuation questions (ex post).
7-12

The respondents' willingness-to-pay values varied, as expected, in accordance with the results

of their wells' nitrate tests and other information provided to them. Poe (1993) reports that

households' whose wells were considered certain at some point in the future to exceed the nitrate

MCL would be willing to pay, on average, $484 per year for a program to keep all wells in Portage

County at or below the MCL. Poe and Bishop (1999) expand on the results of the survey by

developing a non-linear valuation function that characterizes how household willingness to pay for

a 25 percent reduction in well nitrate concentrations varies with the initial extent of nitrate

contamination. Their analysis shows that household willingness to pay for such a program increases

as baseline well nitrate concentrations increase from 2 mg/L to 14.5 mg/L, then declines to zero at

a baseline concentration of approximately 22.5 mg/L. Based on their valuation function, Poe and

Bishop estimate that households would be willing to pay an average of $412 per year for a 25 percent

reduction from a baseline nitrate contamination level of 14.5 mg/L. Since such a change would

reduce nitrate concentrations to very near the MCL, EPA considers it representative of household

willingness to pay to reduce such concentrations to safe levels. Taking the mid-point of the $484

and $412 values reported by Poe (1993) and Poe and Bishop (1999), respectively, EPA estimates that

households whose wells exceed the nitrate MCL would be willing to pay $448 per year to reduce

nitrate concentrations to safe levels.

The reliability of these results appears to be reasonably high because the contingent valuation

(CV) instrument was developed and implemented with careful attention to detail and established CV

research protocol. A potential limitation is that the study is based on a relatively small sample size

(480 households); however, good response rates were obtained from this sample (approximately 80

percent for the first stage and 64 percent for the ex post stage). The Poe and Bishop study is the only

study EPA reviewed that elicited such informed ex post values. These value statements may be

considered more reliable than others because respondents knew more about the condition of their

own water supply and thus were able to make better informed decisions. Moreover, in comparison

to the other studies evaluated, the value estimates from this study seemed to represent a conservative

lower bound on households’ values for reducing nitrates to the MCL.

7.2.5.2 Crutchfield et al. (1997)

Crutchfield et al. (1997) evaluated the potential benefits of reducing or eliminating nitrates

in drinking water by estimating average willingness to pay for safer drinking water. They surveyed

800 people in rural and non-rural areas in four regions of the United States (Indiana, Nebraska,

Pennsylvania, Washington), using the contingent valuation method (CVM) and posing questions in

a dichotomous choice format. Respondents were specifically asked what their willingness to pay

would be to have the nitrate levels in their drinking water (a) reduced to “safe levels,” and

(b) completely eliminated. Respondents were told that this would be accomplished using a filter

installed at their tap, and the cost would be included in their monthly water bill. Respondents were

also asked questions regarding sociodemographic characteristics such as income, age, education, and

whether they currently use treated or bottled water. Across all regions, the resulting willingness to

pay, per household, to reduce nitrates to safe levels ranged from $45.42 per month to $60.76 per
7-13

month, with a mean of $52.89. The willingness to pay to completely remove nitrates from drinking

water ranged from $48.26 per month to $65.11 per month, with a mean of $54.50. The study found

two variables to be significantly related to a respondent’s willingness to pay: “years lived in ZIP

code,” which was positively correlated with willingness to pay, and “age of respondent,” which was

negatively correlated.

7.2.5.3 De Zoysa (1995)

De Zoysa (1995) applied the contingent valuation method to evaluate the benefits of a

number of programs to enhance environmental quality in Ohio's Maumee River basin, including a

program to stabilize and reduce groundwater nitrate levels. The study solicited willingness-to-pay

values from residents of both rural and urban areas in the river basin, as well as residents of one outof-basin urban area. A portion of respondents were asked whether they would pay different amounts,

via a one-time special tax, to reduce nitrate contamination from fertilizer applied to fields. Under

the hypothetical scenarios, nitrate concentrations would be reduced from the current range of 0.5-3.0

mg/L to a range of 0.5-1.0 mg/L. Individuals were also asked questions regarding sociodemographic

characteristics, preferences for priorities for public spending, and how they used the resource in

question. Based on the lower bound of the mean values reported, the study found an average onetime household willingness to pay of $52.78 for a 1 mg/L reduction in groundwater nitrate

concentrations. The study also found that income, the level of priority placed on groundwater

protection, and interest in increasing government spending on education, healthcare, and vocational

training all were positively and significantly correlated with willingness to pay to improve

groundwater quality.

7.2.5.4 Adjustments to the Values

EPA employs the results of the Crutchfield et al. and De Zoysa reports to estimate annual

household willingness to pay to reduce well nitrate concentrations when those concentrations are

already below the nitrate MCL. EPA derives the appropriate value from Crutchfield by comparing

the reported monthly willingness-to-pay values for reducing nitrate concentrations from above the

MCL to the MCL and from above the MCL to zero. The difference between these values is $1.61

per month. For a change between the MCL of 10 mg/L and 0 mg/L, this represents a per mg/L

monthly willingness to pay of $0.16, or $1.92 annually (1997$). To derive a comparable annual

value from De Zoysa, EPA annualizes the willingness to pay value obtained from that study (an

average one-time household willingness to pay of $52.78 for a 1 mg/L reduction in groundwater

nitrate concentrations) at an annual discount rate of 3 percent. This calculation yields an estimated

annual household willingness to pay for a 1 mg/L reduction in nitrate concentrations of $1.58
 CPI-U Series ID CUUR0000SA0, not seasonally adjusted, U.S. city average, all items. 67

7-14

(1995$). EPA applied the Consumer Price Index (CPI) to convert these values to 1999 dollars.67

The Agency then applied the midpoint of the two values, $1.97 per mg/L per household per year, to

value changes in well nitrate concentrations between 10 mg/L and 1 mg/L. Reductions in well

nitrate concentrations below 1 mg/L are not valued, since EPA assumes a natural nitrate background

level of 1 mg/L.

As noted above, EPA relies on the findings of Poe and Bishop to estimate that households

whose wells exceed the nitrate MCL would be willing to pay $448 per year to reduce nitrate

concentrations to safe levels. These values are expressed as willingness to pay per year as long as

the individual lives in the county, and thus can be directly translated to the policy scenarios.

Exhibit 7-7 summarizes the point value estimates used for benefits transfer. 

Exhibit 7-7

WILLINGNESS-TO-PAY VALUES APPLIED TO BENEFITS TRANSFER

Study Value 1999$

Poe and Bishop Annual WTP $448.00

Average of Crutchfield et al. and De Zoysa Annual WTP per mg/L between 10 mg/L and 1 mg/L. $1.97

7.2.5.5 Timing of Benefits

It is unlikely that changes in CAFO regulations would immediately result in the changes in

well nitrate concentrations that EPA's statistical model predicts. While hydrogeological conditions

and other factors may vary significantly from case to case, considerable time may pass before most

wells reach the steady state nitrate concentrations the model forecasts. Therefore, it is necessary to

develop a time profile of the anticipated benefits of revised CAFO standards.

EPA estimates that approximately 75 percent of affected wells would realize the full benefits

of reduced nitrogen loadings within 20 years (Hall, 1996). Assuming that the number of wells

achieving new steady state conditions increases linearly over time, this translates to approximately

3.7 percent of wells achieving new steady state conditions each year. At this rate, all affected wells

would achieve new steady state conditions in approximately 27 years. For purposes of characterizing

the benefits of reduced contamination of private wells, EPA's analysis adopts these assumptions.
7-15

7.3 RESULTS

Exhibit 7-8 illustrates the time profile of benefits for EPA's proposed revisions to the CAFO

standards. As the exhibit shows, annual benefits increase from approximately $3 million per year

in the first year following implementation to between $70 million and $80 million annually in the

twenty-seventh and subsequent years. The profile of benefits over time for all regulatory scenarios

is similar, but in each case reaches a different steady-state level. Exhibit 7-9 summarizes the

estimated annual benefits, once steady state conditions are achieved, for each of the regulatory

scenarios evaluated. As the exhibit indicates, these benefits range from a low of approximately $70

million per year, the estimate arrived at for Option 1-Scenario 1, to a high of approximately $77

million per year, the estimate developed for both Option 2-Scenario 4a and Option 2 Scenario 4b.

7.4 LIMITATIONS AND CAVEATS

Omissions, biases, and uncertainties are inherent in any analysis relying on several different

data sources, particularly those that were not developed specifically for that analysis. Exhibit 7-10

summarizes key omissions, uncertainties, and potential biases for this analysis.
Exhibit 7-8

ANNUAL BENEFITS OF REDUCING PRIVATE WELL CONTAMINATION

$0.00

$10.00

$20.00

$30.00

$40.00

$50.00

$60.00

$70.00

$80.00

$90.00

0 10 20 30 40 50 60 70 80 90 100

Years After Implementation

Annual Benefits (1999 $MM)

Option 1-Scenario 1

Option 1-Scenario 2/3

Option 1-Scenario 4b

Option 1-Scenario 4a

Option 2-Scenario 1

Option 2-Scenario 2/3

Option 2-Scenario 4a

Option 2-Scenario 4b

7-16
7-17

Exhibit 7-9

ESTIMATED ANNUAL BENEFITS OF REDUCED

CONTAMINATION OF PRIVATE WELLS UNDER STEADY

STATE CONDITIONS

($1999, millions)

 Regulatory Scenario Annual Benefits

Option 1-Scenario 1 $70.08

Option 1-Scenario 2/3 $70.17

Option 1-Scenario 4a $74.64

Option 1-Scenario 4b $74.64 

Option 2-Scenario 1 $74.47

Option 2-Scenario 2/3* $74.59

Option 2-Scenario 4a* $77.07

Option 2-Scenario 4b $77.07

* Proposed scenarios
7-18

Exhibit 7-10

OMISSIONS, BIASES, AND UNCERTAINTIES IN THE NITRATE LOADINGS ANALYSIS

Variable Benefit Comment

Likely

Impact on Net

Well, land, and nitrate data

Geographic coverage Unknown Data availability limited the well samples used in the statistical

modeling to those from 138 counties nationwide. 

Well location selection Positive Wells sampled in the USGS Retrospective database may or

may not be random. Samples may be focused on areas with

problems with nitrate.

Year of sample Unknown Samples taken over 23 years. Land use and other factors

influencing nitrate concentrations in the vicinity of the well

may have changed over time.

Nitrate loadings from AFOs with 0- Positive Data for the smallest AFOs were not included in this analysis

300AU because they will not be affected by the proposed regulations.

This may subsequently underestimate total loadings, resulting

in an overestimate of the impact of nitrogen loadings on well

nitrate concentrations. 

Percent of wells above 10 mg/L Unknown Based on the USGS Retrospective database, EPA assumes that 

9.74 percent of wells currently exceed the MCL. If the true

national percent is lower (higher), EPA's analysis overstates

(understates) benefits.

Sampling methods Unknown Data set compiled from data collected by independent state

programs, whose individual methods for measuring nitrate

may differ.

Model Variables

Well construction and age Unknown No reliable data available nationally.

Spatial data Unknown No national data available on the distance from well to

pollutant source.

Benefit Calculations

Per household value for reducing well Negative The Poe and Bishop values generally appear to be a lower

nitrates to the MCL bound estimate of households' WTP for reducing nitrates to

the MCL.

Years until wells achieve steady state. Negative The analysis assumes a linear path over 27 years until reduced

nitrogen loadings would result in most wells achieving

reduced nitrate concentrations. A large portion of wells

(especially shallower wells) may achieve this on a much faster

time path.

Values for marginal reductions below Positive If most of the benefits from reductions in nitrate

the MCL concentrations below the MCL are related to a threshold effect

or removing all human induced nitrates, then the assumption

that benefits increase linearly with reductions in nitrate

concentrations from 10 mg/L to 1 mg/L will overstate the

benefits of marginal reductions.

Baseline characterization Negative Baseline well concentrations are based on observed levels that

are in some cases more than 20 years old. These reflect AFO

loadings from past decades that likely understate current

loadings and, hence, underestimate anticipated well

concentrations absent regulations.

Exclusion of values for reduced nitrate Negative Reductions in nitrate concentrations in wells that would

concentrations in wells that would remain above the MCL after the implementation of new

remain above the MCL after the regulations are not valued. The Agency's review of the

implementation of new regulations economics literature failed to identify studies that would

provide an adequate basis for valuing such changes.

Exclusion of values for marginal Negative The benefits of marginal changes in nitrate concentrations

reductions in nitrate concentrations between 10 mg/L to 1 mg/L for wells with nitrate levels above

below the MCL, for wells with nitrate the MCL at baseline and below the MCL after implementation

concentrations above the MCL at of new regulations are not calculated. These benefits are

baseline and below the MCL after potentially captured in valuing the achievement of safe nitrate

implementation of new regulations concentrations.
7-19

7.5 REFERENCES

Agriculture Canada. 1991. Ontario Farm Groundwater Quality Survey. Agriculture Canada,

Ottawa.

Burrow, K.R. 1998. Occurrence of Nitrate and Pesticides in Groundwater beneath Three

Agricultural Land-Use Settings in the Eastern San Joaquin Valley, California. USGS,

Denver, CO.

Carleton, G.B. 1996. Nitrate in Groundwater and Surface Water in a Residential Subdivision, West

Mercer Township, New Jersey. USGS, Denver, CO.

CDC. 1998. A Survey of the Quality of Water Drawn from Domestic Wells in Nine Midwest

States. NCEH 97-0265. Centers for Disease Control and Analysis. National Center for

Environmental Health.

Crutchfield, S.R., J.C. Cooper, and D. Hellerstein. 1997. Benefits of Safer Drinking Water: The

Value of Nitrate Reduction. Agricultural Economic Report 752. U.S. Department of

Agriculture, Economic Research Service, Food and Consumer Economics Division.

De Zoysa, A.D.N. 1995. A Benefit Evaluation of Programs to Enhance Groundwater Quality,

Surface Water Quality and Wetland Habitat in Northwest Ohio. Dissertation, The Ohio State

University, Columbus.

Desvousges, W.H., M.C. Naughton, and G.P. Parsons. 1992. “Benefit Transfer: Conceptual

Problems in Estimating Water Quality Benefits Using Existing Studies.” Water Resources

Research 28(3):675-683.

Detroy, M.G. 1988. Groundwater Quality Monitoring Program in Iowa: Nitrate and Pesticides in

Shallow Aquifers. USGS, Denver, CO.

Division of Water Quality, Groundwater Section. 1998. Impact of Animal Waste Lagoons on

Ground Water Quality. Draft Report. Department of Environment and Natural Resources,

Raleigh, NC.

Giraldez, C. and G. Fox. 1995. “An Economic Analysis of Groundwater Contamination from

Agricultural Nitrate Emissions in Southern Ontario.” Canadian Journal of Agricultural

Economics 43:387-402.

Hall. 1996. Simulation of Nitrates in a Regional Subsurface System: Linking Surface Management

with Ground Water Quality. Ph.D. Thesis. Colorado State University.
7-20

Ham, J.M., L.N. Reddi, C.W. Rice and J.P. Murphy. 1998. Evaluation of Lagoons for Containment

of Animal Waste. Manhattan: Department of Agronomy, Kansas State University.

Kross, B.C., G.R. Hallberg, and D.R. Bruner. 1993. “The Nitrate Contamination of Private Well

Water in Iowa.” American Journal of Public Health 83:270.

Lichtenberg, E. and L.K. Shapiro. 1997. “Agriculture and Nitrate Concentrations in Maryland

Community Water System Wells.” Journal of Environmental Quality 26:145-153.

Lindsey, B.D. 1997. Nitrate in Groundwater and Streambase Flow in the Lower Susquehanna River

Basin, Pennsylvania and Maryland. USGS, Denver, CO.

Mueller, D.K., P.A. Hamilton, D.R. Helsel, K.J. Hitt, and B.C. Ruddy. 1995. Nutrients in Ground

Water and Surface Water of the United States -- An Analysis of Data through 1992. U.S.

Geological Survey Water-Resources Investigations Report 95-4031.

National Research Council. 1997. Valuing Ground Water: Economic Concepts and Approaches.

National Academy Press, Washington, DC.

Poe, G.L. 1993. Information, Risk Perceptions, and Contingent Value: The Case of Nitrates in

Groundwater. Ph.D. Dissertation, University of Wisconsin-Madison.

Poe, G.L. and R.C. Bishop. 1992. Measuring the Benefits of Groundwater Protection from

Agricultural Contamination: Results from a Two-Stage Contingent Valuation Study. Staff

Paper Series, University of Wisconsin-Madison.

Poe, G.L. and R.C. Bishop. 1999. "Valuing the Incremental Benefits of Groundwater Protection

When Exposure Levels Are Known." Environmental and Resource Economics 13:341-367.

Randall, A. and D. de Zoysa. 1996. Groundwater, Surface Water, and Wetlands Valuation for

Benefits Transfer: A Progress Report. W-133 Benefits and Costs Transfer in Natural

Resource Planning, Ninth Interim Report, Department of Economics, Iowa State University,

Ames, IA.

Richards, R.P. et al. 1996. “Well Water Quality, Well Vulnerability, and Agricultural

Contamination in the Midwestern United States.” Journal of Environmental Quality 25:389-

402.

Ritter, W.F. and A.E.M. Chirnside. 1990. “Impact of Animal and Waste Lagoons on Groundwater

Quality.” Biological Wastes 34:39-54.

Spalding, R.F. and M.E. Exner. 1993. “Occurrence of Nitrate in Groundwater -- A Review.”

Journal of Environmental Quality 22:392-402.
7-21

Stratus. 2000. The Benefits of Reducing Nitrate Contamination in Private Domestic Wells. Report

prepared for U.S. Environmental Protection Agency, Office of Science and Technology.

Swistock, B.R., W.E. Sharpe, and P.D. Robillard. 1993. “A Survey of Lead, Nitrate, and Radon

Contamination of Individual Water Systems in Pennsylvania.” Journal of Environmental

Health 55:6.

Tetra Tech. 2000. Development of Pollutant Loading Reductions from the Implementation of

Nutrient Management and Best Management Practices. Draft report prepared for

U.S. Environmental Protection Agency, Office of Science and Technology.

U.S. EPA. 1990. National Survey of Pesticides in Drinking Water Wells. U.S. Environmental

Protection Agency.

USGS. 1985. Occurrence of Nitrate and Herbicides in Groundwater in the Upper Conestoga River

Basin, Pennsylvania. Water Resources Investigations Report 85-4202.

USGS. 1996. Retrospective Database for Nutrients in Groundwater and Surface Water. USGS.

http://water.usgs.gov/nawqa/nutrients/datasets/retrodata.html. Accessed 6/1/00.

USGS. 1998. Nitrate Concentrations in Ground Water in the Paleovalley Alluvial Aquifiers of the

Nemaha Natural Resources District, Nebraska, 1989 and 1994-96. USGS Water-Resources

Investigations Report 98-4106. USGS, Lincoln, NE.

Vitosh, M.L. 1985. “Nitrogen Management Strategies for Corn Producers.” Extension Bulletin

WQ06. Cooperative Extension Service, Michigan State University. August.

Walker, D.R. and J.P. Hoehn. 1990. “The Economic Damages of Groundwater Contamination in

Small Rural Communities: An Application to Nitrates.” Northcentral Journal of

Agricultural Economics 12:47-56.
7A-1

Appendix 7-A

MODEL VARIABLES

EPA's statistical analysis of the relationship between nitrogen loadings and well nitrate

concentrations is based on the following linear model:

Nitrate (mg/L) = ß0 + ß1 Ag Dummy + ß2 Soil Group + ß3 Well Depth

+ ß4 Septic Ratio + ß5 Alt N Source + ß6 Loadings Ratio + ,i,

where nitrate concentration (mg/L) is the dependent variable.

The variables used to explain nitrate concentrations in well water (i.e., the model's

independent variables) can be classified into two groups: well and land characteristics, and nitrogen

inputs. Definitions of these variables are provided below. Unless otherwise noted, EPA obtained

the data used in developing the model from the USGS Retrospective Database.

Well and Land Characteristics

Ag Dummy: This variable describes the predominant land use at the well's location (1 for

agricultural land; 0 otherwise). Other land uses identified in the database include woods, range,

urban, and other.

Soil Group: The soil group variable is an index that integrates several factors — including

runoff potential, permeability, depth to water table, depth to an impervious layer, water capacity, and

shrink-swell potential — to characterize hydrological conditions in the vicinity of the well. Possible

values range from a minimum of 1 to a maximum of 4.

Well Depth: The well depths reported in the USGS database range from 1 foot to 5,310 feet.

For observations used in the regression analysis, the maximum well depth is 1,996 feet.

Nitrogen Inputs

AFO Loadings Ratios and Scenarios: The AFO loadings ratio is a unique value for each

county. It is calculated by dividing estimated leached nitrate loadings for the county (pounds per

year) by the county's total area (acres). The analysis employs baseline loadings data to estimate the
7A-2

coefficients for the independent variables. It applies these coefficients, combined with loadings data

representative of post-regulatory conditions, to estimate changes in well nitrate concentrations under

each regulatory scenario.

Septic Ratio: The septic ratio is a proxy measure of potential nitrogen loadings from septic

systems. The analysis develops a unique value for each county. This value is calculated by dividing

the number of housing units in the county that use septic systems by the county's total area (acres).

EPA obtained data on septic system use from the 1990 U.S. Census.

Alternate N Source: Alternate nitrogen sources include fertilizer and atmospheric deposition.

Values for this variable are reported in pounds per acre per year.

Summary Statistics

Exhibit 7A-1 reports summary statistics on the variables used in the analysis.

Exhibit 7A-1

SUMMARY STATISTICS

Variable N Mean Deviation Minimum Maximum

Standard

Nitrate Concentrations 2928 3.585 6.552 0.050 84.300

Ag Dummy 2928 0.775 0.418 0.000 1.000

Soil Group 2928 2.418 0.658 1.000 4.000

Well Depth 2928 169.191 133.468 1.000 1,996.000

Septic Ratio 2928 0.029 0.028 0.000 0.151

Alternate N Source 2928 28.890 18.981 0.869 99.631

Loadings Ratio (Baseline

Scenario) 2928 6.626 14.022 0.003 63.354
1

exp( y)y

( )

f (y)

α−

α

−θ

Γ α

θ

=

( ) = ∑[ − Γ( )− + ( − ) ( )]

i

i i i i i i

log L y x ;a, b a logq log a q y a 1 log y

7B-1

Appendix 7-B

THE GAMMA MODEL

The analysis uses a gamma model to fit the right skew of observed values for well nitrate

concentrations as well as the nonnegative constraint on the dependent variable. Visual inspection

of the nitrate concentration distribution suggests a gamma distribution with density function:

 .

Let For this distribution, the expected value of y is i

+ (y ) = "/2 = " exp ($P ) i i i

The use of the gamma distribution instead of the more commonly employed exponential distribution

is appropriate because " is assumed to equal 1 in the exponential distribution, but was estimated to

be significantly different than 1 in EPA's empirical work. The gamma distribution also offers the

advantages of making the density function more flexible and giving more curvature to the

distribution. The likelihood function is:

Exhibit 7B-1 provides statistical results from the gamma model. All coefficients are of the

expected sign and significant at the 1 percent level. In particular, the coefficient for the Loadings

Ratio variable is positive, as expected, indicating that an increase in nitrogen loadings leads to

increased well nitrate concentrations.
7B-2

Exhibit 7B-1

GAMMA REGRESSION RESULTS

Variable Estimate Standard Error Statistic Significance

Parameter Asymptotic TIntercept 1.492 0.151 9.891 0.000

Ag Dummy 0.691 0.066 10.452 0.000

Soil Group -0.335 0.043 -7.725 0.000

Well Depth* -0.106 0.015 -7.178 0.000

Septic Ratio 2.623 1.102 2.380 0.009

Alt N Source* 20.258 1.628 12.444 0.000

Loadings Ratio 0.010 0.002 5.037 0.000

Alpha 0.498 0.011 46.368 0.000

Mean log-likelihood = -1.854

N = 2,928

*The raw data were scaled by a factor of 100 for Well Depth and 1,000 for Alt N Source in order for the GAUSS

program to converge to a solution.
7C-1

Appendix 7-C

LITERATURE SEARCH AND EVALUATION

Literature Search

The objective of EPA's literature search was to identify prior studies that had developed or

elicited values for changes in groundwater quality, focusing in particular on values for reduced

nitrates. The search drew in part upon two databases: the Colorado Association of Research

Libraries (CARL), which includes the holdings of several university libraries in Colorado and the

West; and the Environmental Valuation Resource Inventory (EVRI), a database compiled by

Environment Canada that includes empirical studies on the economic value of environmental

benefits and human health effects. In addition, EPA solicited suggestions for studies pertaining to

groundwater valuation and nitrate contamination through the ResEcon listserver, which reaches a

network of approximately 700 academics, professionals, and other individuals with interests in

natural resource and environmental economics. Through this extensive search and additional review

of selected bibliographies, EPA identified 11 potentially relevant studies. Since most households’

values for reducing nitrates in private domestic wells are primarily nonmarket values, most of the

identified studies involve stated preference value elicitation (e.g., contingent valuation).

Evaluating Studies for Benefits Transfer

The economics literature suggests several criteria in evaluating primary studies for undertaking

benefits transfer. Desvousges et al. (1992) develop five criteria to guide the selection of studies for

application to a surface water quality issue: that the studies to be transferred (1) be based on

adequate data, sound economic method, and correct empirical technique (i.e., “pass scientific

muster”); (2) evaluate a change in water quality similar to that expected at the policy site; (3) contain

regression results that describe willingness to pay as a function of socioeconomic characteristics; (4)

have a study site that is similar to the policy site (in terms of site characteristics and populations);

and (5) have a study site with a similar market as the policy site. NOAA condenses the five

Desvousges criteria into three considerations: (1) comparability of the users and of the resources

and/or services being valued and the changes resulting from the discharge of concern; (2)

comparability of the change in quality or quantity of resources and/or services; and (3) the quality

of the studies being used for transfer [59 FR 1183]. In a general sense, items (2), (4), and (5) of

Desvousges et al. and items (1) and (2) of NOAA are concerned with the applicability of an original

study to a policy site. Items (1) and (3) of Desvousges et al. and item (3) of NOAA are concerned

with the quality of the original study.

To assess original studies for use in valuing estimated changes in well nitrate levels under

alternate CAFO regulations, EPA evaluated the applicability and the quality of the original studies

on several criteria. To the extent feasible, EPA obtained or derived information from each of the
7C-2

reports or papers for 28 categories of information used to characterize the studies. Because

applicability to CAFOs and quality of the value estimates are distinct concepts, EPA evaluated these

characteristics of the studies separately. Overall, the goal of the rating process was to identify studies

that elicited high-quality value estimates (reliable and valid) and which were most applicable to the

benefits assessment. There were three steps in the rating process:

(1) identify study characteristics upon which to judge applicability and quality;

(2) assign scores to the studies based on these characteristics;

(3) assign weights to these scores for aggregating scores into unidimensional

measures of applicability and quality.

Criteria for Ranking based on Applicability

Applicability refers to the relationship between values elicited in the primary groundwater

valuation studies and benefit estimates necessary for application to the analysis of alternate CAFO

regulations. EPA's criteria for evaluation of applicability included comparison of the following

characteristics of studies with likely CAFO situations:

• location (urban, rural, etc.);

• water supply/groundwater use (percentage on wells);

• type of contaminants (scenario involved nitrate contamination of groundwater);

• source of contaminants (scenario involved conditions similar to those relevant

for CAFOs);

• value estimates are for the correct theoretical construct (e.g., total willingness

to pay for reducing groundwater contamination from nitrates).

Criteria for Ranking based on Quality

Analysis of study quality was based on evaluation of the validity and reliability of the value

estimates derived in the primary groundwater valuation research. Most of the 11 identified studies

involved stated preference elicitation using survey methods. Based on professional experience as

to what constitutes a valid and reliable stated preference valuation study, EPA identified

characteristics of these studies that indicate reliability and validity. Criteria for evaluation of study

quality included:
7C-3

• whether the study was published or peer reviewed;

• whether the survey implementation met professional standards;

• how many respondents there were and what the response rate was;

• whether and how the groundwater baseline was characterized and what change

was presented in the groundwater scenario;

• whether the credibility of scenario change was assessed;

• what valuation methodology was used and whether it was appropriate for

eliciting the intended value measures;

• the type and duration of payment vehicle;

• whether appropriate empirical estimation was undertaken;

• whether expected explanatory variables were found to be significant.
 The NWPCAM analysis addresses changes in the quality of lakes, rivers, and streams

68

above the head of tide, and considers recreational swimming, fishing, and non-use values. The

assessment of potential improvements in shell fishing opportunities focuses on marine and estuarine

waters and the commercial use of shellfish resources. The assessment of potential reductions in the

contamination of private wells considers the use of groundwater as a source of domestic water

supplies.

8-1

INTEGRATION OF RESULTS CHAPTER 8

8.1 INTRODUCTION

This chapter summarizes EPA's estimates of the benefits associated with potential revisions

to the NPDES provisions and Effluent Limitation Guidelines (ELGs) pertaining to CAFOs. It first

describes the Agency's approach to aggregating the results of the studies described in Chapters 4

through 7. It then describes EPA's approach to discounting future benefits and presents the

aggregated benefits of each regulatory scenario analyzed, both in a single present value and as an

annualized benefits stream. Finally, the chapter discusses the key limitations of the analysis and the

implications of these limitations in characterizing the benefits of revised CAFO standards.

8.2 INTEGRATION OF ANALYTIC RESULTS

To develop an integrated assessment of the benefits of each alternative regulatory scenario,

EPA simply adds the results of the analyses presented in Chapters 4 through 7. To the extent that

these analyses address similar benefits, this approach may lead to double-counting and

overestimation of benefits. In this case, however, EPA has determined that the potential for doublecounting is small. The analyses that generate the largest benefits estimates — the NWPCAM

analysis of the benefits of improved surface water quality, the evaluation of potential improvements

in commercial shell fishing opportunities, and the assessment of potential reductions in the

contamination of private wells — examine different water resources and different uses of those

resources. Thus, the benefits estimated in these analyses are clearly additive. The only possible 68

source of double-counting, therefore, lies in integrating the results of the NWPCAM analysis with

EPA's evaluation of the benefits attributable to reducing the frequency and magnitude of fish kills.
 The data upon which the fish kills analysis is based include fish kill incidents below the 69

head of tide. The NWPCAM analysis extends only to freshwater resources.

8-2

The extent to which the NWPCAM analysis and the fish kills analysis may double-count

benefits is unclear, but unlikely to be significant. Both analyses address changes in the quality of

rivers, lakes, and streams. In addition, at least some of the benefits of reducing the incidence of

69

fish kills likely stem from the associated improvement in recreational fishing opportunities, a

beneficial use which the NWPCAM analysis considers. Thus, some double-counting is possible.

The NWPCAM analysis, however, is based upon modeling of surface water quality under steady

state conditions; the analysis is not likely to capture all of the impacts of revised CAFO standards

on circumstances (e.g., the overflow of a lagoon under severe storm conditions) that may lead to fish

kills. In addition, the approach employed in valuing the reduced incidence of fish kills explicitly

excludes lost use values, such as those associated with recreational fishing. These considerations

suggest that at least some, if not all, of the benefits estimated in the fish kills analysis are incremental

to those estimated in the NWPCAM analysis.

From a practical standpoint, the implications of any double-counting between the NWPCAM

analysis and the fish kills analysis are minimal. At most, the estimated annual benefits of reducing

the incidence of fish kills amount to no more than approximately 5 percent of the annual benefits

estimated in the NWPCAM analysis; this is the case for Option 1-Scenario 4a. Under EPA's

proposed regulatory scenarios, the estimated annual benefits of reducing the incidence of fish kills

equal less than 0.4 percent of the annual benefits estimated in the NWPCAM analysis. Thus, EPA

has concluded that its approach to integrating the findings of the underlying analyses does not result

in any significant degree of double-counting.

8.3 PRESENT VALUE OF BENEFITS

The results of the analyses in Chapters 4 through 7 are expressed as annual benefits streams.

To calculate the present value of these benefits at the time new regulations are implemented, EPA

employs three alternative real discount rates: three, five, and seven percent. The seven percent

discount rate represents the real rate of return on private investments and is consistent with the rate

mandated by the Office of Management Budget for analysis of proposed regulations. The three

percent discount rate reflects the social rate of time preference for consumption of goods and

services, and is consistent with the rate recommended by many economists for analysis of

environmental benefits. The five percent discount rate represents the mid-point of the three to seven

percent range.

In calculating the present value of benefits, EPA assumes an infinite time frame; i.e., as long

as the regulations remain in effect the associated benefits will be enjoyed in perpetuity. As a

practical matter, this approach is equivalent to assuming that the regulations will remain in effect for

several generations, since the present value of benefits beyond this point approaches zero; however,
8-3

it avoids the need to arbitrarily specify a period of time over which the regulations are assumed to

remain in effect, and allows EPA to represent fully the present value of the benefits estimated. For

purposes of illustrating the sensitivity of EPA's results to this assumption, Appendix 8-A illustrates

the impact of alternative time frames on present value estimates developed for one of EPA's

proposed regulatory scenarios. Appendix 8-B provides additional detail on the calculation of present

values.

Exhibits 8-1 through 8-4 present the results of the present value calculations for each of the

benefit categories addressed in Chapters 4 through 7. As shown, the estimated benefits for

alternative regulatory scenarios vary significantly, with scenarios that employ Option 2 (which would

establish a phosphorus-based manure application limit) generally providing higher benefits than

scenarios employing Option 1 (a nitrogen-based manure application limit). In all cases, Option 2-

Scenario 4b yields the highest benefits, while Option 1-Scenario 1 yields the lowest. Within benefits

categories, benefits are lowest using the seven percent discount rate and highest using the three

percent discount rate, reflecting the impact of alternative discounting assumptions on the present

value of future benefits.

Exhibit 8-1

PRESENT VALUE OF ESTIMATED BENEFITS:

ACHIEVING RECREATIONAL USE LEVELS

(1999 dollars, millions)

Regulatory Scenario 3 Percent 5 Percent 7 Percent

Discount Rates

Option 1-Scenario 1 $163.3 $98.0 $70.0

Option 1-Scenario 2/3 $210.0 $126.0 $90.0

Option 1-Scenario 4a $183.3 $110.0 $78.6

Option 1-Scenario 4b $240.0 $144.0 $102.9

Option 2-Scenario 1 $2,920.0 $1,752.0 $1,251.4

Option 2-Scenario 2/3* $4,236.7 $2,542.0 $1,815.7

Option 2-Scenario 4a* $3,616.7 $2,170.0 $1,550.0

Option 2-Scenario 4b $4,833.3 $2,900.0 $2,071.4

* Proposed scenarios
8-4

Exhibit 8-5 presents, on a present value basis, EPA's aggregated estimate of the benefits of

alternative revisions to the CAFO standards. As the exhibit shows, the present value of benefits

under EPA's proposed regulatory scenarios ranges from approximately $2.1 billion dollars (assuming

a discount rate of seven percent and employing the low-end of the estimated range of benefits for

Option 2-Scenario 4a) to $6.1 billion dollars (assuming a discount rate of three percent and

employing the high-end of the estimated range of benefits for Option 2-Scenario 2/3).

Exhibit 8-2

PRESENT VALUE OF ESTIMATED BENEFITS:

REDUCED INCIDENCE OF FISH KILLS

(1999 dollars, millions)

Regulatory Scenario 3 Percent 5 Percent 7 Percent

Discount Rates

Option 1-Scenario 1 $3.1 - $7.8 $1.9 - $4.7 $1.3 - $3.3

Option 1-Scenario 2/3 $3.9 - $10.2 $2.4 - $6.1 $1.7 - $4.4

Option 1-Scenario 4a $3.7 - $9.7 $2.2 -$5.8 $1.6 - $4.1

Option 1-Scenario 4b $4.4 - $10.8 $2.6 - $6.5 $1.9 - $4.6

Option 2-Scenario 1 $5.9 - $9.4 $3.5 -$5.7 $2.5 - $4.0

Option 2-Scenario 2/3* $7.3 - $12.3 $4.4 - $7.4 $3.1 - $5.3

Option 2-Scenario 4a* $7.1 - $11.8 $4.3 - $7.1 $3.0 - $5.0

Option 2-Scenario 4b $8.1 - $13.2 $4.8 - $7.9 $3.5 - $5.7

* Proposed scenarios
8-5

Exhibit 8-3

PRESENT VALUE OF ESTIMATED BENEFITS:

IMPROVED COMMERCIAL SHELL FISHING

(1999 dollars, millions)

Regulatory Scenario 3 Percent 5 Percent 7 Percent

Discount Rates

Option 1-Scenario 1 $4.9 - $60.5 $2.9 - $36.3 $2.1 - $25.9

Option 1-Scenario 2/3 $6.6 - $78.6 $4.0 - $47.1 $2.8 - $33.7

Option 1-Scenario 4a $5.9 - $73.5 $3.6 - $44.1 $2.5 - $31.5

Option 1-Scenario 4b $7.4 - $85.5 $4.4 - $51.3 $3.2 - $36.6

Option 2-Scenario 1 $5.5 - $71.4 $3.3 - $42.8 $2.4 - $30.6

Option 2-Scenario 2/3* $7.3 - $90.6 $4.4 - $54.3 $3.1 - $38.8

Option 2-Scenario 4a* $6.5 - $80.6 $3.9 - $48.3 $2.8 - $34.5

Option 2-Scenario 4b $8.2 - $98.7 $4.9 - $59.2 $3.5 - $42.3

* Proposed scenarios

Exhibit 8-4

PRESENT VALUE OF ESTIMATED BENEFITS:

REDUCED CONTAMINATION OF PRIVATE WELLS

(1999 dollars, millions)

Regulatory Scenario 3 Percent 5 Percent 7 Percent

Discount Rates

Option 1-Scenario 1 $1,633.2 $798.2 $475.6

Option 1-Scenario 2/3 $1,635.3 $799.2 $476.2

Option 1-Scenario 4a $1,739.4 $850.0 $506.5

Option 1-Scenario 4b $1,739.4 $850.0 $506.5

Option 2-Scenario 1 $1,735.6 $848.2 $505.4

Option 2-Scenario 2/3* $1,738.2 $849.5 $506.1

Option 2-Scenario 4a* $1,796.0 $877.7 $523.0

Option 2-Scenario 4b $1,796.0 $877.7 $523.0

* Proposed scenarios
8-6

Exhibit 8-5

PRESENT VALUE OF AGGREGATED BENEFITS

(1999 dollars, millions)

Regulatory Scenario 3 Percent 5 Percent 7 Percent

Discount Rates

Option 1-Scenario 1 $1,804.5 - $1,864.9 $900.9 - $937.1 $549.0 - $574.9

Option 1-Scenario 2/3 $1,855.9 - $1,934.1 $931.5 - $978.5 $570.7 - $604.2

Option 1-Scenario 4a $1,932.4 - $2,005.9 $965.8 - $1,009.9 $589.2 - $620.7

Option 1-Scenario 4b $1,991.2 - $2,075.6 $1,001.1 - $1,051.8 $614.4 - $650.6

Option 2-Scenario 1 $4,667.0 - $4,736.4 $2,607.0 - $2,648.7 $1,761.7 - $1,791.4

Option 2-Scenario 2/3* $5,989.5 - $6,077.7 $3,400.2 - $3,453.2 $2,328.1 - $2,365.9

Option 2-Scenario 4a* $5,426.2 - $5,505.0 $3,055.9 - $3,103.1 $2,078.8 - $2,112.5

Option 2-Scenario 4b $6,645.5 - $6,741.2 $3,787.4 - $3,844.8 $2,601.4 - $2,642.4

* Proposed scenarios

8.4 ANNUALIZED BENEFITS ESTIMATES

In addition to calculating the present value of estimated benefits, EPA has developed an

estimate of the annualized benefits attributable to each of the regulatory scenarios analyzed; these

annualized values reflect the constant flow of benefits over time that would generate the associated

present value. Appendix 8-C provides additional detail on the calculation of annualized benefits.

EPA assumes that benefits related to surface water quality improvements will begin

immediately after the revised regulations are implemented (i.e., because loadings will immediately

decrease), and that these benefits will be constant from year-to-year. As a result, the annualized

benefits in these categories (improved surface water quality, reduced fish kills, and improved

shellfishing) are equivalent to the annual benefits estimated in Chapters 4 through 6, regardless of

the discount rate employed. In the case of private well contamination, however, EPA assumes an

uneven annual stream of benefits. As a result, EPA's estimates of the annualized benefits of reduced

private well contamination depend upon the discount rate employed.

 Exhibit 8-6 summarizes the range of annualized benefits for each benefit category under each

of the regulatory scenarios analyzed. Note that the range of benefits associated with reduced

contamination of private wells reflects the variation in discount rates employed in developing the

annualized benefits estimate (three to seven percent). In contrast, the range of values presented for

reduced fish kill and shellfishing benefits is based solely on uncertainty in the underlying analyses.
8-7

There is considerable variation in the range of benefits across regulatory scenarios, as well as some

variation within scenarios with respect to the relative magnitude of surface water and groundwater

benefits. In particular, under scenarios that employ Option 1, the annualized benefits of reduced

private well contamination exceed those associated with other benefits categories. In contrast, under

scenarios that employ Option 2, the recreational and non-use benefits associated with improved

surface water quality account for the greatest share of benefits. 

Exhibit 8-6

ESTIMATED ANNUALIZED BENEFITS OF REVISED CAFO REGULATIONS

(1999 dollars, millions)

Regulatory Scenario Benefits Kills Shellfishing Contamination

Recreational Reduced Private

and Non-use Reduced Fish Improved Well

Option 1- Scenario 1 $4.9 $0.1 - $0.2 $0.1 - $1.8 $33.3 - $49.0

Option 1- Scenario 2/3 $6.3 $0.1 - $0.3 $0.2 - $2.4 $33.3 - $49.1

Option 1- Scenario 4a $5.5 $0.1 - $0.3 $0.2 - $2.2 $35.5 - $52.2

Option 1- Scenario 4b $7.2 $0.1 - $0.3 $0.2 - $2.6 $35.5 - $52.2

Option 2- Scenario 1 $87.6 $0.2 - $0.3 $0.2 - $2.1 $35.4 - $52.1

Option 2- Scenario 2/3* $127.1 $0.2 - $0.4 $0.2 - $2.7 $35.4 - $52.1

Option 2-Scenario 4a* $108.5 $0.2 - $0.4 $0.2 - $2.4 $36.6 - $53.9 

Option 2- Scenario 4b $145.0 $0.2 - $0.4 $0.2 - $3.0 $36.6 - $53.9

* Proposed scenarios

Exhibit 8-7 presents EPA's aggregated estimate of annualized benefits for each of the

regulatory scenarios analyzed. Under the proposed regulatory scenarios, annualized benefits range

from $146 million (Option 2-Scenario 4a, assuming a seven percent discount rate) to $182 million

(Option 2-Scenario 2/3, assuming a three percent discount rate). Again, note that variation in

discount rates affects only the annualized benefits associated with reduced contamination of private

wells; other annualized benefits remain constant regardless of discount rates.
8-8

Exhibit 8-7

SUMMARY OF ANNUALIZED BENEFITS

(1999 dollars, millions)

Regulatory Scenario Low High Low High Low High

Discount Rates

3 Percent 5 Percent 7 Percent

Option 1-Scenario 1 $54.1 $55.9 $45.0 $46.9 $38.4 $40.2

Option 1-Scenario 2/3 $55.7 $58.0 $46.6 $48.9 $39.9 $42.3

Option 1-Scenario 4a $58.0 $60.2 $48.3 $50.5 $41.2 $43.4

Option 1-Scenario 4b $59.7 $62.3 $50.1 $52.6 $43.0 $45.5

Option 2-Scenario 1 $140.0 $142.1 $130.4 $132.4 $123.3 $125.4

Option 2-Scenario 2/3* $179.7 $182.3 $170.0 $172.7 $163.0 $165.6

Option 2-Scenario 4a* $162.8 $165.1 $152.8 $155.2 $145.5 $147.9

Option 2-Scenario 4b $199.4 $202.2 $189.4 $192.2 $182.1 $185.0

* Proposed scenarios

8.5 LIMITATIONS OF THE ANALYSIS AND 

IMPLICATIONS FOR CHARACTERIZING BENEFITS

The results presented above are based on the four separate analyses presented in Chapters 4

through 7, and are subject to the specific uncertainties and limitations that are discussed in detail in

each of these chapters. Beyond these limitations, however, it is important to note that EPA's analysis

does not attempt to comprehensively identify and value all potential environmental changes

associated with proposed revisions to the CAFO regulations. Instead, the Agency focuses on specific

identifiable and measurable benefits. The impacts of the regulatory proposal likely include

additional benefits not addressed in these analyses, such as reductions in the cost of treating public

water supplies; improved recreational opportunities in the Great Lakes, estuaries, and other nearcoastal waters; improvement in the condition of non-boatable waters to boatable condition;

improvements in the quality of water resources that are already suitable for swimming;

improvements in commercial fishing; improvements in near-stream activities; and non-water related

benefits, such as potential reductions in odor from waste management areas. In light of these

limitations, EPA believes that the benefits quantified in this report represent a conservative estimate

of the total benefits of revised CAFO standards.
8A-1

Appendix 8-A

IMPACT OF ALTERNATIVE TIME FRAMES ON PRESENT VALUE AND

ANNUALIZED BENEFITS ESTIMATES

Exhibit 8A-1

PRESENT VALUE OF BENEFITS: OPTION 2-SCENARIO 4a

(1999 dollars, millions)

Discount Rate

3 Percent 5 Percent 7 Percent

Time Period Low High Low High Low High

25 years $2,466.8 $2,508.0 $1,958.3 $1,991.6 $1,589.8 $1,617.3

50 years $4,012.2 $4,073.0 $2,731.5 $2,774.6 $1,988.6 $2,021.2

75 years $4,750.9 $4,821.0 $2,960.1 $3,006.1 $2,062.2 $2,095.7

100 years $5,103.7 $5,178.3 $3,027.6 $3,074.5 $2,075.7 $2,109.4

Infinite $5,426.2 $5,505.0 $3,055.9 $3,103.1 $2,078.8 $2,112.5

Exhibit 8A-2

ANNUALIZED BENEFITS: OPTION 2-SCENARIO 4a

(1999 dollars, millions)

Discount Rate

3 Percent 5 Percent 7 Percent

Time Period Low High Low High Low High

25 years $141.7 $144.0 $138.9 $141.3 $136.4 $138.8

50 years $155.9 $158.3 $149.6 $152.0 $144.1 $146.5

75 years $160.0 $162.3 $151.9 $154.3 $145.3 $147.6

100 years $161.5 $163.9 $152.5 $154.9 $145.5 $147.8

Infinite $162.8 $165.1 $152.8 $155.2 $145.5 $147.9
8B-1

Appendix 8-B

CALCULATION OF PRESENT VALUES

The present value (PV) of a benefit (B) to be received t years from now is determined by the

following equation:

PV = B / (1 + r) t

t

where r represents the annual discount rate. Thus, the present value of an annual stream of benefits

from Year 1 through Year n is calculated as follows:

 n

PV = 3 B / (1 + r) t

t

 

 t = 1

When Btis constant S i.e., when benefits (B) each year are the same S and n approaches infinity, the

equation above can be simplified to:

PV = B / r

EPA employs the above equation to calculate present values for all categories of benefits that

are assumed to remain constant from Year 1 onward; i.e., for all categories except reduced

contamination of private wells. In the latter case, benefits are assumed to increase in a linear fashion

until Year 27, and then to remain constant. Thus, the value in Year 27 (V27) of the constant, infinite

stream of benefits (B) expected to accrue from that year forward is calculated as:

V = B / r 27 

In calculating the present value of reduced contamination of private wells, EPA sets the value of B27

equal to that of V . The present value of benefits is then determined using the following equation: 27

 27

PV = 3 B / (1 + r) t

t

 

t = 1
8C-1

Appendix 8-C

CALCULATION OF ANNUALIZED BENEFITS

The constant annual benefit A that, over a period of n years, equals the estimated present

value (PV) of benefits is determined by the following equation:

A = PV(r) / (1-[1 / (1 + r) ]) n

where r represents the annual discount rate. As n approaches infinity, this equation simplifies to:

A = PV(r)

EPA uses the equation above to calculate the annualized benefits reported in this analysis.