The Impact of Federal Programs on Wetlands - Vol. II



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# FLORIDA EVERGLADES

Introduction Physical Description: The Everglades originally stretched about 100 miles from the southern end of Lake Okeechobee down to the tidal estuaries of the Gulf of Mexico and Florida Bay. (See Figure VII

- 1 .) The topography is so flat that in the wet season, sheetflows used to average 40 miles wide and 2 feet deep. Even in the dry season, the majority of the Everglades remained wet. In wet years the water fed into Lake Okeechobee would spill over, flowing very slowly southward to produce the Everglades. Figure VII-1: Southern Florida with Physiographic Divisions 

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12/5/2011 http://www.doi.gov/oepc/wetlands2/v2ch7.htmlToday water from Lake Okeechobee is subject to flood control and irrigation efforts so canals shunt water to the east and west coasts or pumps direct it south for irrigation. Three conservation areas consisting of five pools contain the excess water and constitute the major portion of the remaining wetlands. 1 (See Figure VII

-2.) Between Lake Okeechobee and the remaining everglades lies the 700,000 acre Everglades Agricultural Area (EAA). The EAA divides the historic hydrologic regime into two poorly connected watersheds, the Kissimmee-Okeechobee and the Everglades-Florida Bay. Estimates vary, but Everglades National Park probably preserves 15-20 percent of the original Everglades, and has been designated as a Wetland of International Importance under the Ramsar Convention. The water conservation areas contain about 37 percent of the 

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12/5/2011 http://www.doi.gov/oepc/wetlands2/v2ch7.htmloriginal Everglades, though they are far from pristine. Figure VII-2: Southern Florida's Altered Everglades Ecosystem 

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12/5/2011 http://www.doi.gov/oepc/wetlands2/v2ch7.htmlCharacteristics and Functions: The Everglades in southern Florida

 Represents the largest single marsh system in the United States;

 Hosts a diverse spectrum of aquatic birds, mammals, reptiles, and amphibians, including 56 federally listed endangered or threatened species and 29 candidate species;2

 Protects the Biscayne Aquifer, the primary source of drinking water for the entire southeastern Florida coast from north of the Palm Beach area to Homestead. The highly absorbent, "peaty muck" covers the Aquifer, and safeguards it by recharging the ground water and filtering out pollutants;

 Regulates water, because the "peaty muck" acts like a sponge, thereby moderating floods and buffering droughts; and

 Contains one national park, one national preserve, and one national wildlife refuge. Original Acreage: The Everglades in south Florida contained over 2.3 million acres of wetlands at the turn of the century. Current Acreage: About 1.1 million acres or 48 percent of the original acreage remained in the mid-1970s. Further, much of the remaining acreage is degraded.
Trends: Over the past 200 years Florida has lost 9.3 million acres of wetlands, 46 percent of the original complement. Between 1953 and 1973 the State lost 1.44 million acres of wetlands, averaging 72,000 acres annually, with most losses occurring in the Everglades. The rate has slowed considerably since then. During the period 1984 through 1985, the Florida Department of Environmental Regulation granted permits for conversion of about 1000 acres in the Everglades. The FWS, however, estimates that 3000 acres were lost during that period. About 5 acres each day is degraded in the Everglades Agricultural Area as the result of pollutant runoff which transforms native sawgrass to a monoculture of cattail that cannot support the native diversity of flora and fauna. 

## Factors Adversely Affecting Wetlands An altered water regime, initially to support agriculture and increasingly to support residential development, has been a major cause of wetland decline in the Everglades. The Central and South Florida Flood Control Project (C&SFP) is the primary means of flood control and drainage in the area and serves irrigation needs secondarily. 3 The C&SFP consists of the channelized Kissimmee River, the impounded Lake Okeechobee, three Everglades water conservation areas (water storage areas totaling 1,345 square miles), and an intricate system of over 1400 miles of canals and levees, complete with pumping stations and flood gates. Extensive diking and draining of the Everglades Agricultural Area make it drier. Runoff from rainfall is removed by pumping stations which force drainwater into the conservation areas, the first of which is Loxahatchee Refuge. Moreover, the South Florida Conservancy District Watershed Project (a project supported by the Soil Conservation Service) was able to take advantage of the primary channels provided by the C&SFP. On-farm streams were channelized and drained into the primary channels.4 Such "secondary drainage" is now a significant factor in wetlands destruction. Thus, the C&SFP encourages additional wetland conversion by making a primary network of outflow channels available for carrying the flow from secondary channels. 5 The C&SFP had four direct, adverse, hydrological impacts on wetlands:

 First, drainage and flood control converted 700,000 acres of wetlands to dry lands, and the decreased flow and reduced period of saturation has degraded many others. 6

 Second, an average of 2.2 million acre feet of fresh water is siphoned off annually to the Atlantic Ocean or the Gulf of Mexico, where it has upset the normal saline balance and produced siltation in the estuaries with major consequences for fisheries. The diversion of the water diminishes the historical contribution to the Biscayne Aquifer.

 Third, the sheetflow and hydroperiod in the remaining Everglades has been disrupted by construction of the project and pre-project drainage works.

 Fourth, water delivery practices have drastically altered the seasonal patterns of high and low flows to the remaining Everglades within and outside of the Park. One result of this is that the Florida Bay fisheries to the south, in contrast to those on the Gulf and Atlantic coasts, do not receive adequate freshwater inflow and suffer from increased incidences 

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12/5/2011 http://www.doi.gov/oepc/wetlands2/v2ch7.htmlof hypersalinity. Flood control has also radically altered native plant and animal life. For example, the flood control levees that surround Lake Okeechobee destroyed a band of important native vegetation south of the Lake and wetlands that were important as wading bird feeding areas along the eastern edge of the Everglades. Wading bird populations nesting in the Everglades have suffered a 90 percent decline since the turn of the century (Robertson 1984). 7 In addition, the C&SFP has had a negative impact on soils and water quality. It has helped to dry the organic soils by: draining water from the land, diverting water to the Gulf of Mexico and Atlantic Ocean, impounding water in Lake Okeechobee and the Water Conservation Areas, and altering hydrologic patterns to the south. The drier soils compact and subside (as much as 6 feet below the water level of canals traversing the area), and oxidize chemically or catch fire. Subsidence and oxidation destroy the peaty muck. Soil that formed at the rate of 1 foot each 400 years is vanishing at a rate of 1 foot every 10 years. By the year 2000, 85 percent of the peat existing in 1912 could be gone, and agricultural areas may have to be abandoned (Stephens 1974). The loss of freshwater inflow also allows saltwater to intrude and contaminate drinking water. Moreover, as the peaty muck oxidizes, it releases organically bound nitrogen which combines with other elements to form nitrates. Nitrates contaminate drinking water as they seep into the aquifer or as agricultural drainwater is backpumped into Lake Okeechobee, a source of back-up drinking water for Miami. Because of water quality problems and eutrophication, backpumping from the Everglades Agricultural Area into the Lake was recently limited, and the nitrates and phosphorous from the drainwater now flow into the water conservation areas where they are causing similar problems. Agricultural pesticides, fertilizers, and tilling practices worsen the water quality problem. Sugarcane, the predominant crop in the Everglades Agricultural Area, is chemically intensive. Dairy farms along the Kissimmee River have contaminated the soil and water with phosphorous and nitrogen. 8 In 1987, in an effort to address the problem, the State initiated a program of buyouts and regulation of the dairy farms in the Lake Okeechobee watershed. 9 In south Dade County, tomato and vegetable farming operations start with heavy tilling to break up the deposits of sea shells and coral (limestone) covering the area, thus permitting cultivation. The hydroponic farming used in the broken limestone conditions requires greater use of fertilizer and pesticides. The Everglades National Park lies directly west of these fields and changes in the native plant community have been noted as a result of the increased levels of fertilizer and pesticides. The State has not effectively enforced water quality standards for pumped effluents on the agricultural industry. In 1988, the U.S. Attorney's office in Miami filed suit on behalf of the FWS and the National Park Service against the Florida Department of Environmental Regulation and the South Florida Water Management District (SFWMD) for pumping water that exceeded nutrient water quality standards into the Everglades without a permit. These discharges cause vegetative changes, have impaired the ecological integrity of the Loxahatchee Wildlife Refuge, and are threatening Everglades National Park. In an effort to address the water quality problems in Florida, the State passed the Surface Water Improvement and Management Act (SWIM) of 1986 that called for Water Management Districts to develop plans to control pollutants. The Everglades SWIM plan was completed after settlement of the lawsuit, but is being challenged on legal grounds by agricultural interests. Thus, as of March, 1994, plans have not been implemented which require water treatment areas, and there has been no opportunity to assess the effectiveness of the proposed regulatory measures. Real estate development is expanding rapidly in south Florida. The urban population to the east of the Everglades (Broward, Palm Beach, and Dade Counties) grew 82% from 1970- 1990, and is projected to grow another 15% by the turn of the century, with concomitant demands for housing and water. Urban and suburban development in former Everglades marshes often follows agricultural conversion and, in some cases, rock mining. Construction is occurring along the edges of the present Everglades, in only partially drained areas. 10 Real estate sales in the East Everglades area are vigorous in the dry months. During the rainy season, however, the water rises, overflowing roads, flooding homes and septic systems, and polluting private wells. Predictably, this is followed by demands for protective dikes to reclaim these wetlands at public expense. When population pressures in south Florida lead to the conversion of agricultural lands for urban and suburban purposes, agriculture often pushes into more marginal wetlands for space. Additionally, citrus is moving southward, and constitutes a factor in wetland degradation and conversion. 11 Historically, citrus was a greater factor in conversion than it is now. Currently, citrus operations tend to work around wetlands, utilizing them as water storage areas. Water from citrus enterprises is laden with nutrients and chemicals, however, and hence degrades wetlands. Limestone is the only significant building material available in south Florida. Rock mining for it takes its toll on the Everglades. Surface pits of up to 1 mile square and 60 or more feet deep cover tens of square miles of land that were once Everglades marsh. The water-filled holes have little biological productivity and expose the porous stone and water of the aquifer, providing a possible avenue for contamination of water supplies. Although suitable rock underlies the coastal ridge uplands of Dade and Broward Counties, the cheapest rock underlies the Everglades. The rock mining industry constantly pressures for expansion into the Everglades, including the water conservation areas. 

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12/5/2011 http://www.doi.gov/oepc/wetlands2/v2ch7.htmlIn 1985, the Corps processed 202 applications for activities within the Everglades. Only 11 were denied. Sometimes developers convert wetlands without permits and, instead of being prosecuted, are granted after-the-fact authorization. This encourages adjacent landowners to do the same or to argue (often effectively) in their permit applications that they have a right to encroach upon and develop wetlands to the same extent as preceding projects. Although it has the authority to overrule the Corps, until recently the EPA has been reluctant to veto 404 permits in the Everglades. 12 For example, the FWS estimated that activities permitted between 1984 and 1985 affected at least 3000 acres in the Everglades. 

## Federal Programs and Projects Federal drainage and flood control projects that radically alter the natural water regime have had the greatest impact on the Everglades. Agricultural programs and incentives to residential development have led to the filling of wetlands, and greatly increased the pressure for Federal flood control and drainage efforts. Funds for highways and airports have helped to establish the infrastructure for expanded residential development. 

### Water Projects The Federal Government has financed 80 percent of the cost of constructing the Central and South Florida Project, 13 which provides drainage and flood control for agriculture. Increasingly agricultural land is converted to or encroached upon by residential development, which also benefits from the drainage and flood control. Although the South Florida Water Management District, a regional agency, manages the C&SFP, the Federal Government is responsible for some operation and maintenance (O&M) costs. The Corps still operates the system during floods, and the Federal Government takes responsibility for clearing obstructions from the drainage canals passing through the Everglades Agricultural Area to ensure greater flows to the developing east coast. Operation and maintenance were estimated to cost about $5.8 million in 1987. Local beneficiaries do not pay for drawing water from the C&SFP or use of the drainage system. Instead, the system runs on a permit basis. About 65 percent of the benefits claimed for the project are from conversion of wetlands to agriculture and the maintenance of the converted wetlands in agriculture. Yet, over 85 percent of the acreage in the Everglades Agricultural Area is planted in sugarcane, a highly subsidized crop which is in worldwide surplus. Future Impacts: A number of proposals could adversely affect the Everglades wetlands in the future. Deficits in the area's demands for water are likely to be made up by increasing water storage in Lake Okeechobee, which would threaten the water supply of the remaining Everglades marsh. The Corps is studying how to restore more natural water flows to the Everglades National Park. Local interests are worried about reflooding partially drained wetlands in the East Everglades, an area adjacent to the Park and Water Conservation Area 3. Thus, in addition to purchasing existing wetlands in the flow-way of the Shark River Slough, the Corps proposes to construct levees around the residences and farmlands to protect a 95,440 acre area from the one-in-ten-year flood. Wetlands within the levees are likely to be drained. They are also likely to be filled, because the Corps will probably grant fill permits within the protected area. In addition, there is a self-executing, Dade County zoning ordinance which will allow housing densities to increase eightfold upon completion of the levee. One of the most controversial issues facing the Everglades is what to do with the drainwater laden with fertilizer, pesticides, and nitrates from oxidized peat. Regulatory controls have not been applied. In the past the contaminated water was backpumped into Lake Okeechobee, but serious eutrophication of the Lake and threats to the back-up water supply of Miami have given rise to alternative plans. These include restoring the Kissimmee River floodplain, diverting the runoff from some dairy areas to a 15,000 acre impoundment, creating a 40,000 acre flow-way for agricultural runoff in the Everglades Agricultural Area, and pumping the water forward to the water conservation areas. The last of these proposals has gone into effect on a trial basis, and is seriously impairing water quality in the conservation areas. The State has introduced a more stringent regulatory procedure for dealing with pollutant runoff, but the program is still in its infancy. As indicated above, the U.S. Attorney's office in Miami filed suit against the South Florida Water Management District and the Florida Department of Environmental Regulation to prevent the discharge of degraded waters from agricultural runoff into canals on the Loxahatchee Refuge and Everglades National Park. A settlement agreement was reached in July, 1991. The settlement was affirmed as a decree in February, 1992. The settlement agreement requires the parties to engage in a strategy to clean up the pumped effluent from the Everglades Agricultural Area and specifies a timetable for implementation. Among the actions required are:

 Class III water quality standards for discharges (Clean Water Act standards) must be met by July, 2002. 

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12/5/2011 http://www.doi.gov/oepc/wetlands2/v2ch7.html Phosphorous loads to the Everglades must be reduced by 80% by 1997.

 Phosphorous loads to Loxahatchee Refuge must be reduced by 85% by 1997, and permits must be sought for discharges into the secondary drainage system within the EAA by July, 1993.

 35,000 acres of filtering marshes called stormwater treatment areas must be constructed. The settlement agreement also requires phosphorous loads in the EAA to be reduced by 25% by February, 1996. In addition, an interagency technical oversight committee was formed to coordinate research and monitor discharges. Legal challenges by agricultural interests in the EAA have stayed implementation of the settlement, and make compliance with the deadlines very unlikely. Concentrations of mercury in fish from the Everglades are above action levels specified by the Food and Drug Administration, and fisherman are being cautioned not to eat fish caught at Loxahatchee Refuge or in the Everglades. Extremely high concentrations of mercury have been found in Florida panthers. While research is preliminary, the two leading hypotheses regarding the presence of the mercury are tilling practices/soil oxidation and elevated phosphorous concentrations which allow the mercury to convert to its methylated form. 

### Agricultural Programs Several USDA programs have affected wetlands in the Everglades. Drainage: The Soil Conservation Service (SCS), through the South Central Florida Conservancy District Watershed Project, built a system of canals to drain on-farm water into the main channels of the C&SFP. Today the SCS's role is limited to advising farmers who plan to improve cropland drainage of Swampbuster and its consequences.
Low Interest Loans: The Farmers Home Administration (FmHA) offers low interest loans to agricultural communities for facilities ranging from water storage and delivery systems to short-term housing for laborers. It is not possible to quantify the effect of FmHA programs on wetlands. However, the subsidies provided through the FmHA tend to support agriculture on lands where it might not otherwise have been profitable. Crop Insurance: The Federal Crop Insurance Corporation offers the only multiple peril coverage for crops, providing risk protection from hazards such as flood, fire, drought, and insects. 14 A variety of coverage levels are available, and premiums vary with the level of protection chosen. 15 The Federal Government subsidizes the premiums and pays all administrative costs of the program. 16 Overall, the Federal share amounts to almost 50 percent of the cost of the insurance program. In 1985, premiums in the Everglades Counties totaled about $1.2 million with Federal support amounting to $500,000 annually. The availability of this subsidized insurance clearly reduces the risk of planting in the Everglades. The program protects farmers against yield losses from a variety of natural causes, including flooding and storm damage, both of which are likely to occur in the Everglades. If Swampbuster is fully enforced, subsidized crop insurance should no longer provide an inducement to convert additional flood-prone wetlands to crop production, including sugarcane. 17 Those farmers who do not convert wetlands or plant on newly converted wetlands remain eligible for subsidized crop insurance, however. Even if this latter were not true, ineligibility for subsidized crop insurance probably is not much of a threat to sugarcane producers and probably will not provide much protection for wetlands. Sugarcane producers generally have a low participation rate in the crop insurance program to begin with. They tend to be large firms with capital available to self-insure. The insurance may be important for those converting to other crops, however. 18 Dairy Price Support Program: Although there is a Federal program to support the price of milk, the program is for grade B or manufacturing-grade milk, which is not the type of milk produced in Florida due to a lack of processing plants. 19 Florida producers market only grade A or fluid milk. The program assists Florida producers indirectly by absorbing some grade A milk, which might otherwise have entered Florida's market as competing supplies. Dairy and Citrus Marketing Orders: The dairy and citrus industry benefit from federally sanctioned marketing orders, which regulate the marketing of the product. The system is structured so that it is difficult, if not impossible for nonparticipating producers from the geographic area covered by the marketing order to sell their output. Usually, marketing orders establish 

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12/5/2011 http://www.doi.gov/oepc/wetlands2/v2ch7.htmlstandards for a commodity and the conditions under which it is marketed. The system provides consumers with quality assurance, but at the expense of reduced price competition. The artificially high prices for milk and citrus could encourage the expansion of citrus groves and dairy farms in Florida. As indicated in the previous section, the State is addressing the wetland and water quality problems associated with the dairy industry by statute and regulation. The contamination level in the soils is such, however, that it may take years to resolve the problem. Wetland degradation due to runoff continues to be a problem associated with citrus operations. Sugarcane Price Supports and Import Restrictions: Sugarcane predominates in the EAA with over seven times as much acreage devoted to it as to the four next most significant crops combined. (See Table VII-1.) 14.9 million tons were harvested in the 1991/1992 crop year. NOTE: If this table does not appear as a table, please click on this link to view it as a graphic file. Table VII

- 1 (4Kb gif)

Source: Hazen and Sawyer 1993 The sugar industry receives major Federal subsidies in the form of price supports, import restrictions, and low interest loans. The price support for sugarcane for the period 1991-1995 is 18 cents per pound, about twice the world rate. The subsidy program is implemented through the combination of import quotas (which prevent competition from cheap foreign sugar) 20 and low interest, nonrecourse loans from the Commodity Credit Corporation (CCC) to sugar processors who agree to purchase domestically produce sugarcane at or above the "floor price" established by Congress, thus passing on to growers the benefits of price protection. The processed sugar (known as raw cane sugar) serves as collateral for the loans. This program protects the processors who can sell the sugar for a profit if prices rise, or forfeit the sugar to the CCC in exchange for cancellation of their debt if prices fall. Import restrictions have kept the domestic price of raw cane sugar so high, however, that only in one year between 1981 and 1993 did any processors default on their loans. 21 Between 1982 and 1990, the domestic price for raw cane sugar averaged $.217/lb., compared to a world price of $.098 (adjusted for delivery to New York). Import quotas for 1991/1992 were only a third as large as imports during the period 1975-1981, a period of unrestricted trade in sugar (Jurenas 1992). Subsidizing sugar has guaranteed such high prices that more cane and beet acreage is being planted, and the U.S. is becoming self-sufficient for the first time in its history.22 In the Everglades this leads to greater pressure for drainage and flood control. Moreover, because most of the sugarcane in Florida is grown in the Everglades Agricultural Area just south of Lake Okeechobee, the expansion of acreage devoted to sugarcane production results in an increasing amount of contaminants being released, impairing the water quality of the Lake and the water conservation areas. Acreage harvested for sugar in Florida went from 233,000 in the early 1970s to 346,000 in the early 1980s to 420,000 acres in 1990. Swampbuster and Sugarcane: As indicated above, Swampbuster denies farm program benefits to persons who (i) produce agricultural commodities (including sugarcane) on wetlands converted after December 23, 1985 or (ii) convert wetlands after enactment of the 1990 FACTA. The ineligibility is for all farm program benefits, i.e., not only on the crops which a producer grows on converted wetlands, but on all crops that a producer grows anywhere during the crop year. The intent is to reduce Federal subsidies which provide financial incentives to convert wetland to cropland. For two reasons Swampbuster is almost completely ineffective in deterring the conversion of wetlands to sugarcane. First, Swampbuster's only sanction is the denial of program benefits to growers. But in the case of sugarcane, the growers are not the participants in the USDA program which grants the principal subsidy, the nonrecourse loan or price support program. The sugar processors are the program participants. 23 Since sugarcane growers who convert or plant on converted wetlands cannot be denied eligibility to a program in which they do not participate, there is no Swampbuster sanction for price supports. Secondly, even if the program were restructured, so that the growers were the program participants and received their price supports directly, the restrictive import quotas would still serve to enfeeble Swampbuster. The quotas keep the market price Table VII-1: Everglades Agricultural

Area, 1991 Commodity Acres Sugarcane 457,000 Vegetables 21,000 Sod 23,000 Pasture 11,000 Other Agric. 10,000 

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12/5/2011 http://www.doi.gov/oepc/wetlands2/v2ch7.htmlso high that most growers would probably continue to plant converted wetlands and forego participation in the program. 24 

### Urban Development The deductibility for income tax purposes of mortgage interest and property taxes, mortgage insurance, flood insurance, and loans for expanding the supply of electricity are the principal Federal programs providing incentives for residential development in the Everglades. Income Tax Code: Federal tax subsidies give preferential tax treatment to homeowners in the form of income tax deductibility of mortgage interest and property taxes. This tax treatment applies to second homes as well as primary residences. This subsidy stimulates demand for housing and increases pressure on wetlands. Mortgage Insurance: Mortgage insurance or guarantees provided through commercial lenders by HUD and the Department of Veterans Affairs result in lending on more favorable terms than would have been available in the absence of the guarantees, thereby stimulating the demand for housing. 25 Nationwide, HUD and VA loans account for about 10 percent of the financing for new residential construction. As discussed above, flood control and the filling of wetlands for residential housing have had a significant, adverse effect on the Everglades. The extent to which mortgage insurance programs affect wetlands in the Everglades is unknown, however. For single family housing, neither HUD nor the VA conduct environmental review at the subdivision development stage. 26 HUD performs an environmental review for all new multifamily developments. The VA and HUD used to conduct reviews of residential subdivisions prior to approving financing. The reviews focussed primarily on the construction aspects of projects, although some environmental considerations were involved. In the mid-1980s, the VA's general counsel issued an opinion that NEPA did not apply to the loan guarantee program. Having concluded that its construction reviews duplicated State and local regulatory programs, the VA terminated reviews of subdivisions. HUD formally followed suit in 1993, having significantly curtailed its scrutiny several years earlier. 27 The Wetlands Executive Order mandates that, where practicable, Federal agencies administer their programs so as to protect wetlands. Opinion differs, however, regarding the Order's applicability to the financing of activities on non-Federal property. Although Federal financing of construction in wetlands is covered under section 1(a), section 1(b) states that the order does not apply to Federal "allocations" on non-Federal property, the Department's Solicitor advises that there is no generally accepted interpretation of the term "allocations" in law. It would be useful if these two sections of the Wetlands Executive Order were clarified. Housing developments continue to be constructed in vulnerable areas. If Federal mortgage insurance were unavailable to developments proposed for wetland areas, the increased financial risk might reduce wetland loss. Flood Insurance: Flood insurance and reinsurance for buildings and their contents, both homes and businesses, is provided by the Federal Emergency Management Agency. FEMA's National Flood Insurance Program offers previously unavailable flood insurance to property owners in flood prone and storm hazard areas. While the program specifies building codes and land use practices to minimize the impact of flooding, it offers insurance in areas where the private insurance sector is generally not willing to provide coverage. Without this insurance, financing for such buildings would be difficult to acquire. Although the availability of Federal flood insurance is not the principal stimulus for construction within the Everglades, it appears to facilitate the process. Electrical Supply: The availability of electrical power at subsidized rates encourages development. The Glades Electric Cooperative borrows money from both the Rural Electrification Administration and non-Federal sources to extend electric service into rural areas. As of December, 1985, the Cooperative had borrowed $17 million at below-market interest rates, thus reducing the cost of electricity.28 

### Transportation The Federal Highway Administration (FHWA) provides 90 percent of the funds for interstate highway construction and 80 percent of the funds for other Federal-aid projects. As such, it can be a major contributor to projects affecting wetlands. For example, the Federal Government has paid about $268 million for a 76.3 mile conversion of SR-84 (Alligator Alley which traverses the Everglades) to Interstate Highway 75. Dredging and filling for the highway will destroy 894 acres of wetlands directly, and indirectly is likely to affect wetlands adjacent to the highway. Moreover limerock, used to fill the roadbeds, is often taken from rock mines in the Everglades. The Interstate 75 project requires 1.5 to 1.8 million cubic yards of fill material, equivalent to a 20-acre hole, 50 feet deep. These losses have not been fully mitigated, largely because of the FHWA's past reluctance to mitigate outside of the right-of-way and to use culverts more extensively to maintain sheetflow drainage patterns. Despite these losses, I

-75 will be a considerably better road environmentally than the existing SR

-84. 

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## Status and Prospects Population growth and a booming agricultural economy will continue to exert significant pressure on the Everglades. The publicly and privately owned wetlands in South Florida, however, will experience the pressures differently. The public wetlands, such as Lake Okeechobee and the water conservation areas, are likely to suffer from additional manipulations of the natural water regime. Storage capacity, for example, will probably be increased to meet the demands of a burgeoning population for drinking water. Changes in the timing and quantity of water releases could further perturb the system -- flooding alligator nests, killing fish by changing sensitive salinity balances, and drowning plant and animal life. Both the Federal and State Governments are stepping up efforts to regulate polluters, but until these arrangements are successfully in place, significant degradation and conversion will continue. Pollution will continue to take its toll as drainwater laden with nutrients from oxidized peat and agricultural and urban runoff is pumped into the public water bodies. Road crossings and utility corridors will continue to find public wetlands less costly than alternative upland sites. And given the burgeoning population, increased demand for recreational opportunities in south Florida may lead to construction of parking lots, boat ramps, and other access facilities to allow for hunting, fishing, bird watching, and enjoyment of the remaining Everglades. Privately held wetlands will continue to face residential development pressure. Population pressure is intense. Many financial incentives -- mortgage insurance, flood insurance, and low electricity rates -- spur development. The regulatory authorities are reactive at best, and seem not to be able to withstand the pressure for permits to fill. Similarly, once the structures are built, the pressure to provide flood control is intense and politically difficult to resist. Pressure from agricultural development will also escalate in part due to the displacement of agriculture by residential development, but also due to an artificially induced market for domestic sugarcane and federally sanctioned market orders for the citrus industry. In the absence of legislative changes, Swampbuster will remain ineffective in reducing wetland conversion to cropland. The major Federal subsidy for sugarcane stems from import quotas which keep the domestic price high. Obviously, Swampbuster has no effect on the benefits to the industry from restricting imports. If the import quotas were phased out, price supports for raw cane sugar would sustain the price of sugarcane, but Swampbuster still would not have any effect. Processors of sugarcane, not growers are the participants in the price support program. As a result, growers are exempt from Swampbuster's sanctions. The State of Florida has adopted a "Save Our Everglades" program to try to restore and acquire wetlands. Most significantly, it began in 1984 to restore the Kissimmee River from its current channelization to its former, meandering, floodplain environment. The State has also purchased 50,000 acres and reserved another 70,000 for eventual purchase. The Federal Government is examining ways to restore natural sheetflow to a part of the Everglades National Park. In 1989, Congress passed the Everglades National Park Protection and Expansion Act authorizing the addition of nearly 107,000 acres. The Federal Government has also added to the publicly held wetland acreage by exchanging Federal land for Everglades, a practice that is likely to continue. Restoration and acquisition can help, but the majority of the wetlands are and will remain in private hands. To protect the Everglades from conversion and impaired water quality, activities such as dredging, filling, and subsidization that safeguards existing development and fosters new growth will have to be severely curtailed, while regulation of wetland use will have to be more inclusive and vigorous. 

## Recommendations
1. Water Quality: Explore the possibility of denying Federal program benefits to industries, regions, or States found in violation of water pollution control standards, especially where it affects Federal lands. Water quality degradation is probably the most significant problem facing the Everglades. The Federal Government has brought suit against the South Florida Management District for failing to meet water quality standards. The Federal Government continues to subsidize industries responsible for a large portion of the pollution. The loss of program benefits unless the industries complied with stringent controls could prove an effective inducement for improving water quality. The Clean Air Act contains a provision that would allow the lifting of Clean Air Act grants, certain Federal Highway construction funds, or, at EPA's discretion, sewage treatment construction grants to States that fail to comply with its standards. Such a provision in the Water Pollution Control Act might serve as a similar inducement to States to not only design but implement effective water quality programs.
2. Agricultural Subsidies: 

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12/5/2011 http://www.doi.gov/oepc/wetlands2/v2ch7.htmla. Since April, 1993, in an effort to resolve the water quality problems affecting the Everglades ecosystem,

the Department has been negotiating with the agricultural parties challenging the 1991 settlement agreement of the United States' suit of the State and the South Florida Water Management District. If these negotiations fail to provide an acceptable arrangement for restoring water quality in the Everglades, Congress should consider restructuring the import quotas for sugar in order to promote a solution. Sugarcane, the dominant crop grown in the Everglades Conservation Area, is in worldwide surplus. The industry was made possible in south Florida by the Central and South Florida Project which subsidizes drainage and irrigation costs. The project was financed largely (80 percent) by Federal taxpayers. The industry is sustained by import restrictions, which keep the domestic price for sugarcane well above the competitive world price. In the past, the U.S. has partially compensated sugar exporting countries for the restrictive quotas with foreign aid in the form of surplus foods ($188.3 million worth in 1985). If import quotas were phased out, the price support program (nonrecourse loans) would sustain the domestic price, resulting in a drain on the Treasury. 29 To avoid the budgetary cost and effect the desired social change, the import quota and the price support have to be phased out simultaneously. The destruction in wetland quantity and quality attributable to sugarcane is significant. Withdrawing import quotas and price support subsidies would have a major, positive effect on consumers, taxpayers, and the Everglades wetlands. b. Revise Swampbuster's sanctions so that processors who purchase sugarcane from growers who plant on wetlands converted after enactment of the 1985 FSA or convert wetland after enactment of the 1990 FACTA are ineligible for price supports. Because the nonrecourse loans (price supports) go formally to the sugarcane processors rather than to growers, Swampbuster's effectiveness is almost completely undermined in the Everglades. The Statute makes violating growers ineligible for program benefits, but because growers are not the participants in the sugar program, there is no benefit to withhold. c. Amend Swampbuster's sanctions so that processors who purchase sugarcane from growers who plant on wetlands converted after enactment of the 1985 FSA or convert wetland after enactment of the 1990 FACTA lose their eligibility for marketing allotments. Marketing allotments are imposed on sugarcane processors when domestic production is estimated to be so high that there is a risk of market price falling to a level where loan forfeitures would be expected. Incentives to convert wetlands to sugarcane would be significantly reduced if marketing allotments were included among the Swampbuster sanctions. A processor who purchased sugarcane from a producer found in violation of the Swampbuster provisions would be liable to lose his ability to market sugar in the high priced domestic market. In order to avoid harming the offending processor's law-abiding suppliers of cane, the withheld allotment could be reallocated to other processors.
3. Urban development:

Consider eliminating subsidies for residential development in the Everglades. Insured mortgages and flood insurance offer significant incentives to development in the Everglades. Although a more rigorous regulatory program would help to conserve wetlands, this approach can be costly and politically distasteful. Withholding subsidies in wetland areas fosters Federal budgetary savings, while eliminating the market distortions which encourage economically inefficient and environmentally unsound development. Pressure for additional Federal drainage and flood control projects would also subside, and funding for regulatory purposes could either be reduced or freed up for use elsewhere. Selectively withholding Federal support for unsound development is neither a radical nor a new concept. A similar program has already been implemented on undeveloped coastal barriers under the Coastal Barrier Resources Act of 1982 (CBRA). CBRA made any new development projects in areas designated by Congress ineligible for most federally financed assistance programs.
4. Mitigation:

a. Consider developing a system of mitigation banking that would allow for a more flexible and comprehensive mitigation program. 

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12/5/2011 http://www.doi.gov/oepc/wetlands2/v2ch7.htmlMitigation occurs largely in piecemeal fashion. Often compensation is conducted with little regard for the

ecological functions of the lost wetlands or the relationship which the lost wetlands had to the larger ecosystem of which they were a part. A mitigation bank, sponsored by one or more agencies, could greatly improve the effectiveness of limited mitigation funds. b. Have Federal agencies assess the effects of their programs on wetlands. Where feasible, agencies should minimize the wetland effects of their programs. Where this proves infeasible, agencies should furnish Congress with an explanation of why adjustments cannot be instituted. As we have seen, many Federal programs that affect wetlands are designed and financed in a way that violates the most basic principles of public finance: efficiency and equity. They distort market signals and provide subsidies that are difficult to justify from the point of view of economics under any circumstances, but much more difficult to defend given their environmental impacts. Optimally, these programs should be redesigned in order to confront project sponsors with the full cost of their activities. This would reduce the Federal deficit, strengthen the economy by improving the allocation of resources, and conserve wetlands and other environmental resources. If political realities preclude elimination of these subsidies, at the very least the programs should be responsible for compensating for their impacts on wetlands and the environment. Executive Orders 11990 and 11988, the Executive Orders on Wetland Protection and Floodplain Management, already require, where practicable, all Federal agencies to minimize wetland effects and consider floodplain impacts in conducting their programs. Although most Federal agencies instituted regulations to fulfill the requirements of the Executive Orders, some have not and some that promulgated regulations have not implemented them thoroughly. No oversight information exists on the implementation and effectiveness of the Executive Orders. The Council on Environmental Quality and the Water Resources Council were originally designated to oversee compliance with the Orders. The Reagan Administration dissolved the Water Resources Council, and the CEQ did not have the resources to execute its responsibilities. Neither the Environmental Protection Agency nor the Fish and Wildlife Service has been able to fill the breach. Strengthening the administration and enforcement of these Executive Orders will benefit the environment, the economy, and society as a whole.



## References Dahl, T.E. 1990. Wetlands Losses in the United States, 1780's to 1980's. U.S. Department of the Interior, Fish and Wildlife Service, Washington, DC, 13 pp. Florida Atlantic University-Joint Center for Environmental and Urban Problems. 1986. The Impact of Federal Programs on Everglades Wetlands. Background Report. Prepared for Office of Policy Analysis, U.S. Department of the Interior, Washington, DC, 27 pp. Hazen and Sawyer. 1993. Twenty Year Evaluation of the Economic Impact from Implementing the Marjorie Stoneman Douglas Everglades Restoration Act and U.S. versus SFWMD Settlement Agreement. Draft Report (May, 1993). South Florida Water Management District, Contract No. C-4157. Jurenas, R. 1992. Sugar Policy Issues. Congressional Research Service, Library of Congress, Washington, DC, pp. 16. Robertson, W.B. Jr. and J. A. Kushlan. 1984. "Southern Florida Avifauna," in P. J. Gleason, ed. Environments of South Florida: Present and Past. Miami Geol. Soc., Miami, FL, pp. 219-257. Stephens, J. C. 1974. "Subsidence of Organic Soils in the Florida Everglades - Review and Update," in P. J. Gleason, ed. Environments of South Florida: Present and Past. Miami Geol. Soc. Mem. 2. Miami, FL, pp. 352-361.



## Footnotes
1 The Federal Government leases Water Conservation Area 1 from the State of Florida to serve as the Arthur R. Marshall Loxahatchee National Wildlife Refuge (Loxahatchee Refuge). 

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12/5/2011 http://www.doi.gov/oepc/wetlands2/v2ch7.html2 The listed species include the American crocodile, Florida panther, bald eagle, wood stork, Cape Sable seaside sparrow, and snail kite.
3 Construction of the C&SFP began in the mid-1950s. Operation of the main structures and the Water Conservation Areas began early in 1962. Elements continue to be added to the project.
4 Much of this work was conducted by the Soil Conservation Service. SCS projects are built largely with Federal funds; there are only limited local contributions.
5 The Army Corps of Engineers contends, however, that the distribution of water is a State function and that it only has authority to control flood waters. The State regulates water quality associated with private irrigation and drainage activities through consumptive use and surface water management permits.
6 The EAA was formally created with the construction of the C&SFP. Prior to 1949, approximately 150,000 acres south of Lake Okeechobee, in what is now the EAA, was being farmed. The remainder was Everglades, although much of it was overdrained as a result of State projects.
7 Although the total number of wading birds in the southeastern United States has declined due to habitat loss and degradation, it has not declined to the degree experienced in the Everglades. Birds from the Everglades migrated north, and reestablished nesting areas in Georgia and South Carolina.
8 In the early 1950s large acreages of wetlands were converted to pasturelands when the Kissimmee was ditched. Today, efforts are underway to return the Kissimmee to its original course and to restore the converted wetlands.
9 The State Department of Environmental Regulation promulgated a regulation addressing livestock effluent, and targeted 49dairy farms which were affecting the Lake. As a result, the State Department of Agriculture (DOA) initiated a $23M costsharing program (75% State/25% private) under which 30 farms installed barn-effluent control systems and 19 farms were bought out. SCS and SFWMD designed the control systems; in some cases SCS contributed up to 60% of the private share. Of the 19 farms in the buy-out program, one was purchased outright by the SFWMD, and 18 had their dairy operations purchased by DOA and SFWMD (at $620/head) and a restrictive covenant placed on their deeds prohibiting intensive livestock husbandry.
10 For example, housing construction has recently occurred in the east Everglades along the outskirts of Miami and the eastern border of Conservation Area 3.
11 The United States Sugar Corporation, for example, recently applied (August, 1988) to the Army Corps of Engineers for a section 404 dredge or fill permit to convert 430 acres of wetlands of Southern Division Ranch at the South end of the Lake to sugarcane and citrus.
12 EPA recently vetoed several rock plowing permits in the East Everglades (1988).
13 Construction totaled $252 million between 1950 and 1985.
14 There are private insurance companies which offer coverage, but they are reinsured by the Federal government.
15 The farmer can choose among three levels of yield protection, 50, 65, or 75 percent of his normal yield. His normal yield is referred to as his Actual Production History (APH). If the farmer has at least 10 years of acceptable yield records, the APH will be determined by dropping the highest and lowest yield and averaging the remaining yields. If he has less than 10 years of data, the APH is calculated by a formula which blends the available farm data with county average data. In addition to selecting a level of yield protection, the farmer must also choose from one of three "price elections." This will determine the price which will be used to place a monetary value on any insurable losses which occur. The higher the yield guarantee level and the higher the price election, the higher will be the premium the farmer will pay. If at harvest time, the farm yields are below the yield guarantee level, an insurance adjuster will visit the farm and determine the indemnity which the farmer is entitled to receive.
16 Policies are sold at a discount of 30 percent off of the estimated premiums required to pay out all claims in a given year.
17 Swampbuster denies farm program benefits (like crop insurance) to persons who either produce agricultural commodities (including sugarcane) on wetlands converted after December 23, 1985, or alter wetlands after enactment of FACTA so that a commodity could be produced. (See discussion of Swampbuster in chapter 3 .) It turns out, however, that the principal 

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12/5/2011 http://www.doi.gov/oepc/wetlands2/v2ch7.htmlprotections provided by Swampbuster against conversion of wetlands to sugarcane are illusory. For a full discussion see the section below entitled Swampbuster and Sugarcane.
18 Participation in Federal crop insurance programs tends to be high for tomatoes and peppers, moderate for sweet corn, and low for citrus and sugarcane. Citrus and sugarcane tend to be produced by large companies which prefer to self-insure. 19 The Federal Government supports the price of manufacturing-grade milk chiefly through the dairy price support program. The Government stands willing to buy carlots of butter, cheese, and nonfat dry milk from processors at pre-set prices based on a Federal support price for each hundred pounds of milk. In order to acquire dairy products, commercial distributors must offer milk processors as much or more than the Federal Government would pay. The Federal Government becomes the purchaser of all quantities of milk products produced in excess of commercial market demand at the announced prices.
20 To partially compensate the 39 countries whose sugar quotas were cut in 1985, the Reagan Administration made available surplus foods worth $188.3 million.
21 Some processors defaulted in 1985. In 1989, only about 20 percent of the raw cane sugar crop entered the loan program, but most Florida processors participate in the program. In the five year period 1987-1991, Florida processors accounted for two-thirds of the raw cane sugar under loan.
22 Sugarcane is not the sole domestic source of the Nation's sweeteners. Half of the demand for sweeteners is now satisfied by high fructose corn syrup (HFCS), a substitute for cane or beet sugar made economically attractive by technological advances, the low cost of HFCS, and the high price of domestic sugar. Furthermore, the high price of sugar induced manufacturers of products using sweeteners to substitute artificial sweeteners for sugar. The reduction in sales and market share has been absorbed entirely by foreign suppliers, however. Domestic production of sugar from cane and beets has increased significantly in the last 15 years.
23 The program is structured in this way, because the CCC needs collateral which can be stored easily. Processed sugar can be stored easily; sugarcane cannot.
24 The benefits associated with the program are the access to financing and the risk reduction provided by the floor on the price of sugar. However, because import restrictions tend to keep the market price well above the floor, there is not much risk to be reduced, and financing can be arranged elsewhere, although perhaps at less attractive terms.
25 In general, most types of housing are eligible under these programs, including single-family and multifamily housing, manufactured homes, and condominiums. HUD and the VA no longer insure subdivision site development, and their activity in insuring mobile home parks is limited.
26 HUD requires a builder certification that the property complies with State and local codes, including environmental requirements. HUD can impose sanctions on builders who violate the requirement. The VA assumes that construction is evidence of compliance with State and local codes.
27 HUD curtailed its scrutiny several years earlier, in compliance with a 1983 Congressional mandate that HUD, VA, and FmHA accept each other's subdivision approvals reciprocally. (See Section 535 of the Housing Act of 1949, added by Section 523 of the Housing and Urban-Rural Recovery Act of 1983.) This provision prevented any one of the agencies from conducting its own environmental review of a subdivision which had been approved by either of the other two agencies. When VA subsequently eliminated its subdivision approvals, HUD again ordered environmental reviews in subdivisions containing properties certified by the VA. In response, the housing industry urged Congressional action to continue HUD's automatic acceptance of VA-processed properties. Congress amended Section 535 to require that HUD consider a VA Certificate of Reasonable Value on as little as one house in a subdivision "to be an administrative approval for the entire subdivision." Consequently, a subdivision that received no VA environmental review was excluded by statute from HUD environmental subdivision review. A substantial portion of HUD-insured homes were accepted byHUD as the result of VA processing during the period 1983-1993.
28 Rates of service charged by rural utilities are reduced because the systems are financed at below market rates of interest. However, the per capita expense of providing service to rural areas is high, and hence, rural customers often pay absolutely higher rates than their urban counterparts. 29 Phasing out the quotas while retaining the price supports would have a significant budgetary impact. Currently the quotas keep the domestic price high enough that processors sell all their output on the open market and redeem their loans. If the quotas were phased out, the domestic price for raw cane sugar would fall; participation in the loan program would increase; 

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12/5/2011 http://www.doi.gov/oepc/wetlands2/v2ch7.htmlfew loans would be redeemed by processors; and the Federal Government would find itself acquiring stores of raw cane sugar, something it does not do now.

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For more information on the impact of Federal programs on wetlands, contact Jon H. Goldstein by email at jon_goldstein@ios.doi.gov or

by telephone at 202-208-4077
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